# Presentation: 263119

## Medicare Prescription Drug Coverage Overview

- CAPT Robert E. Pittman
- IHS Principal Pharmacy Consultant
- October 13, 2005

- 8/30/05

**Notes:**
A number of provisions are implemented as a result of the passage of the Medicare Prescription Drug, Improvement and Modernization Act  (MMA).  Some of these include:
Medicare-approved drug discount card
Medicare Advantage
Coverage for some new preventive services
Changes in Medigap
And changes to the Part B deductible and premiums.
Another provision, Medicare prescription drug coverage, is the topic of this training module.

## Session Topics

- Overview
- Key messages
- Eligibility and enrollment
- Extra help
- Out-of-pocket threshold
- Medicare prescription drug coverage
- Coordination with other coverage
- Employment-related coverage options
- Protections for people with Medicare

- 8/30/05

**Notes:**
We’ll begin with an overview of the Medicare prescription drug coverage.  Then we’ll discuss in more detail important information about how the coverage works and the information people with Medicare and their caregivers need to know to make informed decisions about their prescription drug coverage.
Some of the topics we’ll be covering include:
Key messages
Eligibility and enrollment
Extra help
Out-of-pocket threshold
Covered drugs
How these plans work with other coverage
Employment-related coverage options, and
Lastly, we’ll discuss protections for people with Medicare

## Medicare Prescription Drug Coverage

- Coverage begins January 1, 2006
- Available for all people with Medicare
- Provided through
- Prescription drug plans (PDPs)
- Medicare Advantage Plans (MA-PDs)
- Some employers and unions to retirees

- Overview

- 8/30/05

**Notes:**
Beginning January 2006, people with Medicare have the option to enroll in a plan that covers prescription drugs.  These plans offer prescription drug coverage, which is different from discounts that were offered by the Medicare-approved drug discount cards.
CMS contracts with private companies offering prescription drug plans (PDPs) to negotiate discounted prices on behalf of their enrollees.  Insurance companies and other appropriate organizations bid to serve as prescription drug plans.  People with Medicare can also receive drug benefits through their Medicare Advantage plan (MA-PD) if they are enrolled in one.  Some employers and unions may also provide coverage to people with Medicare.
You may hear the term “bid” when reading about the PDP and MA-PD application process.  “Bid” is the term used for organizations’ projected cost for the standard benefit, based on the population they assume will enroll. 

Bidding Process Using Competitive Market Forces for Low-Cost, High-Quality Drug Plans: Issue paper 8

## PDP and MA-PD Regions

- 34 PDP regions
- 26 MA-PD regions
- Key factors in establishing regions
- Eligibility population and capacity
- Beneficiary consideration
- Limited variation in prescription drug spending

- Overview

- 8/30/05

**Notes:**
Medicare Prescription Drug (PDP) regions and Medicare Advantage Prescription Drug (MA-PD) regions have been determined.  A person with Medicare who is eligible for Medicare prescription drug coverage can enroll in a PDP or MA-PD to get coverage.
Key factors in determining the regions include:
Eligible population and capacity:  the regions were designed to provide a sufficient number of potential enrollees
Beneficiary consideration:  CMS considered how well PDP regions “nest” or fit with MA regions.  CMS’ goal was to make PDP regions fit within MA regions as closely as possible, so that the regions are as transparent as possible to people with Medicare.
Limited variation in prescription drug spending:  CMS looked at state-by-state variations in prescription drug spending, based on data estimating average state prescription drug spending by individuals age 65 and over in 2006.  

## Overview

- 8/30/05

**Notes:**
There are 34 regions for the prescription drug plans.  As you can see from the map, the smallest service area is a state.  The largest area comprises seven states across the Upper Midwest.  Larger regions make it more probable that traditionally underserved rural areas would be paired with more profitable urban areas.
Plans have to offer identical benefits at identical premiums to every Medicare beneficiary in a region.  However, the premium amount can vary among regions.  
The law allows state licensing regulations to be waived for up to 3 years to allow insurers licensed in one state to operate in another within the same region.  Insurers have to apply for a license in the other state.

Assuring Access to Drug Coverage Everywhere:  Issue Paper 27

## Overview

- 8/30/05

**Notes:**
The Medicare Advantage plans, including the new Preferred Provider Organizations (PPO), operate in 26 regions.

Improved Access to Drug Coverage and Lower-Cost Health Plans for Beneficiaries In Rural Areas:  Issue Paper 12

## Medicare Prescription Drug Plans

- Must offer basic drug benefit
- Standard benefit
- May offer supplemental benefits
- Enhanced benefit
- Can be flexible in benefit design
- Must follow marketing guidelines

- Overview

- 8/30/05

**Notes:**
Medicare prescription drug plans, or PDPs, must offer a basic drug coverage that we call a standard benefit.  They may choose to offer supplemental benefits through enhanced alternative coverage for an additional premium.
The PDPs have flexibility in how they design their prescription drug coverage.  For example, they can establish a formulary to designate specific drugs that will be available within each class of therapeutic medications, or they can have cost-sharing structures other than the standard benefit structure.
A formulary is the entire list of drugs covered by a PDP or MA-PD.
PDPs can begin marketing in October 2005.  CMS is reviewing all PDP marketing materials for approval in June 2005.

Alternative Part D Benefit Designs and Options for Enhancing Medicare Drug Coverage:  Issue Paper 31

## Example of Standard Prescription Drug Coverage

- Generally less than $32 monthly premium
- $250 deductible
- Coinsurance of 25% of drug costs from $250 to $2,250
- Medicare pays 75%
- 100% of drug costs from $2,251 to $5,100
- After $3,600 in out-of-pocket costs, Medicare pays approximately 95%

- Overview

- 8/30/05

**Notes:**
Medicare prescription drug plans can vary in design.  An example of what a standard plan may look like is this.  People with Medicare enrolled in a prescription drug plan in 2006 generally pay less than a $37 monthly premium and are responsible for a $250 deductible each year.  Once the deductible has been met, Medicare pays 75% of drug costs up to $2,250 in total expenditures, and the person pays the other 25% of these costs.
The person is responsible for 100% of drug costs between $2,250 and $5,100.  
From $5,100 on up, (or $3,600 in out-of-pocket costs) the catastrophic coverage stage is reached where the PDP pays 95% of the drug costs for the rest of the calendar year and the person with Medicare pays 5%.
We’ll talk about what constitutes “out-of-pocket” expenses in a few minutes.
Plan sponsors can have variations in design under the “standard benefit” for either:
The 25% coinsurance or
The 5%, $2/$5 cost sharing after the out-of-pocket threshold is met

Alternative Part D Benefit Designs and Options for Enhancing Medicare Drug Coverage:  Issue Paper 31

## Alternative Prescription Drug Coverage

- Alternative coverage
- Annual deductible is not higher than $250 in 2006
- Catastrophic protection at least as much as under standard coverage
- Enhanced coverage
- Includes supplemental coverage

- Overview

- 8/30/05

**Notes:**
Alternative coverage can be either basic alternative or enhanced alternative (includes supplemental coverage).  In modifying the standard coverage design to offer alternative coverage, the plan sponsors:
Cannot have a deductible greater than the deductible under standard coverage
Must provide at least as much catastrophic protection as under standard coverage

## Enhanced Prescription Drug Coverage 

- Plan can structure benefit differently
- Out-of-pocket threshold applies no matter how it is structured
- Plan may provide coverage where there’s no coverage under standard plan
- May offer additional drug coverage

- Overview

- 8/30/05

**Notes:**
Plans have the option of structuring their basic prescription drug plan differently from the standard benefit as long as the benefits are at least as good as the standard benefit.
Plans themselves, employers/unions, or other third parties may offer additional drug coverage that enhances or supplements the standard benefit.  For example, they may choose to provide coverage when the person with Medicare would otherwise pay 100% of drug costs under the standard benefit.
However, the out-of-pocket threshold expenses still apply to the basic benefit no matter how it is structured, even when there is additional coverage.  In other words, the out-of-pocket threshold must always be satisfied to reach the catastrophic coverage stage.

