Medicare Prescription Drug Discount Card

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Medicare Prescription Drug Discount Card

• Ranjani Varadarajan
• PYPC 7810

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Medicare Today

• 41 million beneficiaries growing to over 62
  million in 2020
• 284 billion in expenditures growing to 898
  billion in 2020
• Slow to adapt to modern medicine
• Need for supplemental coverage

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Medicare Prescription Drug, Improvement, and
Modernization Act of 2003

• Phase 1 Medicare-Approved Drug
  Discount Card Program (June 2004 December 31,
  2005)
• Cards provide discounts (not same as insurance)
• New 600 credit in 2004 and 2005 for low-income
  beneficiaries who do not have Medicaid, with
  incomes below 135 poverty
• 5.8 million beneficiaries currently enrolled
  (CMS, Dec 2004)
• 1.4 million low-income beneficiaries receiving
  600 subsidy (of 7.2 million eligible)
• Phase 2 Medicare Prescription Drug Benefit
  (begins January 1, 2006)
• Beneficiaries will have access to private plans
  that provide new prescription drug benefit under
  Medicare

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• Medicare-approvedDrug Discount Card
• New important first step toward a prescription
  drug benefit for Medicare beneficiaries.
• Voluntary and Temporary program to provide
  immediate assistance by lowering prescription
  drug costs during 2004 and 2005, while
  preparations are made for the Medicare drug
  benefit that begins January 1, 2006.

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Medicare-approvedDrug Discount Card

• Estimated savings of 10-25 on many drugs
• 600 credit to provide immediate relief to
  certain
• beneficiaries with low incomes

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Medicare-approvedDrug Discount Card

• Beginning as early as May 2004
• Effective as early as June 2004
• Must stay with that Card for the rest of the year
• Exceptions
• Move to another state where your current Card
  isnt offered
• Enter or leave a long-term care facility
• Leave or join a Medicare managed care plan
• Private company stops offering that Discount Card

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Medicare-approvedDrug Discount Card

• Each Card company sets annual enrollment fee
• Up to 30
• Pay entire annual fee no matter when you join
• New enrollment fee every year
• No fee if you qualify for the 600 credit
• Cant charge any extra fees

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Some Benefits of the Discount Card

• Card companies must meet Medicare standards
• Beneficiaries have access to
• Discounts
• Responsive customer service system
• Card company must protect privacy

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Some Benefits of the Discount Card

• Many prescription drugs will be discounted
• Will depend upon use of a discount list
• Insulin and supplies associated with its
  injection are included as covered drugs
• 600 credit can be used to purchase any covered
  drugs
• Including drugs not on list
• Cards may offer discounts on non-prescription
  drugs

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Some Benefits of the Discount Card

• Private companies will decide
• Which prescription drugs will be discounted
• Dollar amount of the discount
• You may get a better price if you
• Choose a generic drug instead of a brand name
  drug
• Get your prescription drugs through the mail
• Only drugs on discount drug list will be
  discounted
• Different drugs may be discounted at different
  rates

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Target Audiences

• Beneficiaries
• Primary
• Secondary
• Groups who interact with Beneficiaries
• Providers
• Partners and health care stakeholders

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Eligibility

• Must meet income requirements
• At or below 135 official poverty level
• Income level for 2004
• New levels will be available in February 2005
• Resources are not counted
• Do not have to have high drug costs

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Eligibility For Transitional Assistance Under
Drug Card

• Eligibility for Transitional Assistance
• Must have income of less than 135 of the poverty
  level (12,123) and have no existing drug
  coverage
• Eligibility for Special Transitional Assistance
• Must have income of less than 100 of the
  poverty level (8,980) and have no existing drug
  coverage
• Medically needy individuals are eligible for the
  card and transitional assistance while they are
  in spend down .

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600 Credit Eligibility

• Eligibility for 600 Credit
• Entitled to or enrolled in Part A and/or enrolled
  in Part B
• No other health insurance with prescription drug
  coverage (except MC or Medigap)
• Income of 12,569 or less if single
• Income of 16,862 (combined) or less if married

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600 Credit in 2005
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When does the program end?

• The card will expire when Medicare Part D drug
  benefit begins, or May 15, 2006 (whichever comes
  first)
• Continuation of using any low-income assistance
  left over from 2005 until the card expires.

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TYPES OF TRANSITIONAL LOW-INCOME ASSISTANCE
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For more information

• www.medicare.gov

http//www.medicare.gov/AssistancePrograms/Search/
Results.asp
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Medicare and the New Prescription Drug Benefit

• Part D Medicare Drug Benefit

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PART D MEDICAREDRUG BENEFIT

• Effective January 1, 2006
• Eligibility for Part D
• Must be enrolled in Part A or enrolled in Part B
• Enrollment for Part D
• Voluntary
• Participating Medicare beneficiaries must choose
  1 plan
• Beneficiaries in fee-for-service Medicare will
  receive Part D benefits through a Prescription
  Drug Plan (PDP)
• Beneficiaries in Medicare Advantage Plans will
  receive Part D benefits through Medicare
  Advantage Prescription Drug Plan (MA-PDP) if
  their plan provides drug coverage

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Medicare Prescription Drug Benefit (Part D)

