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Medicare Part D Prescription Drug Benefit

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Medicare Part D Prescription Drug Benefit. Patrick W. Finnerty ... Prescription drug benefit available to all Medicare beneficiaries on January 1, 2006 ... – PowerPoint PPT presentation

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Title: Medicare Part D Prescription Drug Benefit


1
Medicare Part D Prescription Drug Benefit
Presentation to Health Human Resources
Subcommittee House Appropriations Committee
Patrick W. Finnerty Department of Medical
Assistance Services
September 18, 2005 Richmond, Virginia
2
Presentation Outline
Overview of Medicare Part D Extra Help for
Low-Income Persons Impact on Virginia Implementa
tion Activities
3
Medicare is a Federal Health Insurance Program
  • Eligibility for Medicare
  • 65 years or older and eligible to receive Social
    Security
  • Under 65 years, permanently disabled, and have
    received Social Security disability payments for
    at least two years
  • Have permanent kidney failure or need a kidney
    transplant or Amyotrophic Lateral Sclerosis (or
    Lou Gehrigs disease)
  • What Medicare Covers
  • Part A Hospital Inpatient Care (also some
    skilled nursing facility care, home health, and
    hospice)
  • Part B Medical Insurance (such as doctors
    services, labs, medical equipment, preventive
    services)
  • Part D Prescription Drugs beginning on January
    1, 2006

4
What Is Medicare Part D?
  • Medicare Modernization Act (MMA) enacted in
    December 2003 adds a new Part D to provide
    prescription drug coverage
  • Prescription drug benefit available to all
    Medicare beneficiaries on January 1, 2006
  • Enrollment is optional, though a penalty may
    apply for late enrollment (enrollees must apply
    for coverage)
  • Prescription drugs available through private
    prescription drug plans (PDPs)
  • Most enrollees will have cost sharing
    obligations extra help (subsidy) is available
    for low-income individuals

5
Who In Virginia Is Affected By Medicare Part D?
  • There are roughly 947,000 Medicare beneficiaries
    in Virginia
  • Approximately 136,000 Medicare beneficiaries are
    also Medicaid clients, called dual eligibles
  • 93 of Medicaid elderly clients are duals
  • 62 of Medicaid blind disabled clients are
    duals
  • When Medicare Part D becomes effective, dual
    eligibles will receive their prescription drug
    coverage through Medicare, and not Medicaid

6
What is the MedicarePart D Benefit?
  • Prescription drug plans (PDPs) must offer a basic
    prescription drug benefit
  • Medicare Advantage plans (managed care plans)
    must offer basic plan or broader coverage at no
    extra cost
  • PDPs must provide coverage for drugs in each
    therapeutic class, but can establish preferred
    drug lists
  • Will include drugs dispensed by prescription,
    insulin associated supplies, vaccines
  • Will exclude drugs covered under Part A or B,
    over-the-counter drugs, weight gain/loss
    cosmetic purposes cough cold barbiturates
    benzodiazepines certain vitamins (Va. Medicaid
    will continue to cover excluded drugs for duals
    for which we receive FFP)

7
How Are Prescription Drug Plans
Selected/Monitored?
  • The Centers for Medicare and Medicaid Services
    (CMS) will contract with private health plans and
    other vendors to provide the Medicare Part D
    benefit
  • Virginia will have at least 2 PDPs Medicare
    Advantage (MA) Plans (managed care) will also be
    available
  • CMS will require PDPs and MA Plans to meet
    certain quality, access and administrative
    standards (e.g., at least 2 drugs must be
    available in each drug class 60-day notice for
    drug changes network pharmacy access standards
    PT Committee requirements and appeals process)

8
What Are The Cost-Sharing Requirements?
  • Under the standard prescription drug benefit,
    most beneficiaries in 2006
  • Pay an average monthly premium of 34
  • Pay the first 250 in drug costs (deductible)
  • Pay 25 of total drug costs between 250 and
    2,250
  • Pay 100 of the costs between 2,250 and 5,100
    in total drug costs (this 2,850 gap is known as
    the doughnut hole), equivalent to 3,600 out of
    pocket.
  • Pay the greater of 2 for generics, 5 for brand
    drugs, or 5 coinsurance after reaching the
    3,600 out-of-pocket limit
  • These deductibles, benefit limits, and
    catastrophic thresholds are indexed to rise with
    the growth in per capita Part D spending.