## Key Messages

- Drug coverage that helps beneficiaries pay for the prescriptions they need
- Medicare prescription drug coverage is available to all people with Medicare
- There is additional help for those who need it most
- The Medicare prescription drug coverage pays for brand name and generic drugs
- There is a choice of Medicare prescription drug plans and the beneficiary can pick the plan that is right for them

- Key Messages

- 8/30/05

**Notes:**
Medicare prescription drug coverage is helpful, especially for those who currently don’t have coverage for their prescription drugs.  Since this is new, it’s important that people with Medicare understand these key messages.

## Eligibility and Enrollment

- Entitled to Part A and/or enrolled in Part B
- Reside in plan’s service area
- Must enroll in a Medicare prescription drug plan to get Medicare prescription drug coverage

- 8/30/05

**Notes:**
Anyone who has Medicare Part A (Hospital Insurance) and/or Part B (Medicare Insurance) is eligible to join a Medicare prescription drug plan.  A person must live in the service area of a prescription drug plan to enroll.
Individuals who reside outside of the U.S. or who are incarcerated are ineligible to enroll in a PDP or MA-PD plan and therefore are not eligible for this coverage. 
A person must enroll in a plan (PDP or MA-PD) to get Medicare prescription drug coverage.

Part D Benefit Eligibility and Enrollment:  Issue Paper 19

## Enrolling in a Plan

- People with Medicare can enroll
- Directly with the plan sponsor
- Through a personal representative
- “Stands in the shoes” of a person with Medicare and has authority to act on his or her behalf
- This authority comes from state law (e.g., Power of Attorney, guardian) or other applicable law (e.g., tribal or military law)
- By enlisting the assistance of others
- Spouse, relative, friend, caregiver, or advocacy group volunteer

- Eligibility and Enrollment

- 8/30/05

**Notes:**
Eligible people with Medicare will enroll directly with the PDP or MA-PD.
People with Medicare can enroll themselves directly in a plan.  They can use a personal representative who has the legal authority to enroll them, or they can enlist the assistance of others to help them enroll.
Plans are required to process applications in a timely manner, and the plan must notify the applicant of acceptance or denial of the enrollment request.  

## Enrollment Options

- People eligible for Medicare prescription drug coverage may enroll in a
- Prescription Drug Plan (PDP) or
- Medicare Advantage Prescription Drug plan (MA-PD plan)
- People enrolled in an MA plan must receive Medicare prescription drug coverage from the MA-PD plan except if
- Enrolled in a PFFS plan without drug coverage; or
- Enrolled in an MSA plan
- People enrolled in a cost plan can elect to receive Medicare prescription drug coverage from the cost plan or enroll in a PDP

- Eligibility and Enrollment

- 8/30/05

**Notes:**
People who are in the Original Medicare Plan will receive their Medicare prescription drug coverage through a PDP.  People enrolled in a Medicare Advantage plan will receive their coverage through that plan.
There are exceptions to this rule:
If a person with Medicare is in a (Private Fee-for-Service) PFFS Plan with no qualified prescription drug coverage or has an MSA Plan, he or she can enroll in a PDP.
People with Medicare enrolled in a PACE plan that offers qualified prescription drug coverage must obtain the drug plan benefit through that PACE plan.  PACE (Program of All-inclusive Care for the Elderly) combines medical, social, and long-term care services for frail people.
People enrolled in a cost-based HMO have the option either to get Medicare prescription drug coverage from the plan, if it is offered, or to enroll in a PDP.
If the person with Medicare is in an MA plan with prescription drug coverage on December 31, 2005, or the MA plan will offer Medicare prescription drug coverage in 2006, they will be enrolled in the MA-PD plan starting on January 1, 2006.

## Enrollment Periods

- In general, the enrollment periods for PDPs and MA-PDs are similar
- There are three enrollment periods for PDPs
- Initial Enrollment Period (IEP)
- Annual Coordinated Election Period (AEP)
- Special Enrollment Period (SEP)

- Eligibility and Enrollment

- 8/30/05

**Notes:**
There are three enrollment periods.
The Initial Enrollment Period (IEP) allows people to enroll in a Medicare prescription drug plan when they are first eligible for Medicare prescription drug coverage.
The Annual Coordinated Election Period (AEP) allows people to change their Medicare prescription drug plan, enroll in a prescription drug plan, or disenroll from a Medicare prescription drug plan.
And last is the Special Enrollment Periods (SEP).  We will discuss these in more detail in a few minutes.

## Initial Enrollment Period

- Nov 15, 2005, to May 15, 2006, for people who
- Are currently eligible or
- Will become eligible in November, December 2005, and January 2006
- For everyone else, the Initial Enrollment Period is similar to the Initial Enrollment Period for Part B
- This is a 7-month enrollment period
- 3 months before eligibility for Medicare prescription drug coverage
- The month of eligibility and
- 3 months after eligibility for Medicare prescription drug coverage

- Eligibility and Enrollment

- 8/30/05

**Notes:**
For the start of the drug coverage, the Initial Enrollment Period (IEP) is from November 15, 2005, to May 15, 2006, for individuals who 
Are currently eligible, or
Become eligible in November and December 2005, and January 2006
For people who become eligible for Medicare after January 2006, the initial enrollment period is similar to the initial enrollment period for Part B.  This is a 7-month enrollment period, including
3 months before eligibility for Medicare prescription drug coverage
the month of eligibility
3 months after eligibility for Medicare prescription drug coverage

## Annual Coordinated Election Period (AEP)

- For the first year, the AEP is the same as the Initial Enrollment Period (November 15, 2005, to May 15, 2006)
- In 2006 and after, the AEP is from November 15 to Dec 31 of each year

- Eligibility and Enrollment

- 8/30/05

**Notes:**
For the first year, the Annual Coordinated Election Period (AEP) is the same as the Initial Enrollment Period: from Nov 15, 2005, to May 15, 2006.
In 2006 and after, the AEP is from November 15 to December 31 of each year.

## Special Enrollment Period

- Permanent move out of the plan service area
- Individual entering, residing in, or leaving a long-term care facility
- Involuntary loss, reduction, or non-notification of creditable coverage
- Other exceptional circumstances

- Eligibility and Enrollment

- 8/30/05

**Notes:**
There are circumstances in which people with Medicare are given a Special Enrollment Period (SEP).  These include:
When an individual permanently moves out of the plan service area
Involuntary loss, reduction, or non-notification of creditable coverage.  This does not apply when creditable coverage is lost due to non-payment of premiums.  If people with Medicare were not adequately informed that their coverage was not creditable or that their current coverage was reduced so that it is no longer creditable, then they qualify for a Special Enrollment Period (SEP).
When an individual is entering, residing in, or leaving a long-term care facility.
Or exceptional circumstances such as when a PDP terminates its contract or a PDP violates its contract.
Full-benefit dual eligibles have a continuous Special Enrollment Period.  They can change their Medicare prescription drug plan at any time.

## 2006 PDP Enrollment Periods*

**JAN**

**FEB**

**MAR**

**APR**

**MAY**

**JUN**

**JUL**

**AUG**

**SEP**

**OCT**

**NOV**

**DEC**

**DEC**

**Initial Enrollment**
**Period (IEP)**

**Annual Coordinated**
**Election Period (AEP)**

**AEP**

**NOV**

***Does not reflect SEPs**

- Eligibility and Enrollment

- 8/30/05

## Voluntary Disenrollment

- Generally, a person with Medicare may disenroll from a PDP only during
- The Annual Coordinated Election Period, or
- A Special Enrollment Period
- They will receive a notice letting them know that they are disenrolling from the plan

- Eligibility and Enrollment

- 8/30/05

**Notes:**
Generally, a person remains enrolled in a Medicare prescription drug plan for a year.  If the person doesn’t choose a plan during the Annual Coordinated Election Period, he or she may not enroll in a plan until the next Annual Coordinated Election Period or a Special Enrollment Period, if the person has one.

