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Bush Administration Settles Nationwide Class Action in Medicare Prescription Drug Case

Federal Agency Agrees to Additional Protections for Poor Beneficiaries

SAN FRANCISCO, June 19 /PRNewswire/ -- Pursuant to a settlement agreement filed in federal court today in the Medicare Part D class action lawsuit Situ v. Leavitt, the Bush administration has agreed to make significant changes to its administration of the prescription drug benefit for low-income beneficiaries. If approved by the judge, the agreement will make it easier for seniors and individuals with disabilities to access the full benefits of the Medicare Part D program and the Low Income Subsidy.

The case was filed against Michael Leavitt, Secretary of the Department of Health and Human Services, by the National Senior Citizens Law Center and the Center for Medicare Advocacy in April 2006 and was certified as a nationwide class action in January 2007. Pro bono counsel from the law firm of Wilson Sonsini Goodrich & Rosati later joined the plaintiff team. Plaintiffs argued that the Bush Administration failed to provide sufficient protections for low- income senior citizens and persons with disabilities in developing the Medicare Part D enrollment and low income subsidy deeming system.

The case was brought on behalf of 6.2 million low-income "dual eligible" Medicare beneficiaries, who also receive Medicaid. Dually eligible beneficiaries are elderly and/or disabled and very poor. The settlement addresses chronic problems related to information management in the Medicare Part D program. Plaintiffs argued that poor management created ongoing barriers for low-income people struggling to obtain prescription medications. Dual eligibles rely on an average of ten more prescriptions per month than other Medicare beneficiaries. These beneficiaries receive a Low-Income Subsidy (LIS), which entitles them to purchase prescription medication for a nominal charge, and are automatically enrolled into a Part D plan.

"This settlement agreement is a victory for many of our nation's most vulnerable citizens," said National Senior Citizens Law Center Staff Attorney Kevin Prindiville. "These individuals have faced life-threatening delays in receiving vital medication. They do not have the means to front the costs of their prescription drugs while Medicare and the plans sort out paperwork. We view the administration's agreement to this settlement as a sign that it is now committed to providing adequate protections for these beneficiaries."

The information management system that notifies pharmacies of the enrollment and low-income status of dual eligibles has been dogged by extensive delays when enrollees join the system or change drug plans. In addition to voluntary plan changes, a large proportion of beneficiaries have been forced to change plans each year due to ongoing shifts in available coverage. The system is dauntingly complex for beneficiaries and pervasive flaws have left many in this vulnerable population with gaps in coverage of essential medication while technical issues are resolved among the Centers for Medicare and Medicaid Services (CMS, the federal agency responsible for administering the Medicare program), state governments, pharmacies and drug plans.

In exchange for the plaintiff's dismissal of their claims against the Secretary, CMS agreed to make a number of changes that will streamline the Medicare Part D enrollment process. The agency will:

-- Speed up the enrollment process for new dual eligibles. Instead of waiting several weeks to process files received from states identifying new dual eligibles, CMS will process these files within one business day of receipt. CMS will also allow states to submit these files more frequently.

-- Require plans and CMS Regional Offices to provide additional assistance to beneficiaries whose names are inadvertently missing from pharmacy or plan computer systems. New protocols will shift the burden of proof away from beneficiaries and to providers when eligibility is in question.

-- Educate pharmacy organizations about new policies intended to increase protections for dual eligibles who are not automatically enrolled in a plan and, therefore, are unable to obtain medications.

"We're anxious to see CMS successfully implement the changes outlined in the agreement," said Gill Deford, Director of Litigation at the Center for Medicare Advocacy. "CMS has taken the first step by agreeing to do more on behalf of low-income recipients. We look forward to working with agency staff to ensure that these improvements are integrated into its standard business practices."

The settlement agreement does not prevent individual class beneficiaries from filing separate claims for individual benefits. Under the terms of the agreement, the court will retain jurisdiction over implementation of the agreement for up to three years, during which time the plaintiffs will monitor CMS activities to ensure the remedies are fully realized. The agreement must be approved by the presiding judge in the case, the Honorable Thelton E. Henderson, in order to take effect.

Wilson Sonsini Goodrich & Rosati joined the plaintiff team in June 2007. Pro bono counsel from the firm played an integral role in developing the final settlement agreement.

For further information on Medicare Part D or for a copy of the settlement agreement, see or Information about the pro bono activities of Wilson Sonsini Goodrich & Rosati can be found at

SOURCE National Senior Citizens Law Center
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