• Beginning in 2006, beneficiaries will have choice
  of   
• Fee-for-service Medicare, with access to private
  plans offering prescription drug coverage only
  (PDPs)
• Medicare Advantage plans covering Medicare
  benefits and prescription drugs (MA-PD plans
• New plans will provide standard prescription
  drug benefit or its actuarial equivalent
• Plans have flexibility (subject to certain
  constraints) to establish varying features
• Levels of cost-sharing requirements and coverage
  limits other than standard coverage
• Lists of drugs to include on their formulary, and
  on which tier
• Cost management tools
• Premium and cost-sharing subsidies for
  beneficiaries with incomes up to 150 FPL
  (13,965 for an individual in 2004) and modest
  assets up to 10,000

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Standard Medicare Part D Drug Benefit, 2006
Beneficiary Out-of-PocketSpending
Catastrophic Coverage
Medicare Pays 95
5
5,100 in Total Drug Costs
2,850 Gap Beneficiary Pays 100
No Coverage
2,250 in Total Drug Costs
Partial Coverage up to Limit
Medicare Pays 75
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250 Deductible
420 average annual premium
2,250 in total spending is equivalent to 750
in out-of-pocket spending.

5,100 in total
spending is equivalent to 3,600 in out-of-pocket
spending. SOURCE Kaiser Family Foundation
analysis of Medicare Prescription Drug,
Improvement, and Modernization Act of 2003.
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Provisions in the MMA for Low-Income Beneficiaries

• Premium and cost-sharing subsidies, with most
  generous assistance provided to those with lowest
  incomes
• 6.5 million Medicare beneficiaries eligible for
  full Medicaid benefits (dual eligibles)
• Beneficiaries with incomes lt135 FPL
  (12,569/individual in 2004) and assets
  lt6,000/individual
• Beneficiaries with incomes 135-150 FPL
  (12,569-13,965/individual in 2004) and assets
  lt10,000/individual
• Treatment of dual eligibles
• Medicaid stops paying for prescription drugs
  after December 31, 2005
• Dual eligibles can enroll in Part D plans, or
  will be auto-enrolled, if necessary
• Key questions
• Will dual eligibles transition from Medicaid to
  Medicare plans without falling through cracks?
• Will dual eligibles be able to get needed
  medications under new Medicare plans?

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Gap in Standard Part D Benefit in 2006 Could
Leave Many Part D Participants Vulnerable to High
Out-of-Pocket Spending
8.6 million
6.9 Million Part D Participants Reach the
Doughnut Holein 2006
10.5 million
3.0 million
Total 29 Million Part D Participants
NOTE Estimates exclude premiums and assume no
supplementation of Part D coverage. SOURCE
Actuarial Research Corporation analysis for the
Kaiser Family Foundation, November 2004.
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Challenges for Beneficiaries

• Learning about Part D
• Comparing features of plans available within a
  region, including premiums, cost-sharing,
  formularies, and pharmacy networks
• Learning about low-income subsidy programs and
  eligibility rules
• Learning about the rules of enrollment, including
  premium penalty for delayed enrollment and annual
  plan lock-in
• Enrolling in Part D
• Choosing between traditional fee-for-service and
  a stand-alone PDP, or a Medicare Advantage plan
  that covers prescription drugs (where available)
• Enrolling in low-income subsidy program, if
  eligible, at Social Security or state Medicaid
  office
• Using the New Benefit
• Tracking total and out-of-pocket drug spending
• Coordinating Part D with other sources of drug
  coverage (state pharmacy assistance programs,
  employer coverage, etc.)

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Decisions for Medicare Beneficiaries, 2006
Enroll in Part D Plan
Traditional Medicare
Medicare Advantage
Part D Prescription Drug Plan
No Part D coverage
HMO (local)
PPO (regional)
Private Fee-for-Service
Apply for Low-Income Subsidy
Social Security Office
Medicaid Office
Dual Eligibles
Meet Income and Asset Test?
If yes, qualify for
Below 150 FPL
Subsidy for premium on sliding scale, 50
deductible, 15 coinsurance to 5,100 in Rx
costs, 2/generic Rx, 5/brand name Rx after
5,100
Below 100 FPL No
premium or deductible, 1/generic Rx, 3/brand
name Rx, pay nothing after 5,100 in Rx costs
Below 135 FPL
Subsidy for premium, no deductible, 2/generic
Rx, 5/brand name Rx, pay nothing after 5,100 in
Rx costs
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Conclusions

• Implementation deadlines pose big challenge for
  CMS, plans, beneficiaries
• Plan bids due in June, awarded September, plans
  announced Oct 15, 2005
• Low-income subsidy enrollment begins June 2005
• Initial enrollment period from Nov 15, 2005 to
  May 15, 2006
• Beneficiary education will be critical to ease
  confusion, help transition of dual eligibles to
  Part D, and inform plan choice
• Medicare drug benefit projected to reduce
  out-of-pocket drug spending, especially for
  low-income, but many unknowns
• Will new prescription drug-only plans emerge?
• Will seniors sign up for Part D and low-income
  subsidies?
• Will dual eligibles transition from Medicaid to
  Medicare?
• Will new drug plans cover needed medications?
• Important to monitor beneficiaries access to
  needed medications and out-of-pocket prescription
  drug spending as new Medicare drug benefit is
  implemented.

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References

• DuzorPresentation.ppt
• http//www.uwex.edu/ces/flp/health/medicare_act.pp
  t
• medicare .ppt
• www.medicare.gov
• Guide to choosing Medicare-approved drug discount
  card
• Medicare_Rx_Bill.ppt