Press Releases

Washington, DC – In response to problems arising from the implementation of the new Medicare drug plan, a bipartisan group of lawmakers led by Senators Frank R. Lautenberg (D-NJ), Olympia Snowe (R-ME) and Dianne Feinstein (D-Calif.) announced emergency legislation today to reimburse states that have paid millions of dollars for prescriptions for low-income and disabled Medicare beneficiaries.

Senators Chuck E. Schumer (D-NY) and Norm Coleman (R-MN) will also be original co-sponsors of the legislation, which will be introduced tomorrow when the Senate comes back into session. The bill will require the federal government to reimburse States with interest. It also directs the Secretary of Health and Human Services to recover any overpayments made by states to private prescription drug plans and return that money to the Medicare Trust Fund.

“This is a crisis for millions of Americans. The stakes here are life and death. The Federal Government has failed do its job right and the states are left holding the bag,” said Senator Lautenberg. “Congress needs to pay the states back for bailing the Federal Government out of this mess.”

“Problems with the implementation of the new Medicare drug benefit are occurring nationwide,” said Senator Snowe. “In Maine, tens of thousands of our most vulnerable seniors would have lost their prescription drug coverage if the state had not stepped in. States around the country should not have to wait to be compensated by insurance companies for expenses incurred as a direct result of CMS’ errors. The federal government should live up to its new responsibility and reimburse states for these costs.”

“The faulty implementation of the new drug benefit has caused a major health emergency in California and other states across the nation, particularly for seniors with chronic and debilitating diseases who rely on multiple medications every day to keep them alive. Because of severe glitches in the Medicare database, these individuals are leaving pharmacies without their medications or are making undue sacrifices to pay for costs they should not have incurred in the first place,” said Senator Feinstein.

Senator Schumer said, “This Medicare bill is the biggest government fiasco in recent memory. Not only is the Medicare bill confusing, and nearly impossible to navigate, but it’s now costing states hundreds of millions of dollars for low income seniors who fell through the bureaucratic cracks. Every kid learns that if you break it, you buy it. And the federal government broke this drug bill big time. The federal government should pay the states back – with interest for their trouble, and that’s what this bill will do.”

“I find it inexcusable that six million dual eligible beneficiaries and their community pharmacists have been denied coverage and reimbursement because of a computer glitch with the implementation of the Part D program,” said Senator Coleman. “I understand the difficulties of this transition but am very thankful that many states, including Minnesota, have stepped up to the plate to make sure these beneficiaries, the low-income and disabled, have their prescriptions filled. I have no doubt this responsibility falls on the Federal government and our legislation will help States recoup funds spent during this period.”

Currently, 25 states have moved to pick up the cost of these prescriptions. The MEDICARE STATE REIMBURSEMENT ACT would require the Federal Government to reimburse the states for the cost of prescriptions for low-income seniors and people with disabilities (“dual eligibles”) who were eligible for coverage under Medicare Part D, but were improperly denied Federal coverage.

Reimbursement would be through an equivalent reduction in funds owed by each state under the “claw back” provision of the new Medicare law. It would be at a rate equal to 100 percent of all State costs plus an interest rate equal to the market rate on 3-month Treasury Securities plus 0.1 percent.

The Secretary of the Department of Health and Human Services would be directed to recover overpayments by states to private prescription drug plans and return that money to the Medicare Trust Fund.