Title: The Basics of the Medicare Drug Benefit
1The Basics ofthe Medicare Drug Benefit
- Loretto Cowhig
- Northeastern Illinois Area Agency on Aging
- (815) 939-0727 and (800) 528-2000
2Medicare background
- Medicare adopted in 1965 as Great Society
measure -- no Rx benefit provided - Serves 65 younger disabled adults
- Financed by payroll tax, premiums, deductibles,
copays, and general revenue - Currently about 43 million beneficiaries,
including 6 million disabled people - Dont confuse Medicare with Medicaid
3Medicare structure
- Part A, hospitalization -- in original law
- Part B, general medical care -- original law
- Part C, Medicare Advantage (previously called
Medicare Plus Choice) -- managed care, added by
1997 Balanced Budget Act - Part D, new prescription drug benefit added by
Medicare Prescription Drug, Improvement,
Modernization Act of 2003 (known as MMA)
4Medicare Modernization Act (MMA)
- MMA adopted in 2003, most provisions took effect
January, 2006 - Relies on private market to offer Rx insurance
- Projected 10-year budget originally 400
billion, revised to 535 billion for 2004-2013 - Fills one of Medicares biggest gaps lack of
comprehensive prescription drug benefit - Goals generous benefits to people with low
incomes or very high drug costs, and some
benefits for everyone -- all within budget
5Major MMA features
- Full drug benefit began January 1, 2006
- All Medicare enrollees eligible for Part D
- Participation is optional, but think carefully!
- Private insurers contract with Medicare to serve
specific areas meet MMA standards - Extra help for low income beneficiaries
- Subsidy encourages employers to offer Rx benefit
to workers retirees on Medicare -- they cant
also join a stand-alone drug plan
6MMA defines standard benefit
- Premiums set by plans, vary widely
- Maximum deductible is 265 in 2007
- 75 benefit between 265 and 2,400 in 2007
enrollee pays up to 25 - Donut hole between 2,400 and 5,450 in total
drug costs in 2007 -- benefit pays nothing,
enrollee pays 100 - Above 5,450 in total drug cost, benefit pays 95
of costs, enrollee pays 5 -- catastrophic
benefit level
7Private plans vary considerably
- Plans must be as good as the standard benefit,
may be considerably more generous - Formularies (list of covered drugs) vary
- All plans must cover at least two drugs per
therapeutic class -- most plans cover more - Plans set own premium deductible
- Most plans have tiered payment flat copays for
generics, preferred name-brands, others - Most states have 40 plans
8Stand-alone plans in Illinois
- 23 companies offer total of 56 plans
- 17 of those plans are nationwide
- Many other plans serve several states
- 2007 premiums range from 17.10 to 106
- 18 plans have 265 deductible, 4 have reduced
deductible, 34 have none - 15 plans cover generics in donut hole, one cover
generics brands (no donut hole) - Mail order offered in most but not all plans
9MAPD Medicare Advantage, Rx benefit
- Managed care alternative to fee-for-service
- E.g., HMOs, PPOs, special needs plans,
demonstrations, private fee-for-service - Some Medicare Advantage plans have Rx benefit
you may pay some/all of premium - You may not join separate stand-alone drug plan
if youre in a Medicare Advantage plan with drug
benefits
10Employer-sponsored Rx benefit for workers,
retirees
- Employers receive 28 tax credit for their Rx
insurance costs for Medicare workers retirees - Credit offered only if Rx benefit is as good as
or better than standard Medicare Rx benefit - Employers must notify workers retirees whether
Rx benefit meets this standard of creditable
coverage - Workers retirees receiving Medicare-subsidized
Rx benefit from employers may not also join a
standalone Rx plan or Medicare Advantage plan - Creditable coverage from an employer exempts
recipients from delayed-enrollment penalty
11Initial and annual enrollment periods
- November 15, 2005, to May 15, 2006
- Enroll by mail, online through plan site or
Medicare web site, or phone call you make - Starting in 2006, annual enrollment period Nov.
15 to Dec. 31, effective January 1 - Limited ability to switch plans mid-year
- New Medicare enrollees have 7 months to join Part
D plan (same period as for Part B) - Those eligible for federal extra help (subsidy)
can enroll at any time, with no late penalty
12Think carefully before delaying enrollment
- Late enrollment penalty Part D premium goes up
by 1 of base premium for each month delayed - E.g. wait 2 years before enrolling and pay an
extra 24 -- permanently - Exception no penalty if you had creditable
drug benefit from other source -- as good as
Medicare Rx benefit, not necessarily identical - Insurers must notify you whether your Rx benefit
meets standard of creditable coverage
13Base choice on cost, coverage, convenience
- Cost premium, deductible, copayments, coverage
gap. Consider the total of all these. - Coverage how many of drugs you take now does the
plan cover? Any restrictions prior
authorization, quantity limit, step therapy? - Convenience What pharmacies in plan network?
