Print - Litigation - Situ Settlement

DUAL ELIGIBLES AND GOVERNMENT SEEK COURT APPROVAL OF MEDICARE PRESCRIPTION DRUG CASE SETTLEMENT

On June 19, 2008, a nationwide class of Medicare beneficiaries who are also eligible for Medicaid ("dual eligibles") and the Secretary of Health and Human Services filed a formal settlement agreement in federal court in San Francisco. The parties have asked the Court to approve the settlement, a process that is expected to take several months.

The case, Situ v. Leavitt, grew out of the massive problems that greeted implementation of the Part D prescription drug program by the Centers for Medicare & Medicaid Services ("CMS"). It specifically targets the systemic problems encountered by the 6.2 million dual eligibles whose poverty qualifies them for Part D’s Low Income Subsidy ("LIS") and the corresponding nominal payments for their medications.

Since dual eligibles rely on an average of ten more prescription drugs per month than do other Medicare beneficiaries, the difficulties that they have encountered in obtaining their medications have put them at severe, even life-threatening, risk. Dual eligibles and their advocates have been struggling since Part D began, on January 1, 2006, to ensure that their medications were available. The process has remained a daunting and difficult one. This settlement is expected to alleviate some of the more pronounced problems for hundreds of thousands of dual eligibles annually.

The case was filed in April 2006 when it had become clear that CMS’ implementation of the LIS program was having disastrous repercussions for dual eligibles. The Court certified the case as a nationwide class action in January 2007. Since the spring of that year, the parties have been engaged in settlement negotiations, which culminated with the filing and public release of the settlement agreement this morning in San Francisco. (The settlement agreement is available on the Center’s website under "Hot Topics", at http://www.medicareadvocacy.org/SettlementAgreement.)

Under the settlement, the automatic enrollment process for new dual eligibles in Part D drug plans will be speeded up, as states will submit relevant information to CMS on a more expedited basis and CMS will process that information within one business day. The 5-6 week delay in enrollment should be significantly reduced. Second, the new protocol will require prescription drug plans and CMS Regional Offices to provide additional assistance to beneficiaries who do not show up as LIS-eligible on the pharmacy or plan computer systems. While the existing system had required beneficiaries to produce the paperwork to prove their LIS-eligibility, the burden will now be on CMS to contact the state to confirm eligibility for any beneficiary who claims to be LIS-eligible.

Third, CMS is obligated to educate pharmacy organizations about new policies that increase protections for dual eligibles who are not automatically enrolled in a Part D drug plan and therefore are unable to obtain medications. Fourth, CMS must hold quarterly meetings with attorneys for the plaintiff class to monitor implementation of the settlement and to discuss issues facing dual eligibles.

Although the settlement will not resolve all the hardships that Part D has created for low income Medicare beneficiaries, it is expected to solve the more egregious problems that have arisen. The settlement suggests that CMS is committed to resolution of the problems, and the Court will retain jurisdiction over the case for three years to enforce the settlement’s terms.

After today’s filing, the next step is preliminary approval of the settlement. Then there will be notification by publication to the class members, who will have the opportunity to comment in writing on the terms of the settlement and/or to appear at an as-yet unscheduled Fairness Hearing in court. If the judge is satisfied at that point that the class members are well served by the settlement, he will give final approval and the settlement will take effect.

The plaintiff class was represented by attorneys from the Center for Medicare Advocacy and the National Senior Citizens Law Center, and from the Palo Alto law firm of Wilson Sonsini Goodrich and Rosati, who devoted considerable time and hard work to the case, especially the settlement negotiations. Plaintiffs’ attorneys received invaluable and consistent assistance from advocates around the country who have had to spend tens of thousands of hours dealing with the problems caused by Part D.