VIRGINIA COMMONWEALTH UNIVERSITY MEDICARE PRESCRIPTION DRUG PLAN MAY 23, 2005 1:00 P.M. CST CAPTIONING PROVIDED BY: CAPTION FIRST, INC. >> KAREN TRITZ: Good afternoon. My name is Karen Tritz. I will talk today about the prescription drug benefit. I wanted to provide a little bit of context for the prescription drug benefit before I get into the details of the program and how it works and the timing of it. This is providing prescription drugs for individuals with disabilities and the elderly has been a political issue and a policy question for several years. And in 2003, Congress decided that it had $400 billion to spend for this prescription drug benefit, and just to provide a contact because it's hard to imagine what $400 billion is relative to Medicaid spending, the entire Medicaid program spends $300 billion. So this would be an investment in prescription drug coverage that exceeds the entire Medicaid program. There were two main purposes of this new prescription drug benefit. The first was to provide broad coverage and assistance with drugs -- for drug costs for many individuals. And then the second was to provide a targeted benefit for those who had catastrophic drug costs, very high drug costs. So with those two purposes in mind, the drug benefit that I am going to talk about today is structured in a way that the drug coverage and drug assistance jumps in and out depending upon the person's total drug cost. So that's something that is kind of important to keep in mind, that the two purposes were to provide broad coverage, and then to provide assistance for catastrophic drug cost. Today I will give you an overview of a Medicare new prescription drug benefit. How it works, and what it costs. And talk a little bit about the timing and process of this benefit and when it will be rolled out and become enacted -- or when it will be effected. And then I will talk about implications for working people with disabilities. The drug benefit was enacted as part of a broad piece of Medicare legislation called the Medicare modernization act, or the MMA. It was passed in December of 2003. As I mentioned, it provides a new voluntary prescription drug benefit that's referred to -- benefit that's referred to as part "D." Part "A" is hospital, part "B" is supplemental, part "C" is the managed care component, and part "D" is the new prescription drug benefit. Coverage begins on January 1st of 2006. Individuals can start signing up for this new benefit in November 15th of this year. In terms of who is eligible for the Medicare prescription drug benefit, it's individuals who have Medicare part "A," which is the hospital insurance component, or Medicare part "B," the supplemental insurance. If individuals qualify for those two -- either of those two types of programs under the Medicare, they're also eligible for Medicare part "D." There are special rules that apply for those who are dually eligible for Medicaid and Medicare. Individuals who are dual eligibles will no longer be able to receive their prescription drug coverage through Medicaid. They will have to go to a Medicare prescription drug plan to get their coverage for prescription drugs. This gets pretty complicated pretty quickly, and so I am going to talk about three main points. What drugs are covered under this Medicare prescription drug benefit? How are individuals going to enroll in this? And what will be the cost to beneficiaries? As I mentioned, individuals will have to choose a private prescription drug plan. This new drug benefit, unlike the Medicaid program, is going to be offered through private companies that are going to be approved by the centers for Medicaid and Medicare services. The country will be broken up into 26 managed care regions, and 34 private drug plan regions. It will be -- so individuals who are going to be signing up will need to become aware of the drug plans that are going to be available in their particular region to learn what options they have in terms of private drug plans that they may be enrolled in. As I mentioned, all of the plans are going to need to have approval from the centers for Medicare and Medicaid services which is the federal agency that administered Medicare and Medicaid. The drugs covered under the new benefit, under part "D", most drugs, prescription drugs, will be available for coverage under the part "D" program. There are nine types of drugs that cannot be covered under part "D," and I won't go into all of them. We can talk about this later in the chatroom if you are interested. But two of the important groups that would be for this particular population are over-the-counter drugs so, things like Nyquil, or aspirin, or Advil, those types of drugs won't be covered under this particular prescription drug benefit, and benzodiazepines which include drugs such as Valium, Xanax, other types of sedatives. There are other types, but as I mentioned those are the two important ones that cannot be covered. Drug plans will be allowed to establish a formulary for, and that is a list of covered drugs under their particular plan. There's going to be a standard formulary, or alternative formulary, and they have to meet guidelines from CMS. CMS will have to approve the list of drugs on the formulary. The requirements say that -- the federal requirements say that the drug plans must cover