Merck

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Merck Co., Inc.Summary of Medicare Part D and
Vaccines

• December 2007

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• This information is intended to be an overview
  from
• Mercks perspective, and reflects our general
• understanding of Medicare coverage and processes
  for
• vaccines. Other organizations will need to
  assess how
• Medicare issues specifically affect their
  operations in
• these circumstances.

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Objectives

• Present basic information regarding Medicare
  coverage of vaccines
• Describe differences between Part B and Part D
  coverage of vaccines
• Provide information on reimbursement processes
  for Part D vaccine product costs and
  administration fees
• Discussion of potential Part D vaccine processes
  for 2008
• Q A

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Medicare Coverage of Vaccines

• New vaccine benefit in Part D starting January 1,
  2006
• The Medicare Modernization Act (MMA) of 2003
  included vaccines licensed under Section 351 of
  the Public Health Service Act as Part D covered
  drugs
• CMS information describing if a vaccine is under
  Part B
• or Part D
• If a vaccine was previously covered under Part
  B, it will continue to be covered under Part B.
  If it was previously not covered, then it may be
  covered under Part D.
• Information available at www.cms.hhs.gov/MLNMat
  tersArticles/downloads/SE0570.pdf

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Medicare Coverage of VaccinesDifferences
between Parts B and D

• Part D
• Copayments, deductibles and coverage gap can be
  factors for vaccines covered in Part D
• Vaccine cost reimbursed by Part D, administration
  fee paid by Part B in 2007, and Part D in 2008
  and thereafter
• Part D does not have well established processes
  for vaccines
• 2007 process requires billing vaccine cost to
  Part D plan, and administration fee to Part B
• Processes to reimburse 2008 administration fee
  under Part D are still developing
• Part D operates on NCPDP 5.1 pharmacy claims
  system

• Part B
• Covers influenza, pneumococcal and Hepatitis B
  (for high and intermediate risk individuals)
  vaccines
• No beneficiary out-of-pocket costs for influenza
  and pneumococcal vaccines,
• Copayments and deductible apply for Hepatitis B
  vaccine
• Also can cover vaccines in cases of injury or
  direct exposure (e.g., tetanus toxoid)
• Physicians bill for product and administration
  fee on standard medical claim form in
  well-established process
• Part B has been primary vehicle for delivery of
  adult vaccines

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Part D Vaccine Coverage in 2008Recent CMS
Guidance to Part D Plans

• Final 2008 Call Letter
• Available at http//www.cms.hhs.gov/PrescriptionD
  rugCovContra/Downloads/CallLetter.pdf
• -the Call Letter describes CMS goals, provides
  new information and operational reminders to
  Medicare Advantage organizations and Part D plans
  for contract year 2008
• Section 5 Vaccine Formulary Coverage, p. 63
• we will review all sponsors formularies to
  ensure they contain all commercially available
  vaccines (unless excluded due to available
  reimbursement under Part B, e.g., influenza or
  pneumococcal vaccines)

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Part D and Vaccines Administration Fee

• Tax Relief and Health Care Act (TRHCA) of 2006,
  signed by the President on 12/20/06, requires
  that Medicare providers be reimbursed for
  administration fees for vaccines covered by Part
  D beginning 1/1/07
• Per TRHCA, Part B will cover the administration
  fees in 2007, while Part D will cover for 2008
  and thereafter
• CMS has created a G code (G0377) to be used for
  the administration of Part D vaccines in 2007.
  Part B deductibles and copayments do apply to the
  administration fee for Part D vaccines
• Health care professionals (HCPs) administering
  Part D vaccines cannot bill Part B for
  administration fees as of January 1, 2008
• General CMS instruction (see bullet below)
  starting January 1, 2008, is for HCPs to collect
  administration fee from patient in addition to
  vaccine product cost, then patient submits paper
  claim to his\her individual Part D plan for
  reimbursement
• If Part D vaccine is billed and reimbursed
  through a pharmacy, or if a web-based billing
  mechanism is used, the HCP may not need to
  collect administration fee from patient
• A CMS educational article entitled Important
  Notice Regarding Vaccine Administrations in 2008
  (MLN Matters Article SE0723) and a Merck cover
  letter provide more information on this topic
• Merck can provide CMS article and cover letter

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CMS Guidance to Part D Plans on 2008 Vaccine
Administration Fee

• May 14, 2007 Guidance Document on
• Vaccine Administration Under Medicare Part D in
  2008
• Available at
• http//www.cms.hhs.gov/PrescriptionDrugCovContra/d
  ownloads/MemoVaccineAdministration_05.14.07.pdf
• CMS encourages billing of vaccine and
  administration on one claim form
• Guidance language may lead to stronger
  consideration of web portal and pharmacy-based
  vaccination mechanisms
• CMS expects plans to review claims when vaccine
  and admin fee are not billed together
• Vaccine administration fees to be negotiated
  between plans and pharmacies
• CMS expects plans to consider factors (e.g,
  supplies, indirect costs, etc.) used to develop
  current Medicare administration fees
• CMS states Part D plans must allow any provider
  authorized by state law to do so to administer a
  Part D vaccine
• Guidance allows pharmacies to establish
  relationships with immunizers to facilitate
  processing of vaccine administration fees

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Part D and Vaccines Plan Options

• In Network Options
• Retail Pharmacy
• Vaccination at pharmacy allowed in many states
• Specialty Pharmacy
• Out of Network Options
• Default mechanism from Part D regulation out of
  network physician office process
• HCP\Office collects up front payment from patient
  and patient submits paper claim to his\her Part D
  plan for reimbursement
• eDispense Web-Based Billing Mechanism
• CMS indicated plans could develop other
  mechanisms to improve access in addition to those
  listed above

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Paper Claim Process
Description

• Beneficiary pays physician for vaccine and
  submits to Part D drug plan for reimbursement for
  vaccine product only. In 2008, beneficiary would
  pay physician for both vaccine and administration
  fee, and will submit to Part D plan for
  reimbursement for both.