## Involuntary Disenrollment

- Beneficiaries _must_ be disenrolled from a Medicare prescription drug plan when they
- Permanently move out in the service area
- Lose eligibility for Medicare prescription drug coverage
- Pass away
- Are enrolled in a plan that is terminating its contract, or
- Misrepresent third party Medicare prescription drug plan coverage
- Beneficiaries _may_ be disenrolled for
- Not paying their monthly premiums timely
- Disruptive behavior

- Eligibility and Enrollment

- 8/30/05

**Notes:**
People must be disenrolled from a Medicare prescription drug plan if:
They move out of the service area
They lose entitlement to Part A benefits and are no longer enrolled in Part B
They pass away
Their PDP’s or MA-PD’s contract is terminating
They misrepresent information to the PDP sponsor that they have or expect to receive reimbursement for third party coverage.
People may be disenrolled (at the plan’s option) if they:
Do not pay their plan premiums on a timely basis
Exhibit disruptive behavior.

## Postponing Enrollment

- Higher premiums for people who wait to enroll
- Exception for those with prescription drug coverage at least as good as a Medicare prescription drug plan (Creditable Coverage)
- Assessed 1% of base premium for every month
- Eligible to enroll in a Medicare prescription drug plan but not enrolled
- No drug coverage as good as a Medicare prescription drug coverage for 63 consecutive days or longer

- Eligibility and Enrollment

- 8/30/05

**Notes:**
If a person with Medicare chooses not to join a Medicare prescription drug plan at the first opportunity, he or she may have to pay a higher premium if he or she decides to enroll later. 
Exceptions:  If someone has prescription drug coverage that covers at least as much as a Medicare prescription drug plan, then he or she may keep the current coverage.  He or she will not have to pay a higher premium to enroll in a Medicare prescription drug plan at a later date. 
If someone has prescription drug coverage that covers less than a Medicare prescription drug plan, he or she can...
 keep the current drug plan and join a Medicare prescription drug plan to provide more complete coverage, or 
 just keep the current drug plan. But if he or she joins a Medicare prescription drug plan later, then he or she will have to pay a higher premium; or 
 drop the current plan and join a Medicare prescription drug plan. But he or she may not be able to get the other coverage back.
The higher premium is 1% of the base premium for each month the person did not have creditable coverage.  Creditable coverage is coverage that is as good as Medicare prescription drug coverage.
People will pay the higher premium for as long as they are enrolled in a Medicare prescription drug plan.
People who qualify for the extra help and are subject to the higher premium due to late enrollment will receive additional assistance to help pay for the higher premium.  The additional premium subsidy is equal to 80% of the late enrollment higher premium for the first 60 months during which the higher premium is imposed and 100% of their late enrollment premium thereafter.

## Possible Examples of Coverage at Least as Good as Medicare’s

- Coverage under a PDP or MA-PD
- Some Group Health Plans (GHP)
- State Pharmacy Assistance Program (SPAP)
- VA coverage
- Military coverage including TRICARE
- Note: The source of the current drug coverage will send a notice telling the person if it is at least as good as Medicare prescription drug coverage – Creditable Coverage

- Eligibility and Enrollment

- 8/30/05

**Notes:**
Let’s talk about coverage that is at least as good as Medicare prescription drug plan coverage.  Some examples may include:
Coverage under a Medicare prescription drug plan or Medicare Advantage prescription drug coverage
Group Health Plans (GHP)
State Pharmaceutical Assistance Program (SPAP)
VA coverage
Military coverage including TRICARE
Medigap may or may not be creditable coverage.  (E.g., plans in the waiver states – Minnesota, Massachusetts, and Wisconsin as well as some of the “rich” plans sold prior to the standardization may be creditable.) 
People who have other prescription drug coverage will get a notice from their plan that tells them if the plan covers at least as much as a Medicare prescription drug plan.  The plan will also notify them if the coverage changes so that it is no longer as good as Medicare prescription drug coverage.

## MA-PD Election Periods 

- Initial Coverage Election Period (ICEP)
- 7-month period surrounding Medicare entitlement (Part B Initial Enrollment Period)
- 3 months prior to entitlement to Part A and Part B
- Annual Coordinated Election Period (AEP)
- In 2006: Nov. 15, 2005, through May 15, 2006
- In 2007 and beyond: Nov. 15 through Dec. 31
- Open Enrollment Period (OEP)
- Special Election Period (SEP)

- Eligibility and Enrollment

- 8/30/05

**Notes:**
Medicare Advantage election periods are similar to PDP enrollment periods with the addition of the Open Enrollment Period.  There are four MA election periods.
The Initial Coverage Election Period (ICEP)
The Open Enrollment Period (OEP)
The Annual Coordinated Election Period (AEP) and
Special Election Periods (SEPs).

## MA-PD Election Periods

- Open Enrollment Period
- 2006: January through June
- 2007 & beyond: January through March
- Enrollment limited to type of coverage as of January 1  (i.e., same “type”)
- If MA-PD = MA-PD or Original Medicare + PDP
- MA only = MA only or Original Medicare only
- Original Medicare + PDP = MA-PD
- Original Medicare only = MA only

- Eligibility and Enrollment

- 8/30/05

**Notes:**
In 2006, the Open Enrollment Period (OEP) will be 6 months long (January – June) and in 2007 and going forward, the OEP will be 3 months long (January – March of each year).  This change brings about what is often referred to as “enrollment lock-in.”
Someone cannot use the OEP to change whether or not he or she is enrolled in Medicare prescription drug coverage.
For example, it’s February 2007 and Mr. Smith is currently enrolled in an MA-PD plan.  During the OEP, he could elect another MA-PD plan, or he could elect Original Medicare and a PDP, but he could not drop Medicare prescription drug coverage by electing an MA only (i.e. not an MA-PD) plan.

## 2006 MA-PD Enrollment Periods*

**JAN**

**FEB**

**MAR**

**APR**

**MAY**

**JUN**

**JUL**

**AUG**

**SEP**

**OCT**

**NOV**

**DEC**

**Initial Coordinated **
**Election Period (ICEP)**

**DEC**

**Annual Coordinated**
**Election Period (AEP)**

**AEP**

**NOV**

**Open Enrollment**
**Period (OEP)****

**Part D Begins**

***Does not reflect SEPs**
****Open and limited to same type of drug coverage**

- Eligibility and Enrollment

- 8/30/05

## Enrolling in a Plan

- Look at *Medicare & You 2006* handbook
- Read about the prescription drug plans available in the area
- Contact the plan to enroll
- If someone needs help choosing a plan
- Visit _[www.medicare.gov](http://www.medicare.gov/)__ and get personalized information_
- Call 1-800-MEDICARE
- TTY users should call 1-877-486-2048

- Eligibility and Enrollment

- 8/30/05

**Notes:**
Eligible people with Medicare enroll directly with the PDP or MA-PD.
In the fall of 2005, people with Medicare will receive the Medicare & You 2006 handbook in the mail, which will include information about Medicare prescription drug plans available in their area.
There are other information sources to help people with Medicare choose a plan.  In the fall of 2005, prescription drug plan information will be available and posted on the medicare.gov website.  The MA-PD plan information will replace the Medicare Personal Plan Finder (MPPF) and the PDP information will replace PDAP (Prescription Drug and Other Assistance Program database).  There will be one portal of entry using a series of questions to get to the information you need.  It will be simple and easy to use.
People can also call 1-800-MEDICARE (1-800-633-4227).  TTY users should call 1-877-486-2048, and State Health Insurance Assistance Programs (SHIP).  The Medicare & You handbook contains the local telephone number.

