2006 annual election period

The annual coordinated election period (November 15th through December 31st) is the time that all individuals can choose to make changes in the way they get Medicare—including joining or leaving a Medicare prescription drug plan, Medicare Advantage plan, or other Medicare health plan.

Administrative Law Judge (ALJ)

A hearings officer who presides over appeal conflicts between providers of services or beneficiaries and Medicare contractors.

Appeal

If a beneficiary is not happy with a plan’s decision about covering medication, there is a process defined for appealing that decision. The appeal levels are: (1) Exception or Coverage determination; (2) Redetermination; (3) Reconsideration by an Independent Review Entity (IRE); (4) ALJ hearing; (5) Medicare Appeals Council hearing; and (6) Judicial Review in a District Court.

Auto-enrollment

The process by which CMS will randomly assign individuals with both Medicare and Medicaid (dual eligibles) into prescription drug plans (PDPs).

Beneficiary

Someone who has Medicare prescription drug coverage. (See also: dual eligible.)

Centers for Medicare and Medicaid Services (CMS)

The federal agency that runs the Medicare program, including the Medicare Prescription Drug Benefit program. In addition, CMS works with the States to run the Medicaid program.

Co-insurance

The percentage of the charge for drugs that a Part D enrollee may have to pay after any plan deductibles are paid. For instance, 10% co-insurance on a $50 prescription would be $5.

Co-payment

A dollar amount that a person must pay out-of-pocket for a medication or other health service. For example, a PDP may ask for a $3 co-payment for each generic prescription and $5 for brand name prescriptions. Co-pays may be further tiered by PDPs to discourage use of more expensive drugs.

Cost-sharing

The out-of-pocket payment a person makes to his or her cost of care. This includes deductibles, premiums, co-insurance, and co-payments.

Coverage Determination

A written notice from the Medicare prescription drug plan informing the patient that they will or will not cover a prescribed medication.

Creditable Coverage

Drug coverage that is at least as good as the new Medicare drug benefit. If you have creditable coverage (also known as comparable coverage) you can enroll into a Medicare prescription drug plan with no penalty after May 15, 2006. Creditable coverage includes coverage from former or current employers, Veterans, military or federal benefits, or private individual insurance.

Deductible

A flat dollar amount a person must pay before Medicare will pay for prescription drugs costs. The standard yearly deductible for Medicare patients who don’t have a low-income subsidy is $250.

Dose Limitations

Prescription drug plans (PDPs) can limit the dosage amount for prescription drugs on their formularies. For example, a medication can be included on the formulary up to 20mg, but not to 40mg.

Doughnut Hole

A point in the Medicare prescription drug benefit where the consumer pays the full costs for their drugs. This occurs after reaching $2,250 in total drug costs, and the patient/consumer will pay 100% of drug costs until they reach $5,100.

Drug Tiers

Drug tiers are definable by the individual prescription drug plans (PDP). Generally, drugs are classified by types— generic, preferred brand, and brand. Different co-pays may be required for different tiers and access to tiers other than generic may be restricted by utilization management techniques.

Dual eligible (or duals)

A person who is eligible for both Medicare and Medicaid. CMS will automatically enroll dual eligibles in low-premium PDPs. If they choose to stay in a low-premium PDP, dual eligibles’ only cost for drugs will be a $1 co-pay for generic drugs and a $3 co-pay for brand-name drugs.

Exception

The first phase of the appeals process; a formal decision by a Medicare prescription drug plan to cover a medication not on its formulary, or to reduce a co-payment for a drug not on the PDP’s preferred list. If the plan does not approve the exception, the appeals process can continue.

Extra Help

The name that has been given to the low-income subsidy program for Medicare Part D. Extra Help will pay for part or all of the Medicare prescription drug premiums for Medicare beneficiaries who have incomes below 135% of the Federal Poverty Level (FPL) (including dual eligibles) and part of the premium for those who have incomes between 135% and 150 % of the FPL. The benefit will protect beneficiaries under 150 % of the FPL from the gap in coverage referred to as the "doughnut hole." Dual eligibles will get this benefit without applying. All others will need to apply for Extra Help.

