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Maryland SPAP Premium Subsidies to MedicareRx Plans

National Association of Comprehensive Health Insurance PlansOctober 16, 2008

Richard PopperExecutive Director

Maryland Health Insurance Plan

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What is an SPAP?State Pharmaceutical Assistance Program

Established in certain states, starting in 1970’s to provide drug coverage to limited income Medicare recipients or other non-Medicare uninsured lacking Rx coverage

Serve populations similar to risk pools – self employed/small business retirees, widows and divorcees who lack employer-sponsored retiree Rx coverage

Serve individuals with income/resources that exceed standards for dual Medicaid/Medicare eligibility (which provides low or no-cost comprehensive Rx coverage)

Largely state general fund subsidized, and often managed by state Medicaid unit

Some state enrollment large – PA, NY, NJ each have appx. 100,000 members

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SPAPs & Implementation of Medicare Part D

• 24 state SPAPs were induced to enroll members into MedicareRx in 2006, to shift state costs to federal government

• SPAPs and Medicaid instrumental in MedicareRx early enrollment success due to auto-assigment

• SPAPs did not close after Part D due to disparities between State programs and Medicare:– Formulary limits (no Benzodiazephine & barbiturates) and varieties

among plans– MedicareRx copays higher than expiring SPAP, especially for brand

drugs ($20 vrs $94 copay)– MedicareRx monthly premiums often higher ($10 vrs. $104)– Part D coverage gap (“donut hole”) of up to $3,454 in 2009 once annual

drug costs exceed $2,700– Numerous, numerous Part D plan (PDP) options in states (97 in

Maryland), vs. expiring single monopoly state plan– Federal low income subsidy (LIS-”Extra Help”) has low eligibility

threshold:150% of poverty ($15,600 income) & $11,900 cash resources

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Medicare Part D: Costs and Choices Rise with Income

Above 150% of poverty

Standard Medicare Drug Program

(average costs)

Below 150% of poverty + $11,990 in

assetsCosts with Full

Federal Extra Help – Low Income

Subsidy

Costs with Maryland SPDAP Assistance

Monthly Premium $33 $0 Average $8 per month ($33-25 = $8).

Optional Deductible Up to $275 $0 Up to $265

Co-Insurance for Drug Usage up to $2,510

Average of 25% of the drug costs up to $2,510

$0 25% of the drug costs up to $2,400

Direct out of pocket Costs for costs Between $2,510 - $5,726

Up to $3,216 $1-$3 Up to $2,116

($1,200 subsidy)

Direct Costs for Drug Usage Over $5,726

5% of the costs above $5,726

5% of the costs above $5,726

Plan Options 97 25

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SPAPs Reconfigured Under MedicareRx

SPAPs now provide:• wrap-around subsidies/benefits to Part D• Education & enrollment assistance in choosing option• State copay/coinsurance subsidies is only funding (other

than independent charities or family contrib.) that counts toward coverage gap “True out of pocket costs” (TrOOP) to help member reach “other shore” of coverage gap, into Part D catastrophic coverage– Employer subsidies don’t– Ryan White funding doesn’t– Pharmaceutical industry charities don’t

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Federal Requirements of SPAPs

• Can’t be directly funded by MedicareRx plans

• Can’t discriminate in coordinating with preferred or subset of MedicareRx plan options in state

• Must coordinate state subsidies with all MedicareRx plans which SPAP members choose to enroll

Some exceptions where state is individual’s authorized representative, or state issues an RFP solicitation to PDPs with “reasonable” and “legitimate” purpose for coordinating care of members with a subset of PDPs

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SPAP Administrative OptionsCMS guidelines for SPAPs in Part D “Coordination of Benefits” guidance1) Hire a PBM for point of sale 3rd party payor of copays, coinsurance or non-

covered drugs• Advantage - SPAP has some control over subsidy

- PBM can coordinate with all PDPs - Can subsidize all phases of MedicareRx

• Con Lots of payment reconciliation and reimbursement with PDPs

2) Enter into lump sum funding arrangements directly with MedicareRx plans willing to negotiate

• Advantage PDP responsible for administration of state subsidy

• Con Not all PDPs required to administer wrap around subsidies

3) Subsidize MedicareRx premiums• Con Must coordinate with ALL MedicareRx plans

Does not assist members with significant drug costs

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Maryland Senior Prescription Drug Assistance Program (SPDAP)

Currently Assists 26,000 Marylanders with income below 300% fpl, who are ineligible for 100% LIS, by reducing their Medicare Rx premium by up to $25 per month, under any Medicare Prescription Drug Plan or Medicare Advantage

New $1,200 Coverage Gap (donut hole) subsidy in 2009

www.marylandspdap.com

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Maryland SPDAP “Landscape”