## Auto-Enrollment

- Medicaid prescription drug coverage for full-benefit dual eligibles ends 12/31/005
- Full-benefit dual eligibles who **do not** enroll in a plan by 12/31/05
- CMS will enroll them in a prescription drug plan with a premium covered by the low-income premium assistance
- Their Medicare prescription drug coverage will begin 1/1/06
- Full-benefit dual eligibles have a Special Enrollment Period - Can change plans any time

- Eligibility and Enrollment

- 8/30/05

**Notes:**
Dual eligibles (people with Medicare and full Medicaid benefits) will no longer receive their drug coverage through Medicaid, but rather from Medicare through a PDP or MA-PD.  They will be automatically enrolled by CMS in a PDP or MA-PD if they do not select one on their own by December 31, 2005.  However, they will have a special enrollment period if they decide to change plans at a later date.
CMS will mail a notice to full-benefit dual eligibles in October 2005 that will encourage them to choose a plan and let them know that if they don’t enroll in a plan, Medicare will enroll them in plan XYZ.

## Facilitated Enrollment

- CMS is facilitating the enrollment
- Of additional people with Medicare if they do not choose a plan by May 15, 2006
- These include people with MSP, SSI-only, and those who apply and are determined eligible for the extra help
- Coverage effective June 1, 2006

- Eligibility and Enrollment

- 8/30/05

**Notes:**
CMS is also enrolling additional people with Medicare who qualify for extra help if they do not choose a plan on their own by May 15, 2006.  These include people with Medicare receiving Supplemental Security Income (SSI), people with Medicare who are in a Medicare Savings Program such as QMB, SLMB, or QI, and people who apply and are determined eligible for the extra- help.  Their coverage is effective June 1, 2006.
QMB is Qualified Medicare Beneficiary; SLMB is Specified Low Income Medicare Beneficiary; and QI is Qualifying Individual.  These people receive state help paying for their Medicare deductibles, premiums, and copayments.
When CMS facilitates enrollment, the agency will follow the same rules as those used for auto-enrollment.

## Long-Term Care Facilities

- LTC residents obtain drug benefits from LTC pharmacy selected by the facility
- Special Enrollment Period
- For people who enter, reside in or leave a LTC facility
- An MA-PD plan may be open for enrollment for people who enter, reside in or leave a LTC facility
- PDP and MA-PD must ensure convenient access

- Eligibility and Enrollment

- 8/30/05

**Notes:**
Generally, long-term care facilities (i.e., nursing homes and skilled nursing facilities) contract with one long-term care pharmacy to supply the prescription drugs needed by the residents.  With the implementation of Medicare prescription drug plans, these long-term care pharmacies will have to contract with both the facility and the Medicare prescription drug plans serving the region.
CMS requires that all Medicare prescription drug plans have contracts with a sufficient number of long-term care pharmacies to ensure “convenient access” to prescription drugs for institutionalized people with Medicare in the region.
Each long-term care facility can select one or more eligible network pharmacies to provide a plan’s long-term care drug benefits to Medicare residents.  Long-term care facilities will likely select pharmacies with the largest number of plan networks.  Therefore the plan’s enrollees obtain their drug benefits from the eligible long-term care pharmacy selected by the facility. 

High-Quality Access to Long-Term Care Pharmacies:  Issue Paper 26

## Extra Help

- Assistance with premium and cost sharing
- Eligibility determined by SSA or state
- Income and resources are counted
- Some groups are “deemed” eligible
- Multiple ways to apply
- Can apply as early as May 2005

- 8/30/05

**Notes:**
The extra help is designed to provide people with limited income and resources extra assistance with premium and cost sharing under the Medicare prescription drug coverage.  A person must enroll in a Medicare prescription drug plan to receive extra help.
An application for the extra help may be filed with either the Social Security Administration (SSA) or the state’s Medicaid program office.  CMS is strongly encouraging states to consider using the SSA application and to assist people in filing their applications with SSA.  States may assist individuals who present themselves at state offices in completing the SSA application, with the state sending the completed applications to SSA for processing.  The SSA application relies on self-attestation—a certification by an individual that the information is correct.  There is a verification process that relies primarily on automated data matches with sources such as the IRS.  The verification process may also involve some follow-up with the individual on an exception basis when additional information is needed.  The office that processes the application , either SSA or the state Medicaid agency, will decide when and how often someone must reapply and how they can appeal a determination. 
Certain groups of people with Medicare are “deemed” eligible, meaning that they do not have to apply for the assistance; they automatically qualify.
People with Medicare can apply for the extra help by:
Completing the SSA form that is sent to potential eligibles
Applying on the SSA website
Going to an SSA field office
Going to a state Medicaid Office
Working with community-based organizations

## Deemed Eligible

- Full-benefit dual eligibles
- SSI recipients
- Medicare Savings Program groups, e.g., QMBs, SLMBs, QIs
- All others must file an application for low-income assistance

- Extra Help

- 8/30/05

**Notes:**
On the previous slide we discussed people with Medicare who are considered “deemed.”  These are certain groups of people who are automatically considered eligible for the extra help.  These include:
Full-benefit dual eligibles (People with Medicare who also get full Medicaid benefits)
People with Medicare who get Supplemental Security Income (SSI) but no Medicaid benefits.
People with Medicare who qualify for a Medicare Savings Program (MSP) such as QMB (Qualified Medicare Beneficiary), SLMB (Specified Low-Income Medicare Beneficiary), or QI (Qualifying Individual).
All other people with Medicare must file an application.
CMS is mailing a notice to these groups in May 2005 letting them know they automatically qualify for the extra help and do not need to apply.
Starting in May through August of 2005, SSA is mailing an application to people who may qualify for the extra help (but will not be deemed eligible) and will begin processing applications on July 1, 2005.  SSA will send the applicant a determination once the application is processed.

## Applying for Extra Help

- People with Medicare can apply
- Personal representatives can apply
- Who has authority to act on behalf of a person with Medicare under state law (e.g., Power of Attorney, guardian) or other applicable law (e.g., tribal or military)
- Representative payee appointed by SSA
- People with Medicare and personal representatives may enlist others to apply
- Spouse, child, caregiver, advocacy group volunteer

- Extra Help

- 8/30/05

**Notes:**
People with Medicare can apply on their own behalf for the extra help to pay for their prescription drug coverage.  They may also enlist the help of a personal representative who has the authority to act on their behalf,  such as Power of Attorney.
They may also enlist the help of others such, as a spouse, family member, caregiver, or advocate.

## How is Income Counted?

- Follows SSI rules
- Includes income of applicant and spouse
- Income is compared to family size standard
- Family includes dependent relatives who reside with the applicant and who rely on them for at least half their support
- Assistance available to people with income below 150% of the Federal poverty level (FPL) who also meet the resource test

- Extra Help

- 8/30/05

**Notes:**
Income is counted using the rules of the SSI program.  Since the SSI rules are clear on what is income is counted, CMS goes by SSI rules.
In terms of whose income to count, CMS looks at the income of the applicant and the spouse residing with the applicant, regardless of whether or not the spouse is applying for the extra help.
The issues of what income to count and whose income to count are only half the equation.
The other half is the standard against which to determine eligibility.  The standard is the Federal poverty level standard appropriate to the size of the applicant’s family.  Basically, the size of the family takes into consideration whether the applicant or his or her spouse have dependent relatives who reside with them and who rely on them for at least half of their support.
Thus, a grandparent raising grandchildren may qualify as a result of using a greater family size, but the same person might not have qualified as an individual.
Extra help is available to people with incomes below 150% of the Federal poverty level.
Contact SSA for additional information on income requirements.

## How Are Resources Counted?

- Includes resources of applicant and spouse
- Uses a more streamlined definition than what SSI uses
- Will only consider
- Liquid assets
- Can be converted to cash within 20 days
- Real estate
- Does not include applicant’s primary residence
- Extra help available to people with resources up to $11,500 for individuals and $23,000 for couples who also meet the income test
- Trust Income

- Extra Help

- 8/30/05

**Notes:**
In simple terms, resources are counted for an applicant and a spouse residing with the applicant and compared against a resource standard.
Because this section does not actually define resources, and because the law envisioned a simplified application in which applicants attest to their level of resources and submit only minimal documentation, CMS was able to propose a streamlined definition of resources compared to what is normally used under the SSI.
In order to keep the process simple and minimize administrative cost, only two resources are considered available to the applicant to pay for the Medicare prescription drug coverage premiums, deductibles, and copayments:  
Liquid resources (e.g., savings accounts, stocks, bonds and other assets that could be converted to cash within 20 days) and 
Real estate does not include the applicant’s primary residence or land on which the primary resident is located
Items such as wedding rings and family heirlooms are not considered resources for the purposes of the extra help.