least two drugs in each therapeutic class and category. And there are about 150 of these that were developed by a national pharmaceutical advisory company, but drug plans will also be allowed to set up a -- their own types of categories and classes. But generally the requirements are two drugs in each therapeutic class and category. However, in the review process, CMS is also going to look at does the formulary of covered drugs at the private drug plans offer meet the needs of certain types of disability groups? So these would be individuals with mental illness, individuals with HIV-AIDS, and other types of disabilities that rely on prescription drugs. If an individual is not -- enrolled in a plan that does not provide the drugs that they need, there is going to be an appeals and exceptions process in place for each drug plan. That will request that the prescription plan cover the particular drug they need. The exceptions processes is detailed in regulation and guidance by CMS but generally it says that their physician has to certify that the drug that they're requesting would be more effective than the drugs currently on the prescription drug formulary. And that it would have an adverse affect on the individual. In this request for an exception, it will be reviewed by the plan. If it's an unfavorable decision for the beneficiary, there may be other levels of appeals. And so there are ways to cover drugs on the -- for the private drug plans that are not on the formulary, but there's going to be a need to be an exceptions process where the physician is involved. The state is also going to have to make decisions about what coverage it may continue to provide for these individuals. As I mentioned, drugs like over-the-counter drugs are not going to be covered under the Medicare prescription drug benefit, but some state Medicaid agencies continue to offer this to current Medicaid recipients and may continue to do so. So the states will be in the process of making decisions over the next 6 to 9 months of how they may provide coverage beyond what the private drug plans may offer. So as I mentioned, each of these -- each individual is going to need to enroll in a private drug plan. The enrollment is going to occur directly with that private drug plan. So there's not going to be any government-wide enrollment process for the Medicare prescription drug benefit. Individuals will need to go directly to that private drug plan. There's going to be a couple of enrollment periods. The first enrollment period is from November 15th of this year through May 15th of 2006. And there's going to be penalties if individuals enroll after that period, so if individuals are going to be switching, that is the first open enrollment period. On an annual basis, individuals may switch drug plans between November 15th and December 31st of each year. So they'll have a window of time where they can switch drug plans. There are special rules regarding enrollment for dual eligibles. The first of which is that dual eligibles will be automatically enrolled in a private drug plan. They will receive a letter this fall that says if you do not take any action, you will be enrolled in a particular drug plan. And these -- the drug plan that's going to be assigned on a random basis. The individual can choose to opt out and enroll in another drug plan, if that particular drug plan does not meet their needs. But they're going to be receiving a letter that assigns them to a particular drug plan. In addition, dual eligibles can switch drug plans at any time. So unlike other Medicare beneficiaries that have that window that they can switch enrollment, dual eligibles can switch at any time. There is a facilitated enrollment process for groups of beneficiaries known as the Medicare savings group. These are qualified Medicare beneficiaries, specified low income beneficiaries, and qualified individuals. These are the terms given to three groups of individuals who receive assistance from the Medicaid program for Medicare cost sharing, such as Medicare premiums and those kinds of things. They're low-income Medicare beneficiaries. If they do not choose a private drug plan, there's going to be a facility enrollment process for these individuals. What that enrollment process is, that's still to be worked out. The details of this are not clear. But there will be a process to get those individual also enrolled in a drug plan if they wish. I talked about the enrollment process, what the window is, and how these individuals will enroll. I will move to talking about what it will cost beneficiaries. Many individuals watching this webcast have prescription drugs they get through where they pay a premium, they pay co-payments. A similar kind of process will be in place for these individuals, and I want to talk about how the cost-sharing will be affected depending upon what particular group you are in. There are five categories of individuals, and the cost-sharing rules differ depending on which one of the five groups that you are in. The first group that I will talk about is what is the standard cost-sharing for prescription drug coverage. Groups 2-5 that I will talk about are what is known as the low-income subsidy group, and that has its own set of rules associated with it. The -- for certain, as I mentioned, out-of-pocket drugs