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AHIA Medicare Update Medicare Prescription Drug Benefit

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Part D plans may limit coverage to drug lists formularies ... Consideration of beneficiary's existing drug coverage and its cost ... – PowerPoint PPT presentation

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Title: AHIA Medicare Update Medicare Prescription Drug Benefit


1
AHIA Medicare UpdateMedicare Prescription Drug
Benefit
  • December 6, 2005
  • Mark S. Joffe, Esq.

2
How Does a Beneficiary Get Part D Drug Benefits?
  • Voluntary benefit available to all Medicare
    beneficiaries through
  • Prescription drug plans (PDPs)
  • Medicare Advantage plans (MA-PD plans)
  • Coordinated care plans required to offer Part D
    benefits
  • PFFS plans may elect to offer Part D benefits
  • MA enrollees must get their Part D drug coverage
    from an MA-PD plan

3
When Can a Beneficiary Enroll in a Part D Plan?
  • Initial enrollment period
  • November 15, 2005 to May 15, 2006
  • For new Medicare beneficiaries, generally the
    period from 3 months before to 3 months after the
    person is first eligible for Medicare hospital
    benefits or is age 65.
  • Annual election period
  • November 15-December 31, 2007 and subsequent
    years
  • Special Election Periods (SEPs) include
  • Full benefit dual eligibles
  • Upon disenrollment from MA plan during open
    enrollment period
  • Creditable coverage Involuntary loss of
    creditable coverage or inadequately informed of
    creditable coverage status
  • Moved out of service area
  • Other SEPs at the discretion of CMS

4
What Drugs Can a BeneficiaryGet Under Part D?
  • Includes
  • Coverage of prescription drugs and biologicals
    that must be covered by states that provide
    Medicaid Rx benefits
  • Excludes
  • Agents used for weight loss or gain, fertility,
    cosmetic purposes, coughs and colds
  • Vitamins
  • Barbiturates
  • Benzodiazepines
  • Also excluded are
  • Non-prescription drugs
  • Part B covered drugs

5
Can Enrollees of a Part D Plan Get Any
Prescription Drug?
  • Part D plans may limit coverage to drug lists
    formularies
  • CMS has a number of requirements related to
    formularies including having two drugs in each
    class and category
  • Formulary changes are permitted
  • With 60 days notice
  • No changes between November 15 and March 1
  • Exceptions process

6
What Factors Influence a Decision to Enroll in a
Part D Plan
  • An evaluation of the benefits and costs of
    enrolling in a Part D plan
  • Benefits include drug coverage and ability to
    purchase drugs at drug plans negotiated prices
  • Cost include premiums and cost sharing
  • Consideration of beneficiarys existing drug
    coverage and its cost
  • Evaluation of whether beneficiary will need to
    pay a late penalty for enrolling later
  • Late enrollment period only during enrollment
    periods

7
What Factors Influence theChoice of Part D Drug
Plan?
  • MA-PD plan vs. PDP
  • Basic coverage vs. enhanced coverage
  • Benefit design
  • Formulary (which drugs are covered and use of
    formulary tiers)
  • Pharmacies in network
  • CMS has developed tools to assist in selection
    at www.Medicare.gov

8
(No Transcript)
9
When Does a Part D Enrollee Qualify for
Catastrophic Coverage?
  • Catastrophic coverage commences when enrollee has
    incurred true-out-of-pocket (TrOOP) costs of
    3,600
  • TrOOP costs are those incurred
  • By the Part D enrollee or on behalf of the Part D
    enrollee, including
  • payments by family members, SPAPs, bona fide
    charities
  • funds from an HSA, MSA, FSA
  • On covered Part D drugs by the plan
  • Incurred costs do not include
  • Costs covered through group health plan or other
    third-party arrangement
  • Costs funded from HRA

10
What Happens If a Beneficiary Enrolls in a Part
D Plan Late?
  • Late enrollment penalty applies if there is a
    continuous period of 63 days after the initial
    enrollment period during which the beneficiary
    is
  • Eligible to enroll in a part D plan
  • Not covered under creditable coverage
  • Not enrolled in a part D plan
  • Amount of penalty
  • Beneficiary premium increased by 1 of base
    beneficiary premium for each uncovered month

