Medicare Part D Outpatient Prescription Drug Benefit

1
Medicare Part DOutpatient Prescription Drug
Benefit

• David E. Hickman, Pharm D
• Director, Outpatient Pharmacy Services Sutter
  Health

2
MMA Medicare Advantage Plans

• Types of Medicare Advantage Plans
• Medicare Manage Care Plans (HMO)
• Medicare Preferred Provider Organizations (PPO)
  Plans
• Medicare Private Fee-for-Service (PFFS) plans
• Medicare Specialty Plans (or Special Needs Plans)

3
Medicare Part D Enrollment

• Must be entitled to Part A or enrolled in Part B
• Enrollment in Part D in voluntary, but penalties
  apply for delay in enrolling
• Beneficiary must choose a Prescription Drug Plan
  (PDP) or Medicare Advantage Drug Plan (MA-PD)
• Initial enrollment November 15, 2005 through May
  15, 2006
• Enrollment for 2006 and beyond November 15
  through December 31

4
Design of the Basic Part D Benefit
Beneficiary Out-of-Pocket Spending Medicare Part
D Benefit
Catastrophic Coverage
5
5,1001
No Coverage (donut hole)
100 cost-sharing
2,250
25
Partial Coverage
250
Deductible
National average of 35 per month Part D premium
(420 total for year)
1Equivalent to 3,600 in out-of-pocket spending
3,600 250 (deductible) 500 (25
cost-sharing on 2,000) 2,850 (100
cost-sharing in the gap). Source Kaiser Family
Foundation, November 2003.
5
Beneficiaries Cost

• Standard (or actuarially equivalent or enhanced)
• Deductible of 250
• Premium estimated to be 35 per month (420
  annual)
• Co-payments
• 3600 out of pocket maximum to catastrophic
  coverage (TrOOP)
• Even with coverage gap, the benefit covers an
  average of 53 cents on the dollar
• Low Income Subsidies
• Deductible and Premiums
• Dual eligibles and lt135 of poverty level none
• Co-payments
• Dual eligibles in nursing homes none
• Dual eligilbles community dwelling and lt100
  poverty - 1 and 3
• lt135 proverty level - 2 and 5
• 135-150 poverty level (not above SSI resource
  limit) - 50 deductible and 15 sliding scale
  co-insurance
• Eligible for full or partial subsidies no
  doughnut hole

6
Delivery of Part D Benefits Intended to Come From
Capitated, At-Risk Plans

• Prescription Drug Plan (PDP)
• Covers prescription drugs only
• Bears insurance risk for members drug spend,
  within limits
• Market does not currently exist
• Current PBMs would have to restructure to bear
  risk
• Medicare Advantage Prescription Drug (MA-PD)
  Plan
• Covers medical benefits prescription drugs
• Bears insurance risk for medical services and
  drugs, within limits for drugs only
• Market currently exists (Medicare Advantage)
• Plans can trade off between drug and medical
  risk, unlike PDPs

7
Private Plans will Deliver Drug Benefit
Offerings will Vary by Region

• Plans will bid to offer the prescription drug
  benefit to beneficiaries in a certain region, or
  multiple regions (possibly including nationally)
• Each enrollee must have a choice of at least two
  plans in their region
• At least one plan choice must be a stand-alone
  PDP, so beneficiary can remain in FFS Medicare
  for medical benefits
• 34 PDP service regions
• Each state is assigned to only one region
• California is its own region
• CMS hopes that this configuration will encourage
  robust participation and competition among plans

8
34 PDP Regions in 2006


NOTE Each territory is its own PDP. SOURCE
CMS, http//www.cms.hhs.gov/medicarereform/mmaregi
ons/, December 6, 2004.
9
Review of Formularies

• CMS will evaluate Part D plans proposed
  formularies for potentially discriminatory
  practices
• Review includes
• Pharmacy and Therapeutics (PT) committee
  structure and role
• Formulary drug lists
• Use of drug benefit management tools Pharmacy and
  Therapeutics Committee
• USP Model Guidelines as a safe harbor for
  classification system only
• USP establishes 143 therapeutic categories and
  classes of drugs
• Formularies will need to include at least two
  drugs in each category or class
• USP also established Key Drug Types
• CMS will review cost-sharing tier placement to
  assure that the formulary does not discourage
  enrollment of certain beneficiaries
• CMS will analyze the availability and tier
  position for the most commonly prescribed drug
  classes for the Medicare population in terms of
  cost and utilization

10
Review of Formularies

• CMS will analyze formularies to determine whether
  appropriate access is afforded to drugs addressed
  in widely accepted national treatment guidelines
  for the following conditions

• Asthma
• Diabetes
• Chronic stable angina
• Atrial fibrillation
• Heart failure
• Thrombosis
• Lipid disorders
• Hypertension
• Chronic obstructive pulmonary disease
• Dementia
• Depression
• Bipolar disorder
• Schizophrenia

• Benign prostatic hyperplasia
• Osteoporosis
• Migraine
• Gastroesophageal reflux disease
• Epilepsy
• Parkinsons disease
• End stage renal disease
• Hepatitis
• Tuberculosis
• Community-acquired pneumonia
• Rheumatoid arthritis
• Multiple sclerosis
• HIV

11
Review of Formularies

• CMS expects that best practice formularies will
  contain a majority of drugs within the
  following therapeutic classes
• Antidepressants
• Antipsychotics
• Anticonvulsants
• Antiretrovirals
• Immunosuppressants
• Antineoplastics
• CMS will ensure that beneficiaries who are being
  treated with these classes of medications have
  uninterrupted access to all drugs in that class
  via formulary inclusion, utilization management
  tools, or exceptions processes