• In 2006 - 18 Drug Plan sponsors, offering 47 options

• In 2007 – 24 Drug Plan sponsors, offering 54 options

• In 2008 - 26 Drug Plan sponsors, offering 97 options

• Approximately 388 different MedicareRx plan payment variations, including standard premiums, and 25%, 50%, 75% LIS variation

• Only 13% of Maryland SPAP participants are eligibe for partial federal subsidies (135-150% fpl)

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Membership Distribution by Plan – May 2008

ORGANIZATION NAME 0% LIS 25% LIS 50% LIS 75% LIS Total

Aetna Medicare 895 14 24 20 953 AmeriGroup Community Care 7 0 1 1 9 Bravo Health 312 16 11 13 352 Care Improvement Plus 349 8 13 11 381 CIGNA Medicare Rx 193 5 10 8 216 Coventry AdvantraRx 581 6 8 3 598 EnvisionRx Plus 39 1 0 1 41 Erickson Advantage 62 0 0 0 62 Evercare® Health Plans 60 2 2 1 65 First Health Part D 229 6 13 4 252 Health Net 28 0 1 2 31 HealthSpring Prescription Drug Plan 10 0 1 0 11 Hopkins Elder Plus 2 0 0 0 2 Humana Insurance Company 3715 58 68 49 3,890 Kaiser Permanente Medicare Plus 59 0 1 1 61 Medco Medicare Prescription Plan 67 2 5 2 76 Medi-CareFirst BlueCross BlueShield 9303 74 84 71 9,532 MEMBERHEALTH 267 12 8 12 299 Pennsylvania Life Insurance Company 138 4 3 2 147 RxAmerica 115 4 9 4 132 Secure Horizons 1 0 0 0 1 SierraRx 26 0 0 0 26 SilverScript Insurance Company 175 3 7 7 192 Sterling Life Insurance Company 26 0 0 0 26 Today's Options 49 0 1 0 50 UniCare 77 3 2 3 85 Unicare Life & Health Ins. Company 40 0 0 0 40 United American Insurance Company 858 9 5 12 884 United Healthcare 5416 86 80 73 5,655 WellCare 893 15 23 22 953

Subtotal 23,992 328 380 322 25,022

Members with no PDP 671

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2007 SPDAP Participants Coverage Gap Costs Among Certain Plans

SPDAP Participants

Participants in Coverage Gap % in Gap

Estimated Average Member Cost in Gap

Estimated Median Cost in Gap

Humana 3,632 188 5.2% $1,156 $1,100

Medi-CareFirst 11,271 3,366 29.9% $1,616 $1,250

UnitedHealth Plan 6,580 1,888 28.7% $942 $591

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Approximately Half of those in Coverage Gap have costs under $1,200

Member Amount Paid Percent by In Coverage Gap Max Gap Expense 07

(1) $0 - $150 0%(2) $151 - $500 5%(3) $501 - $1000 28%(4) $1001 - $1500 26%(5) $1501+ 41%

MEDICARE PART D YEARLY COSTS FOR AN ACTUAL SPDAP MEMBER – Plan A

(Less expensive than plan B $1,846)

ATENOLOL TAB 50MG HYDROCHLOROTHIAZIDE TAB 25MG LORAZEPAM TAB 0.5MG Lotrel CAP 10-20mgLotrel CAP 5-20mg LOVASTATIN TAB 40MGSPIRONOLACTONE TAB 50MG

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Impact of $1,200 Coverage Gap Subsidy

Total Annual Cost of Drugs

M edicare Drug P lan

Pays Person PaysMedicare Drug

Plan PaysMaryland

SPDAP pays Person PaysUp to $2,700 (Initial Medicare Coverage Lim it) $1,804 $896 $1,804 $896From $2,700 to $6,153 (doughnut hole) $0 $3,454 $0 up to $1,200 up to $2,254Catastrophic Coverage (over $4,350 in member OOP costs) 95% 5% 95% 5%

Current 2009 New Maryland SPDAP Subsidy

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Contract Administrators Key

• Maryland directly contracted with Affiliated Computer Services, Inc (ACS) to implement and run SPDAP, Oct 05 to Dec 07. Over 50,000 calls and 600,000 subsidy payments made

• Competitive solicitation awarded contract to Pool Administrators, Inc (PAI), effective Jan 08. PAI developed proprietary SQL payment application and is assisting in coverage gap subsidy implementation.

• Key to successful subsidy coordination of payments for 25,000 members among 97 MedicareRx options is CMS COB interface, where monthy file exchange thru CMS tells SPAP what PDP option each member is in, and also informs Rx plans of SPAP eligibility

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SPDAP Outreach Efforts

SPDAP has held 200 community enrollment & education events throughout Maryland since Sept. 2005, attended by 8,000 individuals (35% of program participants). Conducted by SPDAP outreach contractor gkv Reach, and MHIP staff.

Approximately 68,000 calls have been answered or made by program between September 05 thru August 08.

35 coverage gap events throughout Maryland are planned for October-December 2008