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Medicare Part D

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  1. Medicare Part D The New Prescription Drug Benefit and Implications for CARE Act Clients Mary Vienna Division of Training and Technical Assistance HIV/AIDS Bureau Health Resources and Services Administration Department of Health and Human Services

  2. Medicare Part D and Ryan WhiteOverview • The new Medicare benefit called Medicare Part D • How that will change care for our clients on Medicare • How it will impact grantees

  3. Medicaid Federal and State program with State flexibility Means-tested Takes into account financial resources Poor AND Disabled on SSI Parents, children, pregnant women Medically Needy Prescription drug benefit 200,000 with HIV/AIDS (44% of those in care) $10.4 billion (Federal and State) in 2005 Medicare Federal program No means testing 65 or older OR Permanently disabled Under 65 and receiving SSDI for 2 years No prescription drug benefit Approx 80,000 with HIV/AIDS (19% of those in care) More likely to have AIDS diagnosis and T4 count 0-199* $2.9 billion in 2005 Medicaid versus Medicare • SOURCE: Bozzette, et al. “The Care of HIV-Infected Adults in the United States.” NEJM, Vol. 339, No. 26. • December, 1998

  4. What is Dual Eligible? • 70-85% of Medicare beneficiaries with HIV/AIDS also qualify for Medicaid • Disabled, poor and at end-stage illness • Use Medicaid for access to medications People Living with HIV/AIDS Medicaid 200,000 Medicare 60,000 - 80,000 Dual Eligible 50,000 – 60,000

  5. Medicare Modernization Act • Medicare Prescription Drug, Improvement and Modernization Act (MMA) of 2003 signed into law on December 8, 2003 • Biggest change to Medicare in 40 years • Adds a prescription drug benefit to Medicare called Medicare Part D • Benefit starts January 1, 2006

  6. Basic Prescription Drug Benefit • Enrollment period from November 15, 2005 to May 15, 2006 • Medicare beneficiary chooses to enroll in Medicare Part D • Medicare beneficiary then chooses either: • A stand-alone prescription drug plan [PDP] for those in traditional fee-for-service (Part A and B) Medicare • A managed care plan (Medicare Advantage) that includes a prescription drug plan [MA-PD] for those in Part C • Beneficiaries will have a choice of at least two prescription drug plans • Choices and plans will vary between regions • Plans have flexibility (subject to certain constraints) to establish varying features: • Levels of cost-sharing requirements and coverage limits other than “standard” coverage • Lists of drugs to include on their formulary, and on which tier • Cost management tools

  7. Basic Prescription Drug Benefit • Generally, people are enrolled in a plan for a year. In special circumstances people can change plans. Dual eligibles can change plans at any time. • Expected premium in 2006 of $32.20 per month but will vary by plan • Basic benefit will have deductibles, coinsurance and co-pays • People with limited resources will receive low-income subsidies (LIS) for these costs • Most Medicare beneficiaries with HIV/AIDS will qualify for some type of LIS • CMS pays subsidies directly to the plan • All beneficiary costs and subsidy eligibility will be adjusted annually

  8. Basic Prescription Drug Benefit • This benefit is different for Medicare • Subsidies are means tested • Benefit will vary by region • Implementation requires coordination between CMS, the Social Security Administration and State Medicaid Agencies • Many Medicare beneficiaries have other drug coverage--requires coordination (e.g., retiree plans, VA, Tricare)

  9. Medicare Part D and Dual Eligibles • As of January 1, 2006, Medicaid will no longer provide federal matching funds for Medicare beneficiaries’ prescription drug coverage • Dual eligibles will be switched to Medicare for drug coverage • Impact dependent on differences between previous State Medicaid plan and Medicare drug plans available in the area

  10. Medicare Part D and Dual Eligibles • The switch from Medicaid to Medicare will take place on January 1, 2006 • No transitional period • To ensure continuity of drug coverage, CMS will auto-enroll all dual eligibles and notify them of their plan assignment in October • Dual eligibles can choose another plan at any time – no annual election period

