The new Medicare-drug discount program begins in June 2004. It's aimed at seniors and people with disabilities who have no other prescription coverage. Pharmacy chains, groups such as AARP, and other private organizations are expected to offer the discounts. But scam artists have been peddling phony cards for months. Consumers in Alabama, Georgia, Idaho, Nebraska, New York, Oklahoma, Rhode Island, and Virginia have complained about people illegally pushing “Medicare-approved cards.”

These scams are but the latest problem with discount prescription-drug cards. Over the years, they have been the source of many consumer complaints.

“It is a violation of federal law to solicit any Medicare product door-to-door or over the phone,” said Leslie Norwalk, the acting deputy director and chief operating officer of the Centers for Medicare and Medicaid Services, the government office administering the health-care programs.

To weed out shady operations, the CMS requires that companies disclose any past or pending investigations or legal actions when they apply to offer a Medicare card. The Justice Department checks up on applicants before they are accepted.

Here's how the new card program is supposed to work:

You pay an annual enrollment fee of up to $30 and can use the drug card at any pharmacy to receive discounts of 10 to 25 percent on each prescription.

Those with a low income (generally less than $12,564 for singles and $16,862 for couples) have the enrollment fee waived and will receive a $600 credit on prescriptions this year and next. But only low-income cardholders will owe copayments of 5 to 10 percent, which will erode the savings from the card.

Merck has announced that it will provide its drugs free to low-income consumers after the $600 credit is exhausted. “Other firms may follow suit,” said Deane Beebe, communications director for the Medicare Rights Center, a nonprofit organization.

The program has drawbacks, however:

• Not all drugs will be discounted by each card, so some prescriptions
may not make the cut. But at least one drug in all categories is covered. Discounts can't be combined with other card programs.

• Each card provider will have its own price list, which may change weekly.
If you sign up for a card because it offers the best price on your most-expensive drugs, you may find the deals are not so hot a week later. You can change cards only during a six-week open-enrollment period at year’s end.

• If your health changes, requiring different medication, there's no guarantee that your discount card will have the best price on the new drugs--or that it will discount them at all.

It's up to you to figure out where to find the best deal. “The bottom line is, no matter what program you sign up for, you have to keep monitoring the discount card,” said Joe Baker, chief of the New York attorney general's Health Care Bureau.