Settlement proposed in Medicaid/Part D case

The lawsuit was one of the first pieces of litigation to arise in the opening days of the Medicare drug benefit.

By David Glendinning, AMNews staff. July 21, 2008.

Washington -- The tens of thousands of Medicaid beneficiaries who become eligible for Medicare's drug benefit each month soon will have new federal protections to ensure that they keep receiving their subsidized prescription drugs without delay.

The safeguards are the result of a proposed settlement of a lawsuit against the Bush administration that has been pending for more than two years. Two beneficiary advocacy groups filed the suit in April 2006 after Medicaid beneficiaries complained that they were encountering widespread problems when transitioning to the Medicare drug benefit, which launched in January of that year. Congress had decided that, in cases in which beneficiaries were eligible for both programs, Medicare would take on the responsibility of covering their drug needs.

In some instances, delays of a month or more at the Centers for Medicare & Medicaid Services in processing information from states meant that pharmacies had no record that a beneficiary was enrolled in a Medicare Part D plan. In other cases, the pharmacy knew the patient was enrolled but had no indication that the patient was considered low income. Instead of paying no more than about $3 for each prescription under Medicare's low-income subsidy system, some patients were suddenly expected to make co-payments of about $60 or more to receive their drugs.

The situation was potentially life-threatening for these Medicare-Medicaid "dual eligibles," some of whom had received Medicaid drugs at little to no cost, said Kevin Prindiville, staff attorney with the National Senior Citizens Law Center in Oakland, Calif. Along with the Connecticut-based Center for Medicare Advocacy, the law center filed the suit on behalf of 13 beneficiaries who had encountered transition problems.