Executive Director

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Medicare Prescription Drug Improvement and
Modernization Act Beneficiaries With Mental
Illnesses Presentation to NAMI Convention June
19, 2005 Andrew Sperling, Director of Federal
Legislative Advocacy, NAMI andrew_at_nami.org
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Ongoing NAMI Education Advocacy Activities

• Meetings with senior CMS Officials
• Comments on CMS regulations and formulary
  guidance, USP Guidelines
• Presentations at NAMI state affiliate meetings
• Report cards ratings for PDPs and MA drug plans

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• P.L. 108-170, Signed on December 8, 2003
• Key Features
• Voluntary drug benefit administered through
  drug-only plans or integrated plans that provide
  a full set of Medicare benefits
• Unprecedented role for private sector plans to
  administer an optional benefit under Medicare on
  an at-risk basis
• Premium and cost-sharing subsidies for low-income
  beneficiaries
• Medicare beneficiaries with full Medicaid (dual
  eligibles) get benefits through Medicare, not
  Medicaid, beginning January 1, 2006
• Nearly half of authorized spending under the MMA
  goes toward dual eligibles, low-income coverage
  and subsidies

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• Medicare Drug Benefit - Projected 10-Year Cost
  Fueling Threats to MMA
• Original Congressional Budget Office (CBO)
  10-year projection - 395 billion (2004 through
  2013),
• Most recent 10-year projection from OMB CMS
  Actuary - 724 billion (2006 through 2015),
• Reaction to escalating cost projections
• cap drug benefit at 400 billion?
• expand importation?
• repeal non-interference provision in MMA?
• threatened Presidential veto!!

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Dual Eligibles - Who Are They?

• Full dual eligibles -- Medicare services as
  primary payor for their health care, with
  Medicaid serving as secondary payor (for services
  not covered under Medicare such as Rx and
  long-term care. Medicaid also pays their premium
  and cost sharing for Medicare (QMB SLMB)
• Partial dual eligibles receive assistance only
  with Medicare premium and, in some cases, cost
  sharing obligations
• To qualify for full Medicaid under the federal
  minimum standards, Medicare beneficiaries
  generally must have income lt74 of poverty (about
  6,600 for individuals) and assets lt2,000 (i.e.,
  SSI requirements)
• Elderly and non-elderly people with disabilities
  above federal minimum levels are covered as a
  state option

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Dual Eligibles -- How Many Are There?

• Full Dual Eligibles -- 6.3 million
• Partial Dual Eligibles -- 1 million
• 14.1 million elderly lt150 of poverty
• Other Medicare Beneficiaries -- 31.9 million
• Total Medicare Beneficiaries -- 38.8 million

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Treatment of Dual Eligibles in P.L. 108-170

• Beginning in November 2005, dual eligibles will
  be auto-enrolled in Medicare Part D plans.
  Coverage effective January 1, 2006 when drug
  coverage through Medicaid ends.
• Full dual eligibles qualify for low-income
  subsidy regardless of income or assets
• No premium if a dual selects average or lower
  cost plan
• Cost Sharing no deductible, no co-payment if
  institutionalized, indexed copay of 1 per
  generic/3 per brand name if lt100 of poverty and
  2 per generic/5 per brand name if gt100 of
  poverty, no copay above the 2,200 catastrophic
  limit

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Transition of Dual Eligibles into Part D

• 3 separate notices planned from CMS SSA
• Summer 2005 - notice that new drug coverage is
  coming in January 2006
• October 2005 - notice of initial enrollment
  period once all plan options become available
• November 15, 2005 - auto-enrollment notice sent
  to all dual eligibles that have not yet signed
  up opportunity to sign up for a different plan
• Big concerns about continuity of care for dual
  eligibles -- patients currently stable on
  specific medications need to retain coverage when
  they shift over the Medicare on January 1, 2006

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Transition of Dual Eligibles into Part D

• CMS will require PDPs and MA plans to put in
  place a special transition plan in cases of
  enrollment in a PDP or MA plan that excludes an
  individual dual eligibles medication from drug
  plans formulary exception process available if
  a medication is on the formulary but is prior
  authorized
• Dual eligibles will be able to switch drug plans
  at any time, both before and after January 1,
  2006 effective date.

