The Medicare Prescription Drug Benefit Program Medicare Part D P & T Committee Meeting

1. The Medicare Prescription Drug Benefit Program Medicare Part D P & T Committee Meeting Virginia Department of Medical Assistance Services August 31, 2005

2. Medicare Prescription Drug Benefit • Help with premiums or deductibles for those with limited means • Choice of at least two drug plans in each region • Available to those living in nursing facilities • Required for those who have both full Medicaid and Medicare benefits

3. Medicare Prescription Drug Coverage • Available for all people with Medicare • Coverage begins January 1, 2006 • Provided through: • Prescription drug plans (PDPs) • Medicare Advantage Plans (MA-PDs) • Some employers and unions to retirees • Most enrollees will have cost sharing obligations; subsidies available for low-income individuals

4. PDP and PPO Regional Plans RegionPDP PPO • Five DE, DC, MD DE, DC, MD • Six PA, WV PA, WV • Seven VA VA, NC

5. Medicare Prescription Drug Plans • Must offer basic drug benefit • May offer supplemental benefits • Can be flexible in benefit design • Must follow marketing guidelines

6. Standard Prescription Drug Coverage under Part D • $32 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

7. What Payments Count Towards True Out of Pocket (TrOOP) • In addition to the beneficiary, payments counting towards TrOOP may be made by: • Another individual (e.g., a family member of friend) • A bona fide charity, or • A Personal Health Savings Vehicle, Flexible Spending Account, Health Savings Accounts, and Medical Savings Accounts

8. 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

9. 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)

10. 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

11. Possible Examples of Coverage at Least as Good as Medicare Part D * • Coverage under a PDP or MA-PD • Some Group Health Plans (GHP) • VA coverage • Military coverage including TRICARE • The source of the current drug coverage is required to send a notice advising if coverage is at least as good as Medicare Part D.

12. Enrolling in a Plan • Medicare & You 2006 handbook • Prescription drug plans available in the area • Contact the plan to enroll • 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 AAA/VICAP

13. Auto-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 can change plans any time

14. 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 who are QMBs, SLMBs, QIs, SSI-only, and those who apply and are determined eligible for the extra help • Coverage effective June 1, 2006

15. Extra Help for Beneficiaries < 150% FPL • Group 1 • Full-benefit dual eligibles with incomes at or below 100% of 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 ($10,000 individual and $20,000 married couple)

16. Extra Help

17. How Can Persons Find Out If They Qualify For “Extra Help?” • Medicare beneficiaries apply to the Social Security Administration (SSA) • Scannable application (mail or in-person) • Calling SSA toll-free (1-800-772-1213) • Over the internet (www.ssa.gov) • “Qualifier Tool” • Local DSS assist with application and will determine eligibility if the applicant insists

18. Medicare Prescription Drug Coverage • Available only by prescription • Prescription drugs, biologicals, insulin • Medical supplies associated with injection of insulin • Brand name and generic drugs will be in each formulary • Drugs not covered: • Drugs excluded by MMA law • Non-prescription drugs • Drugs that are covered for a person under Medicare Part A or Part B

19. 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

20. Formulary • PDPs and MA-PDs may have a formulary • Tiered Formularies - Preferred Drug Levels • CMS will ensure formularies do not discourage enrollment among certain groups of people • CMS will approve formularies and the therapeutic categories upon which the formulary is based in advance for plans to complete their bid

21. Formulary 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

22. Formulary Requirements • Must include all or substantially all drugs in six categories: • Antipsychotic • Antidepressant • Anticonvulsant • Anticancer • Immunosuppressant • HIV/AIDS • Issues: • Extended release and varied dosages • Exclude either escitalopram or citalopram

23. Network Pharmacy Access • Retail Pharmacy Access • Home Infusion Pharmacy Access • Long-Term Care Pharmacy Access • Any Willing Pharmacy Requirements • Preferred and Non-Preferred Pharmacies

24. 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

25. 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 2006 handbook • Facts About Medicare Prescription Drug Plans • 1-800-MEDICARE • VICAP– 1-800-552-3402

26. Administrative/Operational Implications for Virginia • Local Departments of Social Services (LDSSs) have significant new responsibilities related to “Extra Help” program • There are also implications for DMAS: • Assist transition of “dual eligibles” to Part D • Provide monthly data to federal government • Handle increased telephone inquiries from “duals” • Provide “coordination of benefits” information • Conduct additional appeal hearings related to “extra help” determinations

27. States Must Pay A Significant Portion of The Part D Drug Benefit • Phased-Down State Contribution “Clawback” • States are required to help finance Medicare Part D by paying the federal government the state share of the cost of prescription drug coverage for “dual eligibles” • State share is set at 90% of costs for 2006 and decreases to 75% by 2015