March 16, 2005 12:00noon -1:30pm EST

1. Medicare Part D: CriticalUpdates for Infusion ProvidersA National Home Infusion Association AudioconferenceSponsored by Innovatix, LLC March 16, 2005 12:00noon -1:30pm EST

2. Lorrie Kline Kaplan NHIA Executive Director Bruce Rodman NHIA Director of Health Information Policy Alan Parver Counsel to NHIA , Powell Goldstein LLP Dan Boston Exec. VP & Partner, Health Policy Source Presenters 2

3. Aggressive advocacy: FIX THE PROBLEMS Work with CMS, Congress, the Administration, Part D, and MA plans Education and information on the benefit as written Prepare providers to make sound business decisions regarding participation in the program Assist Part D plans in understanding distinct issues associated with home infusion Medicare Part D: Two pathways of activity right now for our community 3

4. “Only specialized infusion pharmacies can provide home infusion therapies” Part D plans must demonstrate that they provide access to home infusion pharmacies Part D plans can establish distinct quality standards for home infusion drugs for the protection of beneficiaries Medicare Part D: Positive Components for Home Infusion 4

5. Part D plans can negotiate different dispensing fees or drug reimbursement to reflect increased costs of providing infusion therapies Significant problems remain for home infusion—no precedent for most aspects of the plan Medicare Part D: Positive Components for Home Infusion 5

6. Home Infusion Under Part D 6

7. Two Types Of Plans Available: Stand-Alone Coverage Of Part D Drugs a/k/a Prescription Drug Plans (PDPs) Standard Coverage Or Actuarial Equivalent Most Medicare Advantage (Part C) Plans Must Offer Part D Benefit To Members a/k/a Medicare Advantage – Prescription Drug Plans (MA-PD Plans) Part D Prescription Drug Plans 7

8. Plans compete based on premiums and negotiated drug prices At least 2 plans per region (34 regions) At least 1 must be a stand-alone PDP No limit on number of approved plans Part DPlans 8

10. Standard Benefit 2006 Out-of-pocket Threshold Catastrophic Coverage Total Spending $250 $2250 $5100 Coverage Gap (“Donut Hole” 75% Plan Pays $ + Deductible ≈ 95% 25% Coinsurance Total Beneficiary Out-Of-Pocket $250 $750 $3600 TrOOP 15% Plan Pays 5% Coinsurance Direct Subsidy/ Beneficiary Premium Beneficiary Liability Medicare Pays Reinsurance

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12. Part D benefits beyond basic or standard coverage; can be offered by enhanced alternative plans in 2 forms Reduced cost-sharing (reduced premiums, coinsurance/ copays, and/or deductibles and/or an increase in the initial coverage limit) Coverage of non-Part D drugs Coverage of supplies, equipment, services for home infusion Enhanced Alternative Benefits 12

13. Home infusion is part of the medical benefit for most Medicare managed care (MA) plans How does Part D affect current programs? Will home infusion drugs be subject to donut hole? Standard benefit –likely Enhanced alternative—not necessarily MA-PD Issues/Considerations 13

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15. Who is eligible? Medicare-Medicaid dual-eligibles Part D enrollees with income < 135% FPL Up to $12,569 (2004) and assets <$6,000 for individuals Part D enrollees with incomes 135-150% FPL $12,569 -$13,965 (2004) and assets <$10,000 Low Income Subsidies 15

16. Dual-eligibles Auto-enrollment Medicaid will no longer cover drugs for dual-eligibles Major concerns for long-term care providers or others with high Medicaid % Special Issues for Medicaid and Low-Income Enrollees 16

17. Home Infusion Coverage: Generally Stated 17

18. Not covered: Enteral nutrition Vitamins and minerals added to TPN Heparin when used for flushing Out of formulary without grant of “exception” Home Infusion Coverage: Details 18

19. A drug coverable under Parts A or B as prescribed, administered and dispensed to the patient cannot be paid under Part D Example: If meets DMERC coverage policy, cannot be covered by Part D. Otherwise, it can be covered* Example: If meets Part B Carrier coverage policy for physician AIC, can be covered by Part D if administered in home* Home Infusion Coverage:Parts A/B vs. Part D *Formulary restrictions apply 19