## Extra Help

- Group 1
- Full-benefit dual eligibles with incomes at or below 100% Federal poverty level (FPL)
- Group 2
- Full-benefit dual eligibles above 100% of FPL; QMB, SLMB, QI, SSI-only, or non-dual eligible beneficiaries with incomes below 135% FPL and limited resources ($6,000 per individual and $9,000 married couple)
- Group 3
- Beneficiaries with incomes below 150% FPL and limited resources ($11,500 individual and $23,000 married couple)

- 8/30/05

**Notes:**
Three groups have been identified for the extra help:
Group 1 are full-benefit dual eligibles with incomes at or below 100% of the Federal poverty level (FPL).
Group 2 are full-benefit dual eligibles above 100% of FPL; QMB, SLMB, QI, SSI-only, or non-dual eligible beneficiaries with incomes below 135% of the FPL, with resource limits of $6,000 per individual and $9,000 for a married couple.
Group 3 are Medicare beneficiaries with incomes below 150% of the FPL, with resource limits of $10,000 for an individual and $20,000 for a married couple.
Cost sharing and premiums for full-benefit dual eligible beneficiaries on Medicaid who are institutionalized is $0.  In other words, they have no cost sharing, no premiums, no deductible. 
Now let’s look at the assistance for each group.

## Extra Help

|  | Group 1 | Group 2 | Group 3 |
| --- | --- | --- | --- |
| Premium $32/month | $0 | $0 | Sliding scale based on income |
| Deductible $250/year | $0 | $0 | $50 |
| Coinsurance up to $3,600 out of pocket | $1/$3 copay | $2/$5 copay | 15% coinsurance |
| Catastrophic 5% or $2/$5 copay | $0 | $0 | $2/$5 copay |

- 8/30/05

**Notes:**
People who are in Group 1, full-benefit dual eligibles with incomes at or below 100% of FPL, are not responsible for the monthly premium or the annual deductible.  They are only responsible for small copayments, $1 for generics and $3 for brand-name drugs.  If the extra help combined with these small copayments reach $3,600, the person would not be responsible for any other copayments for the rest of the year. 
People in Group 2, full-benefit dual eligibles above 100% of FPL; QMB, SLMB, QI, SSI-only or non-dual eligible beneficiaries with incomes below 135% FPL and limited resources ($6K/individual and $9K/married couple), are not responsible for the monthly premium or the deductible.  They have a $2 copayment for generic drugs and a $5 copayment for brand-name drugs.  Here again, if the extra help and copayments total $3,600, the person would not have any other copayments for the rest of the year.
For people in Group 3, those with incomes below 150% FPL and limited resources ($10K/individual and $20K/married couple), the premium is based on a sliding scale depending upon the person’s income.  They are responsible for a reduced deductible of $50 per year, and they will be responsible for 15% of the cost of their prescriptions up to the $3,600 out-of-pocket maximum.  Once they have reached that maximum, they will have a $2 copayment for generic drugs and a $5 copayment for brand-name drugs for the rest of the year.
As you can see, there is not an instance where these groups would be responsible for 100% of the costs.
Institutionalized full-benefit dual eligibles will not be responsible for any out-of-pocket costs.
NOTE: The premium for Groups 1 and 2 will only be $0 if the person enrolls in a plan with a premium at or below the low-income subsidy amount. If someone chooses a plan with a premium that is greater than the amount of premium assistance available, then he or she is liable for the difference.

## How the Extra Help Works

- CMS notifies PDP or MA-PD of member’s eligibility
- PDP or MA-PD
- Reduces member’s premium and cost sharing
- Tracks amounts applied to out-of-pocket threshold
- Reimburses any amount paid in excess

- Extra Help

- 8/30/05

**Notes:**
CMS notifies the Medicare prescription drug plan of the plan member’s eligibility for the extra help and the amount of the assistance.
The PDP or MA-PD must reduce the enrollee’s premium and cost sharing as applicable and provide CMS with the amounts of those reductions.
The PDP or MA-PD must track the extra help amounts applied to the out-of-pocket threshold.
The PDP or MA-PD must reimburse the person with Medicare, and/or organizations paying cost sharing on his or her behalf, for any excess premiums and cost sharing paid after the effective date of the extra help.

## Out-of-Pocket Threshold

- The amount of money to reach catastrophic coverage
- Consists of
- Deductible - **$250** in 2006
- 25% coinsurance - **$500** in 2006
- 100% between $2,250 and $5,100 - **$2,850** in 2006
- Medicare prescription drug plan premium is not part of out-of-pocket threshold

- 8/30/05

**Notes:**
What is the out-of-pocket threshold?  This is the amount of money a person with Medicare must spend on PDP or MA-PD covered drugs in a calendar year to reach the catastrophic cap.
In the standard benefit, the out-of-pocket threshold consists of the three amounts that a person with Medicare is responsible for paying:
Deductible ($250)
25% coinsurance in the initial coverage stage ($500)
100% between $2,250 - $5,100 ($2,850)
For 2006, the total out-of-pocket threshold amount is $3,600.  The PDP or MA-PD premium is not part of the out-of-pocket threshold.

## Sources Applied to Out-of-Pocket Threshold

- Payment from
- People with Medicare themselves
- Another individual such as family member
- Medicare’s cost-sharing assistance
- Qualified State Pharmacy Assistance Program

- Out-of-Pocket Threshold

- 8/30/05

**Notes:**
Sources of payments for Medicare prescription drugs that are counted toward the out-of-pocket threshold include:
The person with Medicare, as long as he or she is not reimbursed by an insurer
Other individuals such as family members or friends, as long as they are not reimbursed by third party coverage
Medicare’s cost-sharing assistance for people with low incomes such as QMB, SLMB, or QI
A qualified SPAP (State Pharmacy Assistance Program)
A bona fide charity 
A qualified SPAP allows the person with Medicare to enroll in any Medicare prescription drug plan available to him or her and does not steer the person into one plan or another to meet the eligibility requirements or receive higher assistance amounts.  If it’s a qualified SPAP, then payment counts toward the out-of-pocket threshold.
An unqualified SPAP steers the person with Medicare into one plan or another in order to become eligible for the program or to receive a certain level of assistance.  Payments made by unqualified SPAPs do not count toward the out-of-pocket threshold.
Your plan (PDP or MA-PD) will calculate the out-of-pocket threshold for you.
The deductible does not have to be satisfied by out-of-pocket payments.  It can be paid by insurance or another payer.

## Sources Not Applied to Out-of-Pocket Threshold

- Employer/retiree group health plans
- TRICARE
- Black Lung
- VA
- Worker’s Compensation
- Automobile/no-fault/liability insurance
- Supplemental benefit portions of PDP or MA-PD

- Out-of-Pocket Threshold

- 8/30/05

**Notes:**
Here are some examples of sources of payments that would not count toward the out-of-pocket threshold:
GHP (such as retiree coverage provided by a former employer or union)
Governmental programs such as TRICARE, Black Lung, and VA
Worker’s Compensation
Automobile, no-fault, or liability insurance
Supplemental benefit portions of PDP or MA-PD

## Sources Not Applied to Out-of-Pocket Threshold

- Most third party payment arrangements
- Drugs purchased outside the US
- Over-the-counter drugs
- Drugs not on the Plan’s formulary
- Drugs not covered by law
- Indian Health Service appropriated funds

- Out-of-Pocket Threshold

- 8/30/05

**Notes:**
Other payments that don’t count toward the out-of-pocket threshold include:
Payment made by any other third party payment arrangement
Drugs purchased outside the U.S.
Over-the-counter drugs
Drugs not on the plan’s formulary (sometimes drugs not on a plan’s formulary may be approved for use through an appeals or grievance process and are then treated as being included in the formulary)
In general, Flexible Spending Accounts (FSA), Health Savings Accounts (HSA), Medical Savings Accounts (MSA), and Health Reimbursement Accounts (HRA) are not counted toward the out-of-pocket threshold.  However, certain, HRAs may be counted, depending on the specific design.
Also, payments for drugs considered not covered by law are not applied to the out-of-pocket threshold.