  11. Ensuring a Smoother Transition • Letter to State Medicaid Directors promising Federal matching funds for early refills and 30-90 day prescriptions near the end of 2005 • PDPs must have a transition process for new enrollees, with outreach efforts and a transition timeframe to introduce formulary requirements

  12. Standard Benefit: Beneficiary Cost Per Year (for 2006), Excluding LIS • Expected monthly premium of $32.20 • $250 deductible • 25% coinsurance from $251 to $2,250* • 100% coinsurance from $2,251 to $5,100 (coverage gap commonly referred to as the “donut hole”) • Catastrophic coverage level: co-pay of 5% or $2/$5 (whichever is greater) after total drug costs reach $5,100 AND beneficiary has paid $3,600 in true out-of-pocket costs (TrOOP) • Coinsurance is a term used in Medicare Part D that refers to the beneficiary’s contribution toward prescription drug costs until the catastrophic coverage limit has been reached

  13. Standard Benefit in 2006 Out-of-pocket Threshold Catastrophic Coverage $250 $2250 $5100 Total Spending 75% Plan Pays Coverage Gap 80% Reinsurance $ + Deductible ≈ 95% 25% Coinsurance Total Beneficiary Out-Of-Pocket $250 $750 $3600 TrOOP 15% Plan Pays 5%Coinsurance Direct Subsidy/ BeneficiaryPremium BeneficiaryLiability Medicare Pays Reinsurance

  14. Case Study: Peter Jones • 65 years old, HIV positive, aged into Medicare • Income $1,600 per month (200% FPL) • Antiretroviral regimen is Efavirenz (Sustiva) + FTC/TDF (Truvada) • Drugs cost $1,300 per month • Peter pays: • $32.20 per month in premiums • Month 1: $250 deductible plus $262 (25% coinsurance) towards $1050 balance • Month 2: $237 coinsurance (25% of $950 balance to reach $2250 co-insurance limit) plus $350 (100% coinsurance for balance of $1300 pharmacy cost) • Month 3: $1,300 prescription cost (100% coinsurance) [Peter has now paid $2,399 out-of-pocket towards his drugs] • Month 4: $1,201 prescription cost (100% coinsurance for a total of $3,600 in out-of-pocket costs). Total drug costs are also $5,200 (above the $5,100 limit) so the catastrophic coverage level has been reached. • Months 5-12: $65 per month (5% co-pay) • Peter pays $4,506.40 for the year [$386.40 in premiums, $3600 out-of-pocket and $520 in co-pays]

  15. Who Qualifies for a Low Income Subsidy (LIS)? • Medicare beneficiaries who are automatically qualified for a full subsidy (known as “deemed eligible”) are : • Dual eligible (receive full Medicaid benefits) • 70-85% of Medicare beneficiaries living with HIV/AIDS • In a Medicare Savings Program • Qualified Medicare Beneficiary (QMB) • Specified Low-Income Medicare Beneficiary (SLMB) • Qualifying Individual (QI) • Receiving SSI benefits • Medicare will notify them May-June • Dual eligibles will be auto-enrolled in October and may choose a different plan

  16. Who Qualifies for a Low Income Subsidy (LIS)? • Other Medicare beneficiaries who qualify for a full or partial subsidy, but not automatically, are: • Single with an annual income below $14,355 and resources less than $11,500 in 2005* • Married with a combined annual income below $19,245 and resources less than $23,000 in 2005* • These individuals must apply to the Social Security Administration or Medicaid State Agency to qualify • SSA sending nearly 19 million letters and applications this summer. Can apply by mail, SSA’s 1-800, online, or in person. • Medicaid State Agencies who qualify Medicare beneficiaries for LIS must also screen them for eligibility for Medicaid and Medicare Savings Programs • Medicare will enroll those who don’t choose a plan by May 15 *Higher in Alaska, Hawaii and for certain reasons

