Medicare Part D

Let the questions begin

By Jonathan Nelson

Unless you’ve just awoken from a yearlong slumber or you’ve just returned from a double shift on the International Space Station, you’ve probably heard that big changes are just around the corner for Medicare. As of Jan. 1, 2006, more than 40 million Medicare patients can get some help with their prescription drug bills from the federal government through Medicare Part D, the prescription drug benefit established by the Medicare Modernization Act of 2003. Without a doubt, this is the most significant change in the program’s 40-year history and it’s likely to create a great deal of confusion among beneficiaries. You and your staff should expect to field a deluge of questions from perplexed patients.

The good news is the benefit should be substantial for the country’s seniors. The average beneficiary will save around $700 a year, according to an analysis by Medicare Today and PricewaterhouseCoopers. More than half of all seniors in Texas who are not on Medicaid currently have no prescription drug coverage and for them, the new drug benefit can’t come soon enough. Their annual drug expenses should drop by two-thirds, from $1,905 to $626.

Mark McClellan, M.D., Ph.D., administrator of the Centers for Medicare and Medicaid Services, says the new benefit characterizes a major shift in focus for Medicare. “This represents a switch from a program where Medicare just pays the bills when people get sick to a program that helps people stay well,” he told a group of Texas health care leaders at a brief gathering in Austin this September hosted by the Texas Medical Foundation Health Quality Institute. “Forty years ago, when Medicare started, the focus of health care was on treating an existing illness. Today it’s also about preventing that illness.”

The benefit will be provided through private stand-alone drug plans that work with traditional Medicare and so-called Medicare Advantage plans, which can be HMOs or PPOs offering drug coverage plus other benefits. It’s a voluntary program, so seniors will have to choose whether they should participate and in which plan they should enroll. Monthly premiums for the plans will vary, but McClellan says competition among the plans that have applied with Medicare has driven down the previously estimated average of $37 to somewhere around $32. One plan in Texas is offering coverage for less than $20 a month. “What we’re seeing so far is that [premium] costs are going to be lower than expected and that’s good news for seniors.”

All Medicare Part D plans have to provide coverage that’s at least as good as the Medicare basic plan. With that level of coverage, a beneficiary would have to meet an annual deductible of $250, after which Medicare would pay for 75 percent of drug costs until the total reaches $2,250. After that, the beneficiary falls into the “donut hole,” where he or she pays the total cost of all prescriptions from $2,251 to $5,100. Then the catastrophic coverage kicks in and Medicare pays for 95 percent of all drug expenses until the end of the year. For higher premiums, beneficiaries can expect to find plans offering expanded formularies, zero deductibles, coverage through the donut hole and more.

Any Medicare Part A or Part B beneficiary can enroll in a plan starting Nov. 15, 2005. For those who join by Dec. 31, 2005, coverage begins on Jan. 1, 2006. After that, coverage begins on the first day of the next month. Seniors who currently have no drug coverage or who have coverage that is not as good as the Medicare basic plan will have to pay higher premiums if they wait until after May 15, 2006 to enroll. Those who have prescription drug coverage that matches or bests the basic plan can opt to enroll in a Medicare Part D plan any time with no penalty.

Seniors with low income and limited resources will be eligible for extra help that will pay for 85 to 100 percent of their drug costs, although most will have to apply for the subsidy through the Social Security Administration. Many eligible individuals received applications mailed by SSA earlier this year. Eligibility starts for those whose income is below 150 percent of the poverty level — $14,355 a year for individuals and $19,245 for couples — and who have assets totaling less than $11,500 for individuals and $23,000 for couples. The asset test doesn’t include homes or vehicles.

With the advent of the new prescription drug coverage, states will no longer be allowed to draw down federal matching funds to pay for drugs for patients eligible for both Medicare and Medicaid. These “dual eligible” patients will be automatically enrolled in Medicare Part D plans and their new coverage will begin on January 1. For the 314,000 dual eligible Texans, the change marks the end of a three-script-per-month limit they’ve been juggling while receiving drugs through the Texas Medicaid Vendor Drug Program. But for the state, the change equals a net loss of funds, since states will have to make annual “claw-back” payments to the federal government. The payment, which is based on the estimated amount the state would have spent on prescriptions for dual eligibles, will probably be around $300 million for Texas in 2007, according to the Texas Health and Human Services Commission.

