1 filling the holes in part d: spaps to the rescue? marc steinberg, families usa health action 2005...
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Filling the Holes in Part D: SPAPs to the Rescue?
Marc Steinberg, Families USAHealth Action 2005 * January 27, 2005
www.familiesusa.org
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State Pharmaceutical Assistance Programs (SPAPs) 38 states: 22 benefit programs, 16
discount programs 1.3 million enrollees in benefit
programs: 54% in 3 states: NJ, NY, PA
Most cover seniors only; a few cover seniors & disabled or more
Some benefit caps Few have asset test for eligibility
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SPAP Income Eligibility, 2002source: Trail, Fox, Cantor, Silberberg, & Crystal, 2004
0
50
100
150
200
250
300
350
400
450
500
MA RI NY NJ NV IL CT VT DE MI NC MO PA ME SC IN KS FL MN MD WY
State
Per
cen
t o
f P
ove
rty
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Why SPAPs Matter for Medicare Part D SPAP beneficiaries are major targets of
Part D Significant savings for SPAPs likely Can identify low-income beneficiaries, but
asset test is a problem SPAP help can fill the donut hole and
other gaps in coverage Counts towards a beneficiary’s “TROOP”
(true out-of-pocket cost)
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Gaps SPAPs could fill Premiums Deductible Co-insurance Co-payments Non-formulary drugs Non-network purchases
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Choices for States
Wrap around Part D with existing or new SPAP? Could be major help for beneficiaries Costs are uncertain (e.g. non-
formulary drugs) Covering additional drugs is
administratively complex
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Other Choices for States Continue existing SPAP with minimal
changes As secondary payer? Similar to a
wraparound As alternative plan? - not likely a long-term
solution Abolish SPAP
Politically “safe” in some states Lost opportunity
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Building a Wraparound SPAP: Coordination Problems Filling gaps means coordination of
benefits; harder with multiple plans States cannot:
discriminate among plans Auto-enroll SPAP members in preferred plan Steer SPAP members to preferred plan
States can: Act as an authorized representative (per
state law) and auto-enroll at random Compare plans for members
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Building a Wraparound SPAP: Additional Problems Who will be covered? Different federal
subsidy levels mean different benefits Appeals:
SPAP could have interest in appealing denial of coverage
SPAP can appeal if it is an authorized representative per state law
Multi-state regions add complexity
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Questions to Ask If state has an SPAP:
Will program continue in 2006? What savings are projected Is wraparound an option? If so, what
type? Who and what are covered? What role in low-income subsidy
determination?
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Questions to Ask If state does not have an SPAP:
Can state create one in coming years Who and what could be covered?
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Summary SPAPs have potential to ease burdens
on low-income Medicare beneficiaries Can make Part D a more complete
benefit Substantial administrative complexity
is likely Few states have made decisions yet
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Appendix: Benefit Levels
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Low-Income Subsidy, “Tier 1” Income: under
135% FPL Assets: below
$6,000/individual, $9,000/couple
Asset limits increase with consumer price index
Premium: full subsidy (average for region)
Copays: $2 generics/ $5 non-generics
No copayments when total costs exceed $5,100
Copays and catastrophic limit increase with Medicare drug inflation
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Low-Income Subsidy, “Tier 2” Income:
135%-150% FPL or Under 135% and
over assets Assets:
Under $10,000/individual or $20,000/couple
Assets increase w/ CPI
Premium: sliding scale of $0-$35/month (increases annually)
$50 annual deductible 15% co-insurance up to
$5,100 drug costs $2/$5 copays after
drug costs reach $5,100/year
Copays and catastrophic limit increase with Medicare drug inflation
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Low-Income Subsidy for Full Dual Eligibles (Part 1) Institutionalized
Premium: full subsidy (average for region) No copayments
Income up to 100% FPL Premium: full subsidy (average for region) Copays: $1/generic & $3/non-generic No Copays after total drug costs reach
$5,100/year Copays indexed to consumer price index Catastrophic limit increases with Medicare
drug inflation
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Low Income Subsidy for Full Dual Eligibles (Part 2) Income over 100% FPL
Premium: full subsidy (average for region)
Copays: $2/generic & $3/non-generic No Copays after total drug costs reach
$5,100/year Co-pays indexed to Medicare drug
spending Catastrophic limit increases with
Medicare drug inflation
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Medicare Part D Basic Benefit(all dollar amounts are indexed to Medicare drug costs)
Coverage Drug Costs
Part D Pays
You Pay
Tot. Costs (TROOP)
Deductible $0-250
0% 100% $250
Initial Benefit
$251-$2250
75% 25% $750
Donut Hole
$2251-$5100
0% 100% $3600
Catastrophic
Over $5100
95% 5% $3600 plus 5% of remainder