## How Out-of-Pocket Threshold Works

- PDPs and MA-PDs will calculate out-of-pocket threshold
- PDP will ask person with Medicare what third party coverage he/she has
- Total out-of-pocket threshold for 2006 is $3,600
- Wrap-around drug coverage doesn’t count but is beneficial

- Out-of-Pocket Threshold

- 8/30/05

**Notes:**
The plan (PDP or MA-PD) is required to calculate the out-of-pocket threshold.  They will ask what other insurance coverage the person with Medicare has so that they can accurately calculate the out-of-pocket threshold.  The plan will send the person a statement at least on a monthly basis showing how much has been spent for the year and where the person is in terms of reaching the out-of-pocket threshold for catastrophic coverage.
If a person with Medicare materially misrepresents the supplemental coverage, this constitutes grounds for termination of coverage from any Medicare prescription drug plan.
Once the $3,600 in out-of-pocket costs threshold is met, the catastrophic coverage begins.  When this occurs, Medicare will pay 80%, the Medicare prescription drug plan will pay 15%, and the person with Medicare will pay 5% of drug costs in that year.
Wrap-around coverage, drug coverage that does not count toward the out-of-pocket threshold, is still beneficial because it provides coverage where the PDPs or MA-PDs do not, and essentially delays the start of the catastrophic coverage.  Catastrophic coverage is not effective until the $3,600 out-of-pocket threshold is met.

## How Out-of-Pocket Threshold Works

- Example under standard benefit
- Met $250 deductible
- Gets a prescription for $100
- PDP pays $75
- Person with Medicare pays $25
- $250 deductible and $25 co-insurance are counted toward out-of-pocket threshold

- Out-of-Pocket Threshold

- 8/30/05

**Notes:**
Here is an example of how the out-of-pocket threshold works.
A person with Medicare has already paid the $250 deductible (assuming he or she is not receiving extra help).  Suppose this person purchases a drug that costs $100.  The PDP will pay $75 and the person is responsible for a $25 copayment.  The $25 will be counted toward the out-of-pocket threshold.  (The $250 deductible paid earlier would count also.)

## Medicare Prescription Drug Coverage

- Available only by prescription
- Prescription drugs, biologicals, insulin
- Medical supplies associated with injection of insulin
- A PDP or MA-PD may not cover all drugs
- Brand name and generic drugs will be in each formulary

- Covered Drugs

- 8/30/05

**Notes:**
A Medicare-covered prescription drug must be available only by prescription, approved by the Food and Drug Administration (FDA), used and sold in the United States, and used for a medically accepted indication.
A covered drug would include prescription drugs, biological products, and insulin.  Medical supplies associated with the injection of insulin, such as syringes, needles, alcohol swabs, and gauze, are covered.  (Used needle containers are not covered insulin supplies.)
Not all “covered drugs” will be covered by the PDP or MA-PD plan.  Each plan may develop a formulary.  A formulary is a list of preferred medications covered by the PDP or MA-PD.  Each plan is required to meet certain standards for its formulary.  For example, the plan formularies must be developed by a Pharmacy and Therapeutics Committee.  The majority of the committee’s members must be physicians and practicing pharmacists.  In addition, the formulary must include drugs in each therapeutic category and class of covered drugs.

## Excluded Drugs

- Drugs for
- Anorexia, weight loss, or weight gain
- Fertility
- Cosmetic purposes or hair growth
- Symptomatic relief of cough and colds
- Prescription vitamins and mineral products
- Except prenatal vitamins and fluoride preparations
- Non-prescription drugs
- Barbiturates
- Benzodiazepines

- Covered Drugs

- 8/30/05

**Notes:**
The drugs excluded from Medicare prescription drug coverage are the same drugs that were excluded under the Medicare-approved drug discount card.  These drugs are excluded by statute.
In addition, drugs covered under Medicare Part A or Part B are not covered under this part of Medicare (even though a deductible may apply).

## Formulary

- PDPs and MA-PDs may have a formulary
- CMS will ensure formularies do not discourage enrollment among certain groups of people
- Formulary review requirements are posted on the cms.hhs.gov/pdps website
- CMS will approve formularies

- Covered Drugs

- 8/30/05

**Notes:**
CMS relies on industry-recognized best practices for existing drug benefits to ensure non-discriminating, appropriate access for Medicare beneficiaries.
CMS looks at drug classes and categories, specific drugs, utilization management tools, and appeals processes of plans to assure that people with Medicare are able to receive access to products in a non-discriminatory and timely manner.
Plans are given the flexibility in the benefit design to promote real choice while protecting people with Medicare from discrimination.
A plan is required to give a 60-day notice to affected enrollees if it removes a Medicare-covered prescription drug from its formulary or makes changes to its tiered cost-sharing structure during a plan year.  If the notice requirement is not met, a plan must provide affected enrollees with a 60-day supply of the medication in dispute and a notice of the change when the enrollee requests a refill.
Plans can set their own drug classifications.  However, they are required to have more than one drug in their classifications.

## Tiered Formularies - Preferred Drug Levels

- Tier 1 is lowest cost sharing
- Subsequent tiers have higher cost sharing in ascending order
- CMS will review to identify drug categories that may discourage enrollment of certain people with Medicare by placing drugs in non-preferred tiers
- Plan must have exceptions procedures for tiered formularies

- Covered Drugs

- 8/30/05

**Notes:**
Some Medicare prescription drug plans may structure their plan with a preferred drug level also known as a tiered formulary.  This is a formulary that has different cost-sharing amounts depending upon the drug that is being purchased.  The lowest cost-sharing tier is tier 1 and subsequent tiers have higher cost sharing in ascending order.
CMS will review drug categories to ensure there is no discrimination by drug plans  discouraging enrollment of certain people with Medicare by placing drugs in a non-preferred tier.
Plans must have exceptions procedures for formularies and tiered cost-sharing structures.  We’ll talk about that next.

## Exceptions Process

- Ensures access to medically necessary Medicare covered prescription drugs
- Provides process for enrollee to
- Obtain a covered Medicare prescription drug at a more favorable cost-sharing level
- Obtain a covered Medicare prescription drug not on the formulary

- Covered Drugs

- 8/30/05

**Notes:**
The exceptions process is different from an appeal or grievance.  This is a process by which enrollees may have access to medically necessary Medicare-covered prescription drugs.  There are two types of exceptions: tiering exceptions and formulary exceptions.  An enrollee may request a tiering exception to obtain a Medicare covered prescription drug at a more favorable cost-sharing level, or a formulary exception to obtain a Medicare-covered prescription drug that is not on a plan’s formulary.
An enrollee’s appointed representative may request a coverage determination (including an exceptions) or any appeal on behalf of the enrollee.
A physician may request a standard or expedited coverage determination and an expedited redetermination on the enrollee’s behalf without being the enrollee’s authorized representative.