are not -- or over-the-counter drugs are not covered. There are certain requirements in federal law that the beneficiary has to contribute to the cost of particularly -- of a particular part "D"-covered drugs. If the beneficiary goes to the store and buys Nyquil to relieve cold symptoms, that cost is not counted towards their required contributions for this particular benefit. It is only the portion of spending that they have on the drugs that are also covered by the private drug plans. Now, I will talk about that a little bit more later. First group that I want to talk about is the standard cost-sharing for Medicare beneficiaries. It's Medicare beneficiaries whose income is greater than or equal to 150% of the federal poverty level. And income is counted using the same rules as are determined by SSI, in terms of counting income and assets. But for this purpose assets is not counted. The monthly premium is going to vary by the drug plan and the actuaries have estimated that it will be about $37 per month. There's going to be is a $250 deductible where the beneficiary will need to cover 100% of the cost of their drugs up to $250. If the person's total drug cost are between $250 and $2250, the individual will pay 25% of their drug cost. And this is per year. If their drug costs are about 2250 and 5191 total drug cost, the beneficiary pays 100% of the total cost. If drug costs are above 5100, the beneficiary will pay 50%. And the various levels increases annually. Two things I want to point out here. This is what I referred in terms of the jumping in and jumping out. As you can see with the structure of the cost-sharing benefit, there's broad coverage between 250 and 2250. Then the Medicare coverage drops off for a period of time. And then at $5100 in total drug costs, the government steps back in and covers a significant share of those who have considered high drug costs, catastrophic drug costs. The other point I want to make sure is that this requires -- will require a significant amount of tracking of a person's total drug cost, and so this will be a huge investment in terms of information systems and resources for an individual to understand what they're going to owe at a particular point in time based on their particular drug cost. The next group that I want to talk about is the -- starts the low-income subsidy groups. The first group, Group 2, are Medicare beneficiaries whose income is between 135% and 150% of the federal poverty level, and they have low assets. Low assets meaning that there are $10,000 for an individual and $20,000 for a couple. That amount will increase -- will also increase annually. For this group of individuals, the monthly premium will be a sliding scale up to the $37. So it will start at zero at the lower levels and work its way up. There will be a $50 deductible, and a co-insurance of 15% up to $5,100 in total drug costs. So for this group there is no dropping out of government coverage middle drug cost range. This group will have co- insurance of 15% up to $5,100 in total drug costs. Above that level they will have co-pays of $2 or $5. So that will -- so they'll be limited beneficiary cost sharing above the $5,100 in total drug costs. And, again, these amounts, the $5,100, will increase annually. So this is just for 2006. The third group that I want to talk about is the Medicare beneficiaries whose income is less than 135% of the federal poverty, and they have limited assets, or they are dual eligibles, meaning -- they're dual eligibles, and they VIN come above 100% of the federal poverty level. They'll receive what's called a full premium subsidy. And that is basically a regional average of the premiums in their particular region. It does not -- and it cannot be less than the lowest cost private drug plan. So there will be at least one drug plan for these individuals where there will be zero premium for them. It does not mean, however, that the drug plan that has zero cost will meet their particular drug needs based on the formulary. So individuals are going to have to evaluate the drug plans both on what they're going to -- what drugs are covered under the formulary, and then look at the premiums associated with that. So there may be some premiums for these individuals that they choose a different plan. There won't be any deductible for this group of individuals, and there will be co-payments for drugs of $2 or $5. And the $2 or $5 is dependent upon the class of drug that they have. Generally $2 will be for generic and certain types of prescription drugs, and the $5 will be for those prescription -- for prescription drugs. So they're trying to encourage the use of generics through this co-payment structure. And the individual's co-payments will drop off after the person's total drug cost -- has a total drug cost of $5,100. So above that level there will be no co-payments. This group would include the specified low income beneficiaries and the qualified individuals that I mentioned earlier. So these individuals would fall under Group 3. Again, these are 2006 amounts, and the dollars are going to increase annually. Group 4 is dual eligibles whose income is at or below 100% of the federal poverty level. These individuals will have the full premium subsidy, again, which is a regional average. There will be no deductible, and there will be