Antonio Butcher
Gurjit Dhillon
Edward Kwong
Prameel Singh
I.
Overview
a. What is Medicare
Medicare is a federal government
program that helps older folks and some disabled people pay their medical
bills. The program is divided into two parts: Part A and Part B. Part A is
called hospital insurance and covers most hospital stay costs, as well as some
follow-up costs. Part B, medical insurance, pays some doctor and outpatient
medical care costs
i. Part A
Part A helps pay for necessary medical care and services
given by Medicare-certified hospitals, skilled nursing facilities, home health
agencies, and hospices. It does not cover doctor visits or prescription drugs.
ii. Part B
Part B of Medicare helps pay for doctors, outpatient
hospital care, ambulance transportation, and a variety of other tests and
services.
á The
Part B monthly premium in 2004 is $66.60. It is deducted from your Social
Security, Railroad Retirement, or Civil Service Retirement check. If you do not
get any of the above payments, Medicare sends you a bill for your Part B
premium every 3 months
á Please
call the Social Security Administration at 1-800-772-1213 or visit or call your
local
Social Security office to sign up.
Although
it seems as though Medicare covers almost everything it does not cover most
outpatient prescription drugs, most nursing home care, eyeglasses
(except after cataract surgery), dental care, hearing aids, health care outside
of the United States and acupuncture.
http://www.thebeehive.org/health/medicare.asp
If
you have questions about your eligibility for Medicare Part A or Part B, or if
you want to apply for Medicare, please call the Social Security Administration
toll-free at 1-800-772-1213 or visit or call your local
Social Security office. The TTY-TDD number for the hearing and speech
impaired is 1-800-325-0778. You can also get information about buying Part A as
well as Part B if you do not qualify for premium-free Part A.
II.
History
The
battle for Medicare started with Harry TrumanÕs abortive attempt to enact
national health insurance in 1948.
In the early 1950s, Social Security officials realized that older
Americans were facing a health care crisis. The Social Security system, which
was created as an economic safety net for older Americans, was failing to
protect them against the greatest single cause of economic dependency in old
age–the high cost of medical care.
Between 1950 and 1963, the aged population grew from about 12 million to
17.5 million, or from 8.1 to 9.4 percent of the U.S. population. At the same
time, the cost of hospital care was rising at a rate of about 6.7 percent a
year. In1960 when health care
costs rose, it caused politicians to push through Congress legislation under
which the federal government provided states 50 percent to 80 percent of the
funds they spent on medical assistance for the poorest old people, which
included hospital, surgical and physician care, drugs, and false teeth. By 1963 five big states ( New York,
California, Massachusettes, Michigan, and Pennsylvania) with only 32 percent of
the population were taking up 90 percent of the federal funds. In 1964 Lyndon B. Johnson made Medicare
an overarching priority. In July
1965, the House and Senate passed the bill which established Medicare, a social
insurance program designed to provide all older adults with comprehensive
health care coverage at an affordable cost. In 1972, Medicare eligibility was
extended to two other groups that were facing similar problems in obtaining
reliable health coverage–people with disabilities and people with
end-stage renal disease.
In addition to further explain-
Medicare is a program of national health insurance for persons who are over the
age of sixty-five or seriously disabled. Administered by the federal Social
Security Administration, it was established under the Social Security
Amendments of 1965. Opposition by the medical profession and private insurance
interests kept health insurance out of the Social Security Act of 1935 and its
various amendments of the 1940s and 1950s. The Kerr-Mills Act of 1960 was an
effort to forestall more radical action by providing federal support for state
medical programs that served the aged poor. But few states participated, its
coverage was extremely limited, and the matching-grant formula meant that the
poorest states tended to receive the least assistance. The inadequacies of this
law, in fact, increased the demand for a more comprehensive program.
Even after it became clear that
some form of health insurance would be enacted, advocates disagreed bitterly
over whether the program should be compulsory or voluntary, serve all incomes
or just the poor, and be run by the federal government or the states; also at
issue was how public and private agencies would be balanced. As finally
enacted, the 1965 amendments represented a compromise. Medicaid, adopted at the
same time, served only the poor and was administered by the states; Medicare
served the elderly and disabled of all incomes and was run by the federal
government. Furthermore, under Part A of the Medicare legislation, hospital
insurance was made compulsory; under Part B, recipients were permitted to
choose whether or not to participate in a government-assisted insurance program
to cover doctors' fees. A major role was guaranteed to the private sector by
essentially limiting Medicare to a financing system. Program recipients would
purchase all their health services in the open market; the government's only
involvement would be in relation to payment.
