Federal Medicare Prescription Drug Coverage: Impact on Medicaid Beneficiaries

1
Federal Medicare Prescription Drug
CoverageImpact on Medicaid Beneficiaries
Trey Berndt Senior Policy Advisor, Office of
Health Services
2
What is Dual Eligibility?

• Dual Eligibility refers to individuals who are
• Medicare eligible (aged or disabled)
• Low income and
• Also eligible for some level of Medicaid coverage
• There are different types of dual eligibility,
  but generally, they fall into two categories
• Full dual eligibles
• Other dual eligibles

2
3
Dual Eligibility, Continued

• Full Dual Eligibles
• Entitled to Medicaid benefits that Medicare does
  not cover, including Medicaid drug coverage
• Include low-income aged and disabled individuals
  in Medicaid community care programs, nursing
  homes, and state schools
• Other Dual Eligibles
• Eligible only for Medicaid payments for Medicare
  premiums, deductibles, and coinsurance for
  Medicare services
• Not entitled to Medicaid prescription drugs
  services
• Include several categories of eligibility
  incomes generally up to 135 of federal poverty
  level (if not in institution)

3
4
What is Medicare Part D? (Its Not the Discount
Card Program!)

• New Medicare Rx coverage starts January 2006
• New Part D offers optional drug coverage to all
  Medicare beneficiaries
• Rx coverage provided through private drug plans
  or Medicare HMOs (Medicare Advantage)
• Limited to private plans formulary
• Medicare beneficiaries with Medicaid Rx coverage
  (full duals) must switch to Medicare Part D

4
5
How Does Medicare Part D Change Medicaid Rx?

• Medicaid Rx changes effective January 1, 2006
• New law prohibits states from drawing federal
  Medicaid funds for drugs for dual eligibles
• Medicaid Rx coverage for dual eligibles will be
  discontinued 1/1/06
• Medicare will auto-enroll dual eligibles into
  Part D plans
• States make monthly payment to Medicare (clawback)

5
6
Who is Affected? What Do They Need to Do?
6
7
What Medicaid Drug Coverage Continues for Full
Dual Eligibles?

• Medicaid continues to pay cost sharing for
  Medicare Part B covered drugs
• Medicaid will continue to pay for a few
  categories of drugs not covered by Part D (wrap
  around)
• Nonprescription drugs (over-the-counter
  medications).
• Barbiturates
• Benzodiazepines
• Medicaid cannot pay for a drug whose category is
  included in Part D, but not covered by a
  particular plans formulary.

7
8
How Many Medicaid clients are affected? (as of
5/1/05)
8
9
How Does Part D Coverage Work for Higher income
Medicare Beneficiaries? (Not Dual Eligible Over
150 FPL Not in Medicare HMO)

• Standard Benefit (Beneficiaries pay monthly
  premiums (estimated at 35 in 2006)
• Based on annual amount of drug costs,
  beneficiaries may pay a significant portion
• Deductible (first 250 of drug costs)
• 25 of drug costs between 250 and 2250
• 100 of drug costs between 2250 and 5100 (no
  Medicare coverage gap) premiums continue
• Copayments or 5 of drug costs after 5100
  Medicare pays 95
• Enrollment in Medicare Managed Care may lower
  these out of pocket costs
• At 5100 of drug costs, beneficiary has paid
  3600 in out-of-pocket spending, not including
• premiums

9
10
Cost Sharing - Standard BenefitExample A (Not
Dual Eligible Over 150 FPL Not in Medicare
HMO)
Standard Benefit 250 per month(3000
annually) in Drug Costs Total Out of Pocket
1500 (50)Does not include premiums
10
These costs do not apply to beneficiaries with
low-income subsidy.
11
Cost Sharing - Standard BenefitExample B (Not
Dual Eligible Over 150 FPL Not in Medicare
HMO)
Standard Benefit 500 per month (6000
annually) in Drug Costs Total Out of Pocket
3645 (61)Does not include premiums
11
These costs do not apply to beneficiaries with
low-income subsidy.
12
Part D Low-Income Subsidies (Full duals, Other
duals, Low Income Medicare-only)

