Rul­ing leads Md. to ex­tend re­tiree drug cov­er­age

Former state em­ploy­ees can keep cur­rent in­surance plan

Baltimore Sun - - FRONT PAGE - By An­drea K. McDaniels

Af­ter a fed­eral judge ruled that Mary­land can’t force state re­tirees to switch to a fed­eral pre­scrip­tion drug plan dur­ing this en­roll­ment pe­riod, Gov. Larry Ho­gan an­nounced Thurs­day that the state would ex­tend its cov­er­age through De­cem­ber 2019.

Ho­gan’s of­fice and law­mak­ers pre­vi­ously said they would work out a long-term so­lu­tion dur­ing the Gen­eral As­sem­bly ses­sion in Jan­uary.

“This means im­pacted re­tirees DO NOT have to en­roll in a Medi­care Part D plan for 2019 and may con­tinue the cov­er­age they have now into 2019 and at the same pre­mium they are pay­ing now,” the ad­min­is­tra­tion said in a post to the web­site of the Depart­ment of Bud­get and Man­age­ment. “De­tails will fol­low in a no­tice mailed to re­tirees’ homes.”

A group of four Mary­land gov­ern­ment re­tirees sued the state and Ho­gan last month on be­half of fel­low re­tirees seek­ing to stop Mary­land from mov­ing them from a state pre­scrip­tion drug plan to a Medi­care Part D plan.

The four re­tirees asked the court to is­sue a tem­po­rary re­strain­ing or­der and pre­lim­i­nary in­junc­tion against the state forc­ing them to en­roll in a fed­eral plan when open en­roll­ment starts Oct. 15. Cov­er­age would start Jan. 1.

Dis­trict Judge Pe­ter J. Mes­sitte is­sued the in­junc­tion Wed­nes­day, say­ing a switch could not hap­pen un­til a de­ci­sion came on the law­suit.

At­tor­neys Deb­o­rah Hol­loway Hill and Breon John­son, who rep­re­sent the re­tirees, ap­plauded the judge’s rul­ing.

“We had a great vic­tory,” Hill said. “Af­ter years of ser­vice the re­tirees were promised these ben­e­fits by the state.”

Mary Frye, a re­tired so­cial worker named in the law­suit, said she felt her voice had fi­nally been heard.

“I am very happy with the judge’s de­ci­sion,” Frye said. “He clearly saw the wrong and made it right. Our at­tor­neys did an amaz­ing job and fought so hard for us. The state made no at­tempt to help us.”

The state does not plan to ap­peal the de­ci­sion, said Sha­reese De­leaver-Churchill, a Ho­gan spokes­woman.

She said the gov­er­nor agreed with the judge’s de­ci­sion be­cause he al­ways wanted the change in plans to hap­pen at a later date.

“The gov­er­nor deeply sym­pa­thizes with re­tired state em­ploy­ees who have been di­rectly af­fected by this po­ten­tial change and the un­cer­tainty that came along with it,” De­leaver-Churchill said in a state­ment. “Our ad­min­is­tra­tion al­ways op­posed the Jan­uary im­ple­men­ta­tion time­line, and we are ex­tremely com­fort­able with the court’s de­ci­sion to­day. We are hope­ful that this will now en­able our ad­min­is­tra­tion to work with the leg­is­la­ture to achieve a per­ma­nent so­lu­tion for af­ford­able pre­scrip­tion cov­er­age for state re­tirees.”

The Gen­eral As­sem­bly and Ho­gan had bat­tled over when to switch re­tirees over to the new plan. Both had ar­gued for later dates, but couldn’t come to an agree­ment.

The move to the fed­eral pre­scrip­tion drug plan is part of state pen­sion re­form passed in 2011 dur­ing Gov. Martin O’Mal­ley’s ad­min­is­tra­tion at the sug­ges­tion of a bi­par­ti­san state-ap­pointed com­mit­tee. But many re­tirees said they heard noth­ing about it un­til they re­ceived let­ters from the state bud­get of­fice last spring. They flooded law­mak­ers’ phones and started a Face­book page crit­i­ciz­ing the plan.

The orig­i­nal 2011 leg­is­la­tion called for mov­ing re­tirees to Medi­care Part D by July 2019 to co­in­cide with the fed­eral gov­ern­ment’s plan to close what is known as the dough­nut hole — a gap in Medi­care’s pre­scrip­tion drug cov­er­age. But then the fed­eral gov­ern­ment closed the dough­nut hole early and state of­fi­cials searched for a new date.

Ho­gan’s bud­get of­fi­cials tes­ti­fied twice against mov­ing the switch to Jan. 1 and in­stead pushed to keep state cov­er­age through June 2019.

