Health Care Reform & Medicare: The Basics (and a little more)

1. Health Care Reform & Medicare: The Basics (and a little more) Leslie Fried, Esq. ABA Commission on Law & Aging Leslie Fried, ABA Commission on Law & Aging

2. Brief Legislative History of Patient Protection & Affordable Care Act of 2010 • Over a year of various proposals and debate • Senate passed it on December 24, 2009 • House passed Senate version 3/21/10 • President signed into law, 3/23/10 • House passed Reconciliation bill and sent to Senate on 3/21/10 • Senate made a couple of changes, sent back to House, which passed it again on 3/25/10 • President signed the reconciliation into law 3/30/10 Leslie Fried, ABA Commission on Law & Aging

3. 2010 & 2011: Medicare Overview • Part D: Rebate (2010) and beginning gradual closure of the coverage gap (2011) • Annual wellness visit and personalized prevention assessment plan; eliminate cost sharing on some preventive services (2011) • Restructure payments to Medicare Advantage (MA) plans (2011) • Reduce market basket updates to institutional providers, including nursing facilities (2010) • Establish new Center for Innovation (2011) Leslie Fried, ABA Commission on Law & Aging

4. Part D: Phased in subsidies of the coverage gap Leslie Fried, ABA Commission on Law & Aging • Phased in subsidies in the coverage gap • 2010 only - $250 rebate • 2011-2020 - phased in subsidies • Generic drugs: government subsidy 7% in 2011 increases to 75% by 2020. • Brand drugs: • 50 percent discount from pharmaceutical manufacturers beginning 2011. • 2013-2020 - government subsidy of 2.5% in 2013 increases to 25% by 2020

5. $250 Rebate Check • Who is eligible? Beneficiaries who are: • Enrolled in a Part D drug plan • Enters the coverage gap in 2010 • Not receiving LIS or Medicaid benefits • Beneficiaries do not have to do anything to get the check. • Lag time of 45 days to 4 months; Paper checks mailed to address on file with the SSA Leslie Fried, ABA Commission on Law & Aging

6. Medicare’s “Standard” Drug Benefit in 2020 5% paid by enrollee Catastrophic coverage 15% paid by plan; 80% paid by Medicare Brands: 50% discount25% paid by plan Generics: 75% paid by plan 25% paid by enrollee Initial coverage limit 25% paid by enrollee 75% paid by plan Deductible 100% paid by enrollee SOURCE: Kaiser Family Foundation illustration of standard Medicare drug benefit for 2020 under the Patient Protection and Affordable Care Act (P.L. 111-148), as amended by the Health Care and Education Reconciliation Act of 2010.

7. Cost Sharing for Brand-Name Drugs in the Medicare Part D Coverage Gap, 2010-2020 minus $250 rebate SOURCE: Kaiser Family Foundation analysis of the standard Medicare drug benefit under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010.

8. Cost Sharing for Generic Drugs in the Medicare Part D Coverage Gap, 2010-2020 SOURCE: Kaiser Family Foundation analysis of the standard Medicare drug benefit under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010.

9. The Weeds • Definition of covered Part D drug will change: • All Part D drugs must be covered by a manufacturer discount agreement with Secretary • Agreement applies to all manufacturers for all its drugs • Exceptions (CMS hopes not to apply this authority) • Essential to the health of Part D enrollees • Extenuating circumstances for 2011 Leslie Fried, ABA Commission on Law & Aging

10. More Weeds • Covered in the “discount” – negotiated price of the drugs, including sales tax and vaccine administration. • Not the dispensing fee except for straddle claims • Discount will be provided at the pharmacy counter (Point of Service) • Manufacturers will make discount payments directly to plans within 14 days of invoice from CMS contractor • CMS cannot touch the money Leslie Fried, ABA Commission on Law & Aging

11. Getting the Discount • To get the discount during the coverage gap: • Enrolled in a PDP or MA-PD plan • Drug must be on the formulary, or the enrollee obtained an exception • The enrollee is not LIS or Medicaid • Enrollee is partly or wholly in the coverage gap Leslie Fried, ABA Commission on Law & Aging

12. Access to Information • For Prescribers: if a manufacturer does not sign an agreement, none of its drugs are Part D drugs • At Pharmacy: Enrollees should receive better information on what is covered, how much is discounted • Confusing if a straddle claim; or if enrollee has supplemental coverage which will pay first, before discount; or if other health benefits (eg SPAP) which pays after discount • Coverage Determinations and Appeals apply Leslie Fried, ABA Commission on Law & Aging

13. Important Issues for Patient/Beneficiary Advocates • Messaging: Need to provide information in simple and understandable language • New and improved EOB: enrollees can follow status of TrOOP • Accuracy of Information: especially about drug prices • Privacy: important that enrollees information is protected Leslie Fried, ABA Commission on Law & Aging

14. Annual Wellness Visit & Preventive Services • Provides an annual wellness visit and personalized prevention plan services as of 1/2011 • Every 12 months, starting 12 months after Welcome to Medicare exam • No cost-sharing for visit • Includes personal risk assessment & prevention plan services(exam for height, weigh, BMI, blood pressure, detection for cognitive impairment, updates for medical and family history, lost of risk factors, screening schedule for 5-10 years and more) • Eliminates cost-sharing for some preventive services, effective 1/2011 Leslie Fried, ABA Commission on Law & Aging

