Medicare Reform Enacted; Final Design Remains Uncertain

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (P.L. 108-173) that was signed into law in December:

• adds a prescription drug benefit to Medicare (Medicare D)

• revamps the Medicare+Choice (M+C) program to add prescription benefits

• revises rules governing Medicare Secondary Payer (MSP) recoveries

• makes improvements to Medicare’s Rural Health Care (RHC) incentives

• amends the Internal Revenue Code to establish tax-advantaged health savings accounts (HSAs) that can be used to pay for qualified medical expenses

• introduces new cost containment, administrative, regulatory and contracting provisions

• adds a preventive services benefit to Medicare Part B

Already, Democratic members of Congress have filed legislation to repeal parts of this package. If strong backlash materializes, especially in an election year, the legislation may be significantly changed before it takes effect. BCBSIL workgroups are analyzing product and operational impact in anticipation of possible changes.

An overview of some of the law’s major provisions is available in BCBSIL’s December 2003 Legislative Update, which can be found on the Producer Portal. An electronic copy of the legislation’s Interim Final Rule, as well as information about the law’s transitional prescription drug program and other provisions, can be found at the Centers for Medicare and Medicaid Services (CMS) Web site at www.cms.hhs.gov/discountdrugs/.

The information in this article should not be construed as legal advice or as a legal opinion on any specific facts or circumstances, and is not intended to replace the advice of independent legal counsel.