Law­mak­ers thought that mak­ing peo­ple en­roll in a state plan for six months and then switch to Medi­care in the mid­dle of a Medi­care plan year could be chaotic and con­fus­ing. Switch­ing in July also might be more ex­pen­sive for re­tirees. They might spend the state plan’s out-of-pocket max­i­mum of $1,500 be­fore July, then face a new de­ductible with a Medi­care Part D plan for the rest of the year, ac­cord­ing to the non­par­ti­san Depart­ment of Leg­isla­tive Ser­vices.

An­other ef­fort in the Gen­eral As­sem­bly to ex­tend state cov­er­age un­til Jan. 1, 2020, giv­ing re­tirees more time to ad­just to the change, failed to make it out of com­mit­tee be­cause of op­po­si­tion from the Ho­gan ad­min­is­tra­tion, who said it would be too ex­pen­sive. State law­mak­ers in­stead moved the date to this Jan. 1to co­in­cide with open en­roll­ment for all health plans.

To ease the tran­si­tion, Ho­gan and key Gen­eral As­sem­bly lead­er­ship had put in place a plan to help re­tirees with costs in the first year and said they would re­visit the is­sue dur­ing the next Gen­eral As­sem­bly ses­sion. They set aside $33 mil­lion to re­im­burse re­tirees for out-of-pocket drug costs ex­ceed­ing $1,500, the out-of-pocket cap un­der the cur­rent state pre­scrip­tion plan.

It wasn’t enough to ap­pease many re­tirees who said they wanted the gov­er­nor and state law­mak­ers to step in sooner, whether through an emer­gency ses­sion or ex­ec­u­tive or­der.

The re­tirees’ law­suit ar­gues that they are en­ti­tled to the prior drug cov­er­age be­cause it was promised to them as part of their em­ploy­ment and that the state is break­ing a con­tract by deny­ing these ben­e­fits. Chang­ing plans would also cause “ir­repara­ble harm” to the re­tirees be­cause of the costs, the law­suit ar­gued.

The state, on the other hand, con­tended in court doc­u­ments that the pre­scrip­tion pro­gram did not con­sti­tute a con­tract and that the case should be dis­missed. Not all re­tirees will feel a fi­nan­cial hit, the state said. The tran­si­tion could in­crease costs for some re­tirees but de­crease it for oth­ers. The re­tirees also would be al­lowed a longer en­roll­ment pe­riod that lasts through Fe­bru­ary.

The switch in plans was needed to keep the state’s ben­e­fits pro­gram fi­nan­cially vi­able, state of­fi­cials said in lay­ing out their case. The tran­si­tion to Medi­care Part D saves $5.5 bil­lion in costs for ben­e­fits other than pen­sions pro­vided to state re­tirees.

Sev­eral law­mak­ers said in a joint state­ment Thurs­day that they will in­tro­duce leg­is­la­tion in the Gen­eral As­sem­bly ses­sion in Jan­uary to rem­edy the is­sue. Sen. Kathy Klaus­meier, a Bal­ti­more County Demo­crat; Sen. Jim Mathias, a Lower Shore Demo­crat; and Del. Eric Bromwell, a Bal­ti­more County Demo­crat, and Del. Ned Carey, an Anne Arun­del County Demo­crat, is­sued a state­ment ap­plaud­ing Mes­sitte’s judge­ment.

“The Depart­ment of Bud­get & Man­age­ment’s mis-man­age­ment of this tran­si­tion caused a great deal of con­fu­sion and anger among state re­tirees, and we ap­plaud Judge Mes­sitte for putting the brakes on this change,” the state­ment said. “When the Gen­eral As­sem­bly con­venes in Jan­uary, we will in­tro­duce a bill to re­peal the law which kicked state re­tirees off of the State’s pre­scrip­tion drug plan and re­quired them to tran­si­tion to Medi­care Part D.”

The la­bor union that rep­re­sents state em­ploy­ees said it will be watch­ing closely to see what hap­pens.

“AFSCME re­tirees will con­tinue to or­ga­nize to make sure that there is a long-term agree­ment by the Gov­er­nor and the Leg­is­la­ture to keep the prom­ise and main­tain cur­rent ben­e­fits,” said Ida Ward, pres­i­dent of Mary­land AFSCME Re­tiree Chap­ter 1, in a state­ment. “Hun­dreds of mem­bers have called the gov­er­nor and con­tinue to sound the alarm of the dan­gers of tak­ing away this ben­e­fit from Mary­land’s re­tirees. The bot­tom line is that this elim­i­na­tion of ben­e­fits would be un­af­ford­able to some re­tirees and con­fus­ing to many.”

Re­tired Mary­land state em­ployee Jef­frey Is­rael, who worked 34 years in pro­ba­tion and pa­role, said the judge’s de­ci­sion gave him hope. The judge lis­tened to them when the politi­cians didn’t, he said.

“The de­ci­sion was as good as we could get,” he said.

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