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Senate to Vote on Retiree Drug Benefit Plan

The Maryland Senate is poised to vote on a change to state retiree pharmacy benefits on Wednesday morning, with a bill that is more expensive than a 2011 reform, but less costly than maintaining the current program indefinitely.

The state’s current program, which moves Medicare-eligible retirees onto Medicare Part D, while also including additional wraparound coverage, remains in place as the result of a federal injunction, which will continue the current benefit as a lawsuit winds through the courts and could be extended longer if plaintiffs prevail in their class-action claims.

The issue has rocked Annapolis since retirees received notice in the spring that they’d be moving entirely to the Medicare Part D prescription drug plan. A large pension reform bill passed in 2011 was accelerated last year when federal lawmakers closed a coverage donut-hole earlier than anticipated. But retirees looking to enroll in the Medicare Part D plan, without the added benefits of the old state plan, found that their medications weren’t covered or cost substantially more.

Sens. Melony G. Griffith (D-Prince George’s) and Andrew Serafini (R-Washington) teamed up to write Senate Bill 946 in response. The bill would establish new state programs for retirees who started with the state before and after the reform bill was passed in 2011. The new programs would cap the out-of-pocket expenses for Medicare-eligible retirees who retired before Dec. 31, 2018 at $1,500 for an individual and $2,000 if they have a spouse on the plan. For Medicare-eligible retirees who leave (or have already left) state service after Jan. 1 of this year, the cap would be $2,500.

The bill also includes a life-sustaining prescription drug assistance program that would reimburse current and future retirees for costs over $2,500 for prescription drugs not covered by Medicare Part D, but which are covered under the current state plan.

If passed, the bill would increase the state’s benefit liability by $2.84 billion over the 2011 law. However, that level is much lower than the estimated $10.7 billion liability increase to revert retirees back to pre-reform coverage.

“It’s still costly, but for the state and for those people who were in our pre-reform plan, it is sustainable. And that’s where we were trying to get,” Griffith said.

At a hearing for the bill late last month, some retirees continued to press for a reinstatement of the pre-reform benefit, citing worries that even a limit on out-of-pocket expenses could harm retirees who live on limited resources. Witnesses also noted that, despite the fiscal note’s warnings about liabilities, ongoing costs would remain the same as they are today.

The annual cost of providing the state’s current program is about $187 million. The annual cost under Senate Bill 946 is an estimated $35 million, not including the cost of the life-sustaining drug provision, which was a late amendment to the bill.

The bill is now sponsored by 46 of 47 members of the chamber. Senate President Pro Tem Katherine A. Klausmeier (D-Baltimore County) is not listed a cosponsor. She had introduced a bill that would reinstate the current program altogether.

There are just over 45,000 retirees in the state prescription drug benefit program.

Based on an analysis of 2017 claims, the Department of Budget and Management concluded that about 20 percent of state retirees would pay less on Medicare Part D.

About 40 percent would see an increase less than $500 annually. About 16 percent would see an increase between $500 and $1,000. About 3.5 percent of retirees, or about 1,500 people would see annual increases of $5,000 or more.

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Senate to Vote on Retiree Drug Benefit Plan