20. According to CMS, payment can include compensation for “reasonable pharmacy costs”, including costs of: Compounding Pharmacist’s time in verifying patient information Performing QA activities associated with preparing the drug Professional services, such as patient counseling, if related to QA activities or to satisfy state pharmacy practice standards Overhead associated with the facility and equipment Home delivery Coverage: The Dispensing Fee 20

21. Different dispensing fee could be established for home infusion pharmacies vs. retail pharmacies PDPs and MA-PDs not supposed to reimburse in the dispensing fee for: Equipment and supplies Care coordination Professional pharmacy services unrelated to dispensing nor compensated through MTMP Nursing visits However… Coverage: Dispensing Fee (2) 21

22. Concept of Part D: market forces set rates No Medicare fee schedules or allowances Drug payment is negotiable Does not have to be ASP-based Dispensing fee is negotiable Both rates must be sufficient to ensure access Coverage: What About Rates? 22

23. CMS: “Enrollees will have access to home infusion services, though they may have to pay for supplies, equipment, and professional services out-of-pocket particularly if they are enrolled in a Part D plan – especially a standalone PDP—and have no source of supplemental coverage” If you participate, must you accept all patients? Probably a contractual issue Are these patients “appropriate for home infusion”? No Secondary Coverage? 23

24. Patients may have secondary coverage for the drug and Part D plans must coordinate with: State Pharmaceutical Assistance Programs (SPAPs) Medicaid programs (including 1115 waiver programs) Group health plans FEHBP plans TRICARE and VA Indian Health Service (IHS) Rural Health Centers Federally Qualified Health Centers Other entities as CMS determines Your Costs for Coordination of Benefits (COB) 24

25. Patients may have secondary coverage for non-drug products and services: Medicare Advantage plan Medicaid programs Group health plans (retiree) FEHBP plans TRICARE and VA IHS Etc. Your Costs for COB (2) 25

26. All Medicare secondary payer rules apply The TrOOP True-Out-Of-Pocket costs = $3,600/yr. Part of the statute After 2006, increases by annual % increase in per capita Part D drug expenditure Your Costs for COB (3) 26

27. Standard Benefit 2006 Out-of-pocket Threshold Catastrophic Coverage Total Spending $250 $2250 $5100 75% Plan Pays Coverage Gap $ + Deductible ≈ 95% 25% Coinsurance Total Beneficiary Out-Of-Pocket $250 $750 $3600 TrOOP 15% Plan Pays 5% Coinsurance Direct Subsidy/ Beneficiary Premium Beneficiary Liability Medicare Pays Reinsurance

28. Adding to complexity even for retail: Secondary and MSP coverage Co-pay % and donut hole depends on TrOOP CMS to online automate/adjudicate secondary payments at point-of-sale & report to Part D plan How much secondary online adjudication occurs now in retail? Your Costs for COB (4) 28

29. Adjustments/recoups given updated status to Part D plan of beneficiary status within TrOOP $3,600 to collect if patient is over indigent thresholds Demonstrating to secondary that you did not get complete Part D payment because: Deductible, co-pay (25%, 5% or whatever), or donut hole Necessary drugs/vitamins not paid for, e.g. heparin for flush Equipment, supplies, nurse visits, professional pharmacy services, care coordination not covered and unlikely you can bill them to demonstrate a denial EOB Likely to be even worse than current DMERC denial situation! How will secondary payers understand all of this to correctly pay your claims? Your Costs for COB (5) 29

30. Insurance Verification Becomes Even More Critical and Complex • You must check for Part D coverage (standard or otherwise), wrap-around, and other coverage • You must be experts at what is coverable under Part B vs. Part D vs. other secondary • You must know what is fully or nearly covered for Medicaid and indigent patients • ALERT: On 1/1/06, dual-eligibles switch to Part D • No drug coverage if you aren’t in the dual eligibles Part D plan network • Transfer them or sign up for Part D is your choice 30

31. Claiming and Coding: NHIA Advocacy • NHIA has fought long and hard for home IV claiming simplification via: • Standardized coding of charge lines on claims • Single consolidated claims include charges for services, supplies, equip and drugs to single primary payer NOT “SPLIT BILLING” • Electronic claiming as path to faster adjudication • X12N 837 professional claiming for your professional medical practice of home infusion • Coverage by medical benefit as has been predominant in private/Medicare for 15+ yrs (drugs and all else) 31

