Medicare Prescription Drug Benefit: Part D

1. Medicare Prescription Drug Benefit: Part D Health & Disability Advocates Stephanie Altman, J.D. 312-223-9600 Ext. 15 www.hdadvocates.org www.makemedicarework.org

2. Drug Options for Medicare Consumers in 2006 • Three ways for Medicare Consumers to get Prescription Drugs: • Employer-sponsored retiree or union health plans. • $88 billion in incentives for employers to keep providing benefits. • Medicare Part D: Prescription Drug Plans (PDP). • Medicare Advantage plans with drug coverage.

3. Medicare Part D Drug Coverage: Basics • Starting in January of 2006, many Medicare Consumers will get their drugs through the Part D Prescription Drug Benefit. • Medicare Consumers must identify, select and enroll in a private Prescription Drug Plan (PDP) before December 31, 2005. • Plans contract with Medicare to provide drug benefit by regions (must be at least state-wide). 17 PDPs and 11 MA-PDs have been approved in Illinois. • Each plan negotiates its own prices and decides which drugs will be offered. • Low-income consumers on Medicaid will be auto-enrolled in one of the basic plans if they do not select a plan before December 31, 2005.

4. Medicare Part D: Basics • There is a penalty if you don’t enroll when first eligible • for most existing Medicare consumers sign up is between Nov 15, 2005 and May 15, 2006 • exception: if beneficiary has coverage that is “creditable” (at least equivalent to Part D) from retiree plans offered by employers or unions or covered by their employer if still working. • Employers or unions must send enrollees notice of whether their retiree/employee plan is creditable by November 15, 2005.

5. Medicare Part DDrug Plans and Their Formularies • Formulary and Plan Finder is on CMS website at www.cms.hhs.gov • PDPs are required to carry at least two drugs for each of the 209 drug therapy categories. • Should carry majority of six classes of drugs —antidepressants, anti-psychotics, anticonvulsants, HIV/AIDS, anti-neoplastics, immunosuppressants. • PDPs can change drug formulary at any time with 60 days written notice to enrollees or sooner if drug is provided in interim. • Some pain killers will not be provided by any PDP — including Benzodiazepines, Valium, Xanax but still provided under Medicaid and Illinois Cares Rx Plus.

6. Medicare Part D: PDP Benefit Management “Tools” • Plans can control costs by using various tools to steer enrollees to less costly formulary drugs • Tiered co-payments • Different cost-sharing for brand vs. generics • Can require enrollee to pay 100% of cost • Generic substitutions • Prior approval/Prior authorization • However, there are limitations on benefit management tools that can be used if an enrollee has previously been taking medications in the six classes of protected drugs. • There are also guidelines for pharmaceutical transition procedures for persons who are on Medicaid or on a specific drug regimen prior to enrolling in a Medicare PDP.

7. Medicare Part D: Formulary “Exceptions” • Process for PDP to pay for non-formulary drug • Prescribing doctor determines that any formulary drug not as effective, adverse effects, or both • Process to get prescribed drug at lower tier with lower co-pay • Prescribing doctor determines lower-tiered drug not as effective, adverse effects or both • ONLY ALLOWED ONE EXCEPTION PER DRUG • These are the regulatory guidelines but each PDP may have a separate exceptions procedure if it meets the regulatory guidance.

8. PART D---BASIC COVERAGE The actual PDP plans look different from the standard coverage.The standard coverage is below: • Individual pays premium. • Individual pays first $250 of drug costs (deductible) • Individual pays 25% of costs between $250 and $2250 ($500) • Individual pays 100% of costs between $2250-$5100 ($2850): the “donut hole” • Individual pays 5% of costs over $5100. • State Pharmacy programs and Patient Assistance Programs can help pay for costs and those payments will count towards the individual’s “true out of pocket costs” to meet catastrophic limit. However, ADAP program payments do not count towards TrOOP.

9. Medicare Part D:“extra help” • Designed to help pay for cost sharing of basic benefit. Also called the Low-Income Subsidy. • Full extra help & Partial extra help • Full extra help: Pays for everything except small co-pay • Partial extra help: Pays for some of the cost sharing and expenses during donut hole • Some consumers will automatically get extra help; others will need to apply – depending upon income level and eligibility for Medicaid or the Medicare Savings Programs.