12
Review of Formularies

• Excluded Drugs
• Drugs included under Medicare Part A or Part B
• Benzodiazepines
• Barbiturates
• Drugs to treat weight loss or gain
• OTC drugs
• Fertility drug and cosmetic drugs
• Vitamins and minerals except prenatal vitamins
  and fluoride
• Drugs to relieve cold and cough symptoms
• Outpatient drugs for which the manufacturer seeks
  to require associated tests purchased exclusively
  from the manufacturer

13
Auto-Enrollment of Dual Eligibles, Facilitated
Enrollment for Others

• CMS will auto-enroll full dual eligibles starting
  November 15, 2005, and complete on or before
  January 1, 2006
• Full dual eligibles may switch PDP or MA-PD at
  any time
• While provision grants duals flexibility since
  they are being auto-enrolled, they may need to
  pay the difference in premiums to maintain their
  current plan
• For full dual eligibles in an MA plan, CMS will
  facilitate enrollment into MA-PDs with lowest
  premium offered in same MA organization

14
Summary of Important Dates

• October 1, 2005
• Marketing of approved pharmacy plans
• October 15, 2005
• Medicare Website activated www.medicare.gov
• Medicare 24 hours toll free number 1-800-Medicare
  activated
• Medicare and You 2006 handbook
• November 15, 2005
• Open enrollment begins
• January 1, 2006
• New pharmacy benefit takes effect
• May 15,2006
• Close of open enrollment

15
Approved Prescription Drug Plans For California

• 19 Medicare Advantage Prescription Drug Plan
  Organizations
• Plan are available by county
• Sutter providers are contracted with PacifiCare
  Secure Horizons and HealthNet Seniority Plus
• Blue Cross is offering a Medicare PPO plan
• 18 Stand Alone Prescription Drug Plan
  Organizations
• Total of 45 PDP plans available
• 8 stand alone prescription drug plans eligible to
  receive auto-enroll dual eligibles (includes HN
  and PC)

16
MA-PDs

• Secure Horizons
• Available in higher population Sutter Health
  counties
• Premiums for Part D 0.00 to 23.00 per month
  (59-150)
• Most plans with no deductible (except Santa Cruz)
• Tiered copays (8.50, 26.15, 50, 33)
• No coverage in coverage gap in our area
• 81 of top 100 drugs covered
• HealthNet Seniority Plus
• Available in more Sutter Health counties
• Premiums for Part D 0.00 to 14.66 per month
  (39-65)
• No deductible in any plan
• Ttiered copays - (5, 25, 55, 25)
• No coverage in coverage gap in our area larger
  gap 2000 to 3600
• 96 of top 100 drugs covered
• Blue Cross Freedom Blue (I and II)
• Available in all counties
• Premiums for Part D are 7.00 or 32.00
• No deductible in any plan
• Tiered copays - (10, 30, 25, 25)

17
Limited Info on Plans to Date

• Formulary Information sporadic available for
  all plans by November 17
• PDP (most national plans)
• Most national plans
• Premiums - 5.41 - 66.08
• Deductibles 40/60 split on 250 deductible
• Tiered benefits - yes
• Coverage gap generics/brand with higher premium
• Formulary limited info today comparable to
  MA-PDs

18
Medicare Part D - Impact on Patients

• Identify current prescription drug coverage
• Dual eligibles will be auto-enrolled
• Current Medicare Advantage enrollees will be auto
  enrolled in their current health plan MA-PD
• MA patient will be dis-enrolled if they sign-up
  for a PDP
• Medigap, union members, employer retirees must
  compare
• Compare available plans in the following areas
• Formulary coverage of current medication
  (especially high cost meds)
• Understand premiums, deductibles and copays
• Understand pharmacy network and benefit
  management tools (exceptions)
• Patients can potentially have multiple changes to
  their medication regimen
• Transition period may result in unavailability of
  medications (plans must have transition plan)
• Healthy Medicare patients will need to enroll or
  face possible penalties (up to 12 annually) down
  the road
• 65 of Medicare beneficiaries will pay less for
  medications

19
Medicare Part D - Impact on Physicians

• Physicians will need to become educated on new
  Medicare Part D pharmacy plans to respond to
  patient needs
• Physicians will be exposed to formulary and
  pharmacy benefit management for the Medicare
  population
• Physicians will be exposed to the process of
  obtaining exceptions for medically necessary
  medications
• Physicians will need to adjust patients
  medications or apply for exceptions
• Medical groups and IPAs will need to decide on
  their own strategy and resources

20
Providers Can

• Provide names of plans in which they participate
• Provide objective info on specific plans
• Distribute PDP marketing materials INCLUDING
  Enrollment Applications
• Distribute MA-PD marketing materials EXCLUDING
  Enrollment Applications
• Provide info and assistance in applying for the
  limited income subsidy
• Refer patients to other sources of information
• Print out and share info with patients from the
  CMS website
• Use comparative marketing materials created by a
  non-benefit/service providing third-party

21
Provider Cannot

• Direct, urge, or attempt to persuade
• Collect enrollment applications
• Offer inducements to persuade beneficiaries to
  enroll in a particular plan or organizations
• Expect compensation for enrollment of a
  beneficiary
• Expect compensation directly or indirectly from
  the Plan for beneficiary enrollment activities

22
Resource Available for Providers and Patients

• Multiple pieces from SH CID pharmacy department,
  Managed Care Department and internal (group)
  marketing
• Sutter Health and affiliate websites
• CMS Materials for display or distribution from
  office
• Toll Free Line for patients 1-800-Medicare
• CMS Website www.medicare.gov
• Personalized and local assistance
• Health Insurance Counseling and Advocacy Program
  (HICAP) 800-434-0222