  17. LIS for Dual Eligibles • No premiums unless beneficiary chooses an above-average cost PDP • Then pay balance of premium cost • No deductible or coinsurance • Prescription co-pay • Below 100% FPL: $1 generic/$3 brand drug co-pay • Above 100% FPL: $2 generic/$5 brand drug co-pay • No cost after total drug costs of $5,100 and $3,600 out-of-pocket limit is reached • Subsidy counts toward out-of-pocket costs • What someone pays out-of-pocket + what Medicare pays as the extra help = $3,600

  18. Case Study: Jane Matthews • On SSDI, Medicare and Medicaid (dual eligible) • SSDI benefit $780/month (less than100% FPL) • Antiretroviral regimen is Sustiva + Truvada • Drugs cost $1,300 per month • Jane pays $6 in co-pays per month for two scripts (income < 100% FPL so $3 brand name co-pay applies) for three months • By 4th month, total drug costs of $5,200 exceeds $5,100 catastrophic coverage level ($1,300 x 4) • No cost to Jane after that • Jane pays $18 for the year [3 months of $6 co-pay]

  19. Full Low-Income Subsidy • Those eligible for this subsidy include Medicare beneficiaries who are: • In a Medicare Savings Program (QMB, SLMB, QI) • Receiving SSI benefits • Have an income below 135% FPL and resources of no more than $7,500 single/$12,000 per couple* • No premiums unless beneficiary chooses an above-average cost PDP • No deductible or coinsurance • Prescription co-pay • $2 generic/$5 brand drug co-pay • No cost after total drug costs of $5,100 and $3,600 out-of-pocket limit is reached • Subsidy counts toward out-of-pocket costs and reaching catastrophic level • Adjusted annually; resources include burial exclusion of $1500 for individual, $3,000 per couple.

  20. Case Study: Joseph Black • On SSDI and Medicare • SSDI benefit is $950/month (less than120% FPL) • Antiretroviral regimen is Sustiva + Truvada • Drugs cost $1,300 per month • Joseph pays $10 in co-pays per month for two scripts ($5 brand name co-pay times two) for three months • By 4th month, total drug costs of $5,200 exceeds $5,100 catastrophic coverage level ($1,300 x 4) • No cost to Joseph after that • Joseph pays $30 for the year [3 months of $10 co-pay]

  21. Partial Low Income Subsidy (2006)* • Those eligible for this subsidy include Medicare beneficiaries who are: • Below 150% FPL and with resources of no more $11,500 (individuals) and $23,000 (couples) • Benefit • Sliding scale premium • $50 deductible • 15% coinsurance up to catastrophic coverage level • $2 generic/$5 brand name drug co-pay after total drug costs of $5,100 and $3,600 out-of-pocket limit is reached • Subsidy counts toward out-of-pocket costs and reaching catastrophic coverage level * Adjusted annually

  22. Sliding Scale Premium Assistance *Numbers are for 2006

  23. Case Study: Jason Smith • On SSDI, Medicare and small private disability insurance benefit • Income $1,100 per month (138% FPL) • Antiviral regimen is Sustiva + Truvada • Drugs cost $1,300 per month • Jason pays: • About $8 per month in premiums (75% subsidy of $32.20) • Month 1: $50 deductible plus $187.50 (15% coinsurance of $1,250 balance) • Month 2: $195 coinsurance (15% coinsurance of $1,300) • Month 3: $195 coinsurance (total drug costs $3,900) • Month 4: $180 coinsurance (on $1200 balance of $5100 total drug cost limit for catastrophic coverage level) • Months 5-12: $10 per month ($5 brand name co-pay on two scripts) • Jason pays $983 for the year [$96 in premiums, $807.50 in deductible and coinsurance, $80 in co-pays]