15. Medicare 2011 Part D Plans • Open enrollment for 2011 play year is November 15 – December 31 • Average PDP plans premium increased by $1 • Average MA-PDP plans decreased by 1% • Reduction in plans this year • 1.2 million individuals affected by non-renewals and will have an SEP until 1/21/11 • 600,000 LIS will have to be re-assigned • For state by state fact sheets, go to www.cms.gov/center/openenrollment.asp Leslie Fried, ABA Commission on Law & Aging

16. New: Medicare Disenrollment Period • January 1 – February 14, 2011 • Medicare beneficiaries can disenroll from Medicare Advantage plans and return to Original Medicare • Beneficiaries will be able to join a Medicare PDP at this time Leslie Fried, ABA Commission on Law & Aging

17. 2011: Cost Containment • New Center for Medicare & Medicaid Innovation within CMS • Will test, evaluate and expand different payment structures to foster patient-centered care and care coordination across treatment centers and slow cost growth • Freeze income threshold for income-related Part B premiums at 2010 level; Ties Medicare Part D premiums to income for those with incomes above $85K individual/$170K couple Leslie Fried, ABA Commission on Law & Aging

18. 2011: Medicare Advantage • Prohibits MA plans from imposing higher cost sharing for some Medicare covered benefits • Restructure payment to plans by phasing payments to different percentages of Medicare FFS • 2010 average is 114% of FFS • Medicare 2011 payments to plans frozen at 2010 rates • Cuts in MA payments but not in mandated services (could result in cut in extra/optional benefits) Leslie Fried, ABA Commission on Law & Aging

19. 2012 and beyond • Annual Part D and MA plan enrollment period shifts backward to October 15 – December 7, 2011 for 2012 plan year • A variety of models, demonstration and pilot programs, to promote quality care and cared coordination including • Accountable Care Organizations – take responsibility for costs and quality of care of patients • Medical homes for individuals with chronic conditions • Medicare Hospice Concurrent Care Demo • Medicare Independence at Home demo. Which provides high-need beneficiaries with primary care services in their homes • Bundled payments per episode of care pilot • Medicare Shared Savings Program to coordinate services under Parts A and B Leslie Fried, ABA Commission on Law & Aging

20. Independent Payment Advisory Board • 15 members, leading experts, appointed by the president for 6-year terms, and 3 HHS officials • Membership on IPAB is a full-time job • Makes recommendations to Congress to reduce Medicare spending if spending exceeds target growth rate; which Congress must consider under an expedited procedure • Makes annual detailed reports to Congress on health care costs, access and more Leslie Fried, ABA Commission on Law & Aging

21. Changes for Nursing Facility • Requires nursing home disclose their owners • Establishes Quality Assurance Performance Improvement Program to improve quality assurance standards • Report information about how well nursing homes are staffed and direct care staff costs • Provides training for workers who care for residents with dementia and to prevent abuse • Initial training of 75 hours Leslie Fried, ABA Commission on Law & Aging

22. Equal Justice Act • Establishes Elder Justice Coordinating Council to coordinate activities (govt and private agencies) relating to elder abuse, neglect and exploitation • Additional funding for Adult Protective Services (APS) and LTC Ombudsman programs • Establish and support forensic centers relating to elder abuse, neglect and exploitation • Grants to enhance LTC staffing Leslie Fried, ABA Commission on Law & Aging

23. CLASS Act • Establishes new public LTC insurance program • Purchase of community living assistance services and supports by individuals with functional impairments • Financed through voluntary payroll deductions or contributions; automatic enrollment with opt-out • 5 year vesting Leslie Fried, ABA Commission on Law & Aging

24. CLASS Act • Enrollees eligible for benefits after meeting disability criteria that is expected to last at least 90 days • If eligible, a cash benefit will be paid based on functional ability, averaging not less than $50 a day • Secy of HHS required to establish premiums to ensure solvency for 75 years • Treated in same manner as a LTC insurance policy Leslie Fried, ABA Commission on Law & Aging

25. Final Thoughts about Health Reform • Implementation through guidance and regulations is where the rubber hits the road • CBO Projections – extends the Medicare Trust fund by 12 years to 2029 and will save $124 billion over 10 years • Important provisions for older adults and provide support for the continuum of care for seniors Leslie Fried, ABA Commission on Law & Aging

26. Hot Issue: Hospital Observation Cases on the Rise • Observation status are patients who are in the hospital but treated as outpatient rather than inpatient • Should be limited to 24 – 48 hours but increasing trend of much longer • Results in higher cost-sharing for patient • Outpatient time doesn’t count toward 3 days for SNF care Leslie Fried, ABA Commission on Law & Aging

27. Hot Issue: Improvement Standard • For years, individuals with chronic, debilitating and degenerative conditions denied skilled therapy if patient’s condition won’t “improve” • Federal law supports coverage of maintenance therapy; restoration not required • Center for Medicare Advocacy is looking for plaintiffs for a lawsuit Leslie Fried, ABA Commission on Law & Aging