**Notice of Action: Reduction of Benefits**

FYI.  Your beneficiaries may bring this letter to your clinic to ask
what the notice means.

Beginning January 1, 2006 individuals who are eligible for Medicare will
no longer receive their prescription drug coverage under Medicaid.  Dual
Eligible beneficiaries will soon receive a notice from their state
Medicaid office informing them that they are no longer eligible for
pharmacy services under Medicaid (42 CFR Part 431 Subpart E requires the
State agency to issue a Notice of Action if Medicaid covered services
will be terminated or reduced.  States are legally obligated to issue a
Notice of Action to dual eligibles advising them that their prescription
drug coverage under Medicaid will be reduced or terminated effective
January 1, 2006). 

States have requested guidance regarding the content of the Notice of
Action.  CMS has developed suggested language that States may choose to
use when composing their notices.  States are encouraged to adapt this
model as appropriate for their specific programs.   Below is the
suggested language CMS has developed for States to use.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

DEHPG/DEEO 11/15/05

**Notice of Action: Reduction of Benefits**

Beginning January 1, 2006 individuals who are eligible for Medicare will
no longer receive their prescription drug coverage under Medicaid. 42
CFR Part 431 Subpart E requires the State agency to issue a Notice of
Action if Medicaid covered services will be terminated or reduced.
States are legally obligated to issue a Notice of Action to dual
eligibles advising them that their prescription drug coverage under
Medicaid will be reduced or terminated effective January 1, 2006.

This Notice of Action must be sent at least 10 days before the date of
action pursuant to 42 CFR §431.211. While there is no provision
regarding the maximum amount of time prior to the action within which
the notice may be sent, we recommend states issue the Notice of Action
no earlier than 45 days before the effective date of the action.

Under 42 CFR §431.220(b), a hearing does not need to be granted if the
sole issue being appealed in the result of a change in law which
adversely affects some or all recipients. Additionally, 42 CFR
§431.230(a) provides that benefits need not be continued pending the
appeal decision when the sole issue is such a change in law. If the
appeal is for other reasons, such as the application of the law to the
individual, or if there is another factual issue, then a hearing must be
granted and benefits continued pending the decision. If the agency is
sustained in its action, any expenditure for prescription drugs may be
recouped from the recipient.

States have requested guidance regarding the content of the Notice of
Action. CMS has developed suggested language that States may choose to
use when composing their notices. States are encouraged to adapt this
model as appropriate for their specific programs. If states choose to
develop an alternate notice, the notice [must]{.underline} include the
following:

-   The benefits that will be reduced;

-   the effective date of the action;

-   the reason for the reduction; and

-   appeal rights.

If States choose to develop an alternate notice, it is strongly
recommended that the notice include information about how prescription
drugs will be covered effective January 1, 2006 as well as contact
information for Medicare Part D. As always, all notices must conform to
the requirements of the ADA and Title VI.

**Reduction of Benefits Notice**

[Important Information about Your Drug Coverage]{.underline}

Date:[\<*No later than 12/21/05*\>]{.underline}

> \<Header or footer must include contact information\>

Dear\_\_\_\_\_\_\_\_\_\_\_\_:

We are sending you this letter to let you know that starting January 1,
2006 Medicare will pay for most of your prescription drugs. Because
Medicare will pay for most of your prescription drugs \<*State Medicaid
program*\> must stop paying for the drugs that are covered by Medicare.

We cannot pay for your Medicare covered drugs after January 1, 2006
because the law at Section 1935 (d)(1) of the Social Security Act
requires us to stop paying as soon as Medicare starts to pay. This law
applies only to people who have [both]{.underline} Medicare and \<*State
Medicaid program*\>. Our files show that you have both Medicare and
\<*State Medicaid program*\>. If you think this is wrong, call your
eligibility worker right away.

\<\<OPTIONAL FOR STATES WITH SPA TO COVER EXCLUDED DRUGS: There are
certain kinds of drugs that Medicare will not cover. \<*State Medicaid
program* \> will still cover some of these drugs for you. \<*States may
insert description of covered drugs or include reference to a list of
covered drugs*\> When you go to the pharmacy to pick up your
prescriptions, show the pharmacist both your \<*State Medicaid
program*\> card and the card from your Medicare drug plan.\>\>

**It is important for you to know how to get your medicines.** To get
your prescriptions paid for through Medicare, you need to join a
Medicare drug plan. If you have not already joined a plan, or if you
need help choosing the plan that's right for you, call 1-800-MEDICARE
(1-800-633-4227). TTY users should call 1-877-486-2048. Or, you can call
\<*insert name of SHIP*\>, your State Health Insurance Program (SHIP) at
\<*insert SHIP telephone number*\>. If you don't choose a plan yourself,
Medicare will put you in a plan in your area. If you don't like that
plan, you will be able to switch to another plan at any time.

You have the right to request an appeal if you think this change is
wrong, but you will have a hearing only if you think the law does not
apply to you or if you think we do not have the right facts about you.
If you ask for an appeal because you think the law is wrong, your appeal
will be decided without a hearing. If you want to appeal this action,
please read \<*the back of this letter/the information below*\>.

\<\<*Include State-specific information regarding alternative formats
under the ADA and language options under Title VI.\>\>*