10. Part D Full Benefit Eligibles—Auto-Enrollment in Extra Help • Certain “categories” of individuals will be automatically enrolled in the full extra help program. • These individuals include those enrolled in Medicaid (including a Medicaid Buy-In) or a Medicare Savings Program (QMB, SLIB, QI-1). • Although auto-enrolled for extra help, these individuals will still need to sign up for a PDP or they will be assigned to a PDP by December 31, 2005 if on Medicaid or have enrollment facilitated by May 15, 2006 if only on a Medicare Savings Program.

11. Medicare Part D extra help---Application Required for All Others Partial extra help No extra help Full extra help • Income – 150% & Above FPL Income- Up to 135% FPL Assets -$6000/individual $9000/couple • Income – 135 -149% FPL • Assets - $10,000/individual • $20,000/couple • Sliding scale premium assistance • $50 deductible • No Doughnut Hole • 15% Co-Insurance up to $3,600 OOP ($2/5 co-pay above) Not Eligible for extra help • Premium assistance • No deductible • No doughnut hole • $2/5 co-pay – up to $3,600 OOP ($1/$3 if under 100% FPL and no co-pay for LTC)

12. Extra help – How to Apply • Social Security responsible for enrolling in the “extra help” program • Sent letters to those that are expected to be eligible beginning in June, 2005. • Many ways to enroll – written application, on-line, phone • Local DHS offices must also accept extra help applications and process them if requested by applicant (See DHS Policy Memo) • CMS responsible for helping people enroll in Part D plans • As well as handling auto-enrollment for extra help and in Part D for dual eligibles and MSP enrollees • CMS and SSA are sharing data information with the States on auto-enrollment of dual-eligibles; spenddown population; and MSP enrollees. Should be able to look up enrollment at SSA but, if in doubt, apply for extra help.

13. Proposed Rules ― “extra help”:Appeals Process • Initial Determination (60 days to appeal) • Hearing Conducted by Phone unless applicant does not want phone conference and then case review only (can present evidence and be represented - 60 days to appeal) • Appeal to Federal District Court • DHS Appeal Process applies for those applications processed by the State.

14. STATE WRAP AROUND PROGRAMS: What Happens to SeniorCare and CircuitBreaker? • New legislation created Illinois Cares Rx Basic and Plus. • Illinois will coordinate the state program with a subset of available prescription drug plans and MA-PDs. • All current enrollees will be enrolled in new program but must enroll in a prescription drug plan that has signed a coordination agreement with Illinois to receive full wrap around benefits and must apply for extra help. • Illinois will send notice to all current enrollees telling them which PDPs to choose from; to apply for extra help; and to provide asset information to allow state to apply for extra help on their behalf if need be. • Costs will stay almost the same. • Formularies may be different because they correlate with the formulary in the PDP. • Remember: Non-Medicare beneficiaries will have no change in benefits.

15. What is Illinois Cares Rx? • Helps to pay for Medicare Part D for individuals over age 65 or under age 65 and disabled and under 225% FPL. • Pays cost-sharing if person is not eligible for extra help or if extra help does not cover all expenses. • Plus plan replaces SeniorCare and pays for PDP drugs only and non-formulary drugs such as Bezodiazepines and Basic plan replaces CircuitBreaker and pays for 10 classes of PDP drugs only (cardiovascular and diabetes drugs are included.) • Rules have not been issued yet.

16. Illinois Cares Rx Basic and Plus Specifics • State pays for basic premium, deductible, and drug costs except for co-pays up to $1,750 a year. Then the enrollee pays 20% of drug costs between $1,750-$5,100 and 5% of drug costs after $5,100. • Co-pays remain $2 for generic and $5 for brand name. • State will coordinate coverage with a subset of PDPs and auto-enroll Illinois Cares Rx recipients in a coordinated PDP by December 31, 2005 if CMS grants approval. • State will apply for extra help for Illinois Cares Rx recipients throughout 2006.

17. Medicare Part D Implementation Important Timelines • May to August 2005 – Extra help applications will be sent to potentially eligible individuals by the Social Security Administration. • June 2005 – Notices will be mailed to dual eligibles and individuals in MSPs to inform them they are eligible for extra help and will be automatically enrolled. • October 15th – All Medicare recipients will receive information on drug plans available in their area. • November 15th – Medicare recipients can enroll in a PDP and retirees must receive notice of creditable coverage. • January 1, 2006 – Part D Begins and Dual Eligibles automatically enrolled • May 15, 2006 – Last Day to Enroll without Penalty unless have creditable coverage and MSP facilitated enrollment.