co-payments for drugs of $1 or $3. Again, the difference between generics and non-generics. There will also be no co-payments after the person's total drug cost reach $5,100 in 2006. This group, group 4, would also include the qualified Medicare beneficiaries. Again, these are 2006 amounts, and they'll increase annually. The last group I want to talk about are dual eligibles in long-term care facilities. These would be facilities such as nursing facilities and intermediate care facilities for individuals with mental retardation. Again, they have the full premium subsidy which is the regional average. There will be no deductible, and no co-payments. So the full premium subsidy is the only cost-sharing that these individuals have. So depending upon the types of drugs and the drug costs that a person has, there may be some -- for some of these individuals, they may have significant cost sharing. So there is a question can others help with the -- the beneficiary with cost sharing and have it still count towards what the beneficiary is required to contribute? And there are basically three types of organizations or entities I should say that can help a person with their cost sharing. It can be a family or a friend. It can be a qualified state pharmacy assistance program, and several states has them. CMS will determine what's considered a qualified program. And a bona fide charity can also help the individual with cost sharing. Except for the pairs that I just mentioned, payment by other does not count towards the beneficiary cost sharing. So if a person has employer coverage that's picking up part of the cost that won't count towards what the beneficiary is required to contribute in terms of the deductible, and co-payments and those kinds of things. So it's only those three payers that I mentioned earlier that can help the person with that. For dual eligibles, this is going to be a significant change. They're going to have to transfer from the Medicaid program that they're currently receiving their drugs under to Medicare private drug plan. There are a number of differences between the drug coverage that they're getting now under Medicaid, and the drug coverage that they'll be getting under the new Medicare benefit. I want to talk about few of those. The first issue is sort of a comparability. Right now in states whether you are in City "A" or City "B," you are getting the same drug coverage. You have access to the same number of drugs. And the same types of drugs. This will no longer be the case. So you may have an individual, you know, actually two individuals in City "A" who may be enrolled in different drug plans and have access to different types of prescription drugs. This will be a significant challenge for the individuals to navigate which drug plan might be most beneficial for them, but it's also going to be a challenge for those folks working with these individuals to try to understand which plan an individual is enrolled in, and what the benefits are for that particular type of plan. The types of drugs covered are also going to be somewhat different. As I mentioned, the current Medicaid law requires that individuals can access a broad range of prescription drugs. Under the private drug plans there will be a formulary that they will have to look toot assess whether or not their particular drugs are covered. There's also the cost of drugs that I mentioned, or that I discussed earlier. Dual eligibles will have limited cost sharing for the Medicare prescription drug benefit compared to the other groups. But for some this will still be an increase from what they're currently playing. There are 12 states now that don't require any co-payments for prescription drugs under the Medicaid program. And so those individuals who have -- who are moving to $1 and $3 co-payments, or $2 and $5 co-payments, this will be an increase from what they're currently paying. And in addition, most individuals have no premium to participate in the Medicaid program, and so this will also be a change from their current coverage. On sort of the other side of the equation, the Medicare prescription drug benefit, it does not allow states to set limits -- or does not allow the private drug plans to set limits on the number of drugs that can be covered. And that is different from some state Medicaid program which currently limit the number of drugs that a person can receive, or require prior authorizations for coverage of prescription drugs. Those two rules are features of the Medicaid program that will not be in place in the Medicare prescription drug benefit. As I mentioned, CMS is going to have criteria for reviewing the formularies to make sure, and this is of particular relevance for dual eligibles for reviewing the formularies for individuals with particular diagnoses to ensure that the formulary will be able to meet their particular drug needs. As I mentioned, there will be an appeals and exceptions pro -- as I mentioned, there will be an appeals and exceptions process to allow individuals to take an exception for the drugs under their formulary, and CMS is got a new transition process for enroll es. They'll have to evaluate the list of current drugs they may be taking, and there may be some drugs that are already covered by the private drug plan they're interested. There may be others that