Medicare Prescription Drug Plans

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James Hake Rosemary Feild CMS Region III July 28,
2005
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Medicare Prescription Drug Coverage
Overview

• Coverage begins January 1, 2006
• Available for all people with Medicare
• Provided through
• Prescription drug plans (PDPs)
• Medicare Advantage Plans (MA-PDs)
• Some employers and unions to retirees

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PDP and MA-PD Regional Plans

• Region PDP MA-PD
• Five DE, DC, MD DE, DC, MD
• Six PA, WV PA, WV
• Seven VA VA, NC

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Medicare Prescription Drug Plans
Overview

• Must offer basic drug benefit
• Standard or alternative benefit
• May offer supplemental benefits
• Enhanced benefit
• Can be flexible in benefit design
• Must follow marketing guidelines

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Example of Standard Prescription Drug Coverage

• 37 average monthly premium
• 250 deductible
• Up to 2,250 Beneficiary pays 25 drug costs and
  Medicare pays 75 drug costs
• Between 2,250 and 5,100 Beneficiary pays 100
  drug costs (coverage gap)
• After 3,600 in out-of-pocket spending Medicare
  pays approximately 95 and beneficiary pays
  greater of 2/5 copay or 5 coinsurance

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Standard Benefit 2006
Beneficiary Liability
Direct Subsidy/ Beneficiary Premium
Out-of-pocket Threshold
Medicare Pays Reinsurance
Catastrophic Coverage
Total Spending
250
2250
5100
75 Plan Pays, up to 1500
Member pays 100
80 Reinsurance

Deductible
95
25 Coinsurance
Total Beneficiary Out-Of-Pocket
750
3600 TrOOP
250
15 Plan Pays
5 Coinsurance
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What Payments Count Towards TrOOP?

• In addition to the person with Medicare, payments
  counting towards TrOOP may be made by
• Another individual (e.g., a family member or
  friend)
• A State Pharmaceutical Assistance Program (SPAP)
  as defined under 1860D-23
• A bona fide charity, or
• A Personal Health Savings Vehicle (Flexible
  Spending Account, Health Savings Accounts, and
  Medical Savings Accounts)

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What Payments Dont Count Towards TrOOP?

• Coverage by insurance or otherwise, a group
  health plan or other third party payer does not
  count towards TrOOP. These include
• Group Health Plans (e.g., employer/retiree plans)
• Government programs (TRICARE, the V.A., etc.)
• State-run programs that do not meet the
  definition of SPAPs under 1860D-23
• Workers Compensation
• Drug plans supplemental or enhanced benefits
• Automobile/No-Fault/Liability

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2005 PDP Timeline

• January 2005 Final Rule Published
• February 2005 Letters of Intent to apply
• March 2005 PDP/MA-PD applications due
• April 2005 Formulary due
• June 2005 Bid submission
• July 2005 Final pharmacy contracts
• August 2005 Final pharmacy network
• September 2005 PDPs announced
• October 2005 Marketing Begins
• November 2005 Enrollment Begins
• January 2006 Program Begins

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Eligibility and Enrollment
Eligibility and Enrollment

• Entitled to Part A and/or enrolled in Part B
• Reside in plans service area
• Must enroll in a Medicare prescription drug plan
  to get Medicare prescription drug coverage

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Enrollment Periods
Eligibility and Enrollment

• In general, the enrollment periods for PDPs and
  MA-PDs are similar
• There are three enrollment periods for PDPs
• Initial Enrollment Period (IEP)
• 11/15/05 5/15/06 then similar to Part B IEP
• Annual Coordinated Election Period (AEP)
• 11/15 12/31 each year thereafter
• Special Enrollment Period (SEP)

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Special Enrollment Period
Eligibility and Enrollment

• Permanent move out of the plan service area
• Individual entering, residing in, or leaving a
  long-term care facility
• Involuntary loss, reduction, or non-notification
  of creditable coverage
• Other exceptional circumstances

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Postponing Enrollment
Eligibility and Enrollment

• Higher premiums for people who wait to enroll
• Exception for those with prescription drug
  coverage at least as good as a Medicare
  prescription drug plan
• Assessed 1 of base premium for every month
• Eligible to enroll in a Medicare prescription
  drug plan but not enrolled
• No drug coverage as good as a Medicare
  prescription drug coverage for 63 consecutive
  days or longer

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Possible Examples of Coverage at Least as Good as
Medicares
Eligibility and Enrollment

• Coverage under a PDP or MA-PD
• Some Group Health Plans (GHP)
• VA coverage
• Military coverage including TRICARE
• Note The source of the current drug coverage
  will send a notice telling the person if it is at
  least as good as Medicare prescription drug
  coverage

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Enrolling in a Plan
Eligibility and Enrollment