Fail first

(Also known as "step therapy") This requires that a patient fail on one or more preferred formulary drugs—generally lower price, or generic drugs—before a prescription will be filled for the non-preferred drug a physician has determined would be most appropriate/effective for the patient.

Federal poverty level (FPL)

The FPL serves as one of the indicators for determining eligibility in a wide variety of federal and state programs.

Fee-for-Service

(Also known as "traditional" or "original" Medicare, in which Medicare directly reimburses the cost of care, rather than through a managed care plan.

Formulary

A list of medications that a prescription drug plan covers (prior authorization by the Medicare prescription drug plan may be required).

Generic Substitution

Prescription drug plans (PDPs) may automatically switch prescriptions to generics when they are available.

Independent Review Entity (IRE)

The third stage of the Part D appeals process; an IRE reviews a plan’s decision not to cover a medication. An IRE is a review body that is under contract with the prescription drug plan to do such reviews.

Limited Income

Under Medicare, limited income refers to income below 150% of the Federal Poverty Level. In 2005, the year Medicare prescription drug benefit goes into effect, this is equal to a yearly income of $14,355 for an individual and $19,245 for a couple, with other resources of no more than $11,500 for an individual and $23,000 for a couple.

Long-term care facility

A facility or medical institution that meets criteria outlined by the Social Security Act and which cares for residents with Medicare and/or Medicaid. Includes primarily skilled nursing homes.

Low-income subsidy (LIS)

(Also known as Extra Help) A program that will pay for part or all of the Medicare prescription drug premiums for Medicare beneficiaries who have incomes below 135% of the federal poverty level (FPL) (including dual eligibles) and part of the premium for those who have incomes between 135% and 150% of the FPL. Dual eligibles will get this benefit without applying. All others will need to apply.

Medicaid

A joint federal and state program that provides medical coverage for people with low incomes and limited resources. Medicaid programs vary from state to state.

Medically Necessary

Medical services or supplies that: are proper and needed for the diagnosis or treatment of a patient’s medical condition; are provided for the diagnosis, direct care, and treatment of a patient’s medical condition; meet the standards of good medical practice in the area; and are not chosen mainly for the convenience of the patient or doctor.

Medicare

The federal health insurance program for: people 65 years of age or older; certain younger people with disabilities; and people of any age with end-stage renal disease (permanent kidney failure with dialysis or a transplant), sometimes called ESRD. Part A pays for hospital care, Part B pays for doctor visits, Part C includes the managed care option, and Part D is the new prescription drug benefit.

Medicare Advantage Perscription Drug Plan (MA-PD)

The Part D prescription drug plan that will be offered to enrollees in a Medicare Advantage managed care plan.

Medicare Appeals Council (MAC)

The fifth stage of the Medicare prescription drug benefit appeals process is conducted by the Medicare Appeals Council (part of the Centers of Medicare and Medicaid Services), after an Administrative Law Judge (ALJ) has denied a request to cover a medication.

Medicare prescription drug coverage

The new prescription drug benefit added to the federal Medicare program, known as Medicare Part D. The prescription drug coverage will begin on January 1, 2006.

Medicare Savings Plan

Medicaid programs that help pay for some or all of Medicare premiums and deductibles.

Medigap Policy

A Medicare supplement insurance policy sold by private insurance companies to fill "gaps" in original Medicare coverage.

Network pharmacy

A pharmacy that is under contract with a Medicare prescription drug plan. Plan members must get their prescriptions filled at a network pharmacy.

Non-formulary drugs

Drugs not on a prescription drug plan (PDP) approved list.

Non-Medicare prescription drugs

By law, Medicare cannot cover certain drugs, including benzodiazepines, barbiturates, and prescription vitamins.

Off-label restrictions

Although many drugs are routinely used to treat conditions for which the FDA may not have approved them, this allows PDPs to cover drugs only for their FDA-approved uses.

Partial dual eligible

Low-income individuals with Medicare, including Qualified Medicare Beneficiaries (QMB), Specified Low-Income Medicare Beneficiaries (SLMB), and Qualifying Individuals (QI), as well as Supplemental Security Income (SSI) recipients and individuals with Medicare Savings Plans. These individuals will have facilitated enrollment by CMS into prescription drug plans and will receive financial help with the costs of Medicare Part D.