are not and they would need to pursue an exceptions process. And this is of particular -- many individuals for Episcopal see community are particularly interested in this area because as many of you are probably aware for some it has required going through a number of drugs to find one that works. And so this is important for these individuals to be aware of how they can access particular drugs on a formulary, and access the information about what drug plans are covering to make sure that they don't have to restart that process of going through different drugs to find one that works and one that's covered. So it's a lot of information that individuals are going to need to sort out. I remember when I bought a car that, you know, there was a number of sources that I went to get information this. I went online. I looked at the ratings, and what different people said about what kinds of cars had what kinds of features. I looked at some of the basic criteria that I had, and then I look -- basic criteria that I had, and then I looked at the price. All of these things are things that will need to be navigated by these individuals, many of whom have substantial disabilities and limitations that is going to affect how they take in the information and understand what's being processed. Individuals are going to get information about these drug plans and about the formularies and the costs through a number of different areas. The first is the WWW.Medicare.GOV website which CMS has said will compare drug plans, compare the formularies, and so individuals will be able to access information about that. Second is the 1-800-Medicare toll-free line which individuals will be able to talk with an individual about what is in their particular drug -- what their drug needs are, and what drug plans may be offered in their area. The Medicare and you handbook will also have some information in there. The Social Security Administration offices have joined with CMS in this effort, and I will talk about their process for the low-income subsidy in a minute, but they'll also have information about the drug plans in a particular area. And there's state health insurance and assistance programs that are also receiving grants from CMS and training from CMS to be able to help counsel individuals one on one for the drug plans in their area, and what might best meet their needs. And there are 1,200 of these offices nationwide. State Medicaid offices are going to have a role in helping people sort out this information. There's also a list serve at the CMS women site, CMS.HHS.GOV, and there is a list serve that is called Part "D" cov ben, and we'll have more information it was comes out. But it is a huge information challenge to help the millions of Medicare beneficiaries and the 7 million or so individuals who are dually eligible for Medicaid and Medicare to make this transition from Medicaid and Medicare and to sort out their options in this area. The low-income subsidy will be of particular relevance for this. I think that it's something that individuals are going to be interested in accessing. And these are the groups 2-5 that I was talking about earlier. There's going To be a separate application process for the low-income subsidy assistance. It's separate from the enrollment process of the private drug plan, and so individuals are going To need to go to a social security administration office, or the state Medicaid office to apply for the low-income subsidy. There are a couple of groups that are automatically Eligible for the low-income subsidy, and they don't need to go and apply for the benefit. These are dual eligibles, qualified Medicare beneficiaries, specified low- income beneficiaries, and qualified individuals and SSI recipients. And so those groups of individuals will be deemed automatically Eligible for the low-income subsidy and won't need to apply for the benefit. There's also going To be a simplified process for applying for these benefits. So CMS has made and SSA have made efforts to allow for individuals to attest to their income and resources, and so there's not going To be -- they won't need to be bringing in a ton of paperwork proving all of the income and resources that an individual can attest to those particular -- to their particular income and resources, and then CMS and SSA are going To be verifying the information provided by individuals through data matches with the Social Security Administration and with the Internal Revenue Service, and -- with the Internal Revenue Service, and then only follow up with the individual for the low-income subsidy if there is a need for additional verification. They're trying to create a more simplified process than would be currently available if an individual were applying for Medicaid. They're trying to simplify the process to encourage people to apply for the low-income subsidy benefit. And their eligible for the low-income subsidy is -- subsidy is effective for one year. They would need to be redetermined on the basis after that. But their eligibility will be effective for one year. The application for the low-income subsidy is going To be administered by the Social Security Administration, and by the state Medicaid agencies. And the states will be screening these individuals for other benefits when they go to the state Medicaid agency