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Medicare Part D Prescription Drug Benefit

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Under 65 years, permanently disabled, and have received Social Security ... for Medicare beneficiaries seeking information on Part D (woodwork effect) ... – PowerPoint PPT presentation

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Title: Medicare Part D Prescription Drug Benefit


1
Medicare Part D Prescription Drug Benefit
Presentation to Senate Finance Committee
Patrick W. Finnerty Department of Medical
Assistance Services
May 19, 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 900,000 Medicare beneficiaries
    in Virginia
  • Approximately 120,000 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 37
  • 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 lt100 Federal Poverty Level (FPL)
    (9,570/year) no resource limits
  • Group 2 Persons with income lt135 FPL
    (12,919/year), and limited resources
    (6,000/individual 9,000/couple)
  • Group 3 Persons with income lt150 FPL
    (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 will send 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
  • September 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
  • Assist clients applying for Extra Help
  • Determine eligibility for low-income subsidy if
    state determination is demanded by a Medicare
    beneficiary
  • Process Extra Help monthly data reporting
    requirements
  • Determine eligibility for other assistance
    programs for Medicare beneficiaries seeking
    information on Part D (woodwork effect)
  • DSS estimates a need for 71 new staff at LDSSs

17
Administrative/Operational Implications (contd)
  • 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
  • DMAS estimates a need for 8 staff to handle
    administrative responsibilities

18
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

19
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

20
As A Result of Several Factors, It Appears
Medicare Part D Will Incur Additional Costs for
Virginia
Estimated General Fund Impact (Millions)
21
DMAS Is Working With CMS on Clawback
Administrative Costs Will Be Considered in Budget
Development
  • CMS Administrator has stated CMS wants to make
    sure Part D does not impose additional costs on
    states
  • DMAS is reviewing its preliminary estimates with
    CMS to determine if any adjustments can be made
  • Administrative costs, including those for both
    DMAS and LDSSs, will be considered carefully in
    the development of Executive Budget (caboose bill
    and new biennial budget)

22
Presentation Outline
Overview of Medicare Part D Extra Help for
Low-Income Persons Impact on Virginia Implementa
tion Activities
23
DMAS and DSS Are Working Together Closely To
Assist CMS/SSA Implement Part D
  • DMAS has formed a Medicare Part D Task Force
  • Over 30 groups are participating, including
    federal and state agencies, LDSSs, provider
    associations, advocacy groups, and others
  • DMAS/DSS are completing necessary computer system
    changes
  • Information provided to General Assembly members
  • Communicating with dual eligibles
  • Providing training programs/materials

24
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 will
    be available for interested parties and will be
    posted on agency internet sites
  • DMAS, DSS, and other Health Human Resources
    agencies will continue to help the federal
    government implement the Part D program
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