The Basics of Medicares Basic Drug Benefit

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The Basics of Medicares Basic Drug Benefit

• January 26, 2006
• Dee Mahan, Families USA
• Health Action 2006

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A multiplicity of benefit levels

• Basic or standard benefit
• Low Income Subsidy (LIS) for non-duals, higher
  incomes or assets
• LIS for non-duals, lower incomes or assets
• LIS for dual eligibles, higher income
• LIS for dual eligibles, lower income
• LIS for dual-eligibles in residential care

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With even more players
PLANS (est. 250)
CMS
Pharmacies
Customer Service
Carve-Out Drug Mgmt
In one zip code 47 PDPs 9 MA-PDs 6 PPO-PDs
TrOOP Facilitator
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How did we get here?

• Program based on market competition with heavy
  subsidies
• Medicare Drug Gold Rush Profit from the
  Biggest New Benefit in the History of Medicare
  Part D Drug!!!
• With limited manufacturer price pressures

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Now that were here..

• Help beneficiaries navigate the program
• Monitor whats happening
• Work to make the program better

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Picking a plan Working through the questions
Low-income subsidy?
That covers my drugs
START
PDPs in my area
If 0, try again with new drugs
At low cost-sharing
And low drug prices
Convenient preferred pharmacy
With affordable premiums
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What drugs are covered?Medicare vs- the PDPs

• Part D covered drugs
• Drugs Medicaid must cover
• Smoking cessation drugs
• Certain vaccines
• Insulin supplies
• Drugs not covered by Part D
• MOST optional Medicaid drugs, inc. OTC drugs
• Drugs covered by Parts A or B

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What the plans cover

• Plans MUST cover
• At least 2 drugs per USP class
• 146 unique therapeutic categories and drug
  classes
• All or substantially all drugs in some categories
• Most plans cover a large percent of drugs
• Plans CAN cover
• Non-covered drugs, e.g. OTC drugs

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When can plans change what they cover?

• Not under cover of darkness
• Not around enrollment
• Required 60 days notice to affected
  beneficiaries, pharmacists, providers
• What counts as a coverage change
• Change in cost-sharing or tier
• Changes in UR do not

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Whats covered and whats the benefit look like?

• Actuaries have been busy.
• The missing basic benefit
• In one region 7 of 47 plans offer something
  resembling the basic benefit
• Up to five coverage tiers
• Multiple use restrictions
• But the doughnut hole is alive and well

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Tiers and more tears
Review of select plans in Region 5
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Many ways to control costs
Review of select plans, Region 5
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What if you strike out?

• Appeals and exceptions
• Required of all plans
• Specified requirements for turnaround in
  emergency situations
• Physician statement can automatically move a
  request to an emergency determination
• Transition benefit if it works

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Up-front costs most have to pay-Examples from one
region

• Premiums
• 6.44 to 68.97 per month
• Average premium 37.86
• Deductibles
• No deductible for 26 plans (55)
• 17 (36) at 250

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Theres also the drugs price

• Price matters
• How far the benefit goes
• Costs in the doughnut hole
• In what the benefit costs overall
• Plans negotiate individually
• Must pass on some discount
• Prices vary by pharmacy
• Prices can change anytime

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Prices vary
Nov. Price Ranges, PDPs in one region
30-day supply
Based on a review of all plans, Region 5,
November 2005
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And prices matter
Cost/Year, VA prices substituted for plan prices,
three Medicare recommended plans
Drugs profiled Lipitor 10 mg, Plavix 75 mg,
Fosamas 70 mg, Norvasc 5 mg and Protonix 40 mg.
Select plans, Region 5, 11/05.
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Finally, where can I get my Rx?

• Pharmacy networks
• Must accept willing providers
• Most have broad networks
• Smaller group of preferred pharmacies

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Helping out

• Managing the marketing frenzy avoiding fraud
• Deciding whether and when to enroll
• Picking a planthe hard part
• Using the Plan Finder
• Double checking with the plans if you can
• Managing problems afterwards

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Special considerations

• Employer sponsored coverage
• Check before enrolling in Part D
• Drug company assistance programs
• Can continue, with changes
• Low Income Subsidy
• Its own set of enrollment and access issues

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What to expect moving forward

• Reduction in number of plans?
• Business consolidations
• Cost of maintaining if few enrollees
• Few immediate changes in program structure
• Delay penalty, allow switches mid-year?
• Price negotiations?
• Duals fixes

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Right now what are we getting?

• A "modest to moderate" decline in out-of-pocket
  spending for those who do not receive low-income
  subsidies
• Racial minorities, near-poor, those with severe
  chronic conditions saving least.
• Average out-of-pocket savings est. 196 in 2006