As of October 1, the floodgates are open and the marketing blitz is on. Over the next few months, seniors will find themselves bombarded with advertisements, marketing pitches, direct mail pieces, phone calls and e-mails from all sorts of companies offering plans, not to mention the volumes of educational materials from myriad well-intentioned health coalitions and agencies. With so many choices to consider, many seniors may come down with a toxic case of Medicare Part D overload.

“It is a complicated program and will be challenging for patients to sit down — even with adult children or other individuals — and make the best decision for them,” says Susan Hidebrandt, assistant director of AAFP’s government relations division. “There will be a great deal of information to compare and we have heard that each CMS region may have as many as 40 plans.” AAFP has partnered with CMS and some educational coalitions like Medicare Rx and Medicare Today to help provide consistent, clear information to seniors. In Texas, seniors will have 20 stand-alone drug plans, seven Medicare Advantage HMO plans and one PPO plan from which to choose. “Our goal is to make sure our members and our patients understand the benefit so they can make an informed decision,” Hildebrandt says.

In such a large-scale information campaign, mistakes are inevitable, and CMS has already committed a pretty big one that could hurt the very population that needs this benefit the most, low-income seniors. Around 14 million Medicare beneficiaries are expected to qualify for the Part D subsidy but they must sign up for a plan with a premium at or below the average for their region. Should they choose a plan with a premium above the average, they will be billed for the difference.

But the CMS handbook, “Medicare and You,” that the agency mailed in early October to all Medicare beneficiaries lists all plans as available for the zero premium subsidy. Medicare officials plan to correct the mistake in their online materials and through their telephone help lines, but health officials are concerned that many low-income seniors will join plans based on the printed information and be stuck paying bills they can’t afford.

Another concern is the likelihood that unscrupulous individuals will try to prey on seniors. Companies offering plans can market to seniors by mail, e-mail or by unsolicited telephone calls. They will also put promotional materials in pharmacies, community centers and anywhere else they think they can drum up some business. Solicitors of Part D plans are not allowed to sell door-to-door, so seniors should be wary of anyone using that tactic.

Enrollment for the prescription drug benefit is free and solicitors are not allowed to charge for helping seniors fill out any paperwork or process information. Tell your patients they should never give out their Medicare ID number, credit card numbers or personal financial information over the phone or the Internet without being sure the person on the other end is on the up and up. CMS has approved all available plans and seniors can call Medicare at (800) 633-4227 to make sure the company they are considering is legitimate. There is no pressure to sign up for a plan right away. Seniors should take their time and weigh all the options.

Hildebrandt says formulary issues are what concern her most, and she’s not alone. HHSC senior policy advisor Trey Berndt characterizes the new benefit as “the largest experiment in mass formulary change in the history of the world.”

CMS bears the responsibility for approving the formularies for all plans and insisting that they include a “broad range of medically appropriate drugs to treat all diseases,” according to the agency’s educational materials. Formularies must include at least two medications from each category and class in all cases where two or more drugs are available. All drugs in the categories of anti-neoplastics, anti-HIV/AIDS drugs, immunosuppressants, anti-psychotics, anti-depressants and anti-convulsants are required to be covered by all formularies. The plans must offer an appeals process to request exceptions for coverage of non-formulary drugs, and Medicare beneficiaries and providers must be notified at least 60 days before plans drop medications or before they initiate higher cost-sharing policies.

Hildebrandt says most plans will contain the same drugs but they will handle them differently. For example, one plan may put a particular drug on its first tier while another plan could make the same drug a second- or third-tier option, meaning the cost would be different. “Our continuing concern has been that drugs will be dropped from and added to formularies and these changes will affect patients who are taking them,” she says. “As a result, we will closely monitor this issue and the appeals process.”

With all of these different and changing formularies, it’s unclear how physicians will know which drug in a particular class will be covered by any particular plan. Hildebrandt says she’s heard that CMS is devising a program in which the formularies will be available for physicians to call up using a hand-held device, “however, this is another large issue that we will need to watch.”