A threatened boycott of Medicare
and Medicaid by the American Medical Association did not materialize, and
Medicare went into effect in 1966. The effects of the program were far-reaching.
Most important, it gave millions of elderly and disabled people new access to
medical care. But by arranging for program recipients to purchase their care
from private providers at whatever fee those providers customarily charged,
Medicare maintained relatively little control over the quality and cost of the
services they received. In fact, the program proved to be far more expensive
than its framers anticipated. Among the factors involved were the expanded
market for health services that Medicare created, the growing number of elderly
people in the population, and the increasing use of expensive medical
technology. The rising cost of all health care during the 1970s and 1980s,
dramatically reflected in growing Medicare budgets, provoked widespread debate.
In response, state and federal officials initiated various schemes to control
program costs, most notably the initiation of a "prospective payment"
system in 1984, under which Medicare payment rates were set in advance for each
medical diagnosis. There was even some discussion of giving Medicare only to
the poor. At present, cost control remains an unsolved problem. Nevertheless,
Medicare has become an established element in the nation's social welfare
system.
Also look at
http://www.medicarerights.org/maincontenthistory.html
The roots of the Department of Health and Human
Services go back to the earliest days of the nation:
1798
Passage of an act for the relief of sick and
disabled seamen, which established a federal network of hospitals for the care
of merchant seamen, forerunner of today's U.S. Public Health Service.
1862
President Lincoln appointed a chemist, Charles M.
Wetherill, to serve in the new Department of Agriculture. This was the
beginning of the Bureau of Chemistry, forerunner to the Food and Drug
Administration.
1871
Appointment of the first Supervising Surgeon
(later called Surgeon General) for the Marine Hospital Service, which had been
organized the prior year.
1878
Passage of the National Quarantine Act began the
transfer of quarantine functions from the states to the federal Marine Hospital
Service.
1887
The federal government opened a one-room
laboratory on Staten Island for research on disease, thereby planting the seed
that was to grow into the National Institutes of Health.
1891
Passage of immigration legislation, assigning to
the Marine Hospital Service the responsibility for medical examination of
arriving immigrants.
1902
Conversion of Marine Hospital Service into the
Public Health and Marine Hospital Service in recognition of its expanding
activities in the field of public health. In 1912, the name was shortened to
the Public Health Service.
1906
Congress passed the Pure Food and Drugs Act,
authorizing the government to monitor the purity of foods and the safety of
medicines, now a responsibility of the FDA.
1912
President Theodore Roosevelt's first White House
Conference urged creation of the Children's Bureau to combat exploitation of
children.
1921
The Bureau of Indian Affairs Health Division was
created, the forerunner to the Indian Health Service.
1930
Creation of the National Institute (late
Institutes) of Health, out of the Public Health Service's Hygenic Laboratory.
1935
Passage of the Social Security Act.
1938
Passage of the Federal Food, Drug and Cosmetic
Act.
1939
The Federal Security Agency was created, bringing
together related federal activities in the fields of health, education and
social insurance.
1946
The Communicable Disease Center was established,
forerunner of the Centers for Disease Control and Prevention.
The Cabinet-level Department of Health, Education
and Welfare was created under President Eisenhower, officially coming into
existence April 11, 1953. In 1979, the Department of Education Organization Act
was signed into law, providing for a separate Department of Education. HEW
became the Department of Health and Human Services, officially arriving on May
4, 1980. Some highlight dates in HEW and HHS history:
1955
Licensing of the Salk polio vaccine.
The Indian Health Service was transferred to HHS from the Department of
Interior.
1961
First White House Conference on Aging.
1962
Passage of the Migrant Health Act, providing
support for clinics serving agricultural workers.
1964
Release of the first Surgeon General's Report on
Smoking and Health.
1965
Creation of the Medicare and
Medicaid programs, making comprehensive health care available to millions of
Americans.
Also in 1965, the Older Americans Act created the nutritional and social programs
1966
International Smallpox Eradication program
established -- led by the U.S. Public Health Service, the worldwide eradication
of smallpox was accomplished in 1977.
Also in 1966, the Community Health Center and Migrant Health Center programs
were launched.
1970
Creation of the National Health Service Corps.
1971
National Cancer Act signed into law.
1975
Child Support Enforcement program established.
