Presentation Outline

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Presentation Outline

• Part D Basics
• Implementation Timeline
• Benefit Payment Structure
• Key Players
• CMSs Program Integrity Strategy
• Title 1 Regulatory Authority
• MEDICs
• Part D Manual Fraud, Waste, and Abuse
  Compliance Chapter
• III. Key State Issue Dual Eligibles

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Prescription Drug Program Implementation Timeline
Oct 1, 2005
March 2005
May 15, 2006
Dec 2003
June-August 2005
Jan 2006
April-June 2005
June 2004
Sept 2005
Nov 15, 2005
June 2007
2006 enrollment period
Temporary Drug Card Program
CMS contracts with Plans
Plans submit formularies marketing materials
Payment reconciliation for CY 2006
Jan 1 Drug Coverage begins
Plans apply to participate in drug program
(PDPs MAPDs)
Review of plan payment bids
Plans begin marketing to beneficiaries
MMA Enacted
April 25 Employer PDP apps due
Plans begin receiving payments from CMS TrOOP
begins
Sept 30 Employer subsidy apps due
Low-Income Subsidy Outreach begins
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Visual Standard Benefit 2006
Out-of-pocket Threshold
Catastrophic Coverage
Total Spending
250
2250
5100
75 Plan Pays
Coverage Gap
80 Reinsurance

Deductible
95
25 Coinsurance
Total Beneficiary Out-Of-Pocket
750
3600 TrOOP
250
15 Plan Pays
5 Coinsurance
Direct Subsidy/ Beneficiary Premium
Beneficiary Liability
Medicare Pays Reinsurance
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Numbers are for 2006
Standard Drug Benefit for beneficiaries with
income greater than 150 FPL or less than 150
FPL but more than the resource limit (resource
limit for partial subsidy 11,500 individual,
23,000 couple) 32 monthly estimated premium
Full-benefit dual eligibles with income greater
than 100 FPL 0 monthly premium and no deductible
Full-benefit dual eligibles with income less than
or equal to 100 FPL 0 monthly premium and no
deductible
5100

1 - 3 co-pays apply
100
Cost sharing is 0 if the beneficiary is a
full-benefit dual eligible and institutionalized.
For more information on the Low-Income Subsidy
http//www.cms.hhs.gov/medicarereform/lir.asp
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Medicare Part D Program Structure The Key
Players
Medicare
M A N U F A C T U R E R
Part D Plan (MA-PD or PDP)
Pharmacy Benefit Management Company (PBM)
Pharmacy
Wholesaler

• Arrows represent the flow of Medicare
• PBMs can be either a Company or viewed as a
  function depending on individual structure

Physicians/ Providers
Beneficiary
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Prescription Drug Plans (PDP) and Medicare
Advantage Prescription Drug Plans (MA-PD)

• Who are they?
• CMSs Contractual Business Partners
• PDPs and MA-PDs (collectively referred to as
  Plans or Sponsors) will offer the drug
  benefit to Medicare beneficiaries
• Licensed risk-bearing entities
• Usually traditional health insurers
• Will subcontract many activities

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What is the difference between a PDP and MA-PD?

• PDPs are stand alone Prescription Drug Plans a
  beneficiary may choose to join, while they
  continue to remain in Medicare Fee For Service
  for Parts A and B
• Must provide the standard benefit serve an
  entire PDP region to participate
• MA-PDs are Medicare Managed Care Plans (formerly
  known as MC Plans) that include all services,
  including a prescription drug plan
• May offer additional drug coverage for no
  additional cost
• May offer local plans
• Note Medicare Advantage Plans without a
  prescription drug benefit will continue to exist

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PBMs A Key Behind the Scenes Player

• In most instances will serve as subcontractor of
  PDPs and MA-PDPs
• Been in the business for many years
• Employer based coverage
• Some Medicaid
• Very little Fed Govt interaction to date
• 3 primary players (approx one third of market
  share 80B)
• Caremark Rx (recently acquired AdvancePCS), Medco
  Health Solutions, Express Scripts
• 190M covered lives
• 40 - 50 medium smaller size PBMs

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Other Key Players

• Wholesalers, Manufacturers, Pharmacies,
  Physicians
• Roles and relationships will vary since each
  Sponsor will choose how and who to subcontract
  with to deliver the drug benefit to its members

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Program Integrity GroupPart D Strategy

• Title 1 Regulatory Authority
• MEDICs
• Part D Manual Fraud and Abuse
  Compliance Chapter

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Title 1 Regulatory Authority

• Subpart D, Cost Control and Quality Improvement
  Requirements for Part D Plans
• Subpart G, Payments to Part D Plan Sponsors for
  Qualified Prescription Drug Coverage
• Subpart K, Application Procedures and Contracts
  with Part D plan sponsors
• Subpart M, Grievances, Coverage Determinations,
  and Appeals
• Subpart O, Intermediate Sanctions
• To view the regulation
• http//www.cms.hhs.gov/medicarereform/pdbma/genera
  l.asp

