# Presentation: 709922

## New Prescription Drug Related Opportunities for Rural Health Networks

- The Medicare Prescription Drug, Improvement, and Modernization Act of 2003
- February 17, 2004 Conference Call
- Delta States Rural Development Network Program Conference Call

## Why is this an Important Issue for Rural Health Networks to Consider?

- Need is greater in rural areas
- Models to build on
- Medicare 2003 legislative changes create opportunity
- Complexity of new law creates opportunity where scale of networks can promote significant efficiencies

## Greater Need: Mueller and SchurInsurance Coverage of Prescription Drugs and the Rural ElderlyWinter 2004 – Journal of Rural Health

- Rural elderly – 59% some pharmaceutical care coverage vs. urban elderly 75%
- Rural elderly higher out-of pocket cost ($337) as compared to urban ($280)
- Total prescription expenditures related to coverage (both urban and rural)

## Access Project’s Safety Net Study Reinforces Greater Rural NeedAndrulis et al – January 2003

- Between 2/3 and 3/4 ER and hospital outpatients from rural areas report they needed help to pay for medications vs. 56% of overall survey respondents
- Almost 30% of rural respondents said they did not get all of their medications due to cost as compared to 13% overall

## Growing Number of Network-led Models

- Acknowledge that many of these models have focused on uninsured and used pharmaceutical manufacturers discount programs

## Medicare Part D – Prescription Coverage

- Medicare Standard Benefit starts in 2006
- Rx Drug Discount Card available to all Medicare beneficiaries May 2004.  HHS estimates savings between 15% and 25% per prescription – Interim final regulations already out.
- Big private role in management of benefits – insurers, health plans, and pharmacy benefit managers
- Provides $88 billion in tax subsidies for employers (both public and private) to retain existing drug coverage.

## Medicare Prescription Drug Discount Card and Transitional Assistance Program

- Many seniors will need help accessing this complex program
- May 2004 – Medicare beneficiaries can enroll in a prescription card – intended for elderly without outpatient prescription drug insurance
- Private sector players that meet set standards can qualify for Medicare approval/endorsement to provide discounts
- CMS has 106 applications to date from entities seeking to offer discount card

## Prescription Drug Discount Low Income Subsidy

- June 2004 Medicare will provide $600 in 2004 and up to $600 in 2005 to (non-Medicaid eligible) low income seniors with incomes ≤ 135% poverty line
- Medicare will pay the $30 per year enrollment fee that private programs can charge for the low income elderly eligible for $600 subsidy
- $600 subsidy helps pay for co-insurance that will vary by beneficiary income level

## Major Private Players with Existing Products

- Pharmaceutical Benefit Management programs cards available to all adults and can be used to purchase most outpatient drugs
- Pharmaceutical manufacturer sponsored cards available to low income Medicare beneficiaries can be used to purchase only outpatient produced by sponsoring manufacturers
- “Deeper discount vs. Broader Choice” – Both models have advantages.
- See September 2003 GAO report – “Prescription Drug Discount Cards! Savings Depend on Pharmacy and Type of Card Used”

## Possible Roles for Networks: Prescription Drug Discount Card & Transitional Assistance Program

- Educational efforts for your network providers
- Educational efforts for elderly consumers (general)
- Learn more about PBMA’s, Pharmaceutical Manufacturers and other private players serving your area
- Assess/how both transitional and 2006 benefit affect your remote integrated pharmaceutical service
- Actively help low elderly access the $600 subsidy and enroll/use the system

## Short Term Nature of Transitional Assistance Program

- More active roles make more sense for networks with existing pharmaceutical access network product line

## Standard Prescription Drug Benefits in 2006“Middle Class Elderly” (Above 150%PL)

- $275 deductible
- 75% (government), 25% (consumer) to $2,200
- Consumer responsible for $3,600 “out of pocket” before catastrophic kicks in
- Once Medicare catastrophic coverage kicks in – 5% co-insurance

## Pharmaceutical BenefitOften Called a “Donut” Benefit

**Pharmaceutical Benefit****Often Called a “Donut” Benefit**

**25%**

**       ****100%**

**5%**

- Patient Responsibility for payment

- Medicare Responsibility for payment

## Complex BenefitSubsidies for Low Income Elderly Vary

- Different Levels of subsidy for different income levels
- Medicare/Medicaid Dual Eligible
- Federal rules apply to benefit
- 10 year phase down to 75% state contribution to deal with unfunded mandate issues
- $1 for generics, $3 for brand name
- Cost sharing and premium assistance for those up to 150% of poverty level – A number of tiers
- Role of 25 state subsidized pharmaceutical assistance programs may change

## Perhaps More Like a Rainbow Colored Danish?Hypothetical Wraparound Redesign of a State Subsidized Prescription Assistance Program (150-180% Poverty Level)

**Perhaps More Like a Rainbow Colored Danish?****Hypothetical Wraparound Redesign of a State Subsidized Prescription Assistance Program (150-180% Poverty Level)**

- Patient Responsibility for payment

- Medicare Responsibility for payment

- State Administered Prescription Assistance Program

## Medicare DSH Program Adjustment Opportunity

- Statute increased the disproportionate share hospital cap for small and rural hospitals to 12%
- Opens the door for high DSH hospitals to Bureau of Primary Health Care’s 340B program

## Medicare DSH Program Adjustment Opportunity (continued)

- 340B program obtains dramatic discounts (20 to 40% average wholesale price) for outpatient drugs
- Small and rural hospitals with Medicare DSH % of ≥ 11.75% qualify
- Visit BPHC’s Pharmacy Affairs Branch website to help determine eligibility http://bphc.hrsa.gov/opa

## Possible Roles for Networks in 2006Medicare Prescription Benefit

- Educational roles (general) for network providers and consumers will continue – complex benefit
- Network revenue source for integrated pharmacy/remote systems(?)
- “Activist” education broker role for elderly – particularly with networks that have pharmaceutical access or disease management as “core” business products
- CHC – Hospital partnership efforts with BHPC’s 340B program
- Revenue generating service for network – to demystify/navigate elderly through complex benefit(?) – Monthly fees for broker type service
- Advocacy role on state and federal policy issues

## Upcoming Educational Opportunities

- Volunteers in Health Care - Teleconference
- Feb 25th – 2:00 p.m. – 3:30 p.m. EST
- $50 registration fee
- Toll Free # (877) 844-8842
- www.volunteersinhealthcare.org