## Exception Requests

- Enrollees may request an exception if
- The enrollee is using a drug that has been removed from the formulary
- A non-formulary drug is prescribed and is medically necessary
- The cost-sharing status of a drug an enrollee is using changes
- A drug covered under a more expensive cost-sharing tier is prescribed because the drug covered under the less expensive cost-sharing tier is medically inappropriate

- Covered Drugs

- 8/30/05

**Notes:**
An enrollee may request an exception under the following circumstances:
The enrollee is using a Medicare covered prescription drug on a plan’s formulary that has been removed during the plan year for reasons other than safety
The enrollee’s physician prescribed a non-formulary Medicare-covered prescription drug for the enrollee that the physician believes is medically necessary because the formulary drug is medically inappropriate
The enrollee is using a Medicare-covered prescription drug that has been moved during the plan year from the preferred to the non-preferred cost-sharing tier
The enrollee’s physician prescribed a Medicare-covered prescription drug for the enrollee that is included in a plan’s more expensive cost-sharing tier because the prescribing physician believes the Medicare-covered prescription drug included in the less expensive cost-sharing tier is medically inappropriate for the enrollee.  The enrollee can request an exception to obtain a non-preferred Medicare-covered prescription drug at the cost-sharing terms that apply at the preferred (but not generic) level.
Generally, plans must grant exceptions when they determine that it is medically appropriate to do so. 
When a plan denies an exception request, the enrollee may appeal the plan’s decision.

## Exception Procedures

- _Adjudication timeframes_:  A plan must notify an enrollee of its determination no later than 24 or 72 hours as appropriate
- _Failure to meet adjudication timeframes_:  Forward enrollee’s request to IRE
- Generally, plans are prohibited from requiring additional exceptions requests for refills and from creating a special formulary tier or other cost-sharing requirement applicable only to Medicare covered prescription drugs approved under the exceptions process

- Beneficiary Protections

- 8/30/05

**Notes:**
The plan must notify the enrollee and the prescribing physician involved, as appropriate, of its determination as expeditiously as the enrollee’s health condition requires, but no later than 24 hours for expedited requests, or 72 hours for standard requests, after receipt of the request for a coverage determination or receipt of the physician’s oral supporting statement for exceptions requests.
A plan must provide an expedited coverage determination if it determines, or the enrollee’s prescribing physician indicates, that applying the standard timeframe for making a determination may seriously jeopardize the life or health of the enrollee or the enrollee’s ability to regain maximum function.  If a plan does not make its determination within the appropriate timeframe, it must forward the enrollee’s request to the IRE within 24 hours of the expiration of the adjudication timeframe.
Once a plan sponsor approves an exception request, it cannot require the enrollees to file additional exception requests for refills for the remainder of the plan year so long as the physician continues to prescribe the drug and it continues to be safe for treating the enrollee’s condition.
Plan sponsors are prohibited from assigning drugs approved under the exceptions process to a special formulary tier, copayment, or other cost-sharing requirement.

CMS Further Strengthens Beneficiary Protections in Part D to Ensure That All Beneficiaries Get Access to Medically Necessary Drugs:  Issue Paper 33
Coverage Determination and Appeals Processes:  Issue Paper 21

## 5-Level Appeals Process

- Redetermination by plan sponsor
- Reconsideration by Independent Review Entity
- Review by Administrative Law Judge
- Review by Medicare Appeals Council
- Review by Federal District Court

- Covered Drugs

- 8/30/05

**Notes:**
(Same as MA)
Level 1:  Redetermination
Enrollee can request when the plan’s initial coverage determination is unfavorable; plan has 7 days; can request expedited appeal, up to 72 hours
Level 2:  Reconsideration
Enrollee can request when plan’s redetermination is unfavorable; IRE has 7 days to make its decision; can request expedited appeal, up to 72 hours
The IRE must solicit the views of the prescribing physician whenever it processes either a standard or expedited reconsideration.
Level 3:  Administrative Law Judge (ALJ)
Enrollee can request when IRE’s determination is unfavorable; must meet amount in controversy requirement
Level 4:  Medicare Appeals Council (MAC)
Enrollee can request when ALJ is unfavorable; MAC is entity within Department of Health and Human Services that reviews ALJ decisions
Level 5:  Federal District Court
Enrollee may request when MAC is unfavorable; must meet amount in controversy

## Coordination with Other Insurers

- EGHP
- VA
- TRICARE
- Medicaid
- Medigap

- Coordination with Insurers

- 8/30/05

**Notes:**
There will be a system of data sharing between Medicare, PDPs, SPAPS, GHPs, insurers, and other third-party arrangements.  CMS is developing and implementing a coordination of benefits system including the facilitation of tracking out-of-pocket threshold costs that will enable pharmacies to obtain information about secondary insurers as well as the correct billing order.

## Medigap companies that have H, I, or J enrollees must send creditable coverage notice
Enrollees will be notified of their options

- Enrollees will be notified of their options

- Medigap

- Coordination with Insurers

- 8/30/05

**Notes:**
All issuers of Medigap prescription drug policies (whether standardized H, I, or J or pre-standardized or alternative standardized policies in the three waiver states, Minnesota, Massachusetts, and Wisconsin) must send a disclosure letter to all their policyholders with prescription drug coverage telling them whether the coverage they currently have is creditable or not and what their options are based on this fact.
Because some pre-standardized policies contain drug coverage that is richer than the coverage provided by plans H, I, or J, these policies may meet or exceed the actuarial equivalence test for creditable coverage.  The coverage provided by some of the drug coverage options available in the three waiver states similarly may be at least as rich as standard Medicare prescription drug coverage.  Issuers of these policies, too, will have to send the “Yes, this is a creditable coverage” disclosure letter.

New Medigap Options And Supplemental Options:  Issue Paper 11

## Medigap Plans H, I, and J in 2006

- On or after 1/1/06 may not be
- Sold
- Issued
- Renewed
- Policy can be renewed if modified to exclude drug coverage or if the person does not enroll in a Medicare prescription drug plan

- Coordination with Insurers

- 8/30/05

**Notes:**
Beginning January 1, 2006, a Medigap prescription drug policy (H, I, or J) may not be sold or issued as it exists today.  If a person with Medicare currently has one of these policies, 60 days before the Medicare prescription drug plan initial enrollment period, the company offering the policy will notify the person of his or her options to:
Enroll in a Medicare prescription drug plan and keep the policy, modified to exclude drug coverage
Enroll in a Medicare prescription drug plan and purchase a different Medigap policy without drug coverage (guaranteed issue of policies A, B, C or F—including F with the high deductible option—by the same issuer of the Medigap prescription drug plan) within 63 days after the effective date of Medicare prescription drug plan enrollment
Not enroll in a Medicare prescription drug plan, and keep the current policy with drug coverage
Enroll in one of the two new plans, K or L, if the Medigap insurer is offering these
Keep the Medigap policy with drug coverage and enroll in a Medicare prescription drug plan.  People with Medicare may have both, but may not use both at the same time.
However, people who choose the last option will not be guaranteed the option of another Medigap policy if they later enroll in a Medicare prescription drug plan.  If the plan does not provide creditable coverage, they will be subject to higher premiums if they choose to enroll in a Medicare prescription drug plan at a later date.

## New Medigap Plan – Plan K

- Plan K
- Coverage of 50% of cost sharing applicable under Parts A and B except for Part B deductible
- 100% of inpatient hospital coinsurance and 365 lifetime days of inpatient hospital services
- 100% of any cost sharing for preventive benefits
- Annual out-of-pocket limit of $4,000 in 2006

- Coordination with Insurers

- 8/30/05

**Notes:**
There are two new Medigap plans: Plans K and L.  These plans are designed to  protect beneficiaries against catastrophic costs for benefits covered under Original Medicare.  They will be available January 1, 2006.
Plan K:
Covers 50% of cost sharing under Parts A and B except for the Part B deductible
Covers 100% of inpatient hospital coinsurance and 365 lifetime days of inpatient hospital services
Covers 100% of cost sharing for preventive benefits, and
Limits the annual out-of-pocket expenses to $4,000 in 2006

## New Medigap Plan – Plan L

- Plan L
- Coverage of 75% of cost sharing applicable under Parts A and B except for Part B deductible
- 100% of inpatient hospital coinsurance and 365 lifetime days of inpatient hospital services
- 100% of any cost sharing for preventive benefits
- Annual out-of-pocket limit of $2,000 in 2006