Mail order option? Service area? - Medicare website Find Compare Plans tool
identifies plans that cover your drugs at lowest
total cost - Consider your drug needs could change
14Federal extra help for low-income beneficiaries
- 19 million application forms mailed by Social
Security in mid-2005 -- response low - 2007 income limit 15,315 (20,535 couple)
- Asset limit 11,710 (23,410 couple), not
including home, car, personal property - Covers part or all of premium deductible
- Reduces participants copays, no donut hole
- 3 groups get extra help automatically, need not
apply Medicaid Medicare Savings Program
participants, SSI recipients
15Glitches, problems for low-income enrollees
- Even modest copayments (up to 5) may be
burdensome to those who had none before - Assigned plans not custom-selected, may not cover
all drugs Medicaid had covered - Many low income members are frail, have language
difficulties, forgetful, bewildered by new
procedures, otherwise overwhelmed - Initial 30 day transitional coverage extended to
90 days to cover all drugs enrollee had been
using even if not in plans formulary
16Illinois Cares Rx coordinates with Medicare D
- Pharmaceutical Assistance SeniorCare merged
with new name Illinois Cares Rx, that wraps
around Medicare drug benefit - Goals Program participants wont lose benefits
or have significantly higher costs, Illinois
shouldnt pay drug costs that Medicare would
should cover - Recent increase in income limit, to 22,793
single, 30,594 couple. No asset limit. Two
benefit tiers Basic (covers Rx for most common
diseases) Plus (covers most drugs) )
17Illinois Cares Rx members enrolled in Rx plan
- All enrollees must apply to Social Security
Administration for federal extra help - 3 plans coordinate with Illinois Cares Rx
United Health Rx Basic, AARP Medicare Rx, and
Wellcare Signature plans - State randomly assigned enrolled Illinois Cares
Rx members in coordinating plan they can switch
among these three - 25/month rebate for those in with creditable
coverage from other source or in non-coordinating
plan
18Benefits of Medicare D plus Illinois Cares Rx
- Illinois Cares Rx pays members Part D premium
most of copay. No deductible. - Member pays 2.15/generics, 5.35/preferred name
brands, 15/nonpreferred brands - After 2,400 worth of drugs, member pays 20 of
drug cost plus standard copayment - Beyond 5,451, member pays only 5
- Other Circuit Breaker benefits unchanged
19Medicare Advantage (MAPD) Illinois Cares Rx
- 6 coordinating Medicare Advantage plans Group
Health Plan (Advantra), Health Alliance, OSF
Health, Secure Horizon (United Healthcare),
WellCare, and HealthSpring - Limited availability -- plans serve specific
geographic areas - In a non-coordinating Medicare Advantage plan,
you either accept its Rx benefits (forfeiting IL
Cares Rx except 25/month rebate), or leave plan
and get Illinois Cares Rx benefit in
fee-for-service care
20U.S. enrollment on June 11, 2006
- 10.37 million joined PDPs (standalones)
- 6.04M in Medicare Advantage (MAPDs)
- 6.07M dual eligibles, mostly in PDPs
- 6.90M with employer Rx benefit
- 3.55M federal retirees
- Total 32.84M with Part D creditable coverage
- 5.38M with other creditable coverage, e.g. VA
- About 3/4 of those without creditable coverage
are probably eligible for extra help
21Illinois enrollment on June 11, 2006
- 545K in prescription drug plans
- 82K in Medicare Advantage plans with Rx
- 262K dual eligibles
- 345K in retiree plans
- 72K federal retirees
- 1.341 million total with Part D creditable
coverage - Illinois total 1.735 million Medicare
beneficiaries - 280K in Illinois Cares Rx late in 2006, now about
230K -- mostly in standalone drug plans
22Federal information sources
- Call the Center for Medicare Medicaid Services
(CMS) tollfree 1(800)MEDICARE - CMS web site www.medicare.gov
- CMS publications 10050 Medicare You 2007
(state editions) 11109, Your Guide to Medicare
Prescription Drug Coverage - Social Security 1 (800) 772-1213 or
www.socialsecurity.gov for assistance with extra
help application
23State and local information sources
- Illinois Cares Rx info at www.cbrx.il.gov
- Illinois Senior Health Insurance Program (SHIP)
(800) 548-9034 - Illinois Department on Aging (800) 252-8966
- Health Benefits Hotline (800) 226-0768
- Northeastern Illinois Area Agency on Aging (800)
528-2000 and (815) 939-0727 - To contact AAAs and state units on aging anywhere
in U.S., call Eldercare Locator (800) 677-1116
www.eldercare.gov