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Pitfalls No Surprise in Drug Benefit Launch

Healthcare experts say they anticipated the problems in rolling over Medicare beneficiaries to the new program, but they were not heeded.

January 22, 2006|Ricardo Alonso-Zaldivar and Lisa Girion | Times Staff Writers

WASHINGTON — The new Medicare prescription drug program was supposed to start humming almost with the flick of a switch. As the Bush administration envisioned it, beginning Jan. 1, millions of Medicare beneficiaries would be able to go to their pharmacists and get hefty discounts on their prescriptions.

But in the opening days, when druggists tried to enter customers names into the computerized verification system, what they got was an ominous message: "host down" -- cyber talk for system overloaded, unable to respond. Computer system operators were still frantically uploading the names and other information on tens of thousands of Medicare recipients. Three weeks later, Medicare is still catching up, although top officials say the situation is improving every day.

Creation of the Medicare prescription benefit, the biggest expansion of the healthcare program for the elderly in decades, was to be the crown jewel of the administration's domestic record -- the first large-scale test of its theory that the best way to deliver social services such as healthcare is through the private sector. And prior to Jan. 1, administration officials confidently predicted that concerns about the complex program would soon evaporate -- like the misplaced Y2K fears of a global computer crash.

With so much riding on the new program, and with the government's best healthcare experts having had two years to get ready, how could the launch have stumbled so badly?

How did it happen that crucial computer databases were not ready, and that when they did become available, were found to be shot through with errors? Why were telephone help lines understaffed? Why was the system plunged into such confusion and uncertainty that hundreds of thousands of elderly Medicare recipients were in danger of not getting needed medications?

And why was the response from Washington and its private partners in the medical insurance industry so faltering that governors of more than 20 states, including California, felt compelled to step in and guarantee payments so that prescriptions could be filled?

The answers have a familiar ring. Senior administration officials brushed aside advance warnings about many of the problems that materialized when the plan went into effect, critics in both political parties say. In preparing for the launch, they made their plans on the basis of assumptions that things would go relatively smoothly. And high-ranking officials were so committed to their vision that they resisted suggestions to modify the details of their strategy.

"We pointed out all of the predictable problems, and they have been realized," Sen. Gordon H. Smith (R-Ore.), chairman of the Senate Special Committee on Aging, said last week.

"The administration had a lot of pride of ownership in the initial legislation," Smith added, and anyone who suggested changes "was persona non grata."

But Congress -- which approved the legislation largely along party lines -- also shares in the blame.

For example, the Jan. 1 switch in drug coverage for about 6 million low-income seniors and disabled people from Medicaid to Medicare was written into the legislation. The one-day changeover is now widely acknowledged to be the biggest source of problems. There were repeated warnings against trying to handle such a big transition so quickly. Several recommendations were put forward by experts in and out of government for alternative approaches to slow it down or provide a stronger safety net. But the one-day switch remained fixed in the design.

Congress was deeply involved in other provisions as well. Medicare Administrator Mark McClellan, for example, said the law allowed Medicare beneficiaries to sign up for a plan up to the last day of a month and get service the first day of the following month. That caused big problems at the launch.

Last year, when seniors seemed reluctant to sign up for the new benefit, administration officials repeatedly predicted that doubts would melt away and enrollments would surge in late December. When that happened, and thousands of seniors signed up with the myriad private insurance plans offering coverage -- or changed plans when they spotted what looked like a better deal -- there was not enough time to process the paperwork in time for the Jan. 1 start-up.

"This is a real concern," McClellan said in an interview. "We are looking at what we can do to address that." Otherwise, it could perpetuate the snags, officials say. The agency is considering whether it can issue a regulation to change the enrollment rules, or whether Congress must act.

There were also problems with the private insurance companies that, in accordance with the administration's philosophy, were charged with creating and operating the drug plans that Medicare beneficiaries use.

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