Features

• Physician charges beneficiary usual and
  customary charge for vaccine
• Beneficiary pays physician
• Beneficiary files a paper claim form for direct
  reimbursement from the plan beneficiary total
  cost is physician usual and customary charge less
  any plan reimbursement after taking into account
  any deductibles and copayments (coverage gap may
  apply)

Considerations

• Financial risk is borne by the beneficiary
• Beneficiary often uncertain of amount, if any,
  that will be reimbursed at time of vaccine
  administration
• Up front out-of-pocket cost is potential
  financial barrier to vaccine access for some
  people particular disadvantage for low income
  individuals (Dual Eligibles and others eligible
  for Part D subsidies)
• Paper claims processing may be cumbersome for
  beneficiary may lead to member dissatisfaction
• Paper claims processing likely more expensive for
  plan than automated claims process

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In-Network Retail Pharmacy
Description

• Enrollees obtain prescription from physician and
  bring it to local network retail pharmacy for
  filling.

Features

• Network pharmacy has access to coverage
  authorization, reimbursement rates and enrollee
  cost sharing information
• In 2008, Part D network pharmacies should be able
  to bill and be reimbursed for Part D vaccine
  administration fees
• Forty Four states currently allow pharmacists to
  administer some types of vaccinations

• May 2007 CMS guidance for 2008 allows
  administrative arrangements between pharmacies
  and health care providers to facilitate billing
  processes and access to Part D vaccines
• Eliminates up front out-of-pocket payment by
  patient
• Supports physician offices that lack frozen
  storage capabilities
• Prescription negates need for pharmacists to
  screen and identify appropriate patients
• Low relative availability lack of ubiquitous
  vaccine services not all states authorize
  pharmacist vaccination pharmacies may lack
  distribution capabilities

Considerations
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Specialty Pharmacy Process
Description

• Part D Plans specialty pharmacy provides
  vaccines directly to physicians and handles
  claims adjudication

• Physician calls or consumer mails prescription to
  pharmacy
• Pharmacy fills prescription ships vaccine to
  physician office, bills Part D plan for product
  charge and patient for applicable copayment or
  other out of pocket cost
• Consumer would most likely return to physician
  office at later date for administration
• For 2007, administering provider bills Part B for
  vaccine administration fee

Features
Considerations

• May 2007 CMS guidance to plans may reduce
  interest in the use of specialty pharmacy model
  for Part D vaccines among plans
• Eliminates up front out-of-pocket payment
• Keeps administration in physician office
• More expensive distribution model for plans for
  single dose product with lower cost (compared to
  most specialty products)
• SPs may lack necessary shipping infrastructure
• Non-acute nature of vaccines may result in
• Lower consumer satisfaction and participation in
  two visit model

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eDispense Web-portal Process
Description

• Web portal which is expected to allow for real
  time electronic claim adjudication in-office

Features

• Model should enable user to
• Immediately verify Part D eligibility and plan
  information
• Provide consumer with co-payment information in
  real-time
• Submit Part D vaccine product claim directly to
  MA-PD or PDP plan
• Determine plan reimbursement amount (which
  includes consumer co-payment)
• Physician agrees to accept plan allowable
  reimbursement instead of collecting charge from
  patient

• Four major Part D plans are implementing this
  mechanism currently, with more expected to do so
  in 2008
• eDispense launched August 2007
• eDispense should be able to process 2008
  administration fee billing and reimbursement
• Negates need for HCP\office to collect all Part D
  vaccine costs up front
• Physician subject to portal user agreement
• Possible issues with integration into physician
  billing system

Considerations
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Long Term Care Part D Vaccines During Medicare
Part A Stays in NFs

• Q Can a vaccine reimbursed under Medicare Part D
  be provided to a Medicare beneficiary in a
  nursing facility during a Part A
  (Medicare-covered) stay?
• A Yes. According to a CMS letter, Part D
  covered vaccines are reimbursable for Medicare
  beneficiaries during a Part A stay because
  preventive vaccines are outside the scope of the
  Part A benefit, and no benefit category exists
  for Part D vaccines in Part B
• Merck can provide a copy of the CMS letter along
  with other contextual information

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Important CMS Resources on Part D and Vaccines

• December 2006 - CMS Educational Articles to
  Providers Containing Information on Part D
• Vaccine Administration Fee Implementation
• http//www.cms.hhs.gov/MLNMattersArticles/download
  s/MM5443.pdf
• http//www.cms.hhs.gov/MLNMattersArticles/download
  s/MM5459.pdf
• January 2007 - Medicare Rx Update and Educational
  Article Informs Pharmacies of Part D
• Vaccine Administration Fee Implementation
• http//www.cms.hhs.gov/Pharmacy/downloads/update01
  0107.pdf
• http//www.cms.hhs.gov/MLNMattersArticles/download
  s/MM5486.pdf
• January 2007 CMS Educational Article to
  Providers Furnishing Services under the
• Hospital Outpatient Prospective Payment System
• http//www.cms.hhs.gov/MLNMattersArticles/download
  s/MM5438.pdf
• April 2007 Final 2008 Call Letter to Medicare
  Advantage Organizations and Part D Sponsors
• http//www.cms.hhs.gov/PrescriptionDrugCovContra/D
  ownloads/CallLetter.pdf
• May 2007 CMS Memo to Part D Plans on Vaccine
  Administration in 2008

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