1977
Creation of the Health Care Financing
Administration to manage Medicare and Medicaid separately from the Social
Security Administration.
1980
Federal funding provided to states for foster care
and adoption assistance.
1981
Identification of AIDS. In 1984, the HIV virus was
identified by PHS and French scientists. In 1985, a blood test to detect HIV
was licensed.
1984
National Organ Transplantation Act signed into
law.
1988
Creation of the JOBS program and federal support
for child care.
Passage of the McKinney Act to provide health care to the homeless.
1989
Creation of the Agency for Health Care Policy and
Research (now the Agency for Healthcare Research and Quality).
1990
Human Genome Project established.
Passage of the Nutrition Labeling and Education
Act, authorizing the food label.
Also, the Ryan White Comprehensive AIDS Resource Emergency (CARE) Act began
providing support for people with AIDS.
1993
The Vaccines for Children Program is established,
providing free immunizations to all children in low-income families.
1995
The Social Security Administration became an independent
agency.
1996
Enactment of welfare reform under the Personal
Responsibility and Work Opportunity Reconciliation Act.
Enactment of the Health Insurance Portability and Accountability Act (HIPAA).
1997
Creation of the State Children's Health Insurance
Program (SCHIP), enabling states to extend health coverage to more uninsured
children.
1999
The Ticket to Work and Work Incentives Improvement
Act of 1999 is signed, making it possible for millions of Americans with
disabilities to join the workforce without fear of losing their Medicaid and
Medicare coverage. It also modernizes the employment services system for people
with disabilities.
Initiative on combating bioterrorism is launched.
2000
Publication of human genome sequencing.
2001
The Centers for Medicare & Medicaid is
created, replacing the Health Care Financing Administration.
HHS responds to the nationÕs first bioterrorism attack -- delivery of anthrax
through the mail.
2002
Office of Public Health Emergency Preparedness
created to coordinate efforts against bioterrorism and other emergency health
threats.
2003
Enactment of the Medicare Prescription Drug
Improvement, and Modernization Act of 2003, the most significant expansion of
Medicare since its enactment, including a prescription drug benefit.
administered by HHSÕ
Administration on Aging.
In addition, the Head Start program was created.
http://www.medicarerights.org/maincontenthistory.html
http://www.actuary.org/pdf/medicare/evaluating.pdf
III.
Coverages
a. Part A
á
Helps pay for necessary
medical care and services
á
Medicare-certified hospitals,
skilled nursing facilities, home health agencies, and hospices.
á
It does not cover doctor
visits or prescription drugs.
á
You can also call the Social
Security Administration toll free at 1-800-772-1213 or call or visit your local Social Security office for more
information about buying Part A
b. Part B
á
Helps pay for doctors,
outpatient hospital care, ambulance transportation, and a variety of other
tests and services.
á
If you did not take Part B
when you were first eligible for Medicare, you may sign up during the General
Enrollment Period. The General Enrollment Period runs from January 1 through
March 31 of each year.
á
Call the Social Security
Administration at 1-800-772-1213 or visit or call your local Social Security office to sign up.
IV.
Options
A. Medigap Insurance
Definition: Insurance policies
sold by private insurance companies to fill some of the "gaps" or
costs of the Original Medicare Plan. Except in Massachusetts, Minnesota and
Wisconsin, you can choose from one of 10 standard policies, labeled A-J.
Medigap policies only work with the Original Medicare Plan.
A.
Medigap Policies
a.Medigap policy is a health insurance policy sold by private
insurance companies to fill the "gaps" in Original Medicare Plan
coverageThe benefits covered by Medigap Plan A are the same regardless of which
health insurance carrier is offering Plan A.
b.There are ten standardized
Medigap plans called "A" through "J."
i. The front
of a Medigap policy must clearly identify it as "Medicare Supplement
Insurance." Each plan A through J
has a different set of benefits.
ii. Medigap policies only help pay
health care costs if you have the Original Medicare Plan. You don't need to buy
a Medigap policy if you are in a Medicare + Choice Plan. In fact, it is illegal
for anyone to sell you a Medigap policy if they know you are in one of these
plans.
c. A Medigap policy is not: Coverage you
get from your employer or union, a medicare + Choice Plan, Medicare Part B, and
Medicaid.
B.
Medigap Policies
Medigap Benefit |
A |
B |
C |
D |
E |
F |
G |
H |
I |
J |
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C.
