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.

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.

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.

Prescription Drug Plan (PDP)

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

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.

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.

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.

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.

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.

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.

Medicare Savings Plan

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

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.

Auto-enrollment

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

Formulary

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

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.

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.

Medigap Policy

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

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.

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.

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.

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.

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.

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.

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.

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.

Coverage Determination

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

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.

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.

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.

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).

Non-formulary drugs

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

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.

Beneficiary

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

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.

Social Security Administration (SSA)

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

Transition & Continuity of Care

The transition of many Medicare patients from their current drug coverage to coverage under Part D creates a number of concerns about how patients will be able to continue to receive the medications on which they are currently stabilized.  This transition applies in three different situations: the initial transition of beneficiaries to Part D on January 1, 2006; the transition of new enrollees after that date; and the transition of individuals who switch from one plan to another after the implementation of the benefit. 

CMS has acknowledged the specific needs of patients with mental illness to be able to continue on their same drug regimens.  In their online FAQs (http://questions.cms.hhs.gov ) states “beneficiaries should be permitted to continue utilizing a drug in these categories that is providing clinically beneficial outcomes.” It is important to understand that CMS’s transition policy is suggestive rather than mandatory and is being revised regularly as more issues come into question.  We will provide updates as new information becomes available.

Of special concern are the difficulties that may arise for dual eligible patients, patients with both Medicaid and Medicare, who have been receiving drugs through their state Medicaid programs.  Although these patients will be automatically enrolled in a low-premium prescription drug plan (PDP) by CMS to ensure that they will not have a gap in coverage, there are questions about whether the new plans will provide them with the exact same medications they are currently receiving and about the co-pays they will now be responsible for under Part D.  Because these patients will be permitted to switch to more appropriate plans as needed, they and their caregivers will likely turn to their psychiatrists to help them make informed decisions.

Questions Answered

NEW What is the CMS Point of Sale protection plan and how does it affect the transition of dual eligible individuals?

The Centers for Medicare and Medicaid Services (CMS) recently announced a new point of sale (POS) fallback plan for dual eligible patients (individuals eligible for both Medicaid and Medicaid) who, for whatever reason, failed to be enrolled in a pharmacy benefit plan, as part of the autoenrollment process for duals. When dual eligible patients appear at the pharmacy because they need a refill of their medication, if the pharmacist is unable to verify that the customer has been enrolled in a drug plan using the new centralized query system established by CMS, the point of sale (POS) protection plan will go into effect. » Click here to read the full answer.

When will the transition from coverage of medication by Medicaid to the Medicare Prescription Drug Plans occur for dual eligibles?

Medicaid coverage ceases on December 31, 2005, and Medicare Drug coverage begins January 1, 2006.

What is CMS’s current transition policy to maintain continuity of care for a patient who is already stabilized on a drug regimen?

As stated above, CMS has acknowledged the specific needs of patients with mental illness to be able to continue on their same drug regimens.  In August 2005, the APA requested clarification in writing as to how this would work.  Although no written response has yet been provided, at a September meeting with the APA, CMS staff stated that patients who present at a pharmacy after January 1, 2006, with refills will be presumed to require those drugs to maintain their stability and are to be provided with them as long as the drugs are on the plan formulary.  If the required drugs are not on the formulary at all, or not on the formulary in the form or dosage requested, PDPs may require that a request for an exception be filed to adjudicate access to the needed drugs.

What is CMS’s guidance concerning temporary/emergency one-time-supply refills?

CMS requires that a PDP’s transition process “address situations where an individual first presents at a participating pharmacy with a prescription for a drug that is not on the formulary, unaware of what is covered by the plan or what is included in the plan’s exception process to provide access to Part D drugs that are not covered.”  PDPs are to consider “processes such as the filling of a temporary one-time transition supply in order to accommodate the immediate need of the beneficiary and to allow the plan and/or the enrollee time to work out with the prescriber an appropriate switch to another medication or the completion of an exception request to maintain coverage of an existing drug based on reasons of medical necessity.”  CMS has suggested that a first-fill supply of 30 days would be a reasonable standard.

What is CMS’s current transition policy for patients who move into Part D coverage from other coverage in an “unplanned transition,” (e.g., there is a change in the level of care such as a patient being discharged from a hospital because he or she has been stabilized on drugs that are not on the formulary or the PDP that now provides the patient’s drug coverage)?

CMS’s guidance on unplanned transitions stipulates that beneficiaries and providers “need to utilize the PDP’s exceptions and appeals process.”  CMS acknowledges that “there may exist some period of time in which beneficiaries have a temporary gap in coverage while an exception or appeal is undertaken,” and suggests but does not require that plans utilize a one-time supply fill to cover this gap as the enrollee goes through the plan’s exception process.

What is CMS’s current transition policy for patients in long-term care facilities?

CMS’s guidance states, “the transition process take into account the unique needs of residents of long term care (LTC) facilities who enroll in a Part D plan.”  Where there are gaps between an LTC resident’s current regimen and a PDP’s formulary, CMS notes that PDPs “may need to provide a temporary first-fill supply order for a limited quantity of medication prescribed by a physician.”  The suggested transition period for a first-fill supply order is 90 to 100 days rather than the 30 days suggested for all other situations.

How can I find out about the transition policy of a specific PDP?

CMS has stated that PDPs “must make transition processes available to beneficiaries available in a manner similar to information provided on formularies and benefit design.” This means this information should be available from the plan directly upon request or online at www.medicare.gov.

Why is it important to know specifics about the PDPs my patients choose or are auto-enrolled in (as may occur for dual eligibles and other patients with low-income subsidies)?

It is essential to be able to determine if a plan’s formulary, utilization management requirements, and transition policies will permit the continuation of a proper course of care for your patient

Where will I be able to access information about the plans my patients are enrolled in and what drugs are available through them?

In October 2005, the CMS website, www.cms.gov (for providers) and www.medicare.gov (for consumers), is expected to post the list of participating drug plans in each region along with each plan's formulary, including the utilization management techniques that will be employed.  This information will also be available by phone at 1-800-MEDICARE (1-800-633-4227).

What if the formulary of my patient’s new plan doesn’t include one or more of his or her medications on the formulary?

Enrollees will be able to review plan formularies and utilization management techniques starting in mid-October, and this will hopefully allow them to choose a plan that better fits their medication needs (see above).  CMS has stated that if a patient is stabilized on certain drugs, the new plan must continue to provide these same drugs when the patient requires a refill, so this may help solve the problem of plan selection for them.  The plan is not, however, obligated to provide the drug in the same form or dosage the patient has been getting.  Therefore, if the patient’s medication is not available as needed, an exception will have to be filed with the PDP or the patient will have to look for a PDP that can supply the necessary drugs.

Should I refill my dual eligible patients’ current prescriptions by December 31, 2005?

As a general rule, you should refill your patients’ current prescriptions prior to January 1, 2006, if this is permitted by the state Medicaid program.

Will my patient be able to fill prescriptions in the way they always have?

Enrollees will need to have their prescriptions filled at a pharmacy that participates with their plan.  This means that patients should also look at participating pharmacies choices when choosing a plan that’s best for them.

It is important to note that there are still many uncertainties about the specifics of how PDPs will operate.  Therefore, it is not possible to make predictions at this point about what patients will encounter at the pharmacy.  The APA has developed a flowchart for possible scenarios when a dual eligible patient visits the pharmacy after January 1, 2006.  [link to At the Pharmacy flow chart

Current as of 12-19-2005

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