Medicare Prescription Drug Discount Card

Medicare Prescription Drug Discount Card Ranjani Varadarajan PYPC 7810 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 2 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 3 Medicare-approved Drug 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. 4 Medicare-approved Drug Discount Card  Estimated savings of 10-25% on many drugs  $600 credit to provide immediate relief to certain beneficiaries with low incomes 5 Medicare-approved Drug 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 isn’t offered  Enter or leave a long-term care facility  Leave or join a Medicare managed care plan  Private company stops offering that Discount Card 6 Medicare-approved Drug 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  Can’t charge any extra fees 7 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 8 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 9 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 10 Target Audiences  Beneficiaries: • • Primary Secondary  Groups who interact with Beneficiaries: • • Providers Partners and health care stakeholders 11 Eligibility  Must meet income requirements  At or below 135% official poverty level Income level for 2004 Single $12,569 Married $16,862 New levels will be available in February 2005  Resources are not counted  Do not have to have high drug costs  12 13 14 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” . 15 $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 M+C or Medigap) Income of $12,569 or less if single Income of $16,862 (combined) or less if married 16    $600 Credit in 2005 If you join between You will get Jan. 1 - March 31, 2005 April 1 - June 30, 2005 July 1 - Sept. 30, 2005 Oct. 1 – Dec. 31, 2005 $600 $450 $300 $150 17 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. 18 TYPES OF TRANSITIONAL LOW-INCOME ASSISTANCE 100–135% FPL Transitional Benefits Enrollment Fee Paid be Federal Government < 100% FPL Transitional Benefits Paid by the Federal Government $600 annual benefit: Monetary Benefit $600 annual benefit Generally the balance carries over to next year Balance information made available electronically or by phone at point of service Cost Sharing Requirement 10% 5% 19 For more information  www.medicare.gov http://www.medicare.gov/AssistancePrograms/Search/Results.asp 20 Medicare and the New Prescription Drug Benefit Part D Medicare Drug Benefit PART D MEDICARE DRUG 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 22 provides drug coverage  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 23 Standard Medicare Part D Drug Benefit, 2006 Catastrophic Coverage 5% Medicare Pays 95% Beneficiary Out-of-Pocket Spending $5,100 in Total Drug Costs** No Coverage $2,850 Gap: Beneficiary Pays 100% Partial Coverage up to Limit $2,250 in Total Drug Costs* 25% Medicare Pays 75% $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 Provisions in the MMA for LowIncome 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 <135% FPL ($12,569/individual in 2004) and assets <$6,000/individual  Beneficiaries with incomes 135%-150% FPL ($12,569-$13,965/individual in 2004) and assets <$10,000/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 25 Medicare plans? Gap in Standard Part D Benefit in 2006 Could Leave Many Part D Participants Vulnerable to High Out-ofPocket Spending 8.6 million $251-$750 30% $751-$3,600 13% >$3,600 11% 6.9 Million Part D Participants Reach the “Doughnut Hole” in 2006 $1-$250 36% 10.5 million No spending 10% 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, 26 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 27 Coordinating Part D with other sources of drug coverage (state pharmacy assistance programs, employer coverage, etc.) Decisions for Medicare Beneficiaries, 2006 Enroll in Part D Plan Traditional Medicare Medicare Advantage No Part D coverage Part D Prescription Drug Plan HMO (local) PPO (regional) Private Fee-forService Apply for Low-Income Subsidy Dual Eligibles Social Security Office Medicaid Office Meet Income and Asset Test? If yes, qualify for: 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 Below 150% FPL: Subsidy for premium on sliding scale, $50 deductible, 15% coinsurance to $5,100 in Rx costs, $2/generic Rx, $5/brand 28 name Rx after $5,100 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. 29    References  Duzor+Presentation.ppt  http://www.uwex.edu/ces/flp/health/medicare_act.ppt  medicare .ppt  www.medicare.gov  Guide to choosing Medicare-approved drug discount card  Medicare_Rx_Bill.ppt 30