Training and
February Q and A
Manjusha P. Kulkarni and Randolph T.
Boyle, Staff Attorneys,
National Health Law Program
Question: I have a number of clients who are dual
eligibles, that is, eligible for both Medicare and Medicaid. How will they be impacted by the Medicare Part
D prescription drug benefit? Is there
anything I can do before it is implemented in January 2006?
Answer: The new Medicare Prescription Drug
benefit will have a huge impact on dual eligibles, moving them into federally-regulated,
private prescription drug plans and possibly imposing greater cost-sharing and
a more limited array of drugs to cover their health care needs. There are several advocacy steps you can (and
should) take now— before Medicare Part D goes into effect.
Background
on Medicare Prescription Drug Benefit
On January 1, 2006, Medicare
will begin providing payment for outpatient prescription drugs through private
plans. This change comes as a result of
the enactment of the Medicare Prescription Drug, Improvement and Modernization
Act of 2003.[1] The Medicare Modernization Act will
fundamentally alter the Medicare program for 35 million elderly Americans and
will also have a dramatic impact on the over six million seniors and
individuals with disabilities who receive Medicaid as well as Medicare benefits
and are known as dual eligibles. The law
adds coverage of outpatient prescription drugs to Medicare, but also terminates
federal funding of Medicaid prescription drug coverage for all dual eligibles.
Medicare Part D, as the
Medicare prescription drug benefit is called, will provide coverage of
medications through prescription drug plans.
What drugs will be covered, however, depends on the plan. While there are certain federal requirements
on plans, they have been given broad flexibility to choose which drugs to
include in their formularies. Moreover,
plans are allowed to limit the number of drugs available in a therapeutic class
to two and may even define what constitutes a therapeutic class for purposes of
developing their formularies.
In obtaining medications
through Medicare Part D, beneficiaries can challenge plan decisions to deny
coverage of a particular prescription drug on its formulary. Beneficiaries can also appeal denials of coverage
for those drugs not on the formulary if the prescribing physician has
determined that no drugs on the formulary are as effective as the prescribed
drug or if the drugs in the formulary have
adverse side-effects for that particular beneficiary.
While Medicare Part D will
pay for prescription drugs, many beneficiaries are likely to have significant
cost-sharing obligations. Dual eligibles
and other low-income Medicare beneficiaries may apply for subsidies to pay many
of these costs. Beneficiaries who are
not eligible for low-income subsidies will have to pay the first $250 in
prescription drug costs, known as their deductible. They will also have to pay for 25% of total
drug costs between $250 and $2250 and 100% of drug costs between $2250 and $5100,
the latter of which is commonly referred to as “the donut hole.” Dual eligibles, however, will not be affected
by the donut hole. Additionally,
beneficiaries who are not low-income will have to pay the higher of $2 for
generic drugs and $5 for brand name drugs or 5% coinsurance after they reach
the $3600 out-of-pocket limit.
Impact on
Dual Eligibles
As mentioned above, dual
eligibles, like other Medicare recipients, will obtain their prescriptions
through the new Medicare program beginning January 2006. In other words, the Medicaid program will no
longer cover most prescription drugs for individuals who receive Medicare. While all
Medicare beneficiaries will be affected by Medicare Part D, there will be a
greater impact on dual eligibles because they are much poorer and tend to have
more significant health care needs than other Medicare beneficiaries. In order to qualify for Medicaid coverage,
seniors and individuals with disabilities must have incomes below the federal
poverty level and very few assets; because of this, more than 70 percent of
dual eligibles have annual incomes below $10,000.[2] Furthermore, dual eligibles are more than
twice as likely to be in fair or poor health as other Medicare beneficiaries.[3] Their
lower income and greater health care needs mean that any increases in
co-payments or limitations in coverage will likely result in less access to
medically necessary medications.
Currently, under Medicaid,
dual eligibles have access to a full range of drugs and have minimal co-payments
because of federal Medicaid mandates. Federal law requires states covering
prescription drugs to provide access to FDA-approved drugs of manufacturers
that have agreed to state rebates.[4] In terms of co-payments, states can only
charge “nominal” amounts, which usually range from $1 to $3, depending on the
type of Medicaid service.[5] This stands in sharp contrast to co-payments
charged by private health plans, as evidenced by a study conducted by the
Kaiser Family Foundation. In their eight
state survey, seniors receiving Medicaid prescription drug coverage reported
fewer out-of-pocket expenses than those with employer sponsored coverage, HMO
plans with drug coverage, Medi-gap and state pharmacy benefits.[6]
Implementation of Medicare Part D
To access Medicare
prescription drug benefits, dual eligibles can receive medications through a
private, stand-alone prescription drug plan or they can join an integrated
Medicare Advantage plan, the Medicare managed care plan previously called
Medicare + Choice which will provide all covered benefits. Medicare will pay the Part D deductibles or
premiums for dual eligibles enrolling in average or low-cost prescription drug
plans. Additionally, dual eligibles can
obtain subsidies for other cost-sharing obligations associated with Part
D. This means that they will not be
subject to 100% of the costs exceeding $2250 that apply to other Medicare
beneficiaries. However,
non-institutionalized dual eligibles with incomes below 100% of the federal
poverty level will have to pay co-payments of $1 for each generic drug and $3
for each name brand drug and those with incomes above that amount will have to
pay $2 copays for generic drug and $5 copays for name brand drugs.[7]
The Medicare Modernization
Act requires that the Secretary of Health and Human Services set up a process
for enrolling Medicare beneficiaries, including dual eligibles, in Part D
plans. Information on Part D plans will
be made available to all Medicare beneficiaries on or around October 15.[8] All dual eligibles will be automatically
enrolled in a prescription drug plan, but will be able to switch plans before
Medicare Part D benefits begin in January.