Medigap Policies
a. For
more information on Medigap and its policies, including what coverage each plan
entails, click on one of the link below
http://www.medicare.gov/default.asp
D.
Medicare Select
a.
If you buy a Medicare SELECT policy, you are buying one of the
10 standardized Medigap plans, A through J.
b.
The difference is with a Medicare SELECT policy, generally you
must use specific hospitals to get full insurance benefits (except in an
emergency)
i. The stipulation requires that
you use their network of providers (doctors and hospitals) in order to receive
full benefits if you are not covered at all hospitals, as you are with regular
Medigap insurance.
c.
For this reason, Medicare SELECT policies generally cost less.
i. If you donÕt use a Medicare
SELECT hospital for non-emergency services, you will have to pay what the
original Medicare Plan doesnÕt pay
ii. The original Medicare Plan
will pay its share of approved charges no matter what hospital you choose.
d.
For more information click on the link below
http://www.medicare.gov/default.asp
E.
Medicare + Choice Plans
a.
provide care under contract to Medicare. They may provide
benefits like coordination of care or reducing out-of-pocket expenses. Some
plans may offer additional benefits, such as prescription drugs. There are two
types of Medicare + Choice plans. They are available in many parts of the
country.
b.
After considering what is important in a health plan, this
chart can help individuals see which types of plans have the things that are
most important to them.
|
Medicare + Choice Plans |
||
|
Original
Medicare Plan |
Managed Care
Plan |
Private
Fee-for-Service Plan |
Costs |
High |
Low to Medium |
Medium to high |
Extra Benefits |
None |
Most |
Some |
Doctor Choice |
Widest |
Some |
Wide |
Convenience |
Varies |
Varies |
Varies |
F.
Health Maintenance Organizations (HMOs)
a.
Definition: A managed care plan that provides health care to
plan members on a pre-paid basis. In most HMOs, you must get all your care from
the doctors and hospitals that are part of the plan's network. Usually a
primary care doctor coordinates all of your care and refers you to specialists
b.
Under the HMO plan, Medicare+Choice HMOs must provide all
Medicare-covered services and may provide benefits not covered by original
Medicare.
c.
For your care to be covered you must receive all your health
care either from the HMO or from a provider the HMO refers you to.
i. The
only exceptions are an emergency or an urgently needed care situation.
d.
Exception
i. HMOs
can offer a Point of Service (POS) option
1.
Under the POS option, beneficiaries can go out of the network
to receive services, but with higher out-of-pocket payment requirements.
2.
Like Medicare HMOs, PPOs must offer all of MedicareÕs required
benefits.
a.
They may also offer additional benefits, such as annual
physicals, other preventive services, disease management, and prescription drug
benefits
e.
For more information click on the link below
http://www.medicare.gov/default.asp
G.
Preferred Provider Organizations (PPO)
a.
Definition: A managed care plan that provides health care to
its members on a prepaid basis. In a PPO, you can get care from the doctors and
hospitals in the plan's network or pay more to go to doctors and hospitals
outside the network. Many PPOs don't require you to choose a primary care
doctor or get a referral to see a specialist)
b.
Like Medicare HMOs, PPOs must offer all of MedicareÕs required
benefits.
i. They
may also offer additional benefits, such as annual physicals, other preventive
services, disease management, and prescription drug benefits.
ii. Unlike
HMOs, PPOs will provide some coverage for services provided outside of their
network
1.
Co-payments and deductibles will be lower when you use network
providers than when you use out-of-network providers.
c.
For more information click on one of the links below
http://www.medicare.gov/default.asp
H.
Provider Sponsored Organizations (PSO)
a.
PSOs also are like HMOs, except that they are formed by a
group of hospitals and doctors who directly take on the financial risk of
providing comprehensive health benefits for Medicare beneficiaries
i. There
is no insurance company involved.
I.
Private Fee-For-Service (PFFS)
a.
Definition: A health plan offered by a private insurance
company plan that accepts people with Medicare. You may go to any Medicare
approved doctor or hospital that accepts the plan's payment. The insurance
plan, rather than the Medicare program, decides how much you pay for the services
you get. You may pay more for Medicare benefits. You also may have extra
benefits not covered by the Original Medicare Plan
b.
Are indemnity-type insurance plans\
i. The
insurance plan, not Medicare, determines how much to reimburse providers.
ii. Providers
are allowed to bill beyond what the plan pays, up to a limit.
1.
The beneficiary is responsible for paying whatever the plan
doesn't cover and could also be responsible for additional premiums.
