06-R 282

2006 -- S 2207

Enacted 05/24/06



J O I N T  R E S O L U T I O N




     Introduced By: Senators Roberts, Paiva-Weed, C Levesque, Goodwin, and Gibbs

     Date Introduced: January 31, 2006



     WHEREAS, Over 40 million Americans, including 170,000 Rhode Islanders, receive

health coverage through Medicare and are eligible to purchase prescription drug coverage through

the Medicare Part D program that began on January 1, 2006; and

      WHEREAS, Medicare beneficiaries must now navigate a new, complex system for

purchasing coverage and receiving prescription drug benefits; and

     WHEREAS, Over 6.4 million Americans including 29,000 Rhode Islanders, eligible for

both Medicare and Medicaid, are known as “dual eligibles”; and

      WHEREAS, Dual eligibles are sicker and more poverty-stricken than other Medicare

beneficiaries. More than half of all dual eligibles require assistance with the activities of daily

living, with more than 60% of dual eligibles living below the poverty level. They have higher

occurrence rates, than other Medicare beneficiaries, for a range of chronic conditions including

Alzheimer’s Disease, diabetes, pulmonary disease and stroke; and

      WHEREAS, Dual eligibles, living in long-term care facilities, are exempt from Medicare

Part D co-payments; however, dual eligibles living in home and community settings must pay

new co-payments, which pose significant financial hardship for many who need multiple

medications to treat chronic conditions. Without access to needed medications, they may end up

needing emergency room or in-patient care at an increased cost to the health care system; and

      WHEREAS, Medicare eligible individuals, who enroll in Medicare Part D after May 15,

2006, will have a 1% penalty for each month between the date they were eligible and the date

they enrolled, and the penalty is cumulative; and

     WHEREAS, The enrollment penalty for Medicare Part B is 10% per year on a standard

premium amount, which is more predictable and less severe than the enrollment penalty for Part

D; and

      WHEREAS, Each prescription drug plan has a different formulary, different co-

payments and varied cost-sharing that Medicare beneficiaries must understand in order to

determine which plan has a formulary that not only includes most or all of the beneficiaries’

drugs but is also the best value for them; and

      WHEREAS, Each plan is allowed to modify its formulary, including dropping coverage

of medications, on a monthly basis, while most Medicare beneficiaries may only change plans

once a year during an open enrollment period; and

      WHEREAS, A beneficiary who needs a drug which is not covered by the formulary

must change to another drug or must pay out-of-pocket for the drug; and

     WHEREAS, Drugs not listed on the formulary, which are purchased out-of-pocket by a

beneficiary or paid for by a discount card or some state pharmacy programs, do not count towards

the beneficiaries’ cost-sharing under the Part D plan; and

      WHEREAS, Plans are not required to disclose complete information about the actual

price of the drugs on their formularies nor the cost of these drugs as negotiated by the plan with

drug manufacturers, resulting in the opportunity for plans to inflate prices charged to Medicare

beneficiaries who will then have to shoulder a higher total cost-sharing amount; and

      WHEREAS, Many states including Rhode Island will have additional costs associated

with the “clawback” provision of the Medicare law, which requires states to reimburse the

Federal government for the costs of dual eligibles based on a formula that may not accurately

reflect actual costs and numbers of these enrollees; and

      WHEREAS, Many states including Rhode Island have had to implement emergency

executive orders or take other administrative actions to ensure that dual eligibles are not denied

access to necessary medications due to computer system and other operational errors in the

implementation of Medicare Part D; and

      WHEREAS, Pharmacies are reporting problems in reimbursement from Medicare Part D

plans which is causing cash flow problems for many Rhode Island independent pharmacies; and

      WHEREAS, The Medicare law explicitly prohibits negotiation over the price paid by the

federal government for these prescription drugs; and

      WHEREAS, These same medications, currently provided to dual eligibles under

Medicaid, are subject to price negotiation by the federal government, and the cost of these

medications, which will be reimbursed by the states to the federal government, is likely to

increase in the absence of price negotiations; and

     WHEREAS, According to the Congressional Budget Office, the new drug benefit is

expected to increase spending by $47 billion in 2006, the first year of implementation, and reach

$174 billion per year in 2015, when it will make up 23% of the $766 billion in total Medicare

spending; now, therefore be it

      RESOLVED, That this General Assembly of the State of Rhode Island and Providence

Plantations hereby requests that the United States Congress and the Bush Administration address

these concerns through rulemaking and, as necessary, through changes to the Medicare

Modernization Act; and be it further

      RESOLVED, That the United States Congress and the Bush Administration specifically

adopt the following changes to the Medicare Part D program:

      (a)    Eliminate the penalty for all Medicare eligible individuals who do not enroll by May

15, 2006;

     (b)   Permit the prescription drug plans to drop coverage of drugs on their formularies only

after advance notice provided once a year to coincide with the annual open enrollment period,

except that drugs that have been determined to be dangerous or have been removed from the

market may be dropped from formularies as necessary;

     (c)    Standardize the formulary design so that each plan has the same number of tiers and

requirements for coverage;

     (d)   Eliminate the co-payment requirement for dual eligibles;

     (e)    Modify the requirements for what can be counted towards the Medicare

beneficiaries’ “true out-of-pocket cost” or “TROOP” to include all prescription drugs purchased

on behalf of the beneficiary regardless of where the drugs are purchased, or whether purchased

through a state pharmacy program or with a discount card, and regardless of whether the drug is

on the formulary of the enrollee’s plan;

     (f)     Ensure transparency so that states know the cost that has been negotiated by the

prescription drug plan, in order to ensure that all negotiated rebates are passed through to the


     (g)    Institute price negotiations for the purchase of prescription drugs for the Medicare

program, similar to the provisions already in place under Medicaid and the Veterans'

Administration; and be it further

     RESOLVED, That the Secretary of State be and he hereby is authorized and directed to

transmit duly certified copies of this resolution to the Rhode Island Congressional Delegation and

President George W. Bush.