11
When Is Drug Coverage Creditable?
  • Expected plan payout for an average individual
    must be at least equal to the average payout
    under the Part D standard benefit
  • Creditable coverage determination only considers
    payout, not who pays the premium

12
How Do Beneficiaries Know If They Have Creditable
Coverage?
  • Disclosure notices must be issued by specified
    entities that provide prescription drug coverage
    to beneficiaries, including the following types
    of coverage
  • Group health plans (including FEHBP and qualified
    retiree prescription drug plans) and individual
    health insurance coverage
  • Medigap
  • Medicaid and State Pharmaceutical Assistance
    Programs
  • VA and military coverage
  • Disclosure notices not required for PDPs and
    MA-PD plans

13
When Do Notices of Creditable Coverage Need to Be
Given?
  • Notices of creditable and non-creditable coverage
    may be provided with other routine materials to
    retirees and must be provided
  • Prior to annual election period
  • Prior to individuals initial election period
  • Prior to effective date of enrollment
  • Prior to change in creditable coverage status
  • Upon request

14
What Special Rules Apply to Medigap Insurers?
  • After January 1, 2006, beneficiaries with Medigap
    drug policies may keep them if they do not enroll
    in Part D
  • No new Medigap Rx policies may be sold
  • Beneficiaries with Medigap Rx policies who enroll
    in Part D plan have right
  • To retain Medigap policy without drugs or
  • Guaranteed issue of certain other policies

15
What Disclosure Requirements Apply to Medigap
Insurers?
  • Medigap insurers must provide a disclosure notice
    to Medigap drug policyholders about initial
    implementation of Part D
  • Notice must be provided to affected policyholders
    60 days before initial enrollment period
    September 16 November 15, 2005

16
What Options Do Employers Have to Offer Drug
Benefits to Retirees?
  • Purchase Part D coverage from a Part D plan
  • Offer retiree drug coverage and qualify for
    Retiree Drug Subsidy
  • Offer benefits as a supplement to Part D drug
    plan coverage
  • Discontinue the offering of drug coverage

17
What Are the Benefits to an Employer That
Participates in Retiree Subsidy Program?
  • Employer group is eligible for a subsidy in the
    amount of 28 of claims costs between 250 -
    5,000 in 2006
  • The subsidy is tax exempt
  • Administrative burden is less than administrative
    burden under Part D program

18
What Tests Must the Employer Meet to Qualify for
the Subsidy?
  • Actuarial equivalence Two prong test
  • Gross Value Test (same as test for creditable
    coverage)
  • Expected plan payout for an average individual
    must be at least equal to the average payout
    under the Part D standard benefit
  • Net Value Test
  • Expected plan payout for an average individual
    reduced by the amount of retiree premium payments
    must be at least equal to the average Part D
    standard benefit payout reduced by the enrollee
    premium (in making calculation, retiree plans
    will consider the impact of supplemental coverage
    provided by the employer/union)
  • Employer with multiple drug benefit designs
    within an ERISA plan
  • Each benefit design must meet Gross Value Test
  • Aggregate value of all benefit designs must meet
    Net Value Test

19
Should a Retiree Covered Under a Subsidy Program
Enroll in a Part D Plan?
  • Employers are no longer eligible for subsidy for
    retirees who enroll in Part D plan
  • Will retiree lose retiree coverage?
  • Is retiree eligible for Part D low income
    subsidy?
  • Does employer have different benefit options with
    different contribution amounts?
  • Is Part D coverage a better value than retiree
    coverage?

20
Who Is Eligible to Receive Low Income Premium
Subsidies?
  • Full subsidy
  • Full benefit dual eligibles
  • Medicare savings program (QMBs, SLMBs, QIs)
  • Others (SSI, under 135 of FPL)
  • Other low-income subsidy (not greater than 150
    of FPL)

21
How Will Medicare Beneficiaries Receive the
Subsidy?
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