V.
Eligibility
á
http://www.medicare.gov/Basics/Overview.asp
, this site can help you determine eligibility.
A. Part A
á
You are eligible for Part A
if you or your spouse has worked for at least 10 years in Medicare covered
employment and you are 65 years old and a citizen or permanent resident of the
United States
B. You
are eligible to receive Part A at age 65 without having to pay premiums if you:
1. are already receiving retirement benefits from Social
Security or the Railroad Retirement Board
2. are eligible to receive Social Security or Railroad
benefits but have not yet filed for them
3. or your spouse had Medicare covered government employment
C. You
are eligible to receive Part A under the age of 65 without having to pay
premiums if you:
á
have received Social Security
or Railroad Retirement Board Disability benefit for 24 months are a kidney
dialysis or kidney transplant patient
D. Part B
á
All of the eligible
candidates for Medicare must pay for Part B.
VI.
Demographics
A.
Median Age
i. 1990
U.S. Census was 32.9
ii. 2000
U.S. Census was 35.3
B.
Population between 45 and 54
i. Swelled
49% from 1990 to 2000 census
C.
Population of 65 and older
i. 2000 census marked the first time in
history that the 65 years and over population did not grow faster than the
total population. The census illustrates that 35 million people were 65 years
of age or older. This amounts to 12.4 percent of the U.S. population. In 1990
there was 3.8 million less and accounted for 12.6 percent of the
population. The decline is said to
be caused by low birth rates in the late 1920Õs and early 1930Õs. Experts
explain that the trend
is temporary, and is expected to reverse as the baby boomers(those born between
1946 and 1964)
reach age 65 starting in 2011.
|
|
|
The following is a listing of
the Medicare premium, deductible, and coinsurance rates that will be in
effect in 2005: Medicare Premiums for 2005: Part A: (Hospital Insurance)
Premium
Part B: (Medical Insurance)
Premium $78.20 per month. Medicare Deductible and
Coinsurance Amounts for 2005: Part A: (pays
for inpatient hospital, skilled nursing facility, and some home health care)
For each benefit period Medicare pays all covered costs except the Medicare
Part A deductible (2005 = $912) during the first 60 days and coinsurance
amounts for hospital stays that last beyond 60 days and no more than 150
days. For each benefit period you
pay:
Skilled Nursing Facility
Coinsurance
Part B: (covers
Medicare eligible physician services, outpatient hospital services, certain
home health services, durable medical equipment)
Additional information about the
Medicare premiums, deductibles, and coinsurance rates for 2005 is available
in the September 3, 2004 Health and Human Services press release
titled "HHS
Announces Medicare Premium, Deductibles for 2005" on the www.hhs.gov website. Further look at www.medicare.gov. http://sbdcnet.utsa.edu/SBIC/demographics.htm http://www.statehealthfacts.kff.org/cgi-bin/healthfacts.cgi?action=profile&area=Mississippi&category=Medicare&subcategory=Medicare+Coverage+by+Demographics |
VII.
Sustainability
of Medicare
Every
year, the Social Security and Medicare Boards of Trustees releases an
annual report on the status of Social Security and Medicare for the next 75
years. Below is the summary for the 2004 report:
ÒAs we reported last year,
Medicare's financial difficulties come sooner--and are much more severe--than
those confronting Social Security. While both programs face essentially the
same demographic challenge, health care costs per enrollee are projected to
rise faster than the wages per worker on which the payroll tax is paid and on
which Social Security benefits are based. As a result, while Medicare's annual
costs are currently 2.7 percent of GDP, or about 60 percent of Social
Security's, they are now projected to surpass Social Security expenditures in
2024 and reach almost 14 percent of GDP in 2078, more than twice the percent
for Social Security in that year.
The projected 75-year actuarial deficit
in the Hospital Insurance (HI) Trust Fund is now 3.12 percent of taxable
payroll, up significantly from 2.40 percent in last year's report mainly due to
higher actual and projected hospital expenditures, as well as lower actual and
projected taxable payroll, and new Medicare legislation. The fund now fails our
test of short-range financial adequacy, as assets drop below the level of the
next year's projected expenditures within 10 years--in 2012. The fund also
continues to fail our long-range test of close actuarial balance by a wide
margin. The projected date of HI Trust Fund exhaustion has moved forward
significantly to 2019, from 2026 in last year's report, and projected HI tax
income falls short of outlays beginning this year, as compared to 2013 in last
year's report. HI could be brought into actuarial balance over the next 75
years by an immediate 108 percent increase in program income or an immediate 48
percent reduction in program outlays (or some combination of the two). However,
as with Social Security, adjustments of far greater magnitude would be
necessary to the extent changes are delayed or phased in gradually, and
continuation of the program after 2078 would require substantial changes.