• Look at Medicare You 2006 handbook
• Read about the prescription drug plans available
  in the area
• Contact the plan to enroll
• If someone needs help choosing a plan
• Visit www.medicare.gov and get personalized
  information
• Call 1-800-MEDICARE
• TTY users should call 1-877-486-2048
• Call the local SHIP 1-800-243-3425

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The Prescription Drug Plan Finder Tool

• The Prescription Drug Plan Finder Tool Will
• Only be accessible through www.medicare.gov.
• Provide plan cost, drug pricing and pharmacy
  network information for all PDPs and MA-PDs
• Provide ranking of plans net cost based on
  beneficiarys location, income level, drugs, and
  pharmacy selection
• Update pricing information weekly
• Live October 13, 2005
• Demo webcast 8/2 _at_ 1 PM

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Dual Eligible Coverage Under Part D
Eligibility and Enrollment

• Medicare beneficiaries with Medicaid
• Will receive prescription drugs from Medicare
  Part D January 1, 2006
• Beneficiaries can have special election period at
  anytime.
• States, at their option, may cover drugs not
  provided by Medicare.

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Auto-Enrollment(can change plans any time)
Eligibility and Enrollment

• Medicaid prescription drug coverage for
  full-benefit dual eligibles ends 12/31/005
• Full-benefit dual eligibles who do not enroll in
  a plan by 12/31/05
• CMS will enroll them in a prescription drug plan
  with a premium covered by the low-income premium
  assistance
• Their Medicare prescription drug coverage will
  begin 1/1/06
• Full-benefit dual eligibles have a Special
  Election Period
• Can change plans any time

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Facilitated Enrollment
Eligibility and Enrollment

• CMS is facilitating the enrollment
• Of additional people with Medicare if they do not
  choose a plan by May 15, 2006
• These include people with MSP, SSI-only, and
  those who apply and are determined eligible for
  the extra help
• Coverage effective June 1, 2006

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Information will be sent to individuals eligible
for additional help

• May June 2005 CMS letter to 8.3 M individuals
  already qualifying for additional help
• May August 2005 Letters from SSA to
  individuals who may qualify for additional help
  SSA website toll-free number (www.ssa.gov
  1-800-772-1213)
• July 2005 later SSA makes qualifying
  determinations
• October 2005 Information about PDP plans is
  available (CMS mailings 1-800-medicare
  medicare.gov CMS advertisements PDP marketing)
• November 15, 2005 Enrollment begins
• January 1, 2006 Coverage begins

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Apply for Extra Help Using SSA Application
Extra Help

• Assistance with premium and cost sharing
• Eligibility determined by SSA
• Or by States, but encouraged to use SSA
  application
• States can assist in completing SSA application
• Income and resources are counted
• Some groups are deemed eligible
• Multiple ways to apply
• Can apply as early as May 2005

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Deemed Eligible for Extra Help
Extra Help

• Full-benefit dual eligibles
• SSI recipients
• Medicare Savings Program groups, e.g., QMBs,
  SLMBs, QIs
• All others must file an application for
  low-income assistance

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Extra Help
Extra Help

• Group 1
• Full-benefit dual eligibles with incomes at or
  below 100 Federal poverty level (FPL)
• Group 2
• Full-benefit dual eligibles above 100 of FPL
  QMB, SLMB, QI, SSI-only, or non-dual eligible
  beneficiaries with incomes below 135 FPL and
  limited resources (6,000 per individual and
  9,000 married couple)
• Group 3
• Beneficiaries with incomes below 150 FPL and
  limited resources (11,500 individual and 23,000
  married couple)

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Extra Help
Extra Help
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Federal Poverty Level 2005

• 2005 FPL One Person Couple
• 100 9,570 12,830
• 797.50/mo 1,069.17/mo
• 135 12,919 17,320
• 1,076.58/mo 1,443.37/mo
• 150 14,355 19,245
• 1,196.25/mo 1,603.75/mo
• Levels revised annually in February

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How the Extra Help Works
Extra Help

• CMS notifies PDP or MA-PD of members eligibility
• PDP or MA-PD
• Reduces members premium and cost sharing
• Tracks amounts applied to out-of-pocket threshold
• Reimburses any amount paid in excess

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Medicare Prescription Drug Coverage
Covered Drugs

• Available only by prescription
• Prescription drugs, biologicals, insulin
• Medical supplies associated with injection of
  insulin
• A PDP or MA-PD may not cover all drugs
• Brand name and generic drugs will be in each
  formulary

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Definition of Medicare Prescription Drug

• Includes
• Drug dispensed by Rx
• Insulin associated supplies
• Compounded drugs
• Parenteral nutrition
• Non-Part B Vaccines

• Does NOT Include
• Drugs covered under Medicare Parts A or B
• Those excluded by statute, including
  benzodiazepines, barbiturates, and OTCs
  1927(d)(2)

