Part D Next Steps: Ensuring Quality Patient Care

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Part D Next Steps Ensuring Quality Patient Care

• Donna A. Boswell
• September 2005

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CMS Selects Prescription Drug Plans Based on
Statutory Requirements

• Qualifications of bidders
• Proposed premium
• The benefit is capitated, up to catastrophic
  coverage
• Federal government pays the lions share of
  catastrophic drug costs.
• Proposed benefit structure
• Formulary, consumer cost sharing
• Actuarial value, premium
• Utilization controls
• Proposed network and service arrangements
• Marketing materials

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PDP must Cover Entire Region
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Plans have been selected

• Ten PDPs prescription drug-benefit only plans
  will provide service to the entire nation.
• There are many regions where there also are
  strong regional plans.
• Every region (except Alaska) has at least one
  plan for a premium of less than 20 per month.
• Every region has more than one plan priced at or
  below the premium subsidy amount for people with
  low-income subsidies. (average premium is 32)
• Each of these contractors may offer multiple
  levels of coverage for different premium amounts
• Medicare Advantage Plans in every region offer
  drugs sometimes for no premium!

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To find the plans in your statewww.cms.hhs.gov/m
ap/map.asp

• Clicking on a state
• lists the names of the PDP (drug only) plans
• Identifies the 20 plans
• Identifies the plans that will be fully paid for
  by the low income premium subsidy and that will
  receive the auto-enrolled dual eligible
  beneficiaries
• Identifies the Medicare Advantage (MA) Plans
• Identifies the MAs that will be PPOs (not HMOs)
  37 states
• Identifies the MAs that will charge no premium
  for the drug benefit, to persons of any income
  level.

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Ten National Plans

• Aetna
• Cigna
• Coventry Health Care
• Medco Health Solutions
• MemberHealth
• PacifiCare Health Systems

• Silverscript, a unit of prescription drug benefit
  manager Caremark
• UniCare, a subsidiary of WellPoint
• UnitedHealth Group
• WellCare Health Plans

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Benefits Permitted By Law

• Basic community rated premium for entire region
• Standard coverage
• Alternative basic same actuarial value as
  standard coverage
• Enhanced uniform premium, benefit, and
  availability for entire region.
• Premium must reflect the actuarial value over and
  above standard coverage.
• Both types must be approved by CMS

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Standard Coverage -- so bids will permit
apples-to-apples comparison

• 250

2,250
5,100
Total Costs
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Capitated Bids Factors To Consider

• Actuarial value of standard coverage
• Formulary and cost sharing
• Prospective population utilization
• Utilization controls
• Retained rebates
• Network pharmacy rates and out-of-network rates,
  and projected prevalence.

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Issues in Benefit Structure

• Consumer directed utilization controls
• Formulary and tiered cost sharing
• Generic incentives
• Out-of-network charges
• Negotiated discount prices
• Provider directed utilization controls
• Medical necessity justifications
• Prior authorization
• Generic substitution
• Benefit structure cannot discriminate or target
  based on disease or special needs.

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Negotiated Discount Price

• Must be published by the PDP
• Only one for each drug on formulary
• Is the benchmark for consumer coinsurance
  payment--
• Ingredient cost for network pharmacy
• minus any share of manufacturer rebates
• Negotiated discount price

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Federal Dollars Buy --

• Approx. 75 of the premiums
• Enhanced payments to the plan for the
  prescriptions of individuals who reach TrOOP
• Low income subsidies
• The rest of the premiums for people under 135
  FPL (and sliding scale up to 150 FPL), and
• The beneficiarys cost-sharing amount minus the
  applicable guaranteed copay amount.

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Consumer Dollars Buy --

• Approx. 25 of the premium of the plan selected
• Tiered cost-sharing -- Applicable of the
  negotiated discount price for each prescription
• Out-of-network pharmacy charges
• (Optional) premium for enhanced coverage from own
  PDP

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Timeline

• Plans have been announced
• October 1 plans may start marketing
• October 1-15 CMS mails Medicare and You
  (which will include information abut the PDPs and
  MA-PDs in your state, and their premiums.
• October 13 Personal Plan Finder website goes
  live
• October 27 to Nov. 10 auto-enrollment mailing
  to dual eligibles
• November 15 plans required to accept
  enrollments
• January 1, 2006 plans required to provide
  coverage
• Auto-enrollment of non-dual subsidy eligible
  individuals May 2006

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What should Medicare beneficiaries be thinking
about
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Consumer Choice, with consequences

• Everybody who has Medicare has the option to buy
  a Medicare Drug Plan that will pay for
  prescriptions starting in 2006.
• If you make your decision by the deadline, you
  will pay the same amount everyone else will pay
  for your Medicare drug plan.
• The deadline for enrolling is March 15, 2006,
• But if you enroll before January 1, 2006, your
  plan will start paying for your prescriptions in
  January.