Part B of the Supplementary
Medical Insurance (SMI) Trust Fund, which pays doctors' bills and other
outpatient expenses, and the new Part D, which pays for access to prescription
drug coverage, are both projected to remain adequately financed into the
indefinite future because current law automatically sets financing each year to
meet next year's expected costs. However, this automatic provision will result
in a rapidly growing amount of general revenue financing--projected to rise
from 0.9 percent of GDP today to 6.2 percent in 2078--as well as substantial
increases over time in beneficiary premium charges.Ó
The
entire report is available for review at: http://www.ssa.gov/OACT/TRSUM/trsummary.html
VIII.
Recommendations
a. On average, name brand prescription drugs in Canada cost an estimated 40% less than they do in the U.S.
b. So what is stopping us from buying from abroadÉÉ.the FDA
c. FDA
i. The U.S. forbids the import of prescription drugs by anyone other than the original U.S. manufacturer, and even then only when the drugs meet all the approval requirements of the FDA.
ii. The FDA asserts that it is looking out for consumer safety, but in fact a growing number of prescription drugs sold in the U.S. are made overseas and brought in by domestic manufacturers.
iii. Prescription drugs bought by Americans increasingly are produced in foreign countries with minimal FDA oversight and then shipped to the U.S.
iv. Seventeen of the 20 largest drug companies worldwide now make drugs in Ireland including Pfizer, producer of Lipitor-the largest selling drug in the world, and Viagra.
1. Other countries include Germany, France, Japan, and even Singapore
d. The FDA maintains that Òconsumers who buy prescription drugs from Canada are at risk of suffering adverse events, some of which can be life threatening.Ó
i. At a June 2003 hearing, members of Congress quizzed William Hubbard, the FDAÕs associate commissioner on the issue.
ii. When asked if he brought any evidence of adverse events that indicated people were harmed by Canadian drugs coming across the border, Hubbard answered, ÒWe have very little evidence.Ó
iii. Actually drug-safety regulation is often stricter overseas than in the U.S.
1. Case in point, in 2002, it was leaked out that a very successful drug, Serzone, had significant side effects
2. Bristol-Myers then announced that it would stop selling the drug in the Netherlands and Sweden, and eventually withdrew it from all of Europe and Canada.
3. The FDAÕs only response to this development was to require a black-box warning on the label.
e. Our recommendation is to allow U.S. consumers to buy prescription drugs from overseas.
i. Prescription drugs in Canada are on average 40% less than here in the U.S.
1. The price of a typical prescription in the U.S. for Zocor, which is a cholesterol reducer, is $372 to $451
2. In Canada, that same prescription would cost a consumer $198 to $224, a savings of nearly 47%.
f. Allowing Americans to buy these same prescription drugs in Canada would not only save Americans money in the short term, but it would also force the prices of these drugs in America to fall to the level of what is seen overseas and reduce the out-of-pocket costs that consumers must pay.
g. Our second recommendation is to adjust the recent Medicare Modernization Act of 2003.
i. The bill bars the Department of Health and Human Services (HHS), which purchases drugs for some seniors under Medicare, from negotiating with drug companies to get better prices
ii. Government auditors have repeatedly singled out Medicare for paying inflated prices compared with what HMOs and retail pharmacy chains pay for the same drugs.
1. In 2001, a HHS inspector generalÕs report said Medicare reimbursements for two dozen drugs Òexceeded actual whole-sale price by $761 million a year.Ó
h. The Department of Veterans Affairs (VA) negotiates lower drug prices through its nationwide Pharmacy Benefits Management Program
i. A 2002 study by the General Accounting Office showed that the VAÕs prices for some cholesterol drugs were more than 70% lower than retail prices for the same drugs
1. The VAÕs largest savings come from deals that are made with big pharmaceutical companies with national contracts
ii. All in all, according to a 2001 investigation, the VA paid an average of 52% less for a list of two dozen drugs than did Medicare all because they were allowed to negotiate the price of their drugs.
i. Allowing
Medicare to negotiate the price of drugs with the pharmaceutical companies
would have the same effect and would save the program hundreds of millions of
dollars.