Medicare Part D

This 20 page guide is for people who work with individuals who are dually eligible for Medicare and Medicaid. It includes information on coverage, joining and choosing a plan, costs, utilization management and convenience, how Medicare Part D is different from Medicaid, prescription denials, Medicaid "Wrap Arounds," and appeals.

GUIDE FOR NURSING HOME RESIDENTS

This short and easy-to-use guide will help people in nursing homes understand their options and responsibilities under the Medicare Part D prescription drug plans that went into effect at the beginning of 2006. The guides provide basic information as well as a listing of resources for help and more information. Guides are being sent to nursing homes across NY State.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 changes the way Medicare has operated from the time of its enactment. Medicare has always functioned as a nationally administered insurance plan based on social security. The addition of Part D introduces a welfare component and extra help is means tested whereas such programs are normally reserved for Medicaid. Currently Medicare provides health insurance for approximately 39 million Americans. Around 34 million of those recipients are retired Americans over the age of 65, while the other 5 million are disabled under the age of 65. The change in federal policy will affect over 6 million impoverished seniors and people with disabilities who are enrolled in both Medicare and Medicaid (i.e, the "dual eligibles"). Effective January 1st 2006 the new law terminates federally-funded Medicaid prescription drug coverage for all dual eligibles, regardless of whether they have obtained coverage through a Part D plan, and regardless of whether their Part D plan's coverage is as broad as their state's Medicaid coverage. The following questions and answers are designed to provide a more detailed explanation of this change in policy, as well as explore its implications for the individuals affected by it.

Voluntary enrollment begins November 15, 2005 and ends May 15, 2006. A penalty may apply if you do not enroll when you are eligible and you do not have evidence of coverage that matches Medicare's or "creditable coverage." Creditable coverage means prescription drug coverage that is as good or better than the benefits offered under Part D. It is critical to remember that the onus is on the individual to keep his or her records of their creditable coverage to prove in the future, if they decide to go on Part D. Late enrollees who will have to pay a 1% higher premium for every month that they were eligible for Medicare Part D and did not take it. This is a lifetime penalty. For example, if an individual is eligible for Part D on January 1, 2006 and does not sign up for a plan, but five years from now changes his or her mind, that person will have to pay 60% higher premium rate every month for the rest of their lives.

The new law outlines the following plan that is used as a standard for the overall value of competing plans; consumers choose from plans that are at least of equal value to the standard.

. Past that point coinsurance worth 25% of covered drugs are out of pocket until you reach $2,250.

. Then 100% of the costs are out of pocket up to $5,100; this is referred to as the "doughnut hole."

. Beyond $5,1000 in covered prescription drug costs out of pocket expenditures are reduced to 5%.

The most important factor determining the cost of a Medicare drug benefit is the scope and structure of its coverage. Choices about coverage include:

. The deductible amount-whether coverage begins with an enrollee's first dollar of drug spending in a given year or after the deductible amount is reached;

. Cost-sharing rates-what part of the cost of a prescription is the responsibility of the enrollee;

. The catastrophic stop-loss amount-the level of spending beyond which the enrollee pays little or nothing for prescriptions.

The actuarial value of total coverage would have to be at least equal to the actuarial value of standard coverage. Plans must provide co-payment of at least the same percentage of costs provided under the standard coverage. Neither the stop loss protection nor the deductible may exceed the amounts established for standard coverage. Plans may therefore change and manipulate the cost sharing for the drug benefit, implement different formularies, or modify the benefit limit while maintaining actuarial equivalence.

Plans are allowed to change their list of covered drugs as long as they give 60 day notice. However these drugs are excluded from all formularies (drug lists):

Drugs can be tiered by plans, meaning the out-of-pocket costs for each prescription depends on the "tier" it is has been placed in. Certain drugs may require additional authorization for coverage by the plan. For example, a brand name may be covered only after the plan's preferred drug has had adverse effects. This condition is labeled by plans as the "fail first requirement."

To get coverage for drug costs consumers have to use pharmacies within their plan's network. To qualify for drugs dispensed from an out-of-network pharmacy two conditions must be met. 1) An individual cannot reasonably be expected to access an in network pharmacy and 2) Their request is not done on a regular basis. Some plans may charge an additional fee for this service. It is important to note that these pharmacy restrictions apply to nursing home residents as well.

At the beginning of October 2005 CMS published on www.medicare.gov a comparison tool that allows consumers to search private plans and compare costs, drugs, as well as pharmacy networks. Area specific information was mailed to potential beneficiaries in the Medicare &You 2006 handbook (distributed in fall 2005). Note that there have been some issues with this handbook, such as incorrect information on the premiums for individuals who qualify for extra help.

To be considered for Extra Help (or Low Income Subsidy) paying for drug costs the requirements include:

. Annual income is below 150% of the federal poverty level (FPL): 14,355 a year for individuals and $19,245 a year for couples.

. Enrollment in Medicaid, a Medicare Savings Program or Supplemental Security Income (SSI) automatically qualifies an individual for help and they do not have to apply for extra assistance but do have to apply for a drug plan.

Those who automatically qualify for extra help should have received notification in the mail in May or June 2005. By December 31, 2005 if Extra Help beneficiaries do not choose a plan they will be randomly enrolled in one that offers only basic coverage.

Applications for Extra Help are available through the Social Security Administration (www.ssa.gov, or 1-800-772-1213) and local Medicaid offices. The application process at the SSA might be easier than the one available through Medicaid offices since it allows you to self-attest income and assets.

Medicare.gov and 1-800-medicare: the "Medicare Prescription Drug Plan Finder" to assist individuals with information and enrollment in the plans. EPIC Helpline: 1-800-332-3742.

FRIA helpline: Spanish & English - 212-732-4455 - (Tuesdays - Fridays 10am to 5pm )

Medicare Rights Center - English/Spanish website, www.medicarerights.org , and toll free consumer hotline: 800- 333-4114 x1.

Families USA - Medicare Drug Coverage Center on their Website, www.familiesusa.org.