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Medicare Advantage and Drug Integrity Contractors
(MEDICs)

• To support CMS anti-fraud and abuse efforts
  associated with the Prescription Drug Benefit,
  the Retiree Drug Subsidy (RDS) and the Medicare
  Advantage (MA) program CMS will contract with
  MEDICS.
• Primary Goals of the MEDIC
• Identify cases of suspected fraud, develop them
  thoroughly and in a timely manner, and take
  immediate action to ensure that Medicare Trust
  Fund monies are not paid inappropriately, and
  that any mistaken payments are recommended for
  recoupment.

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Fundamental MEDIC Activities

• Review PDP and MA-PD fraud and abuse compliance
  plans
• Conduct complaint investigations
• Utilize data systems to efficiently and
  proactively evaluate inappropriate activity that
  may be present in any entities administering the
  benefit.
• Monitor drug utilization patterns through data
  analysis.

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Fundamental MEDIC Activities

• Conduct preliminary investigations into
  nonapproved PDPs conducting fraudulent
  enrollment, eligibility determination and benefit
  distribution
• Investigate aberrant behavior identified by the
  PDP, MA-PD, MA, CMS contractors, beneficiaries,
  or CMS as potentially fraudulent
• Review Plan payment BIDs
• Perform financial audits of at least one-third of
  the PDPs, MA-PDs, and review actuarial
  equivalence in the RDS program.

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Fundamental MEDIC Activities

• Assist CMS and Law Enforcement to develop a flag
  list
• Develop and refer cases to the appropriate law
  enforcement (LE) agency or take administrative
  action as required
• Support LE investigations

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The Five MEDIC Regions
WA
VT
MT
ND
ME
MN
OR
NH
2
ID
WI
MA
NY
SD
MI
WY
3
RI
NE
IA
NJ
CT
PA
NV
OH
IL
DE
IN
UT
CO
WV
1
CA
KS
MO
VA
KY
4
NC
TN
MD
NM
OK
AZ
AR
SC
5
AL
GA
MS
TX
LA
AK
FL
HI
PR
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Part D Manual Fraud and Abuse Compliance Plan

• The PI Group is drafting a chapter on Fraud and
  Abuse Compliance for the Part D Manual. This
  chapter will provide
• Further guidance on what Plans should include in
  their Fraud and Abuse Plan/Compliance Plan.
• Guidance on activities the Plans should perform
  to prevent, detect, and prevent fraud in the
  Prescription Drug program.
• Timeline
• Draft Late Summer 2005
• Final Fall 2005
• Compliance Site Visits Late Winter and Spring
  2006

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Key State Issue - Dual Eligibles

• Dual eligibles receive benefits from both
  Medicare and Medicaid programs.
• Estimated 6.4 million dual eligible beneficiaries
• Reasons for being a Dual Eligible
• Poor Health (52 vs 24 other Medicare)
• Low Income (71 vs 13 other Medicare)
• LTC Facility Resident (22 vs 2)
• Diabetic (24 vs 17 other Medicare)
• Stroke Victim (14 vs 11 other Medicare)
• Alzheimers Patients (6 vs 3 )
• Source Kaiser Commission on Medicaid and the
  Uninsured

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Dual Eligibles - Enrollment

• Will be automatically enrolled in Part D if they
  do not choose a PDP or MA-PD
• The automatic choice may not fit their medical
  needs
• The formulary may not contain necessary drugs

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Dual Eligibles

• Move from a State administered Medicaid
  pharmaceutical benefit to the Federal Part D
  Medicare benefit
• MMA provides for a clawback provision
• All states will pay from 90 in 2006 scaled back
  to 75 in 2015 for Part D costs for duals
• If states do not pay, the federal government can
  charge interest and/or recoup funds from the
  states federal Medicaid share

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Duals Subsidies Under Part D

• No deductible
• No premiums for average or low cost plan
• Depending on income and whether in an
  institution, co-pays are nominal or about 5
• And dual eligibles can switch plans at any time

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Dual Eligibles Presentation Summary

• Dual Eligibles will present challenges as they
  become Part D enrolled
• They are not an attractive market for PDPs or
  MA-PDs because of high drug costs
• Some it is expected will game the system and
  commit frauds against the program
• Others (specifically those with cognitive
  impairment) may be pawns in frauds committed by
  their long term caregivers

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Questions

• Contact Information
• Bill Gould
• [phone]
• William.Gould_at_cms.hhs.gov
• For more information on the Prescription Drug
  Benefit http//www.cms.hhs.gov/medicarereform/