• Subsidies eliminate or lower premium,
  out-of-pocket cost sharing for low income
  beneficiaries
• Based on Income and Asset Test
• Premium subsidies
• No premiums or deductibles for all dual eligible
  Medicaid clients and some low income, Medicare
  beneficiaries
• Sliding scale subsidies for other low income
  beneficiaries
• Cost sharing subsidies-
• No gap in coverage for all dual eligible Medicaid
  clients and some low income Medicare-only
  individuals
• Copays from 1 to 5 for all dual eligibles and
  some low income Medicare-only individuals

12
13
Low-Income Subsidy Groups
13
14
Federal Responsibility Dual Eligibles Drug
Coverage

• Medicare assumes financial responsibility for
  Medicaid full dual eligible drug coverage in
  January 2006.
• Medicare program will assign full dual eligibles
  to a Part D plan in October 2005. Beneficiaries
  can pick a new plan. If they do nothing,
  beginning Jan. 1, 2006, Rx coverage is with plan
  Medicare assigned.
• State must discontinue Medicaid drug coverage for
  full dual eligibles at the end of December 2005.
• No federal Medicaid funding for Part D-covered
  drugs for full dual eligibles after that date
  (except a few limited categories), even if not
  enrolled in a Part D plan.

14
15
HHSC Communications StrategyWhat happened to
my Medicaid Drug Coverage?

• Beneficiaries most likely source of info on
  Medicare Part D (source Kaiser Family
  Foundation Focus Groups)
• Medicare
• Pharmacists
• Physicians
• HHSC also knows (for dual eligibles)
• who they are
• where they live
• Most go to the pharmacy to get their
  prescriptions filled

15
16
HHSC Communications Plan Target Audiences

• Clients
• Full Dual Eligibles
• Non-Full duals
• Medicare-only clients in state-funded Rx programs
• (Kidney Health, New Generation mental health
  medications, HIV/AIDS)
• Providers
• Pharmacists
• Physicians
• Institutional providers (Nursing homes, ICF/MRs)
• HHS Staff, Stakeholders,
• Caseworkers and other front-line staff in all HHS
  agencies

16
17
HHSC Communications StrategyMaterials and
Activities

• Provider-Directed Activities
• Education
• Articles for newsletters
• Briefings for members
• Training materials
• Materials (based on available funding)
• High interest direct mail
• Push cards
• Brochures

17
18
Medicare Part D Key Dates in the Implementation
Timeline

• Jan 2005 Final rule due from Medicare.
• July 1, 2005 States begin providing
  assistance for subsidy application.
• September 2005 awards bids to PDPs and MA-PDs
• October 2005 Medicare notifies full dual
  eligibles of plan assignment. States will also
  be notified of plan assignments.
• October 15, 2005 Medicare disseminates
  information comparing Part D plans via mail
  and 1-800-Medicare
• October 15, 2005 Deadline for Medicare to
  notify states of their annual per capita drug
  payment amounts for 2006.
• November 15, 2005 Enrollment period for Part D
  plan selection opens (runs through May 15,
  2006 in first year only).
• December 31, 2005 Medicaid prescription drug
  coverage for dual eligibles ends.
• December 31, 2005 Medicare discount card
  program ends
• January 1, 2006 Medicare Part D drug coverage
  program begins

18
19
What Should Stakeholders/Providers do to Get
Ready for Medicare Part D?

• May 2005 Who and where are your Medicare
  clients? Who is full dual eligible/other dual
  eligible? Who is Medicare-only?
• Early Summer 2005 Watch for more information and
  communications materials (HHSC, Medicare, TMA,
  other sources)
• September October 2005 Learn who new Medicare
  Part D Plans are (stand alone drug plans and
  Medicare HMOs) Review their formularies, contact
  information for patient coverage problems.
• November-December 2005 and ongoing Check for
  Part D Coverage for duals and Medicare-only.
  Support Part D enrollment on an ongoing basis.

19