November 30, 2005

The Honorable Mark McClellan, MD
Administrator
Centers for Medicare and Medicaid Services
Washington, DC 20201

Dear Dr. McClellan:

On behalf of Consumers Union, the non-profit publisher of Consumer Reports, we want to thank you and all the CMS staff for the incredible amount of work they have done in preparing for the roll-out of the new Medicare drug law. Given the complexity of the law and the sheer massive of data that is involved, the agency truly faces a Herculean task.

On behalf of consumers, we strongly urge that all websites and, to the extent possible, other media, warn consumers

• that the price of drugs in many plans may be changing very dramatically in the next few weeks;

• can change anytime in the future, and

• that Medicare beneficiaries may change their choice of plans between now and the end of the year, if they find that price changes by their original choice plan—or other plans—have altered the attractiveness of that original choice.

We have previously noted confusion about drug prices listed by CMS versus prices listed at plan sites. The recent HHS Inspector General report on the discount card program noted that about a third of all cards saw price changes in the earlier months of that program (many of the prices were downward, to the advantage of consumers). Senator Durbin has identified some dramatic price increases on certain baskets of prescription drugs in some Illinois plans. In one case, the Senator identified a $1,250 increase in the cost of the medicine basket over an 11 day period. If an individual had selected the plan based on the earlier statement of costs, they will be shocked in January at the real prices they are likely to encounter. While this dramatic example may be a computer glitch, the data from Illinois shows how unstable the current pricing data is. It appears that out of 42 plans, all but three had price movement up and (mostly) downward over a two week period.

This price movement, particularly when it is upward, creates the potential for consumer deception—and anger—and we hope that CMS will immediately issue strong warnings about this situation. Specifically, consumers should be warned to take their time in selecting plans because the current accuracy of data is suspect. Plans should be warned that any pattern of price increases over the coming days will be considered a form of ‘bait and switch’ and that CMS is prepared to act against the participation of plans that are abusing beneficiaries who made an early choice.

Thank you for your consideration of these additional steps to protect consumers.

Sincerely,

William Vaughan
Senior Policy Analyst
Washington Office