Congressman Charles Boustany

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‘Case-by-Case’ Approach to Waiving Drug Benefit Penalty for Rita Victims Doesn’t Cut It, Louisiana Lawmakers Say
October 13, 2006
CQ.com
 
CQ HEALTHBEAT NEWS
Oct. 12, 2006

‘Case-by-Case’ Approach to Waiving Drug Benefit Penalty for Rita Victims Doesn’t Cut It, Louisiana Lawmakers Say

By John Reichard, CQ HealthBeat Editor

Louisiana lawmakers said Thursday that a Medicare policy that waives the penalty for late enrollment in the Medicare drug benefit only on a case-by-case basis for beneficiaries living in parishes hit by Hurricane Rita would be unfair. The penalty should be waived automatically, just as it is for beneficiaries affected by Hurricane Katrina, they said.

Lawmakers were responding to a statement by a CMS spokesman Tuesday that the agency is considering waivers of the penalty on a case-by-case basis for beneficiaries living in the six Louisiana parishes affected by Rita.

The spokesman’s comment came in response to a letter from Louisiana’s Democratic Gov. Kathleen Blanco saying it was unfair to penalize beneficiaries in areas affected by Rita, which struck parts of Texas and Louisiana on Sept. 24, 2005, causing billions of dollars of damage and wiping out almost entire communities in some cases. 

By Thursday, however, it was unclear whether CMS would even waive the penalty for Rita-affected beneficiaries on a case-by-case basis. Aides to the lawmakers said they weren’t surprised by the mixed messages coming out of the agency, saying it has given out conflicting information on the issue before. Either way, they argued, the policy for Rita-affected beneficiaries should be the same as that for Katrina-affected beneficiaries, which provides for automatic waivers of the penalty for late enrollment.

“Most people don’t realize if not for Hurricane Katrina, Hurricane Rita would have been the worst hurricane in U.S. history,” said Adam Sharp, communications director for Sen. Mary Landrieu, D-La.

An aide to Rep. Charles Boustany Jr., R-La., added that “a case-by-case waiver falls short of a blanket waiver, especially if CMS has done nothing to ensure that seniors know about it.”

CMS relied on its “demonstration authority,” which is used to test new payment approaches, to automatically waive the penalty for beneficiaries in counties or parishes declared eligible for assistance because of damage caused by Hurricane Katrina.

“So far, the answers my office has received from CMS have been both contradictory and insufficient,” Boustany said. “If CMS is using its demonstration waiver authority, it should do so with a blanket approach, not on a case-by-case basis.”

Beneficiaries who enroll late in the Medicare drug benefit must pay premiums 1 percent higher for each month they are late in enrolling or an added amount that is determined to be “actuarially sound” by the Department of Health and Human Services Secretary. Thus a senior who enrolled one year after becoming eligible for the benefit would have to pay monthly premiums 12 percent higher for the rest of his or her life.

Advocacy groups also have written CMS in recent days to protest the absence of automatic waivers in the case of Rita-affected beneficiaries. In addition to the left-leaning group Families USA and the right-leaning group the 60-Plus Association, the head of the senior advocacy group AARP registered his opposition to the CMS policy in an Oct. 9 letter to HHS Secretary Michael O. Leavitt.

“We applaud the steps you have taken to help people recover” in areas affected by the Gulf Coast hurricanes, AARP’s Chief Executive Officer William D. Novelli said in the letter. But the “disparate treatment” in the six Louisiana parishes “seems both unwise and unfair,” Novelli said.

However, CMS spokesman Peter Ashkenaz said Thursday that CMS is not considering waiving the penalty for Rita -affected beneficiaries, correcting a statement Tuesday that the agency would do so on a case-by-case basis.

According to Ashkenaz, many of the beneficiaries qualify for the low-income Medicare drug benefit and therefore are not subject to a late penalty. An aide to Boustany estimated that some 6,700 Medicare beneficiaries in the six parishes have not enrolled in the Medicare drug benefit.

“As we continue to say, we believe that beneficiaries who qualify for the low-income subsidy account for the vast majority of Medicare beneficiaries who have not yet enrolled in Medicare Part D,” Ashkenaz said. “We are not extending the waiver to any other beneficiaries. The sooner a beneficiary enrolls, the smaller the penalty, and we will assist beneficiaries to complete any of the necessary steps to enroll.”

But when asked about penalty waivers Thursday, CMS Administrator Mark B. McClellan denied that beneficiaries are treated differently depending on which storm was involved. “Rita-affected beneficiaries are not different. Any time the beneficiary has special circumstances that make it impossible for them to enroll during the regular open enrollment period, we have set up mechanisms to work with those beneficiaries on a case-by-case basis,” he said.

He added that Katrina affected “a huge number of individuals — hundreds of thousands,” whereas “we’ve seen fewer cases in other particular areas.”

“We want those individuals to come to us on a case-by-case basis,” McClellan said. Asked about complaints by the Louisiana delegation to Congress that not everyone would hear about the ability to apply for a waiver under a case-by-case policy, McClellan said that “if there are any individuals that they know of who really intended to sign up for the benefit but couldn’t because of something that arose during the open enrollment period for them, we want to hear about it. Bring those cases to us.”