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.

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.

Prescription Drug Plan (PDP)

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

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.

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.

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.

Coverage Determination

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

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.

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.

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.

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.

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.

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.

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.

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.

Formulary

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

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.

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.

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).

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.

Administrative Law Judge (ALJ)

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

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.

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.

Coverage Determinations, Exceptions, and Appeals

If your new pharmacy tells you that a medication is not covered by your plan, or your plan requires a higher co-payment for your medication than for other similar medications, you have the right to have that decision reviewed and possibly changed. This decision process is known as the exception and appeals process. If you decide to file an exception to get your medication covered by your Medicare prescription drug plan, be sure to keep track of all contacts you make (name of the person, phone number, and date and time of the call).

Questions Answered

What are coverage determinations, exceptions, and appeals?

A coverage determination is a written letter from your plan telling you that it will not cover a drug.

An exception is a formal decision by your plan to cover your medication or reduce your co-payment. If an exception is granted, it will for last one year from the date of the decision and will then need to be requested again.

If the plan does not grant the exception, you may take your case to another decision maker. This is known as an appeal.

How do I know if I should file for an exception and/or appeal?

Check Your Plan
Call your plan hotline to find out if your medication is or is not covered. You can find your plan’s phone number either in your plan enrollment materials or on your Medicare prescription drug card. If your medication is not covered, ask for a one-time supply of your medication(s) to help you while you request an exception. Plans approved by CMS will offer at least a 30-day supply called a “transition supply” or “emergency supply.” Your plan should then send you a coverage determination in writing.

Tell Your Doctor or Case Manager
Call your doctor’s office or your case manager to tell them of the denial. They need to be prepared to help you.

Think About Your Options
You should talk with your doctor to either switch your medication to one that is covered by your plan or to request that the plan cover your medication (called an exception). If you have both Medicare and Medicaid, you may also want to look at other plans offered in your area to see if a different plan better meets your needs.

Ask for an Exception
Ask your doctor or a family member to help you ask for an exception. Your doctor will have to show why this medication is needed (called “medical necessity”) for your plan to grant your request. See your Medicare prescription drug plan documents for forms and phone numbers that you might need for this process. Save copies of these forms with times and dates, and give a copy to your doctor or case manager for your file.

After your plan receives your request and supporting statement from your doctor, the plan must make a decision about your request within 72 hours (or 24 hours in an emergency). If you get an exception, go to the pharmacy to have your prescription filled. The exception will last for one year from the date it is approved. If your exception request is denied, you can appeal.

How many steps will I have to go through during the appeals process?

There are five levels of the appeal process. The details of each level are provided below.

Appeal #1: Ask for Redetermination
Ask your Medicare prescription drug plan to review your request to get your medication again (called a redetermination). Your plan materials will tell you if this can be done either in writing or over the phone and what kind of information they need from you or your doctor to make a decision.

Your Medicare prescription drug plan must notify you of a decision within seven calendar days (or 72 hours in an emergency) from the time it receives all your information. If you get a redetermination in your favor, fill your prescription. It will last for one year from the date of the plan’s decision. If your redetermination is denied or the plan does not respond by the deadline, file for appeal #2, also known as reconsideration.

Appeal #2: Ask for Reconsideration
At this level, you will ask an Independent Review Entity (IRE) to review your plan’s previous decision. An IRE is a regional organization under contract with prescription drug plans to review their decisions and make sure that the plans have followed processes and reviewed the details of your request properly. Your request to the IRE may be filed either in writing or over the phone.

  • The IRE must get your doctor’s views in writing, on the phone, or at a teleconference.
  • If your plan does not meet the deadlines for making a decision on your exception or redetermination request, the plan must automatically forward your request to the IRE within 24 hours.
  • The IRE must let you know of their decision within seven calendar days (or 72 hours in an emergency).

If the IRE decides in your favor, go to the pharmacy and fill your prescription. The decision to cover your medication will last for one year from the date of the decision. If the reconsideration is denied, you may file appeal #3 – a request for an administrative law hearing.

Important Note: If your requests for your plan to cover a medication have been denied through the first two reviews, you should talk to your doctor before making another request (going to appeal levels #3-5). The time to get a decision on further appeal requests is much longer and plans are not required to give you refills of your medication during these later levels of appeals. Talk with your doctor about other medications that might work for you, or find other ways to get your medication, such as charitable organizations, drug manufacturer programs, or state-funded programs. The Partnership for Prescription Assistance can help you find programs to help you (www.pparx.org or 1-888-477-2669).

Appeal #3: Ask for an Administrative Law Judge (ALJ) Hearing
If the IRE denies your reconsideration request, you may ask for review by an Administrative Law Judge (ALJ), a federal government employee who will review your case to make sure the plan has followed proper processes and has reviewed your case in a way that meets federal legal requirements. A lawyer may help you with this review. To receive a hearing, your medication costs must be at least $100 (including all refills). This amount will increase yearly.

An ALJ has 90 calendar days to grant a hearing request and 90 calendar days to make a decision. If the ALJ decides in your favor, fill your prescription at your network pharmacy. The decision to cover your medication will last one year from the date of this decision. If your request is denied, then go to appeal #4 – the Medicare Appeals Council.

Appeal #4: Ask for Review by the Medicare Appeals Council
If the ALJ does not approve your request, you may file an appeal with the Medicare Appeals Council, part of the Centers for Medicare and Medicaid Services (CMS). You may have legal help with this review.

The Medicare Appeals Council has 90 calendar days to decide a case. If the Medicare Appeals Council decides in your favor, fill your prescription. It will last one year. If not, go to the final level of appeal – federal court.

Appeal #5: Ask for Review by Federal Court
If the Medicare Appeals Council denies your request, you may appeal to federal court. This step is also known as “Judicial Review.” A lawyer may help you. To appeal at this stage, your total costs must be at least $1,050 in 2006 (This amount will increase yearly).

If all your appeals are denied, you should:

Is there legal help available for the appeals process?

You are able to get legal help with the hearing process during appeal levels 3-5. To find legal help in your area, use the resources listed below. Look for legal aid organizations, health disability law organizations, or law firms that focus on Medicare:

Current as of 9-26-2005

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