Huffpost Politics

Vermont Backs Off Attempt To Take Seniors' Federal Drug Rebates

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MONTPELIER, Vt. — Top Vermont officials relented Monday, saying they would not try to collect $250 federal rebates going to some Medicare beneficiaries for prescription drug costs, falling into line with the Obama administration and its own U.S. senators.

As recently as Monday morning, a top aide to Gov. Jim Douglas was saying the state would go ahead with plans to ask recipients of checks designed to address the so-called Medicare prescription drug "doughnut hole" to turn the money over to the state.

But by the end of the day, Heidi Tringe, Douglas' deputy chief of staff, said administration officials had given up the idea of collecting the money, in part because of the logistical problems connected with try to get people receiving $250 checks in the mail to turn them over to the state.

As he gave in, Douglas on Monday afternoon sent an angry letter to U.S. Health and Human Services Secretary Kathleen Sebelius.

"I certainly hope this is not indicative of what lies ahead for collaboration between HHS and states that have taken the lead on health care reform," he wrote.

In a letter to Douglas on Friday, Sebelius, a former Kansas governor, said she understood the states' financial problems. She wrote that "there is no doubt states face significant financial pressures this year, " but added, "The rebate checks are intended to provide fiscal relief to seniors, not states."

Sen. Patrick Leahy, D-Vt., and Sen. Bernie Sanders, I-Vt., issued a joint statement on Friday criticizing Vermont's efforts to collect the rebates.

"At a time when Vermont seniors are hurting, the state should reconsider its plans to ask many low-income seniors to return this much-needed help," the senators' statement said. "The state's rebate recall also would add confusion and new layers of complexity for seniors and for the state."

On Monday, Leahy praised the state for changing course.

"This is a fair and practical outcome, and I commend Governor Douglas and our legislative leaders for reconsidering the rebate issue," he said in a statement.

The Republican governor argued that with its VPharm program, Vermont had taken steps many other states hadn't: paying premiums allowing low-income seniors to take advantage of federal Medicare Part D prescription drug coverage, as well as help in covering the gap – the "doughnut hole" – between when an individual's drug costs exceed the Medicare coverage and when catastrophic coverage takes over.

The $250 rebates offered under the federal health care legislation are designed to help fill the same gap. Douglas argued in his letter to Sebelius that "without (the state) capturing the rebates, beneficiaries would essentially be receiving the same benefit twice."

Lawmakers had counted on recouping the money when they crafted a very tight budget this year. Dropping the effort to recoup the funds will cost the state about $590,000, said Rep. Martha Heath, D-Westford, chairwoman of the House Appropriations Committee.

"It's disappointing that the implementation of this law wasn't set up to recognize the states that were already giving seniors this benefit," she said.

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