  24. Plan Pays Beneficiary Pays $250 $2250 $5100 $ + About 95% 75 % $5100 $ + $2 - $5 co-pays apply 100 % Numbers are for 2006 Standard Drug Benefit for beneficiaries with income >150% FPL or less than 150% FPL but more than the resource limit $32.20 monthly estimated premium Full-benefit dual eligibles with income >100% FPL $0 monthly premium and no deductible Full-benefit dual eligibles with income  100% FPL* $0 monthly premium and no deductible $5100 $ + $1 - $3 co-pays apply 100 % *Cost sharing is $0 if the beneficiary is a full-benefit dual eligible and institutionalized.

  25. Plan Pays Beneficiary Pays $5100 $ + $2 - $5 co-pays apply $50 $5100 100 % $2 - $5 co-pays apply 85 % Numbers are for 2006 SSI Recipients, Medicare Savings Programs Groups, Applicants with income < 135% FPL who also meet resource test ($7,500 individual / $12,000 couple) $0 monthly premium and no deductible Applicants with income <150% FPL who also meet resource test ($11,500 individual / $23,000 couple) Sliding scale premium assistance

  26. How to Apply for Help • The Social Security Administration (SSA) will mail applications to people who may qualify • Those who think they may qualify should • Complete the application form • Mail it to the address on the back of the form • Use the enclosed postage-paid envelope • Use original forms only • Do not photocopy the application • Photocopying the application could delay timely processing • Apply--even if they’re not sure they qualify

  27. Other Ways to Apply for Extra Help • Apply on the Social Security website at • Apply at a Social Security sponsored event • Apply by phone by calling Social Security at 1-800-772-1213 • Apply at a State Medicaid Office • Apply at a community event that will offer opportunities to apply • State Health Insurance Program (SHIP) counselors will offer free personalized counseling starting in the fall of 2005

  28. Further Help With Costs • AIDS Drug Assistance Programs (ADAP), in accordance with State program policy, can pay: • Premiums • Deductible • Coinsurance (15%, 25% and 100%) • Co-pays • ADAP contributions do not count toward the $3,600 in TrOOP costs needed to reach the catastrophic coverage level

  29. What Counts Toward TrOOP? • Payments made by: • The beneficiary • Another individual (e.g. family or friends) • Certain charities • A State Pharmacy Assistance Program (SPAP) • A personal health savings vehicle (Flexible Spending Accounts, Health Savings Accounts, and Medical Savings Accounts) • Co-pays waived by a pharmacy • CMS to the plan as low income subsidies

  30. What Doesn’t Counts Toward TrOOP? • Premiums • Payments made by: • AIDS Drug Assistance Programs (ADAP) • Group health plans (employer/retiree plans) • Federal government programs (e.g., Indian Health, Medicaid,Tricare, VA, FQHCs) • State-run programs that are not SPAPs • Workman’s Compensation • Automobile/No-Fault/Liability • Part D plans’ supplemental or enhanced benefits

  31. What Doesn’t Count Toward TrOOP? • Payments never count toward TrOOP when made for: • Non-covered drugs that are not obtained through an exceptions or appeal process • Drugs purchased outside the U.S. • Non-Part D drugs • Part B drugs • Drugs excluded in the Part D benefit (e.g. benzodiazepines, barbiturates)

  32. Access to Drugs: Formulary Issues • PDPs have the flexibility (within certain constraints) to establish: • Different levels of cost-sharing requirements and coverage limits other than “standard” coverage • Lists of drugs to include on their formulary • Tiers of drug co-payments • Cost management tools • If a plan uses a formulary, it must include at least two drugs in each therapeutic category and class • The U.S. Pharmacopoeia (USP) has designed a model guideline of therapeutic categories and classes of drugs. Medicare drug plans can use the USP model but they are not required to do so. • CMS will review formularies to assure that prescription drugs for HIV/AIDS are included • A prescription drug plan will not be approved if the formulary design would discourage enrollment of certain groups