Needless to say, your patients are going to have a lot of questions and you can bet they’ll be turning to you for direction. “CMS understands, and our Web site indicates, that physicians are not expected to take time from their clinical responsibilities to counsel patients on this issue, and this sort of counseling is not reimbursable.” Hildebrandt says. But since when has the phrase “not reimbursable” stopped a family doctor from helping a patient in need? AAFP has established a wealth of information on their Web site ranging from simple to complex and TAFP has linked to these resources so that we can direct members and their staff people to the information they need.

CMS has partnered with AAFP and other organizations to publish a comprehensive electronic resource called “The Toolkit for Health Care Professionals: Medicare Prescription Drug Coverage,” which contains fact sheets, extensive FAQs, flyers, brochures, handouts and reproducible artwork available free to providers. On www.medicare.gov, the CMS site for Medicare beneficiaries, you and your patients can access the interactive Medicare Drug Plan Cost Estimator, a tool that allows beneficiaries to enter their prescriptions and other information to see what their potential savings could be if they take advantage of the new benefit. Also, sometime in October, CMS is scheduled to launch the Drug Plan Finder, another online tool designed to help seniors choose the right plan for them based on their formulary needs, their preferred premium level, any desired extra benefits and the selection of plans in their geographic region.

“The new drug coverage is the most important new benefit in Medicare in 40 years, because prescription drugs are so important for keeping your patients healthy,” CMS Administrator Mark McClellan writes in a letter to physicians posted on the CMS Web site. He’s probably right, but implementing the benefit smoothly so that your patients get the drugs they need might be an arduous task. The more you know about the benefit and the more resources you and your staff can access, the better prepared you’ll be to answer your Medicare patients’ questions.

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RESOURCES FOR YOU AND YOUR PATIENTS

Medicare Rx Education Network

www.medicarerxeducation.org

Coalition of associations, industry groups, think tanks and others including AAFP and AMA formed to make sure information about the new drug coverage is available to the Medicare population.

Medicare.gov

www.medicare.gov

The official government Web site for Medicare beneficiaries. There you’ll find a link to loads of information on the prescription drug benefit including an extensive FAQ page, fact sheets, information for people with limited incomes and more.

Medicare Prescription Drug Plan Cost Estimator

Also on www.medicare.gov, you and your patients can access an online tool designed to calculate beneficiaries’ potential savings by joining a prescription drug plan. The calculations are based on the defined standard benefit and the lowest premium amount offered by a plan for a particular region of the country.

Medicare Prescription Drug Benefit Information for Providers

www.cms.hhs.gov/medlearn/drugcoverage.asp

CMS Web site full of information specifically for providers about the new drug benefit.

AAFP Resources

www.aafp.org/x37342.xml

Your national Academy has pulled together a trove of helpful resources and posted them on the AAFP Web site. There you’ll find a list of five important questions to ask your patients to help them prepare for choosing a plan, another great FAQ list, and a link to download the Toolkit for Health Care Professionals that CMS has put together.

Important Dates

Oct. 13, 2005

Medicare to post new plans online at www.medicare.gov.

Nov. 15, 2005

First day to enroll in a Medicare drug plan.

Jan. 1, 2006

Coverage begins for those enrolled by Dec. 31.

May 15, 2006

Last day to enroll without paying a premium penalty unless you qualify for an exception.

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5 questions to ask your Medicare patients

1. Write down the names and dosages of all prescription drugs that you are taking. This information will be important to decide on the right plan for you.
2. Do you have drug coverage through a former employer; union; or Medigap? If so, you should have gotten a letter explaining the drug coverage. Keep the letter so that you can compare the current coverage to the new plans.
3. List the cost and what you currently pay for drugs (if you have drug coverage through the above organizations).
4. List the name, address and phone number for pharmacies you like to use.
5. If you have a limited income or modest means, you can call the Social Security Administration at (800) 772-1213 to apply for extra help. You may also have gotten a letter from the SSA asking you to apply.

Source: AAFP Web site