Initially individuals wishing to change plans can do so during open
enrollment from November 15 through December 31, 2005, and at least once a year
in subsequent years.
Because of these limited periods,
beneficiaries will have little time to learn about their options and even less
time to make a choice. While information
about Medicare Part D is supposed to be provided to dual eligibles by the Social Security Administration and state agencies, many
beneficiaries may still try to obtain prescription drugs with their Medicaid
cards after January 1, 2006. Others may
not understand how to use their new prescription drug cards or realize that
they can no longer go to the same pharmacies as before. Providers who do not know which plan a
beneficiary is in will not know what formulary applies or whether a new
treatment regimen should be considered.
These beneficiaries may experience treatment interruptions resulting in
severe health complications. For these
reasons, it is critical that health and disability advocates conduct
beneficiary outreach, plan ahead with state Medicaid officials and coordinate
with providers.
Timeline
for Selecting and Enrolling in a Medicare Part D Plan[9]
March 2005: To
test its materials, the Social Security Administration (SSA) will mail a
low-income subsidy letter and application to 2000 beneficiaries in 41 zip
codes.
May – August 2005: SSA
will send notices to half of all Medicare beneficiaries informing them of the
low-income subsidy to provide premium and co-payment assistance.
June 2005: Those
who are deemed eligible for the low-income subsidy will be notified that they
do not have to apply.
July 1, 2005: State
Medicaid agencies and SSA offices will begin making eligibility determinations
on applications for the low-income subsidy.
Individuals can also apply on line or by phone.
October 15, 2005: Materials
describing Part D plans provided to all Medicare beneficiaries. Dual eligibles may receive materials about
the Part D plan in which they have been auto-enrolled earlier in the Fall.
November 15 – Open
enrollment period for dual eligibles initially seeking to
December 31, 2005: switch
prescription drug plans.
January 1, 2006: Medicare
Part D prescription drug benefits begin. Dual eligibles can no longer use Medicaid
coverage to obtain most prescription drugs.
Advocacy
Steps
Beneficiary Outreach
Beneficiary outreach will be
critical to the ability of dual eligibles to obtain needed medications through
Medicare Part D. Beneficiaries will need
the information and assistance to make choices that best meet their particular
circumstances. They will need to know
what changes they may need to make— new drug regimens, different pharmacies,
co-payments— and may need assistance with determining how to incorporate the
changes into their lives. For example, many dual eligibles will likely have $1-3 co-payments for
medications that they previously obtained without co-payments. In addition, their right to challenge plan
decisions will probably vary greatly from the Medicaid appeals process they
have used in the past.
Dual eligibles must be
informed of the following:
Plan Ahead
Advocates now should start
working with beneficiaries, providers, and state agencies to map out state
transition plans and strategies to deal with inevitable problems. You will want to make sure that your state is
adequately planning to avoid disruptions in coverage. This might be achieved through working groups
with state agencies, physicians, pharmacies and plans. Proper planning might also be achieved
through collaboration with your state Medicaid Medical Care Advisory Committee,
through a consumer or provider representative on the MCAC or as public comments
during MCAC meetings.
If your state has a state-funded drug assistance program, there may
be mechanisms in place that could guarantee payment of drugs for these
individuals while problems are ironed out.
For beneficiaries in drug plans that do not cover some of their
medications, a state-funded wraparound benefit may be necessary. State agency staff should be encouraged to
plan ahead because if they do a poor job of assisting the beneficiaries of the
new program the state could end up paying more to cover people’s medications or
dealing with beneficiaries’ health crises.
Coordinate with Providers
Providers, including
physicians, nurses, hospitals, pharmacies and community clinics, also will need
to understand Medicare Part D and how to assist beneficiaries with potential
benefits disruptions. They may need to
help beneficiaries understand plan formularies and make good choices. To do so, providers will also need training
on the new program, available funding streams, and information on where they can
obtain reliable assistance for themselves and beneficiaries.
Other Advocacy Tips
Resources on
Medicare Part D
[1] See 42 U.S.C. 1395w-101 et seq.
[2] Jocelyn Guyer
and Andy Schneider, Implications of the
New Medicare Law for Dual Eligibles: 10
Key Questions and Answers, The Kaiser Commission on Medicaid and the Uninsured,
[3]
[4] See 42 U.S.C. § 1396r-8(d)(4).
[5] See 42 C.F.R. § 447.53.
[6]
[7]
[8] Materials
regarding the low-income subsidy will be mailed to Medicare beneficiaries
beginning in May 2005. For more
information, refer to the timeline on the next page.
[9] Vicki
Gottlich, Mark Your Calendars! A Timetable for Medicare Part D
Implementation, Center for Medicare Advocacy, Inc.,
[10] Jeffrey S.
Crowley, MMA and Dual Eligibles: A Transition in Crisis, Health Policy
Institute,