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The Minimum Unsubsidized Part D Benefit

• Catastrophic coverage with a maximum 5
  coinsurance for all covered prescription drug
  expenses in excess of TrOOP. (TrOOP in 2006
  is 3600)
• 1500 in federal payments for prescriptions
  before TrOOP is reached patient share may
  include
• Deductible up to 250
• Coinsurance averaging 25 on the next 2000.
• Access to negotiated discount prices on all
  patient expenditures for covered drugs on the
  plan formulary.

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The Means-Tested Subsidy, part 1

• Federal Premium Subsidy
• Full federal payment dual eligibles and people up
  to 135 of FPL, with assets less than
  6,000/9,000
• Sliding scale premium for people 135 to 150
  FPL, with assets less than 10,000/20,000

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The Means-Tested Subsidy, part 2

• Federal assistance with cost-sharing
• Zero copays for institutionalized dual eligibles
• Copays capped at 1 generic/ 3 brand for dual
  eligibles with incomes under 100 FPL
• Copays capped at 2 generic/5 brand for all
  other duals and for individuals with incomes
  under 135 FPL who meet asset test.
• Max. 50 deductible and 15 coinsurance up to
  TrOOP limit for 135 to 150 FPL.

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If you buy a Medicare Drug Plan--

• You will pay
• The monthly premiums of the plan you choose and
• Discounted payments for your prescriptions until
  you reach your TrOOP (True Out-Of-Pocket) limit
  for the year--which is 3600 in 2006.
• After you reach the TrOOP limit, you will be able
  to buy your prescriptions at a 95 discount or
  better.

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TrOOP -- TRUE OUT-OF-POCKET limit

• TrOOP is a guarantee that if you have significant
  drug costs in a year, Medicare will pay 95 or
  more of the cost of all of your prescriptions
  above TrOOP.
• TrOOP protects every individual
• No matter how high your income or assets
• No matter how old or how sick you are
• No matter how many prescriptions you need
• No matter how much your prescriptions cost.
• TrOOP is 3600 in 2006.

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The gap

• Plans are not required to have a gap
• Some plans will cover generic drugs all the way
  through with no gap in coverage
• Plans are not required to charge a fixed
  percentage coinsurance
• Some plans will have a flat copay for generics
  and other preferred drugs.
• What is constant is the TrOOP maximum on
  out-of-pocket costs.

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If your prescriptions today

• Cost more than TrOOP in a year --
• Buying a Medicare drug plan will give you
  unlimited catastrophic coverage and reduce your
  prescription drug expenses to
• 3600, plus
• 5 (or less) of prescriptions over 3600 no
  matter how much your prescriptions cost, plus
• the cost of your premiums.

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If your prescriptions today

• Cost less than TrOOP in a year
• Buying a basic Medicare drug plan will give you
  unlimited catastrophic coverage and guarantee
  that
• You get an average 75 discount or more on 2000
  worth of prescriptions after you pay for your
  first 250, and
• If your prescription needs increase, you get a
  95 discount after you have spent a total of
  3600 in a year.

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It is important to make a decision to enroll now

• Because the penalty for late enrollment is a
  permanent increase in the patients premiums

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Other important issues

• A patient who has Medicaid will be auto-assigned
  to a Medicare plan, but it may not be the one
  that has the drugs needed by patients with kidney
  disease.
• A patient who has a State Pharmacy Assistance
  Program may need to enroll in a Medicare plan in
  order to keep receiving your state benefits ask
  your plan.
• A patient who has Medi-Gap likely will have a
  better benefit by choosing to switch to a PDP.

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What can caregivers do?
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Evaluating Medicare Drug Plans

• Each plan has a different list a formulary
  of drugs that it covers.
• Most patients can only choose one plan each year
  -- they need one that covers all or most of their
  drugs!
• Each plan will have a different way of arranging
  the discounts on drugs while counting up toward
  TrOOP.
• Some prescriptions will be free
• Some will be heavily discounted
• Others will have smaller discounts.
• Each plan sets its own premium based on the
  formulary and discounts it provides.

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Help Promote Standards of Care

• Key criterion The PDPs formulary or list of
  drugs that it will pay for, and the specific
  amount the patient pays.
• If a drug that you take is not on the plan
  formulary, the patient will have to pay the
  entire cost of that drug all year, with no cap on
  your expenditures.
• Patients with chronic illness need to know what
  drugs will be needed for quality care and quality
  life as their disease progresses.
• PDPs in your state can be scored on their
  coverage and cost of medicines needed by patients
  with a particular disease.