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WASHINGTON — A sweeping Medicare reform bill
before Congress not only would provide a long promised prescription drug
benefit for America’s senior citizens but also would help reduce the
considerable disparity in Medicare payments to hospitals in Alabama and
other rural states, Sen. Jeff Sessions (R-AL) said today.
“Passage of this Medicare bill would be a
historic step toward ensuring that every American would have access to
prescription drugs,” Sessions said. “Today, Medicare will pay for surgery;
it will pay for replacing a kidney, but it will not pay for the drug that
would avoid that surgery from ever occurring. Some people simply can’t
afford the drugs, and this bill will cover virtually all of their drug
expenses.
“This bill is great news
for all Alabama
seniors, and particularly helpful to our people with lower incomes.”
The Medicare reform conference agreement
under consideration in Congress also retained a proposal championed by
Sessions that would result in increased Medicare payments for
Alabama hospitals.
“Over the past years, I have visited a number
of Alabama
hospitals and at every one, hospital administrators and
staff have urged me to do something about the ‘wage index,’” Sessions
said. “I was gratified to see that Senate and House conferees retained
language in the final Medicare reform bill that would help remedy a clear
unfairness in the present system that allows the rich to get richer and
causes the poor to be poorer.”
A complicated and mostly arbitrary formula,
the wage index is part of the Medicare Prospective Payment System for
inpatient and outpatient hospital services. Created in the early 1990s to
reduce Medicare spending, the index established a base rate for Medicare
reimbursement based on two factors — labor and non-labor-related costs.
While non-labor related
costs are similar nationwide, labor-related costs must be adjusted to
account for the regional differences in wage rates. Rural states like
Alabama have lower wage
costs than urban states which means that
hospitals in Alabama get less Medicare reimbursements than hospitals in more
populous states.
Sessions helped get language included in the
proposal that would reduce the labor wage rate component for the wage index
formula from the current 71 percent to 62 percent in October 2004.
"It’s not perfect, but this will narrow the disparity,”
Sessions said. “It’s a very significant step forward.”
The wage index issue is part of a larger rural health package
that would be worth about $1 billion for
Alabama over 10 years. |
What the Bipartisan Agreement Means for
Alabama
Impact
of Prescription Drug Provisions of the Bipartisan
Agreement for
Alabama Medicare Beneficiaries:
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The
Bipartisan Agreement provides all of the 720,462 beneficiaries in
Alabama with access to a Medicare prescription drug
benefit - for the first time in the history of the Medicare program -
beginning in January 2006.
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Beginning in 2006, the Bipartisan Agreement will give 195,000 Medicare
beneficiaries in Alabama access to drug coverage
they would not otherwise have and will improve coverage for many more.
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Within six months after the bill is signed,
Alabama residents will be eligible for Medicare-approved prescription
drug discount cards, which will provide them with savings of between 10
and 25 percent off the retail price of most drugs.
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Beneficiaries with incomes of less than $12,123 ($16,362 for couples)
who lack prescription drug coverage (including drug coverage under
Medicaid) will get up to $600 in annual assistance to help them afford
their medicines, along with the discount card. That's a total of
$221,994,262 in additional help for 184,995
Alabama residents in 2004 and 2005.
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Beginning in 2006, all 720,462 Medicare beneficiaries living in
Alabama will be eligible to get prescription drug
coverage through a Medicare-approved plan. In exchange for a monthly
premium of about $35, seniors who are now paying the full retail price
for prescription drugs will be able to cut their drug costs roughly in
half. In many cases, they'll save more than 50 percent on what they pay
for their prescription medicines.
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267,366 beneficiaries in Alabama who have limited
savings and low incomes (generally below $12,123 for individuals and
$16,232 for couples) will qualify for even more generous coverage. They
will pay no premium for their prescription drug coverage, and they will
be responsible for a nominal co-payment (no more than $2 for generic
drugs or $5 for brand name drugs).
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69,486 additional beneficiaries in Alabama with
limited savings and incomes below $13,470 for individuals and $18,180
for couples will qualify for reduced premiums, lower deductibles and
coinsurance, and no gaps in coverage.
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Additionally, Medicare, instead of Medicaid, will now assume the
prescription drug costs of 138,551 Alabama
beneficiaries who are eligible for both Medicare and Medicaid. This
will save Alabama $275 million over 8 years on prescription drug
coverage for its Medicaid population.
Data source: CMS
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