Medicare Prescription Drug Discount

Card

Ranjani Varadarajan

PYPC 7810

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Medicare Today

41 million beneficiaries growing to over 62 million in 2020

$284 billion in expenditures growing to $898 billion in 2020

Slow to adapt to modern medicine

Need for supplemental coverage

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Medicare Prescription Drug, Improvement, and Modernization Act of 2003

Phase 1: Medicare-Approved Drug Discount Card Program (June 2004 – December 31, 2005)

Cards provide discounts (not same as insurance)

New $600 credit in 2004 and 2005 for low-income beneficiaries who do not have Medicaid, with incomes below 135% poverty

5.8 million beneficiaries currently enrolled (CMS, Dec 2004) 1.4 million low-income beneficiaries receiving $600 subsidy (of

~7.2 million eligible)

Phase 2: Medicare Prescription Drug Benefit (begins January 1, 2006)

Beneficiaries will have access to private plans that provide new prescription drug benefit under Medicare

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Medicare-approvedDrug Discount Card

New important first step toward a prescription drug benefit for Medicare beneficiaries.

Voluntary and Temporary program to provide immediate assistance by lowering prescription drug costs during 2004 and 2005, while preparations are made for the Medicare drug benefit that begins January 1, 2006.

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Medicare-approvedDrug Discount Card

Estimated savings of 10-25% on many drugs

$600 credit to provide immediate relief to certain

beneficiaries with low incomes

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Medicare-approvedDrug Discount Card

Beginning as early as May 2004 Effective as early as June 2004

Must stay with that Card for the rest of the year Exceptions

Move to another state where your current Card isn’t offered

Enter or leave a long-term care facility Leave or join a Medicare managed care plan Private company stops offering that Discount

Card

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Medicare-approvedDrug Discount Card

Each Card company sets annual enrollment fee Up to $30 Pay entire annual fee no matter when you

join New enrollment fee every year

No fee if you qualify for the $600 credit

Can’t charge any extra fees

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Some Benefits of the Discount Card

Card companies must meet Medicare standards

Beneficiaries have access to Discounts Responsive customer service system

Card company must protect privacy

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Some Benefits of the Discount Card

Many prescription drugs will be discounted Will depend upon use of a discount list

Insulin and supplies associated with its injection are included as covered drugs

$600 credit can be used to purchase any covered drugs Including drugs not on list

Cards may offer discounts on non-prescription drugs

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Some Benefits of the Discount Card

Private companies will decide Which prescription drugs will be discounted Dollar amount of the discount

You may get a better price if you Choose a generic drug instead of a brand name

drug Get your prescription drugs through the mail

Only drugs on discount drug list will be discounted

Different drugs may be discounted at different rates

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Target Audiences

Beneficiaries:

• Primary

• Secondary

Groups who interact with Beneficiaries:

• Providers

• Partners and health care stakeholders

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Eligibility

Must meet income requirements At or below 135% official poverty level

Income level for 2004

New levels will be available in February 2005 Resources are not counted Do not have to have high drug costs

Single $12,569

Married $16,862

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Eligibility For Transitional Assistance Under Drug Card

Eligibility for Transitional Assistance Must have income of less than 135% of the

poverty level ($12,123) and have no existing drug coverage

Eligibility for Special Transitional Assistance Must have income of less than 100% of the

poverty level ($8,980) and have no existing drug coverage

Medically needy individuals are eligible for the card and transitional assistance while they are in “spend down” .

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$600 Credit Eligibility

Eligibility for $600 Credit

Entitled to or enrolled in Part A and/or enrolled in Part B

No other health insurance with prescription drug coverage (except M+C or Medigap)

Income of $12,569 or less if single

Income of $16,862 (combined) or less if married

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$600 Credit in 2005

If you join between You will get

Jan. 1 - March 31, 2005 $600

April 1 - June 30, 2005 $450

July 1 - Sept. 30, 2005 $300

Oct. 1 – Dec. 31, 2005 $150

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When does the program end?

The card will expire when Medicare Part D drug benefit begins, or May 15, 2006 (whichever comes first)

Continuation of using any low-income assistance left over from 2005 until the card expires.

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TYPES OF TRANSITIONAL LOW-INCOME ASSISTANCE

100–135% FPL Transitional

Benefits

< 100% FPL Transitional Benefits

Enrollment Fee Paid be Federal Government

Paid by the Federal Government

Monetary Benefit

Generally the balance carries over to next year

Balance information made available electronically or by phone at point of service

$600 annual benefit $600 annual benefit:

Cost Sharing Requirement

10% 5%

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For more information

www.medicare.gov

http://www.medicare.gov/AssistancePrograms/Search/Results.asp

Medicare and the New Prescription Drug Benefit

Part D Medicare Drug Benefit

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PART D MEDICAREDRUG BENEFIT

Effective: January 1, 2006 Eligibility for Part D

Must be enrolled in Part A or enrolled in Part B Enrollment for Part D

Voluntary Participating Medicare beneficiaries must choose 1

plan Beneficiaries in fee-for-service Medicare will receive

Part D benefits through a Prescription Drug Plan (PDP)

Beneficiaries in Medicare Advantage Plans will receive Part D benefits through Medicare Advantage Prescription Drug Plan (MA-PDP) if their plan provides drug coverage

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Medicare Prescription Drug Benefit (Part D)