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Excluded Drugs
Covered Drugs

• Drugs for
• Anorexia, weight loss, or weight gain
• Fertility
• Cosmetic purposes or hair growth
• Symptomatic relief of cough and colds
• Prescription vitamins and mineral products
• Except prenatal vitamins and fluoride
  preparations
• Over the Counter
• Barbiturates
• Benzodiazepines

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Formulary
Covered Drugs

• PDPs and MA-PDs may have a formulary
• CMS will ensure formularies do not discourage
  enrollment among certain groups of people
• Formulary review requirements are posted on the
  cms.hhs.gov/pdps website
• CMS will approve formularies and the therapeutic
  categories upon which the formulary is based in
  advance for plans to complete their bid

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Preferred Drug Formularies
Covered Drugs

• Preferred Drugs have lowest cost sharing
• Subsequent tiers have higher cost sharing in
  ascending order
• CMS will review to identify drug categories that
  may discourage enrollment of certain people with
  Medicare by placing drugs in non-preferred tiers
• Plan must have exceptions procedures for tiered
  formularies

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Formulary Plan Requirements

• Transition plan for moving new enrollees from
  prescribed Medicare prescription drugs not on
  formulary to those that are on formulary
• Access to medically necessary prescription drugs
  to treat all disease states
• Formulary that does not discriminate or
  substantially discourage enrollment by certain
  groups
• Cannot change therapeutic classes and categories
  other than beginning of Plan year

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Formulary Plan Requirements

• Provide 60 day notice to enrollees when drug is
  removed or cost-sharing changes
• Include multiple drugs in each class (at least
  two more in certain circumstances)
• Be developed and reviewed by Pharmacy and
  therapeutic (PT) committee consistent with
  widely used industry best practices
• Majority of committee members must be practicing
  physicians and/or practicing pharmacists

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Formulary Plan Requirements

• Have Benefit Management Tools (e.g., prior
  authorization) that compare with existing drug
  plans to ensure application is clinically
  appropriate
• Medicare Prescription Drug Plans must have
  Electronic Prescription Program capabilities to
• Share information with other pharmacies/physicians
  
• Accept electronically transmitted prescriptions
• Check eligibility, formulary and benefit
  information
• Process refills and order cancellations

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Exceptions Process
Covered Drugs

• Ensures access to medically necessary Medicare
  covered prescription drugs
• Provides process for enrollee to
• Obtain a covered Medicare prescription drug at a
  more favorable cost-sharing level
• Obtain a covered Medicare prescription drug not
  on the formulary

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Exception Procedures
Beneficiary Protections

• Adjudication timeframes A plan must notify an
  enrollee of its determination no later than 24 or
  72 hours as appropriate
• Failure to meet adjudication timeframes Forward
  enrollees request to IRE
• Additional levels of appeal
• Generally, plans are prohibited from requiring
  additional exceptions requests for refills and
  from creating a special formulary tier or other
  cost-sharing requirement applicable only to
  Medicare covered prescription drugs approved
  under the exceptions process during the plan year

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State Pharmacy Assistance Program
Coordination with Insurers

• Provide wrap-around coverage
• Provide same or better coverage and save money
• Reduce state costs or expand population served
• Costs incurred by SPAP are counted toward
  out-of-pocket threshold
• 21 SPAPs received funding to educate their
  enrollees

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Any Willing Pharmacy Requirement

• Plans must contract with any pharmacy that meets
  standard terms conditions
• Standard terms conditions may vary (e.g., by
  geography, type of pharmacy)

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Preferred Pharmacies

• Plans may offer lower cost-sharing at certain
  network pharmacies (preferred pharmacies)
• Any cost-sharing reduction must not increase CMS
  payments to the Drug Benefit Sponsor

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Other Pharmacy Requirements

• Plans must allow enrollees to receive 90-day
  supply of covered Part D drugs at retail pharmacy
• Enrollee is responsible for any higher
  cost-sharing that applies at a retail pharmacy
  vs. a mail-order pharmacy
• Plans must ensure access to out of network
  pharmacies
• Beneficiary will pay out-of-network pharmacy UC
  price

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Other Pharmacy Requirements

• Disclosure of price for equivalents Participating
  network pharmacies MUST
• Disclose the lowest priced generic equivalent
  available at that pharmacy at time of sale
• Unless it IS the lowest priced generic equivalent

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Long Term Care Medicare Prescription Drug
Coverage in Institutions and Our Communities
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Regulatory Access Standards for LTC Pharmacies
(42 CFR 423.120(a)(5))

