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Regulation and Compliance > State Regulation

HHS Releases Final Drug Act Rule

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Changes in an important new Medicare regulation could lead employers and unions to enroll more retirees in private Medicare Advantage plans.[@@]

The U.S. Department of Health and Human Services today posted the final version of the regulation, which will implement the Medicare Prescription Drug, Improvement and Modernization Act of 2003, on its Web site.

An MMA Medicare prescription drug program is supposed to get under way in January 2006, and the act also is supposed to expand the role of private health plans in Medicare by revamping the Medicare Advantage private health plan program.

HHS and the Centers for Medicare & Medicaid Services released a draft of the regulations needed to implement MMA in August 2004.

The authors of the new, final version added language that encourages employers and unions to provide extra help for retiree health plan members who enroll in prescription drug plans or Medicare Advantage plans that offer prescription drug benefits.

“There are several ways that employer and union plan sponsors could supplement the standard Medicare drug benefit,” according to the regulation authors.

CMS officials say recent agency surveys have shown that many employers are interested in several strategies for providing comprehensive coverage, including customized Medicare Advantage plans.

The authors of the final rule also have included language making it clear that prescription drug plans and Medicare Advantage plans, not participating pharmacies, are responsible for coverage decisions.

“Pharmacies will provide standardized notices to help enrollees obtain quick answers from their plans if there are problems with coverage or prices,” according to the text of the final rule.

Some sections of the final rule are aimed directly at strengthening the Medicare Advantage program and addressing concerns expressed by rural members of Congress about how private, network-based plans, such as preferred provider organization plans, will work in rural states with low provider-to-patient ratios.

The revised rule will let Medicare make adjustments in payments to regional plans based on the geographic location of their actual enrollees. “This step helps regional PPO plans offer uniform benefits by protecting plans from unexpected losses if more beneficiaries enroll from high-cost areas,” according to the authors of the final rule. Moreover, the change “prevents excessive payments if more beneficiaries enroll from low-cost areas.”

But HHS and CMS have responded to comments by physicians and consumer activists by requiring Medicare Advantage plans to establish uniform grievance and appeal procedures, along with notice and timeliness procedures to ensure that beneficiary’s rights are protected and that those rights are understood.

Karen Ignagni, president America’s Health Insurance Plans, Washington, says AHIP is still reviewing the final rules. She has issued a statement praising CMS “for working diligently to issue the final regulations quickly to provide information essential to implementation efforts.”

“Our members are committed to working side-by-side with CMS and other stakeholders to make the new programs a success,” Ignagni says.

A page that gives links to the text of the final regulation and materials about the regulation is on the Web at


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