Preferred drug lists

Drug lists that cost less under a prescription drug plan (PDP).

Premium

Regular monthly payment made to a health or prescription drug plan by beneficiaries for health care coverage. The lowest average premium for a Medicare prescription drug plan is expected to be about $32.

Prescription Drug Plan (PDP)

A private insurance plan that offers coverage for prescription drugs under Medicare, also known as a Medicare prescription drug plan.

Prior authorization

Specific drugs on a formulary may require that the physician seek approval from the prescription drug plan (PDP) before the prescription can be filled.

Program of All-inclusive Care for the Elderly (PACE)

A managed care benefit that exists in certain areas of the U.S. and provides a medical and social service delivery system through a nonprofit or public entity, combining Medicaid and Medicare financing.

Qualified Individual (QI)

A person with an income between 120% and 135% of the Federal Poverty Level (FPL) and limited financial resources who receives some assistance with Medicare costs but is not on Medicaid.

Qualified Medicare Beneficiary (QMB)

A person with an income equal to or below 100% of the Federal Poverty Level and limited financial resources who receives some assistance with Medicare costs but is not on Medicaid.

Quantity limitations

Prescription drug plans (PDPs) can limit the quantities of prescription drugs on their formularies. For example, a medication can be included on the formulary up to 100 pills per month, but not 150 pills.

Reconsideration

The third stage of the appeals process; after a redetermination has been denied. This stage of the appeals process is conducted by an Independent Review Entity (IRE).

Redetermination

The second stage of the appeals process, after a coverage determination has been made and the Medicare prescription drug plan has decided not to cover a beneficiary’s medication.

Specefied Low-income Medicare Beneficiary (SLMB)

A person with an income between 100% and 120% of the Federal Poverty Level and limited financial resources who receives some assistance with Medicare costs but is not on Medicaid.

Spend down

This option allows a person to spend down to Medicaid eligibility by having medical expenses that can be subtracted from their income. Subtracting medical expenses such as prescription drugs and eye glasses from your income can reduce a person’s income to a level below the maximum allowed by a particular state’s Medicaid plan.

Social Security Administration (SSA)

The federal government agency that administers and enrolls Medicare beneficiaries into the low-income subsidy program, Extra Help.

State Health Insurance Assistance Program (SHIP)

A state program that gets money from the federal government to give free local health insurance counseling to people with Medicare.

State Pharmaceutical Assistance Program (SPAP)

A state-financed and state-administered program that provides pharmaceutical assistance to certain populations, most often seniors. SPAPs usually work one of two ways: (1) by providing subsidies to qualified individuals for help with costs associated with prescription drugs, or (2) by providing drugs at a discount directly to individuals. At least 41 states have established or authorized some type of SPAP to provide pharmaceutical coverage or assistance, primarily to low-income elderly or persons with disabilities who do not qualify for Medicaid.

Step therapy

(Also known as "fail first") This requires that a patient fail on one or more preferred formulary drugs—generally lower price, or generic drugs—before a prescription will be filled for the non-preferred drug a physician has determined would be most appropriate/effective for the patient.

Supplemental Security Income (SSI)

A program to help aged, blind, and/or disabled people who have little or no income pay for basic needs such as food, clothing, and shelter.

Tiered co-payments

Co-payments of different amounts for different drugs on a PDP formulary.

True Out-of-Pocket Costs (TrOOP)

The government will pay most (or in some cases, all) of your drug costs for the rest of the year, once you pay $3,600 in out-of-pocket expenses (this amount may increase on a yearly basis and does not include premium payments). Out-of-pocket costs include all prescription drug costs paid by you or another person or organization, including the government (for example, Extra Help), State Pharmaceutical Assistance Programs (SPAPs), registered charities, and pharmaceutical manufacturer patient assistance programs. The out-of-pocket costs include payment of the deductible, co-insurance, co-payments, and medication costs that are not covered by other insurance. These costs do not include expenses paid by the individual with Medicare prescription drug coverage for medications that are not on a plan’s covered list of drugs or for medications excluded from the Medicare prescription drug benefit.