• LTC facilities are defined as SNFs and medical
  institutions/NFs for which payment is made for an
  institutionalized beneficiary under section
  1902(q)(1)(B) of the Social Security Act
• Plans must demonstrate convenient access to LTC
  pharmacies for beneficiaries in LTC facilities
• Must offer standard contracting terms
  conditions to all LTC pharmacies in service area
• Must contract with any willing pharmacy
• Standard terms and conditions must conform with
  certain performance and service criteria for the
  provision of LTC pharmacy services established by
  CMS in further guidance
• CMS has provided separate guidance (March 2005
  LTC Guidance) regarding how convenient access to
  LTC pharmacies will be assessed

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LTC Guidance LTC Pharmacy Performance and
Service Criteria

• Comprehensive inventory and inventory capacity
• Pharmacy operations and prescription orders
• Special packaging
• IV medications
• Compounding/alternative forms of drug
  compositions
• Pharmacist on-call service
• Delivery service
• Emergency boxes
• Emergency logbooks
• Miscellaneous reports, forms, and prescription
  ordering supplies

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LTC Guidance Convenient Access

• Convenient access to LTC pharmacies for 2006
• Work plan
• Performance and service criteria
• Contracting with any willing pharmacy
• Attestation of convenient access and list of
  network LTC pharmacies by August 1, 2005
• Convenient access in future contract years may
  look at
• Enrollment/disenrollment rates
• Complaints
• Linking beneficiaries to LTC pharmacies to verify
  LTC pharmacy capacity

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LTC Guidance Formulary

• Plans must have a single formulary for all
  enrollees that will provide comprehensive
  coverage
• Plans must cover all (or substantially all) drugs
  in the following drug categories antidepressant,
  antipsychotic, anticonvulsant, anticancer,
  immunosuppressant, and HIV/AIDS
• Plans must establish an appropriate transition
  process for new enrollees
• Procedures for medical review of non-formulary
  drugs
• Procedures for switching enrollees to
  therapeutically equivalent alternatives failing
  affirmative medical necessity determination
• Temporary one-time supply fills recommended
• Documentation of range and circumstances
  impacting transition timeframes
• Other transition methods (e.g., contacting
  enrollees in advance of initial effective date of
  enrollment)

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Long-Term Care Pharmacy

• Drug packaging, labeling, and delivery systems
  for LTC medication use
• Drug delivery service on a routine, timely basis
• Access to Pharmacist on call
• Emergency boxes and log systems
• Standard ordering systems and medication
  inventories
• Drug disposition systems for controlled and
  non-controlled drugs to urgent medications on
  emergency basis
• PDP is responsible for prescription drugs
  provided for a Medicare member not covered under
  Medicare Part A SNF benefit, even a dual-eligible

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LTC Guidance Exceptions Appeals

• We expect plans to consider interrelationship
  between LTC facility, LTC pharmacy, attending
  physician, and relevant laws and regulations in
  establishing grievance, coverage determination,
  and appeals processes
• Part D plans must cover an emergency supply of
  non-formulary Part D drugs for LTC residents as
  part of their transition process when an
  exception is being adjudicated
• Regulations allow an appointed representative to
  act on an individuals behalf

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Protections for People With Medicare
Protections for People With Medicare

• Customer service
• Pharmacy access
• Appeals process
• Medication therapy management
• Generic drug information
• Privacy
• Uniform benefits and premiums
• Formulary protections

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Waiving of Co-Payments

• Pharmacies are permitted to waive or reduce
  cost-sharing amounts provided they do so in an
  unadvertised, non-routine manner
• After determining beneficiary is financially
  needy or after failing to collect the
  cost-sharing portion co-pay may be waived

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For More Information

• Visit www.medicare.gov
• Visit www.cms.hhs.gov
• Visit www.ssa.gov or
• 1-800-772-1213 or 1-800-SSA-1213
• Publications such as
• Medicare You handbook
• Facts About Medicare Prescription Drug Plans
• 1-800-MEDICARE
• SHIP 1-800-243-3425

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CMS Contact Information Provider Websites

• Contact Philadelphia Regional Office via your
  Association or contact CMS staff directly
• Jim Hake 215.861.4196
  james.hake_at_cms.hhs.gov MD Medicaid Rep
• Marcia Dashevsky 215.861.4194 or
  marcia.dashevsky_at_cms.hhs.gov Provider Services
• Katherine Nguyen 215.861.4163 or
  Katherine.Nguyen _at_ cms.hhs.gov Provider Services
• Rina Kelly, R.Ph. 218.861.4186 or
  rina.kelley_at_cms.hhs.gov Provider Services
• Tamara McCloy 215.861.4220 or
  tamara.mccloy_at_cms.hhs.gov Medicaid Part D State
  Captain
• PHARMACY WEBSITE www.cms.hhs.gov/medicarereform/p
  harmacy/hottopics.asp
• www.cms.hhs.gov
• www.cms.hhs.gov/providers
• www.cms.hhs.gov/opendoor
• www.cms.hhs.gov/medicarereform
• www.cms.hhs.gov/pdps
• www.cms.hhs.gov/medlearn/matters/