32. HCPCS per diem S-codes now the standard for submitting claims to private payers Infusion providers are lowering DSOs through X12N 837 electronic claiming CMS recognized since early 2003 that home infusion isn’t retail pharmacy: Retail NCPDP claim doesn’t meet home IV claiming requirements X12N 837 required per HIPAA for home IV 1/14/05: HHS Secretary letter affirms 837 for home IV (posted on www.nhianet.org) Claiming and Coding: Achievements 32

33. Claiming and Coding: Part D Rule • CMS again recognizes differences and distinguishes between retail vs. home infusion pharmacies in Part D final rule • CMS requires Part D plans to comply with HIPAA regulations (Part D Rule: 423.50) • This means home IV claims to PDPs and MA-PDs should be submitted via X12N 837 33

34. Claiming and Coding: Issues • The benefit is structured by CMS as primarily a retail prescription drug benefit • Accurate calculation of co-pays at point of sale (TrOOP) requires on-line adjudication • Online adjudication is fundamental and NCPDP is assumed 34

35. Part D plans must “provide adequate access to home infusion pharmacies” No requirement for specialty pharmacies that do not provide home infusion services Part D Networks Must Include Home Infusion Pharmacies 35

36. Part D Pharmacy Networks • CMS deadline to Part D plans to demonstrate they have home infusion networks in place: August 1 • PDPs and MA-PDs can negotiate separate contractual terms for infusion pharmacies 36

37. Any willing pharmacy requirements apply to home infusion BUT: MA-PD plans that own and operate their own pharmacies can apply to waive any willing provider if they can meet access standards Any Willing Pharmacy 37

38. Part D plans may submit their own classification system for CMS review, or… Use USP model guidelines (146 classes) CMS will evaluate to ensure access to medically necessary drugs and no discrimination against any beneficiary groups Formularies 38

39. At least 2 drugs per class Some classes broad2 covered drugs will be inadequate Example: USP category 118,“immunologic agents” includes immune suppressants Immune stimulants Immunomodulators Formularies (2) 39

40. NHIA recommends open formulary for home infusion Rarely if ever used in private sector Pharmacists and other home infusion professionals should be on the P&T cmttee Decisions should reflect other clinical and cost factors Patient factors, supplies, drug delivery device, VAD, dosing schedule, nursing considerations Formularies: Considerations for Part D Plans 40

41. Home infusion patients require additional protections Patients often need to continue the drug initiated in inpatient (or other) stay Need an efficient exceptions process Formularies: Considerations for Part D Plans (2) 41

42. Part D plans can “encourage” enrollees to use mail-order—but can’t require it Differential co-pays for preferred vs. non-preferred pharmacies CMS cannot intervene Part D Plan Use of Mail-Order 42

43. Primarily based on state pharmacy practice act Part D plans can establish additional quality standards for home infusion pharmacies Many state laws are not adequate CMS “encourages plans and their network pharmacy providers to establish and agree upon additional QA standards as necessary, including those required for accreditation.” Quality Standards 43

44. Private plans use accreditation to credential providers (limited exceptions to ensure access) JCAHO, ACHC, CHAP An assessment of the entire patient care process Quality standards coming for Part B home IV suppliers, to be implemented by accreditors Accredited providers cannot provide a lower standard of care for Part D patients Quality Standards 44

45. Designed to optimize therapeutic outcomes for “targeted beneficiaries” by improving medication use, reducing adverse drug events Furnished by pharmacist or other qualified provider (i.e., physician, PBM, etc.) Fees must reflect time and resources requiredto implement program Medication Therapy Management 45

46. MTM (2) • Targeted beneficiaries: • Multiple diseases + • Multiple drugs + • Cost threshold (Likely to incur) 46

47. Important Part D Dates 47

48. A lost opportunity for Medicare cost-savings Fix Part D or find a more appropriate benefit Cover the required services, supplies, equipment Drug-only coverage not meaningful! New home IVIG benefit is a perfect example Adopt prevailing quality standards Educate plans on home infusion under Part D NHIA Advocacy Areas 48

49. Grassroots campaign Letter writing, key member contacts, fly-ins NHIA Legislative Defense Fund ensures vigorous representation for NHIA members (legislative and regulatory) Per Diem Cost Study with Abt Associates July 2005 completion date Contact us for more information NHIA Advocacy Activities 49

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