Medicare Prescription Drug Discount
Card
Ranjani Varadarajan
PYPC 7810
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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
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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
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Medicare-approvedDrug 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.
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Medicare-approvedDrug Discount Card
Estimated savings of 10-25% on many drugs
$600 credit to provide immediate relief to certain
beneficiaries with low incomes
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Medicare-approvedDrug 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
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Medicare-approvedDrug 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
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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
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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
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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
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Target Audiences
Beneficiaries:
• Primary
• Secondary
Groups who interact with Beneficiaries:
• Providers
• Partners and health care stakeholders
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Eligibility
Must meet income requirements At or below 135% official poverty level
Income level for 2004
New levels will be available in February 2005 Resources are not counted Do not have to have high drug costs
Single $12,569
Married $16,862
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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” .
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$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
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$600 Credit in 2005
If you join between You will get
Jan. 1 - March 31, 2005 $600
April 1 - June 30, 2005 $450
July 1 - Sept. 30, 2005 $300
Oct. 1 – Dec. 31, 2005 $150
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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.
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TYPES OF TRANSITIONAL LOW-INCOME ASSISTANCE
100–135% FPL Transitional
Benefits
< 100% FPL Transitional Benefits
Enrollment Fee Paid be Federal Government
Paid by the Federal Government
Monetary Benefit
Generally the balance carries over to next year
Balance information made available electronically or by phone at point of service
$600 annual benefit $600 annual benefit:
Cost Sharing Requirement
10% 5%
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For more information
www.medicare.gov
http://www.medicare.gov/AssistancePrograms/Search/Results.asp
Medicare and the New Prescription Drug Benefit
Part D Medicare Drug Benefit
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PART D MEDICAREDRUG 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 provides drug coverage
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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
Standard Medicare Part D Drug Benefit, 2006
+ ~$420 average annual premium
$250 Deductible
$2,250 in Total Drug Costs*
$5,100 in Total Drug Costs**
25%
5%
$2,850 Gap: Beneficiary Pays 100%
*$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 Act of 2003.
Medicare Pays 75%
Medicare Pays 95%
No Coverage
CatastrophicCoverage
PartialCoverageup to Limit
Beneficiary Out-of-PocketSpending
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Provisions in the MMA for Low-Income 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 Medicare plans?
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$1-$250 36%
$751-$3,60013%
$251-$75030%
No spending
10%
>$3,60011%
Gap in Standard Part D Benefit in 2006 Could Leave Many Part D Participants Vulnerable to High Out-of-
Pocket Spending
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, November 2004.
8.6 million
10.5 million
3.0 million
6.9 Million Part D Participants Reach
the “Doughnut Hole”in 2006
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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 Coordinating Part D with other sources of drug coverage (state pharmacy
assistance programs, employer coverage, etc.)
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Decisions for Medicare Beneficiaries, 2006
Traditional Medicare
No Part D coverage
Part D Prescription
Drug Plan
Medicare Advantage
HMO (local)
PPO (regional)
Private Fee-for-Service
Enroll in Part D Plan
Apply for Low-Income Subsidy
Medicaid OfficeSocial Security Office
Meet Income and Asset Test?
Dual Eligibles
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 name Rx after $5,100
If yes, qualify for:
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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.
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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