office to apply. So it may be individuals who have not qualified previously for help with other Medicare cost sharing like qualified Medicare beneficiary, and once someone goes there they would also be screened for eligibility for those programs. So there's going To be -- it would be probably of benefit for individuals to go through that terms of just being able to access the different types of benefits, which they may not have applied for previously. The states may use a SSA application, and SSA has developed, as I mentioned, sort of a simplified application for the low- income subsidies. But the states are going To have to use their own determination if the beneficiary requests that. So it will be one or two avenues that individuals can access the low-income subsidy benefit. The timing of this, there's a lot to be done in the next seven months, and CMS and Social Security Administration and states working vigorously. As one CMS official had said, it's big. And so there is a lot of work to be done in this area. And it's happening now, and there's going To be a couple of steps in the next seven months that I think is important for people to be aware of. This month SSA is sending letters to those individuals who are deemed to be low-income subsidy eligible. So the dual eligibles, the SSI, and the other Medicare cost sharing groups. In July, beneficiaries can start applying for the low income subsidy benefit at the Social Security Administration offices, and the state Medicaid offices. In the fall of 2005, CMS will notify dual eligibles which plan they'll be enrolled in, unless they choose a different one. And so this is the auto enrollment process that I mentioned, and this is happening in the fall of this year. On October 13th, 2005, CMS is saying that individuals will be able to go to the WWW.Medicare.GOV website and can compare the formularies and the types of drugs covered, enrollment processes, those kinds of things. November 15th of this year, individuals will be able to begin enrolling in the prescription drug benefit, and then in January of 2006 the Medicare Part "D" coverage begins. And it's also important to note that the Medicaid coverage for individuals who are dual eligible ends January 1st of 2006. So it's very important for dual eligibles to sign up for a prescription drug plan if they're interested to continue to receive coverage of prescription drugs because their coverage will end January 1st. And that's in 2006. Finally, I want to talk about the implications for workers with disabilities. There are a couple of areas -- many of these individuals would be dually eligible for Medicaid and Medicare and will be required to enroll in a Medicare private drug plan to continue to receive coverage for their prescription drugs. These individuals are going To be -- the changes in their Medicaid eligibility status as they work, as they consider promotions, alternatives, it's important -- this is another benefit that's going To need to be looked at in terms of how work -- looked at in terms of how work will affect coverage in this area. A individual, for example, who is on Medicaid now and who has income of 300% of the federal poverty level or 250% of the federal poverty level will currently deemed to be receiving a full subsidy for their prescription drug benefit. And if that individual were to lose their Medicaid eligibility, they may move to a group 1 or a group 2 and would have increases in their cost-sharing amount. And so it's important to look how the changes in their Medicaid eligibility status, whether they go in and out of being a dual eligible to just being a Medicare beneficiary. It's going to be important to look at how they may transfer between those different groups. The next area is the medically Needy. And these are individuals who currently receive their Medicaid eligibility through spending their income on out-of-pocket medical expenses. These individuals are also eligible for Medicare, and enroll in a drug benefit -- enroll in a drug benefit, the Medicare coverage would pay for their prescription drug and it would no longer be counted as an out-of-pocket medical expense which may affect their ability to get to Medicaid eligibility. So those individuals would need to consider that. For some, it may be that the additional fit of the Medicare prescription drug benefit outweighs what they would be accessing through the Medicaid program. For others they may have other medical expenses that can step in to still meet the ability for them to spend down to a particular level of income. But it's something to look at in terms of individuals who would be, you know, needing information about how different status changes would be affected by the Medicare prescription drug benefit. And then finally, the changes to the income and assets, as I mentioned, is going To affect the cost of the Part "D" benefit. And so the -- they'll be going In and out of the different levels. I think that's going To -- that individuals are going To need to look at how these different programs interact with one another, and changes in income and asset in terms of their qualifications for different groups in terms of cost sharing. That's all that I have. I will be joining new the chatroom after this and I look forward to your questions. Thank you. (Concluded at 1:45 P.M. CST) * * * * *