2009 Updates to Medicare Part D

2009 Updates to Medicare Part D By Carly J. Paoli, MPH 13 March 2009 Managed Care Rotation Pro Pharma

Objectives Review Medicare as a health plan How does Part D fit in? What does(n’t) Part D cover? Who are dual eligibles? What is LIS? Explain the Updates Predict the impact of the changes

What is Medicare? A public health insurance program administered by the US government Eligible participants: US citizens or permanent legal residents (≥5 continuous years in the US) 65 years or older (or those who are disabled) Who receive social security

Parts to Medicare Part A Hospital care No additional fees Part B Medical care Optional coverage Premium taken out of SS check Part C Gap care (e.g Medicare Advantage) Optional coverage Additional fees according to the plan selected Part D Prescription drug coverage Optional coverage Fees vary according to the plan

Part D • Enacted as part of the Medicare Prescription Drug, Improvement and Modernization Act (MMA) in 2003 • Went into effect on 1/1/2006 • Paid for by the US government but administered by private plans through subsidies • Patients ca choose either: • A stand alone prescription drug plan (PDP) OR • A Medicare Advantage prescription drug (MA-PD) plan that would package their Part D benefits into their pre-existing Medicare Advantage plan (Part C)

Part D • Covers prescription medications according to each plan’s formulary • Part D has some excluded drugs that no plan will be reimbursed for • Part D does not cover drugs that are already covered by Part B • Some vaccines (e.g influenza & pneumoccocal) • Home infusion drugs (e.g. morphine & anti-biotic infusions)

Timeline • October 1, 2008 • Medicare Part D prescription drug plan marketing activities can begin • November 15 to December 31, 2008: • Annual Coordinated Election Period • January 1, 2009: • 2009 Medicare Part D plan becomes effective • January 1 to March 31, 2009 • Coordinating Special Enrollment Period (or SEP) • This special period is available for those people who enrolled into a Medicare Advantage Plan with Prescription Drug coverage (MA-PDs) and now wish to disenroll back to original Medicare coverage and a Prescription Drug Plan

95% Catastrophic Benefit Drug Costs 5% Over $6,153.75 $2,700.01 - $6,153.75 $295.01 - $2,700 $.01 - $295 Part D Standard Benefit No Extra Help (LIS) Beneficiary Costs Part D Plan 100% 25% 75% $295 Deductible Monthly Premium

Part D Standard Benefit Design Parameters 2006200720082009 Deductible $250 $265 $275 $295 Initial Coverage Limit $2250 $2400 $2510 $2700 Total Covered Part D Drug Out-of-Pocket Spending including the Coverage Gap $5100 $5451 $5726 $6153 Out-of-Pocket Threshold $3600 $3850 $4050 $4350 Catastrophic Coverage Benefit: Generic/Preferred Multi-Source Drug $2.00 $2.15 $2.25 $2.40 Other Drugs $5.00 $5.35 $5.60 $6.00

Dual Eligibles

Low Income Subsidy (LIS)

Catastrophic Benefit Drug Costs Over $6,153.75 Co-Pays $60.01- $6,153.75 $.01 -$60 • Part D Partial Extra Help (LIS) • Lower Premiums • Lower Deductible • Lower Coinsurance • No Doughnut Hole Beneficiary Costs Part D Plan 15% 85% $60 Deductible Sliding Scale Premiums will vary

Facilities with Exceptions • Patients who are covered under the VA, Indian Health Services and other state programs should not to switch to Medicare Part D • It is usually best for the patient to keep these benefits as long as he/she still qualifies b/c the coverage is typically better • It is possible to have both benefits at the same time • If that patient ever needs Medicare Part D in the future, he/she will not be penalized if signing up late

Compliance • As part of the MMA, all Part D plans are mandated to provide Medication Therapy Management (MTM) programs • MTM services do not have to be offered to all members but do have to offered to those members who have: • Multiple chronic diseases • Multiple covered Part D medications • Likelihood of incurring annual costs exceeding $4,000 for covered part D drugs

2009 Updates • Dual eligibles have fewer choices of plans in which premiums are fully subsidized • Down from nine plans in 2008 to six in 2009 • Many plans have raised their monthly premiums • 80% of beneficiaries in standalone PDPs • Whereas 94% of beneficiaries in gap plans will see no change or a decrease in premiums • Beneficiaries whose income or assets are just above the limit for the LIS will likely face high out-of-pocket prescription costs in relation to their income • Because they have to pay the regular fee structure

2009 Updates • MIPPA (Medicare Improvements for Patients and Providers Act) 2008 • Delays implementation of AMP until 9/09 • Prohibits and limits certain sales and marketing activities by Part C & D plans • Prohibits an increase in monthly premiums for LIS beneficiaries due to late enrollment • Medicare Enrollment Assistance • Permits coverage of barbiturates and benzodiazepines for treatment of epilepsy, cancer, or chronic mental health disorder as of 1/1/13

Impact • We have yet to see the impact of the increasing costs of Medicare Part D this year but as many have forecasted there may be an undue burden upon beneficiaries who do not meet LIS cut-offs • Despite increasing costs, a Harris Interactive Poll recently found that 87% of seniors were happy with their plans in 2008 • Up from 75% in 2007

References http://www.medicare-partd.com/PartD-The-2009-Medicare-Part-D-Outlook.php#M6CC9BD6CD06945999559DF5AF3438C35 www.medicare.gov www.medicare.com www.cms.gov http://209.85.173.132/search?q=cache:7nyHyThfDKEJ:www.dhs.state.mn.us/main/idcplg%3FIdcService%3DGET_FILE%26RevisionSelectionMethod%3DLatestReleased%26Rendition%3DPrimary%26allowInterrupt%3D1%26dDocName%3Ddhs16_143247+medicare+part+d+2009+updates&cd=2&hl=en&ct=clnk&gl=us http://www.pharmacist.com/AM/Template.cfm?Section=Issues&CONTENTID=16988&TEMPLATE=/CM/ContentDisplay.cfm http://www.avalerehealth.net/wm/show.php?c=1&id=796 http://www.piperreport.com/archives/2007/07/pharmaceutical_pricing_new_federal_rules_on_average_manufacturer_price_and.html http://www.sbsun.com/pointofview/ci_11890564

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2009 Updates to Medicare Part D