Medicare mess hits Leavitt's parents

Forced to switch plans: Health chief's mom had said system was 'smooth'
This is an archived article that was published on in 2006, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Not even the senior parents of Washington's top health official are immune from headaches caused by the new Medicare drug plan.

Dixie and Anne Leavitt - parents of Health and Human Services Secretary Mike Leavitt - recently were forced to change Medicare plans after learning that the one they chose imperiled their retiree medical coverage.

The elder Leavitts joined the program last fall with some fanfare and help from their son. Anne Leavitt, 73, was quoted in The Salt Lake Tribune touting the online enrollment as "smooth," and a guaranteed money-saver.

Neither she nor Dixie, 76 - who made his fortune in the insurance business - could be reached for comment on Thursday. But they reportedly suffered no real lapse in coverage. Secretary Leavitt's office confirmed that the couple signed up for another Medicare plan through their insurer, Utah's Public Employee Health Plan.

But the blunder is sure to prove fodder for critics who have labeled the drug benefit "plagued" with problems, from computer failures to overcharging for prescriptions. Troubles have been most acute for millions of low-income seniors and disabled people who were automatically transferred from their state Medicaid plans into Medicare plans that didn't cover their medications.

The latest complaint comes from drugstores that are filling Medicare prescriptions at a loss. Among those struggling most are independent neighborhood pharmacists, such as the Leavitt family's, Evan Vickers.

Vickers owns and operates two Bullock's drug stores in Cedar City, Leavitt's hometown. Founded in the late 1800s, the shops have a loyal customer base.

But Vickers said he is suffering a cash-flow problem because Medicare plans take 25 to 40 days to reimburse for drugs, sometimes at lower rates than private insurers or Medicaid.

The stores are down a combined $60,000, said Vickers. "We'll catch up as money comes in, especially if business picks up, thanks to formerly uninsured patients getting hooked into Medicare. But, as the saying goes, 'You pay taxes on paper profit, and feed your family based on cash flow.' "

Other pharmacists are less forgiving.

"It's a fiasco," said Edward Bush, owner of a drugstore in Kanab. "Just to get a drug approved, the insurer puts you on hold, sometimes for an hour. Other times they'll say, 'We are busy. Call back.' "

The extra man-hours are hardly worth the mark-up that pharmacists are paid, said Bush. "If I spend $1 wholesale, I might get reimbursed $1.02. You can't pay for the water and lights with that."

Glade Baldwin, of Hyland Pharmacy in Salt Lake City, took out a line of credit to keep his shelves stocked while he waits for $20,000 owed him for drugs dispensed under Medicare.

"I haven't taken a day off in eight weeks, because I can't afford to hire help," said Baldwin.

At fault, he said, are the Pharmacy Benefit Managers (PBMs) hired by the federal government to manage the Medicare drug plans. In addition to cutting deals with drug makers who pay to get their brand names on Medicare drug lists, PBMs also negotiate reimbursement rates with pharmacists.

But the negotiations amount to "a take-it-or-leave-it scenario," said Baldwin, who wants the federal government to impose cost controls.

Leavitt would not elaborate on what, if any, changes are in store. On Thursday a spokeswoman said Leavitt "views pharmacists as heroic" for their commitment to customers.

The statement coincided with the release of new enrollment figures. About 1.9 million elderly and disabled Americans enrolled in the drug benefit over the past month, bringing the total of those who have voluntarily enrolled to 7.2 million. An additional 20 million have been automatically signed up.

Still confused?

Seniors can visit or call 1-800-MEDICARE for help choosing plans before the May 15 enrollment deadline. To avoid problems, federal health officials urge people to sign up early in the month, or at least two to three weeks before they plan to use benefits.