Medicare D: What Counties Need to Know

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Medicare D What Counties Need to Know

• Presented by
• Texas Association of Counties Health and Employee
  Benefits Pool
• August 10, 2005

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What is Medicare D?

• New prescription drug coverage from Medicare
  Modernization Act (2003)
• Available to those on Medicare Part A B
• Drug discount card began 2004
• Drug coverage will begin January 1, 2006
• Coverage offered through competing Prescription
  Drug Plans (PDP) or Medicare Advantage Drug Plans
  (MA-PD)
• Center for Medicare and Medicaid Services (CMS)
  has oversight of the program

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Part D Benefits
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Part D Enrollment

• Initial open enrollment period for Part D is
  November 15, 2005 - May 15, 2006
• After May 15, 2006, enrollment period for Part D
  will run concurrent with the enrollment period
  for Part B
• If an individual does not enroll during their
  enrollment period, they will have a higher
  premiumunless they have creditable coverage

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Creditable Coverage

• Overview of creditable coverage issues at
• http//www.cms.hhs.gov/medicarereform/pdbma/Overvi
  ewofCreditableCoverageIssue.pdf
• A prescription drug plan is deemed to be
  creditable if
• Provides for both brand name and generic
• Provides reasonable access to retail, and
  optionally, for mail order
• Plan is designed to pay on avg. at least 60 of
  participants prescription drug expenses
• Satisfies at least one of the following
• No annual max, or max benefit payable of at least
  25,000
• Rx coverage has actuarial expectation that the
  amount payable by the plan will be at least
  2,000 per Medicare eligible individual in 2006
• If have integrated health Rx coverage, the
  integrated deductible is no more than 250 per
  year has no annual max or a max payable of at
  least 25,000 no less than 1,000,000 lifetime
  max.

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Notice of Creditable Coverage

• Entities are required to disclose to CMS
  beneficiaries whether their Rx coverage is
  creditable or non-creditable
• Disclosure must be made annually, and upon any
  change that affects whether coverage is
  creditable
• CMS has provided model language for disclosure
  notices at
• http//www.cms.hhs.gov/medicarereform/CCguidances
  .asp
• Plan sponsors are required to notify all Medicare
  eligible beneficiaries (active, retired, ee
  dep) of the status of their plan by November 15,
  2005

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Notice of Creditable Coverage

• If the Rx coverage is creditable, the disclosure
  notice must address the following information
  elements
• That the entity has determined that the
  prescription drug coverage it provides is
  creditable
• The meaning of creditable coverage i.e., that the
  amount the plan expects to pay in 2006 is the
  same or more than Medicare D benefits
• An explanation of why creditable coverage is
  important and a caution that even though coverage
  is creditable, the person could be subject to a
  higher Part D premium if the person subsequently
  has a break in creditable coverage of more than
  63 days before enrolling in Part D
• Explanation of rights to a disclosure notice
• Explanation of the options beneficiary will have
  available to them when Part D becomes available
• Whether Medicare individuals will still be
  eligible to receive all of their current health
  coverage if they choose to enroll in Part D
• Information on how to get extra help paying for a
  Medicare prescription drug plan including the
  contact information for the Social Security
  Administration

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Non-Creditable Coverage

• If the Rx coverage is determined by the entity to
  be non-creditable coverage, disclosure notice
  must include
• That the entity has determined the coverage to be
  non-creditable
• The meaning of creditable coverage
• That the individual may only enroll in Part D
  from 11/15/05 through 5/15/06
• An explanation of why creditable coverage is
  important and that the individual may be subject
  to higher Part D premiums if he fails to enroll
  in Part D when first eligible
• Explanation of rights to a disclosure notice
• Explanation of the options beneficiary will have
  available to them when Part D becomes available
• Whether Medicare individuals will still be
  eligible to receive all of their current health
  coverage if they choose to enroll in Part D
• Information on how to get extra help paying for a
  Medicare prescription drug plan including the
  contact information for the Social Security
  Administration

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Employer Options

• Congress did not want employers to abandon
  retiree coverage for drugs
• Several options exist for employers
• Apply for employer subsidy
• Work with an open PDP to file an indirect
  contract Waiver PDP
• Apply to become a direct-contract Waiver PDP
• Provide a wrap plan to retirees
• Drop coverage

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Advantages of Subsidy Option

• Minimal or no disruption to retirees
• Minimal operational changes
• No coordination of benefit or TrOOP facilitation
• Simplified communication compared to other
  options
• No restrictions on service areas
• Later CMS deadlines than other options
• Easier management of non-calendar year plans

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Subsidy Basics

• Retiree Drug Subsidy http//rds.cms.hhs.gov/
• Employer keeps existing plan designs as long as
  they are actuarially equivalent to Part D
• Employer will receive up to 28 subsidy for all
  qualifying drug claims between 250 and 5,000
  for qualified members
• Subsidy is estimated to be worth 668 per
  beneficiary in 2006

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Subsidy Basics

• Employer cannot submit claim for subsidy payment
  if member does not qualify for Part D or if the
  retiree is already participating in a PDP or
  MA-PD
• Employer is responsible for identifying those
  retirees dependents for which they can claim
  the subsidy by reporting these members to CMS
• Must pass a no windfall test. Employers who do
  not make a substantial premium contribution for
  retiree coverage may not be eligible for the
  subsidy

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Who is qualified member?

• Individual is eligible for Part D if
• Entitled to Part A and/or enrolled in Part B as
  of the effective date of coverage under Part D
• Resides in service area of a PDP or MA-PD
• Employer cannot submit a retirees claim for
  subsidy if he is enrolled in Part D or if the
  retiree is participating in a PDP or MA-PD

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Five Steps to Receive the Retiree Drug Subsidy

• Submit application to CMS by September 30, 2005
• Attach to the application, an actuarys
  attestation that the plan meets the actuarial
  equivalence standard
• Certify that the creditable coverage status has
  been, or will be, disclosed to plan participants
  and CMS
• Electronically submit (to CMS) periodically
  update enrollment information about retirees
  dependent
• Electronically submit aggregate data about drug
  costs incurred and reconcile costs at year-end
  submission of detailed individual claims is not
  required (records must be retained for audits for
  6 years). Plan sponsors can choose whether to
  submit data and receive payments monthly,
  quarterly or annually.
• Resource http//rds.cms.hhs.gov/how_to_apply/

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Employer To-Do List

• Update your retiree data (names, DOB, address,
  dependents, HIC , etc.) so that you can
  communicate with your beneficiaries
• Find out what your carrier, TPA or PBM can do to
  assist you
• Determine if your plan is creditable
• Obtain actuary attestation (if applying for
  subsidy)
• Submit subsidy application by September 30, 2005
  (if applying for subsidy)
• Distribute creditable coverage disclosure by
  November 30, 2005

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Resources

• CMS home page for Medicare reform
  http//www.cms.hhs.gov/medicarereform
• CMS drug coverage FAQs
• http//www.cms.hhs.gov/medicarereform/drugcoverag
  efaqs.asp
• Home page for Retiree Drug Subsidy
• http//rds.cms.hhs.gov
• Enrolling in Medicare information
• http//www.medicare.gov/publications/pubs/pdf/110
  36.pdf
• Official website for the Social Security
  Administration
• www.socialsecurity.gov