9
Certain Beneficiaries Will Receive Extra Help
To Offset Cost of Prescription Drug Benefit
  • Group 1 Full benefit Dual Eligibles with
    income (9,570/year) no resource limits
  • Group 2 Persons with income (12,920/year), and limited resources
    (6,000/individual 9,000/couple)
  • Group 3 Persons with income (14,355/year), and limited resources
    (10,000/individual 20,000/couple)

10
What Extra Help Is Available?
11
How Do Persons Enroll in Medicare Part D Drug
Coverage?
  • Medicare beneficiaries will need to enroll with a
    PDP or MA plan
  • Enrollment begins November 15, 2005
  • Full-benefit dual eligibles who do not enroll in
    a plan by 12/31/05 will be auto-enrolled in a PDP
  • Can change PDP at any time
  • Information/assistance is available for
    beneficiaries
  • Consult Medicare You 2006 Handbook
  • Contact PDPs for information
  • Call Medicare toll-free 1-800-MEDICARE
  • Visit www.medicare.gov

12
How Can Persons Find Out If They Qualify For
Extra Help?
  • Medicare beneficiaries apply to the Social
    Security Administration (SSA) persons can apply
    multiple ways
  • Scannable application (mail or in-person)
  • Calling SSA toll-free (1-800-772-1213)
  • Over the internet (www.ssa.gov)
  • Qualifier Tool
  • SSA is sending applications to those it believes
    may be eligible others must initiate application
    process
  • States must determine eligibility for Extra
    Help if the applicant insists
  • Virginia will use same SSA application

13
Certain Low-Income Persons Are Deemed Eligible
for Extra Help
  • Certain Medicare beneficiaries will automatically
    qualify for and receive extra help
  • No application is required for
  • Dual eligibles
  • Supplemental Security Income (SSI) recipients
  • Those deemed eligible for extra help are
    identified through data sharing between DMAS and
    CMS

14
Important Dates forMedicare Part D Implementation
  • January 28, 2005 Final federal regulations
    published
  • February 2005 CMS Public Awareness Campaign
    begins
  • May 2005 CMS Notifies Potential Low Income
    Eligibles
  • June 2005 Prescription Drug Plans Bids Due
  • States submit enrollment files
  • July 2005 States/SSA accept low income
    applications
  • Sept. 15, 2005 Prescription Drug Plan Contracts
    Awarded
  • October 1, 2005 Marketing/enrollment of Part D
    benefits
  • November 15, 2005 Enrollment Begins lasts until
    May 15, 2006
  • January 1, 2006 Part D Begins Medicaid payment
    ends 12/31
  • February 2006 States monthly payment (clawback)
    begins

15
Presentation Outline
Overview of Medicare Part D Extra Help for
Low-Income Persons Impact on Virginia Implementa
tion Activities
16
Administrative/Operational Implications
  • Local Departments of Social Services (LDSSs) have
    significant new responsibilities related to
    Extra Help program
  • (will be addressed in Commissioner Conyers
    presentation)
  • There are also implications for DMAS
  • Assist transition of dual eligibles to Part D
  • Provide monthly data to federal government
  • Handle increased telephone inquiries from duals
  • Provide coordination of benefits information
  • Conduct additional appeal hearings related to
    extra help determinations
  • Final cost impact still being determined

17
States Must Pay A Significant Portion of The Part
D Drug Benefit
  • Phased-Down State Contribution Clawback
  • States are required to help finance Medicare Part
    D by paying the federal government the state
    share of the cost of prescription drug coverage
    for dual eligibles
  • State share is set at 90 of costs for 2006 and
    decreases to 75 by 2015
  • Clawback amount based on
  • Per capita costs for dual eligibles in 2003
  • Per capita growth in drug spending nationwide
    since 2003
  • Number of dual eligibles enrolled in Part D

18
Virginias Clawback Amount Does Not Recognize
Recent Pharmacy Program Savings
  • Since 2003, Virginia has implemented several
    pharmacy savings initiatives that are not
    reflected in the clawback amount
  • Preferred drug list
  • Mandatory generic substitution
  • Threshold program
  • Maximum allowable cost (MAC) pricing for generics
  • Expanded drug utilization review (DUR) program
  • While the net impact of the Clawback amount is
    not supposed to impose additional costs to
    states, because post-2003 cost savings are not
    recognized, it appears that paying the clawback
    will be more expensive than continuing the
    current program

19
As A Result of Several Factors, It Appears
Medicare Part D Will Incur Additional Costs for
Virginia
  • Initial estimates indicate the overall impact of
    Part D for Virginia could reach 22 million (GF)
    in calendar year 2006 (11 million for FY 2006)
  • Largest factor contributing to the cost is the
    clawback payment
  • Other factors include administrative costs and
    woodwork effect
  • DMAS is working with CMS to reduce impact of
    clawback payments
  • Final cost estimates are still being determined
    and will be considered carefully in developing
    the Executive Budget

20
Presentation Outline
Overview of Medicare Part D Extra Help for
Low-Income Persons Impact on Virginia Implementa
tion Activities
21
HHR Agencies Are Working Together Closely To
Assist CMS/SSA Implement Part D
  • DMAS has formed a Medicare Part D Task Force
  • Over 75 individuals are participating, including
    federal and state agencies, LDSSs, provider
    associations, advocacy groups, and others
  • HHR agencies are completing necessary computer
    system changes
  • Information provided to General Assembly members
  • Communicating with dual eligibles
  • Providing training programs/materials

22
Training Other Activities
  • An all-day training program featuring CMS and SSA
    staff was provided via videoconference to 29
    sites across the Commonwealth yesterday
  • Training on Part D and Extra Help
  • More than 500 attendees
  • Videoconference was recorded on DVD copies were
    made available for interested parties and
    information has been posted on agency internet
    sites
  • HHR agencies will continue to help the federal
    government implement the Part D program
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