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Broad Coverage Expected for Medications to Treat
Mental Illness

• CMS will require drug plans to cover all or
  substantially all drugs in 6 vulnerable
  classes that include anti-psychotics,
  anti-depressants and anti-convulsants
• CMS guidance states that drug plans should not
  use prior authorization or step therapy, unless a
  plan can demonstrate extraordinary
  circumstances

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Low-Income Subsidies

• Individuals lt135 of poverty and Medicaid
  eligibility -- up to about 12,920 for
  individuals and 17,300 for couples, with assets
  under 6,000 for individuals, 9,000 for couples
  
• - no premium or deductible if average or
  low-cost plan is selected,
• - indexed cost sharing (2 per generic/5 per
  brand name),
• - above catastrophic limit, no cost sharing
• Individuals from 135 to 150 of poverty -- up to
  14,355 for individuals and 19,245 for couples,
  with assets under 10,000 for individuals,
  20,000 four couples
• - sliding scale premium assistance 50
  deductible,
• - 15 co-insurance to catastrophic limit, 2 per
  generic/5 per brand name above catastrophic
  limit

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Low-Income Subsidies

• Apply at Social Security or state Medicaid
  offices now states screen and enroll applicants
  for Medicaid, if eligible but SSA offices will
  NOT screen for Medicare Savings Plan eligibility
• Application for low-income subsidy is separate
  from drug plan enrollment!!!

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Optional Drug Coverage for Medicare
Beneficiaries Above 150 Federal Poverty Level
(FPL)

• Drug coverage in the new Medicare Part D program
  is optional and will require participants to pay
  a monthly premium and deductible.
• After 2,250 there will be no benefit until
  spending hits 3,600, a.k.a. the Doughnut Hole.
• After 3,600 is reached, enrollees pay either 5
  co-insurance or 2 generics/ 5 brand name
  whichever is greater.
• Penalties for late enrollment with creditable
  coverage.

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• True Out of Pocket Costs
• TrOOP establishes the rules by which a plan
  enrollee can meet the requirement of spending
  3,600 of out-of-pocket costs, and thereby access
  significantly lower their co-payments.
• Assistance from most charitable programs and
  certain state assistance programs (including
  programs offered by drug manufacturers) will be
  included in the calculation of TrOOP.
• Final rules maintain CMSs position that payments
  for a drug not on a plans formulary will NOT
  count towards TrOOP.

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Overarching Concerns in the Final MMA Regulations

• ensuring that drug plans (PDPs) that will offer
  coverage to Medicare beneficiaries are required
  to offer broad access to medications to treat
  mental illness,
• limiting the ability of Medicare PDPs to impose
  restrictive policies such as prior authorization,
  fail first requirements, tiered co-payments and
  preferred drug lists,
• limiting impact of involuntary disenrollment
  provision,
• promoting a strong set of appeal and grievance
  rights for beneficiaries and their families, and
• ensuring that individuals dually eligible for
  Medicare and Medicaid are able to make a smooth
  transition into the new Medicare drug benefit in
  January 2006.

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Specific Concerns with the Final MMA Regulations
Plan Formularies In the final rules, CMS
declined to require an open alternative formulary
for Part D enrollees with severe mental
illnesses. Minimum requirement for at least two
drugs in each therapeutic class retained,
however, if there are only 2 distinct drugs in a
particular class, the plan could elect to cover
only one. CMS will not require plans to cover
off-label uses of FDA approved drugs and can
require documentation. Advance notice period for
mid-year changes to a plans formulary extended
from 30 days to 60 days.
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Exceptions, Grievances Appeals

• Final regulations state that determinations must
  be as expeditious as the enrollees health
  requires.
• Expedited appeals must be resolved within 24
  hours and expedited re-determinations within 72
  hours.
• For standard coverage determinations (i.e.,
  requesting an exception to access a non-formulary
  drug) a decision must come within 72 hours.
• An outside independent review can be requested,
  with a decision required within 7 days. The
  final rule also clarifies that a prior
  authorization denial is subject to appeal.

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Exceptions, Grievances Appeals

• Final regulations prevent a denial at the
  pharmacy counter and instead an enrollee will
  have to request the denial in writing from the
  plan -- a requirement likely to discourage many
  enrollees from pursuing appeals.
• Independent review entities will not be able to
  examine the validity of the exceptions criteria
  used by each plan, and will only be able
  scrutinize the application of that criteria.

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Links to More Information
http//www.cms.hhs.gov/medicarereform/pdbma/ www.n
ami.org www.aimcoalition.org/ www.kff.org/medicare
/rxdrugdebate.cfm More information about
prescription drug savings for Medicare
beneficiaries is available at http//www.accessto
benefits.org/ http//www.pparx.org