Medicare: CMS's Implementation and Oversight of the Medicare Prescription Drug Discount Card and Transitional Assistance Program

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) added a prescription drug benefit to the Medicare program, to become effective January 1, 2006. To assist Medicare beneficiaries with their prescription drug costs until the new benefit becomes available, the MMA also required the establishment of a temporary program, the Medicare Prescription Drug Discount Card and Transitional Assistance Program, which began in June 2004. The drug card program is designed to offer Medicare beneficiaries access to discounts off the retail price of prescription drugs. All Medicare beneficiaries, except those receiving Medicaid drug coverage, are eligible to enroll in the drug card program. Certain low-income beneficiaries without other drug coverage qualify for an additional benefit, a transitional assistance (TA) subsidy, that can be applied toward the cost of drugs covered under the drug card program. The Centers for Medicare & Medicaid Services (CMS)--the agency within the Department of Health and Human Services that administers the Medicare and Medicaid programs--administers and oversees the drug card program. The drug cards themselves are offered and managed by private organizations, known as drug card sponsors. There are different types of drug cards. General drug cards are available to all eligible beneficiaries living in a card's service area; there are both national and regional general cards. Exclusive and special endorsement drug cards are available to specific beneficiary groups. Some drug card sponsors offer more than one drug card. Congress asked us to examine CMS's implementation and oversight of the temporary drug card program. Specifically, we reviewed (1) the processes that CMS used to solicit, evaluate, and approve drug card sponsors; and (2) the processes that CMS uses to oversee drug card sponsors and the problems identified as a result of CMS oversight.