- Coordination with Insurers

- 8/30/05

**Notes:**
The second new Medigap plan is Plan L.
Plan L:
Covers 75% of cost sharing applicable under Parts A and B except for Part B deductible
Covers 100% of inpatient hospital coinsurance and 365 lifetime days of inpatient hospital services
Covers 100% of any cost sharing for preventive benefits
Limits out-of-pocket expenses to $2,000 in 2006

## State Pharmacy Assistance Program

- Provide wrap-around coverage
- Provide same or better coverage and save money
- Reduce state costs or expand population served
- Costs incurred by SPAP are counted toward out-of-pocket threshold
- 21 SPAPs received funding to educate their enrollees

- Coordination with Insurers

- 8/30/05

**Notes:**
State Pharmacy Assistance Programs (SPAP) can provide wrap-around coverage to help people with Medicare enrolled in an SPAP with their prescription drug cost sharing.  Therefore, SPAPs will be able to provide the same or better coverage for their enrollees at a lower cost per enrollee to the state.  These savings can then be used to help reduce state budget costs or to expand the population served by their program.
The law intends that all Medicare prescription drug plans in a state be given comparable opportunities to provide benefits in a particular state.  Therefore, if an SPAP auto-enrolls its enrollees into a Medicare prescription drug plan, the costs incurred by the SPAP are not counted toward the out-of-pocket threshold.  However, if the SPAP does not auto-enroll its participants in a Medicare prescription drug plan, any cost sharing provided by the SPAP can be applied toward the out-of-pocket threshold.

## PACE Plans

- Medicare prescription drug coverage applies
- PACE organizations treated like MA-PD plans
- Many administrative requirements will be waived
- PACE participants do not have any cost sharing

- Coordination with Insurers

- 8/30/05

**Notes:**
PACE, or Program of All-inclusive Care for the Elderly, combines medical, social, and long-term care services for frail people.  The requirements for Medicare prescription drug coverage applies to PACE programs.  Many of the Medicare prescription drug coverage requirements closely parallel those already in place under the PACE program.  PACE organizations will be treated similarly to the MA-PD plans, and many of the administrative provisions will be waived for the PACE organizations.  
Although MMA requires cost-sharing responsibilities for people with Medicare, the PACE program exempts participants from paying deductibles, copayments, coinsurance, or any other cost sharing.

PACE Plans and the Drug Benefit:  Issue Paper 22

## Retiree Coverage Goals

- Maintain retiree coverage
- Minimize administrative burdens
- Minimize costs to the taxpayers

- Employment-Related Coverage Options

- 8/30/05

**Notes:**
Many times employment–related coverage is very generous.  Medicare is working with employers to help people with Medicare keep their coverage through a current or former employer or union.  The law provides incentives for employers and unions to continue offering coverage.  Medicare is committed to facilitating effective coordination of Medicare and employment-based drug coverage to minimize administrative burdens and minimize costs to the taxpayers.

Retiree Plan Sponsor Options: More Secure Coverage for Retirees:  Issue Paper 5

## Who Are Plan Sponsors?

- Plan sponsors include
- Private employers
- Unions
- Government employers (Federal, State, Local)
- Churches

- Employment-Related Coverage Options

- 8/30/05

**Notes:**
Plan sponsors who can take advantage of MMA’s plan sponsor options include:  private and public employers, as well as labor unions.  Plan sponsors have multiple options to continue coverage for their retirees.  Let’s talk about what some of these options are.

## Plan Sponsor Options

- Provide drug coverage in lieu of Medicare prescription drug coverage and receive tax-free subsidy
- Must be at least as good as Medicare prescription drug coverage to qualify
- Provide drug coverage that supplements the Medicare prescription drug coverage
- Through a separate plan that coordinates benefits with Medicare drug plans
- Through a contract with one or more Medicare drug plans
- By direct contracting with Medicare to become a Medicare drug plan
- Pay part or all of Medicare prescription drug plan premiums

- Employment-Related Coverage Options

- 8/30/05

**Notes:**
Employer-sponsored plans have several options in how they offer their coverage.
They can:
Offer coverage in place of Medicare prescription drug coverage and receive a  tax-free subsidy as long as the plan is at least as good as Medicare prescription drug plan coverage.  This is also called creditable coverage and must be actuarially equivalent.
Become a PDP or MA-PD
Contract with a PDP or MA-PD to offer coverage
Provide supplemental coverage in addition to the Medicare prescription drug plan  coverage
Pay all or part of the beneficiary’s Medicare prescription drug plan premiums
Subsidies are conditional on the individual choosing to keep the current employer/union coverage and not enroll in a Medicare prescription drug plan.
Employer-sponsored plans  are required to send creditable coverage notices to their enrollees.
Employers that apply for the subsidy must do so on an annual basis.  As a requirement of the subsidy, employers must maintain records for audit purposes and disclose to CMS a notice of creditable coverage.

## What People With Medicare Need to Know About Their Current Employment-Related Coverage

- They will get a information from employer/union telling them about their options
- They can contact their benefits administrator for more information
- They should compare their current plan to available Medicare drug plans
- Medicare is working with employers to help keep the coverage people with Medicare have through a current or former employer

- Employment-Related Coverage Options

- 8/30/05

**Notes:**
If a person with Medicare has insurance through a current or former employer, he/she should contact the benefits administrator to find out about the current drug coverage.
Note:  If a person with Medicare signs up for a PDP or MA-PD, they may lose their employment-related coverage and not be able to get it back.

## Protections for People With Medicare

- Customer service
- Pharmacy access
- Medication therapy management
- Generic drug information
- Privacy
- Uniform benefits and premiums
- Formulary protections

- 8/30/05

**Notes:**
MMA incorporates substantial protections for people with Medicare from traditional Medicare and from the Medicare Advantage program.  Some of them include:
Customer Service:  Plans must provide a toll-free telephone number and place information on the internet; notify enrollees of how much prescription drug spending they had for the year and how close they are to reaching the catastrophic coverage limit
Pharmacy Access: Plans must provide convenient access no matter where enrollees live
Medication Therapy Management:  plans must have medication therapy management programs to help those who have multiple, chronic conditions, use multiple drugs and expect to have high drug costs make sure they are taking safe combinations of drugs
Generic Drug Information:  Plans and pharmacists are required to inform enrollees if you they save money by using a generic drug
Privacy: Plans must maintain privacy and confidentiality of patient records
Uniform Benefits and Premiums:  Plans must provide all enrollees in the plan with the same benefits and charge a community-rated premium
Formulary Protections:  Formularies, or list of drugs the plan covers, must include two drugs from every therapeutic category and class with only a few exceptions

Beneficiary Protections:  Issue Paper 6

## Plan Information Dissemination

- Plans must provide information about
- Service areas
- Benefits
- Cost sharing
- Formulary
- Pharmacy access
- Other aspects of coverage available through the plan

- Protections for People With Medicare

- 8/30/05

**Notes:**
Plans are required to disseminate information on their drug coverage to their enrollees and prospective enrollees about their service areas, the benefits offered under the plan, the cost-sharing amounts, their formularies, pharmacy access, and other aspects of coverage available through the plan.
This information must be provided in writing, as well as on the Plan website and upon request through a toll-free call center.  

## For More Information

- Visit www.pharmacyissues.ihs.gov
- Visit www.medicare.gov
- Visit www.cms.hhs.gov
- Publications such as:
*Medicare & You* handbook
*Facts About Medicare Prescription Drug Plans*
- 1-800-MEDICARE

- 8/30/05

**Notes:**
There are a number of sources where you can get more information, including:
Medicare’s website for people with Medicare, www.medicare.gov
Medicare’s website for partners, www.cms.hhs.gov
Order publications such as the Medicare & You handbook or Facts About Medicare Prescriptions Drug Plans.  They can be ordered from the website or by calling 1-800-MEDICARE
The toll-free number for Medicare, 1-800-MEDICARE (1-800-633-4227) and 1-877-486-2048 for TTY users