  33. HIV Drug Categories in USP Model Formulary

  34. Access to Drugs: Formulary Issues •  In order to protect against discrimination, CMS will review six drug classes in the formulary to ensure there is access to all drugs in that class: • Antidepressants • Antipsychotics • Anticonvulsants • Antiretrovirals • Antineoplastics • Immunosuppressants

  35. Issues for HIV/AIDS Care • Access to medications • Two drugs in each therapeutic class or category with six exceptions • True drug benefit will be determined by plan formulary • Plan can change drugs in formulary while the non-dual beneficiary must remain in plan for one year • Reliance on exceptions and appeals process • Costs • Prevents ADAP from contributing toward TrOOP costs • Drugs not covered by plan do not count towards catastrophic coverage level • Unlike Medicaid, no access to medication for failure to pay co-pay • Pharmacy can waive co-pay • 60 and 90 day prescriptions lower co-pay costs • Requires those eligible for full low-income subsidies to pay premium balance for above-average cost plans

  36. Issues and Challenges for Beneficiaries • Deciding whether to enroll in Part D in 2006 if they have a choice • Financial penalties for delayed enrollment • Enrolling in low-income subsidy program • Will beneficiaries know they are eligible? • Will they sign up? • Comparing plans and deciding which to join • Could face wide variations in premiums, benefit design, formularies and preferred drug lists each year. • Facing potential consequences of a poor plan choice • Annual enrollment period for non-duals • While the plan is responsible for tracking TrOOP costs, the beneficiary is expected to inform the plan of other prescription drug benefits

  37. Challenges for Beneficiaries with HIV/AIDS are Obligations and Opportunities for Ryan White • Initial transition period raises unique challenges • How to educate ourselves • How to educate dual eligibles and enrollees • How to ensure a smooth transition for individual health and public health reasons • Clients will need information and assistance in: • Applying for subsidy programs • Enrolling in Medicare Part D • Choosing a plan that works for them • Providers and case managers must know resources available for help • Once enrolled, clients will look to providers for help with appeals and exceptions • Non-dual Medicare clients comfortable on ADAP programs will need to be encouraged to enroll in Medicare Part D

  38. It’s Happening Fast • May-June2005 • CMS mails notices to people with Medicare who automatically qualify for the low income subsidy and do not need to apply • Applications for subsidies accepted • Summer • SSA mails applications to potential eligibles who don’t automatically qualify • October 2005 • 2006 “Medicare and You” handbook with comparative drug plan information mailed to every beneficiary • Online tool to help select plan on • CMS notifies dual eligibles of the plan Medicare will enroll them in if they do not choose one on their own by December 31, 2005 • November 15, 2005 • Beneficiaries can begin enrollment in Medicare Part D by choosing and enrolling in a Medicare plan • January 1, 2006 • All dual eligibles switched to Medicare • April 2006 • CMS notifies other people who qualify for the low-income subsidy that if they do not choose a plan by April 2006, CMS will facilitate their enrollment in a plan on their behalf, with coverage effective June 1, 2006 • May 15, 2006 • Initial enrollment period for Medicare Part D complete

  39. What’s HAB Doing? • HAB Medicare Workgroup • Expertise and resource to programs and project officers on Medicare Part D • Technical assistance and outreach plan • Venues to reach grantees • HAB project officer training • HAB website information • Qs & As

  40. Who Do I Go To For Answers? • HAB Project Officers • CMS Regional Office • Medicaid State Agency • Social Security Administration • State Health Insurance Program • State ADAP • Title I and II programs • HIV and Professional Organizations

  41. Website Resources • • Medicare Part D webpage • Qs & As • Links • • Information about Medicare Part D • • Medicare HIV/AIDS Fact Sheet • • Click on “Learn About Your Medicare Prescription Coverage Options” • Information for Medicare beneficiaries