Beginning in 2006, beneficiaries will have choice of:    Fee-for-service Medicare, with access to private plans offering prescription drug

coverage only (PDPs) Medicare Advantage plans covering Medicare benefits and prescription drugs

(MA-PD plans

New plans will provide “standard” prescription drug benefit or its actuarial equivalent

Plans have flexibility (subject to certain constraints) to establish varying features: Levels of cost-sharing requirements and coverage limits other than “standard”

coverage Lists of drugs to include on their formulary, and on which tier Cost management tools

Premium and cost-sharing subsidies for beneficiaries with incomes up to 150% FPL ($13,965 for an individual in 2004) and modest assets up to $10,000

Standard Medicare Part D Drug Benefit, 2006

+ ~$420 average annual premium

$250 Deductible

$2,250 in Total Drug Costs*

$5,100 in Total Drug Costs**

25%

5%

$2,850 Gap: Beneficiary Pays 100%

*$2,250 in total spending is equivalent to $750 in out-of-pocket spending. **$5,100 in total spending is equivalent to $3,600 in out-of-pocket spending. SOURCE: Kaiser Family Foundation analysis of Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

Medicare Pays 75%

Medicare Pays 95%

No Coverage

CatastrophicCoverage

PartialCoverageup to Limit

Beneficiary Out-of-PocketSpending

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Provisions in the MMA for Low-Income Beneficiaries

Premium and cost-sharing subsidies, with most generous assistance provided to those with lowest incomes 6.5 million Medicare beneficiaries eligible for full Medicaid benefits (“dual

eligibles”) Beneficiaries with incomes <135% FPL ($12,569/individual in 2004) and

assets <$6,000/individual Beneficiaries with incomes 135%-150% FPL ($12,569-$13,965/individual

in 2004) and assets <$10,000/individual

Treatment of dual eligibles Medicaid stops paying for prescription drugs after December 31, 2005 Dual eligibles can enroll in Part D plans, or will be auto-enrolled, if

necessary Key questions:

Will “dual eligibles” transition from Medicaid to Medicare plans without falling through cracks?

Will “dual eligibles” be able to get needed medications under new Medicare plans?

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$1-$250 36%

$751-$3,60013%

$251-$75030%

No spending

10%

>$3,60011%

Gap in Standard Part D Benefit in 2006 Could Leave Many Part D Participants Vulnerable to High Out-of-

Pocket Spending

Total = 29 Million Part D Participants

NOTE: Estimates exclude premiums and assume no supplementation of Part D coverage. SOURCE: Actuarial Research Corporation analysis for the Kaiser Family Foundation, November 2004.

8.6 million

10.5 million

3.0 million

6.9 Million Part D Participants Reach

the “Doughnut Hole”in 2006

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Challenges for Beneficiaries

Learning about Part D Comparing features of plans available within a region, including premiums,

cost-sharing, formularies, and pharmacy networks Learning about low-income subsidy programs and eligibility rules Learning about the rules of enrollment, including premium penalty for

delayed enrollment and annual plan lock-in

Enrolling in Part D Choosing between traditional fee-for-service and a stand-alone PDP, or a

Medicare Advantage plan that covers prescription drugs (where available) Enrolling in low-income subsidy program, if eligible, at Social Security or

state Medicaid office

Using the New Benefit Tracking total and out-of-pocket drug spending Coordinating Part D with other sources of drug coverage (state pharmacy

assistance programs, employer coverage, etc.)

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Decisions for Medicare Beneficiaries, 2006

Traditional Medicare

No Part D coverage

Part D Prescription

Drug Plan

Medicare Advantage

HMO (local)

PPO (regional)

Private Fee-for-Service

Enroll in Part D Plan

Apply for Low-Income Subsidy

Medicaid OfficeSocial Security Office

Meet Income and Asset Test?

Dual Eligibles

Below 100% FPL: No premium or deductible,

$1/generic Rx, $3/brand name Rx, pay nothing after $5,100 in Rx

costs

Below 135% FPL: Subsidy for premium, no deductible, $2/generic Rx,

$5/brand name Rx, pay nothing after $5,100 in Rx costs

Below 150% FPL: Subsidy for premium on sliding

scale, $50 deductible, 15% coinsurance to $5,100 in Rx

costs, $2/generic Rx, $5/brand name Rx after $5,100

If yes, qualify for:

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Conclusions

Implementation deadlines pose big challenge for CMS, plans, beneficiaries Plan bids due in June, awarded September, plans announced Oct 15, 2005 Low-income subsidy enrollment begins June 2005 Initial enrollment period from Nov 15, 2005 to May 15, 2006

Beneficiary education will be critical to ease confusion, help transition of dual eligibles to Part D, and inform plan choice

Medicare drug benefit projected to reduce out-of-pocket drug spending, especially for low-income, but many unknowns

Will new prescription drug-only plans emerge? Will seniors sign up for Part D and low-income subsidies? Will dual eligibles transition from Medicaid to Medicare? Will new drug plans cover needed medications?

Important to monitor beneficiaries’ access to needed medications and out-of-pocket prescription drug spending as new Medicare drug benefit is implemented.

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References

Duzor+Presentation.ppt

http://www.uwex.edu/ces/flp/health/medicare_act.ppt

medicare .ppt

www.medicare.gov

Guide to choosing Medicare-approved drug discount card

Medicare_Rx_Bill.ppt