Region III State Agency Directors Meeting

1. Region III State Agency Directors Meeting James Hake Rosemary Feild CMS Region III July 28, 2005 CMS Presentation to MD Medicaid Advisory Committee

2. Overview Medicare Prescription Drug Coverage • 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 CMS Presentation to MD Medicaid Advisory Committee

3. PDP and MA-PD Regional Plans RegionPDP MA-PD • Five DE, DC, MD DE, DC, MD • Six PA, WV PA, WV • Seven VA VA, NC CMS Presentation to MD Medicaid Advisory Committee

4. Overview Medicare Prescription Drug Plans • 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 CMS Presentation to MD Medicaid Advisory Committee

5. 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 CMS Presentation to MD Medicaid Advisory Committee

6. StandardBenefit 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 $250 $750 $3600 TrOOP 15% Plan Pays 5% Coinsurance CMS Presentation to MD Medicaid Advisory Committee

7. 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) CMS Presentation to MD Medicaid Advisory Committee

8. What Payments Don’t 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 CMS Presentation to MD Medicaid Advisory Committee

9. 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 CMS Presentation to MD Medicaid Advisory Committee

10. Eligibility and Enrollment Eligibility and Enrollment • Entitled to Part A and/or enrolled in Part B • Reside in plan’s service area • Must enroll in a Medicare prescription drug plan to get Medicare prescription drug coverage CMS Presentation to MD Medicaid Advisory Committee

11. Eligibility and Enrollment Enrollment Periods • 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) CMS Presentation to MD Medicaid Advisory Committee

12. Eligibility and Enrollment Special Enrollment Period • 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 CMS Presentation to MD Medicaid Advisory Committee

13. Eligibility and Enrollment Postponing 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 CMS Presentation to MD Medicaid Advisory Committee

14. Eligibility and Enrollment Possible Examples of Coverage at Least as Good as Medicare’s • 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 CMS Presentation to MD Medicaid Advisory Committee

15. Eligibility and Enrollment Enrolling in a Plan • 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 CMS Presentation to MD Medicaid Advisory Committee

16. The Prescription Drug Plan Finder Tool The Prescription Drug Plan Finder ToolWill: • Only be accessible throughwww.medicare.gov. • Provide plan cost, drug pricing and pharmacy network information for all PDPs and MA-PDs • Provide ranking of plan’s net cost based on beneficiary’s location, income level, drugs, and pharmacy selection • Update pricing information weekly • Live October 13, 2005 • Demo webcast 8/2 @ 1 PM CMS Presentation to MD Medicaid Advisory Committee

17. Eligibility and Enrollment Dual Eligible Coverage Under Part D • 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. CMS Presentation to MD Medicaid Advisory Committee

18. Eligibility and Enrollment Auto-Enrollment(can change plans any time) • 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 CMS Presentation to MD Medicaid Advisory Committee

19. Eligibility and Enrollment Facilitated 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 CMS Presentation to MD Medicaid Advisory Committee

20. 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 CMS Presentation to MD Medicaid Advisory Committee

21. Extra Help Apply for Extra Help Using SSA Application • 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 CMS Presentation to MD Medicaid Advisory Committee

22. Extra Help Deemed Eligible for 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 CMS Presentation to MD Medicaid Advisory Committee

23. 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) CMS Presentation to MD Medicaid Advisory Committee

24. Extra Help Extra Help CMS Presentation to MD Medicaid Advisory Committee

25. Federal Poverty Level – 2005* • 2005 FPLOne PersonCouple • 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 CMS Presentation to MD Medicaid Advisory Committee

26. Extra Help How the Extra Help Works • CMS notifies PDP or MA-PD of member’s eligibility • PDP or MA-PD • Reduces member’s premium and cost sharing • Tracks amounts applied to out-of-pocket threshold • Reimburses any amount paid in excess CMS Presentation to MD Medicaid Advisory Committee

27. Covered Drugs Medicare Prescription Drug Coverage • 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 CMS Presentation to MD Medicaid Advisory Committee

28. Includes Drug dispensed by Rx Insulin & associated supplies Compounded drugs Parenteral nutrition Non-Part B Vaccines Definition of Medicare Prescription Drug Does NOT Include • Drugs covered under Medicare Parts A or B • Those excluded by statute, including benzodiazepines, barbiturates, and OTCs [1927(d)(2)] CMS Presentation to MD Medicaid Advisory Committee

29. Covered Drugs Excluded 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 CMS Presentation to MD Medicaid Advisory Committee

30. Covered Drugs Formulary • 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 CMS Presentation to MD Medicaid Advisory Committee

31. Covered Drugs Preferred Drug Formularies • 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 CMS Presentation to MD Medicaid Advisory Committee

32. 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 CMS Presentation to MD Medicaid Advisory Committee

33. 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 (P&T) committee consistent with widely used industry best practices • Majority of committee members must be practicing physicians and/or practicing pharmacists CMS Presentation to MD Medicaid Advisory Committee

34. 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 CMS Presentation to MD Medicaid Advisory Committee

35. Covered Drugs Exceptions Process • 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 CMS Presentation to MD Medicaid Advisory Committee

36. Beneficiary Protections Exception Procedures • 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 enrollee’s 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 CMS Presentation to MD Medicaid Advisory Committee

37. Coordination with Insurers State Pharmacy Assistance Program • 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 CMS Presentation to MD Medicaid Advisory Committee

38. 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) CMS Presentation to MD Medicaid Advisory Committee

39. 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 CMS Presentation to MD Medicaid Advisory Committee

40. 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 U&C price CMS Presentation to MD Medicaid Advisory Committee

41. 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 CMS Presentation to MD Medicaid Advisory Committee

42. Long Term Care: Medicare Prescription Drug Coverage in Institutions and Our Communities CMS Presentation to MD Medicaid Advisory Committee

43. 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 CMS Presentation to MD Medicaid Advisory Committee

44. 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 CMS Presentation to MD Medicaid Advisory Committee

45. 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 CMS Presentation to MD Medicaid Advisory Committee

46. 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) CMS Presentation to MD Medicaid Advisory Committee

47. 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 CMS Presentation to MD Medicaid Advisory Committee

48. 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 individual’s behalf CMS Presentation to MD Medicaid Advisory Committee

49. 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 CMS Presentation to MD Medicaid Advisory Committee

50. 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 CMS Presentation to MD Medicaid Advisory Committee