Medicare Part D

1. Medicare Part D Elena Chan PharmD candidate, UCSF Tiffany Jew PharmD, MBA candidate, USC

2. Overview • Background on Medicare • The MMA • Medicare Part D • Enrollment/Eligibility • Coverage • Benefit Design • Formulary • Coordination of Care • Medication Therapy Management

3. Background on Medicare • Medicare is health insurance for Americans: • 65 years or older • Younger than 65 with disabilities or end-stage renal disease • 2 types of Medicare Coverage: • Original Medicare Plan • Medicare Advantage

4. Original Medicare Plan Medicare Part D Prescription Drug Plan + + • Automatically enrolled in original plan unless you enroll in Medicare Advantage • Fee for service plan -- just present your Medicare card • Monthly premiums for Part A+B depends on income and if you paid Medicare taxes: • Part A premium usually $0 • Part B premium no more than $161/month

5. Medicare Advantage Medicare Part D Prescription Drug Plan + • Provide the same Part A and Part B coverage but may have extra benefits like dental, eye, or prescription drug plans • Premiums differ by plan • Have to stay “in network” as determined by HMO or PPO

6. Medicare Modernization Act (MMA) • Signed into law Dec 2003 • “Medicare Part D” was added • Voluntary out-patient prescription drug plan to begin Jan 2006 • Can be added to Medicare (original and Advantage)

7. Part A Coverage • Inpatient/hospital charges • “Medically necessary” - anything needed to diagnose or treat a condition • Critical care • SNF’s, but not LTC • Home health • Hospice • Blood

8. Part B Coverage • Ambulatory/Outpatient Care • Medically necessary • Ambulance, blood, am care surg, lab tests, MD services, DME, ER, dialysis, mental health • Medicare-covered preventatives: lab tests, screenings, vaccinations to help diagnose or prevent disease • Some drugs covered: immunosuppressants, clotting factors for hemophilia, some vaccines, erythropoetin…

9. Part C Coverage • Also known as Medicare Advantage • Combines the coverage of part A and B, but like an HMO or PPO

10. Part D Coverage • Adding Rx Drug Benefit to Original Medicare • Adding Rx Drug Benefit to Medicare Advantage (MA): • May already be included in MA • Administered by private plans that are reimbursed by CMS • Formularies are 1st reviewed by CMS • Covers drugs in the most commonly used therapeutic classes • Most generics covered • Doesn’t cover drugs already paid by Part A and B

11. Part D Eligibility and Enrollment • Anyone who qualifies for Medicare can get part D • Optional to enroll, but if you do not enroll when you are first eligible you pay a penalty if you sign up later • 2 ways to get Part D: • Join Medicare Prescription Drug Plan • Join Medicare Advantage that includes a drug plan

12. Part D Benefit Design Total out of pocket costs before catastrophic coverage = $4150

13. An example of Benefit Design

14. Medicare Part D Requirements • Since Part D benefits administered by private companies, CMS requires the following for reimbursement: • Formulary must cover 146 therapeutic categories commonly used by this population as determined by CMS • Formulary must cover at least 2 drugs in each of these 146 therapeutic classes • Except: must cover all or almost all antidepressants, antipsychotics, anticonvulsants, anticancer, immunosuppressants, and HIV/AIDS meds • If generic available, it must be on formulary • All rebates must go back to the payer • Prior authorizations, step-therapy, generic sub, preferred brands OK • CMS must review and approve all formularies in advance

15. Some Common Formulary Restrictions • Prior Authorization: doctor must show that the medication is medically necessary before it is covered • Quantity limits: limits how many pills you can get at a time • Step therapy: one or more lower cost drugs must be tried before step-up therapy drug is covered • Non-Formulary Drugs: BZD’s, barbiturates, weight loss/gain drugs, erectile dysfunction meds, cough/cold meds, OTC’s, fertility drugs…

16. Formulary Tier Copays

17. Coordination of Care • What if a person has coverage other than Medicare? • Medicaid: state benefit • Dual eligibility- Medicare beneficiary currently receiving Medicaid benefits • Medicaid drug coverage for Medicare eligibles terminated December 31, 2005 • Auto-enrolled into qualifying plans October 2005

18. Coordination of Care • Third Party Insurance • Any other insurance will kick in before Medicare is charged Other insurers: -FEHBP (Federal Employee Health Benefits Program), VA, TRICARE (active duty service, retirees, family), Medigap

19. MediGap • In original medicare plan, fills in gaps in coverage for part A and B • Can’t have drug coverage from both MediGap and Medicare Part D coverage- one must be removed • MediGap coverage is not as good as Medicare Part D for drug coverage • Under Medicare Advantage, MediGap won’t work- doesn’t pay deductibles, copays/coinsurance

20. Medication Therapy Management • MMA requires that Part D plans have an MTM program • Clinician (pharmacist) reviews patients’ medication therapy • Focus on patients with chronic diseases or on a multitude of Part D medications • CMS allows for MTM reimbursement • Benefits include optimization of therapy, improved outcomes, and close monitoring of side effects

21. Conclusion • Enroll in Medicare Part D if: • You have Medicare but do not have prescription drug benefits • You qualify for limited income assistance • You spend a lot on prescription drugs • Enroll by Dec 8th for coverage beginning Jan 1st; there are late enrollment penalties • Research the different options available to you • Part D as well as most drug benefits are subject to change year to year

22. Additional Resources • www.medicare.gov • www.healthdecisions.org/guide • www.partdoptimizer.com • www.medicare.gov/medicarereform/local-plans-2007.asp