The Basics of Medicares Basic Drug Benefit January 26, 2006 Dee Mahan, Families USA Health Action 2006

A multiplicity of benefit levels Basic or standard benefit Low Income Subsidy (LIS) for non-duals, higher incomes or assets LIS for non-duals, lower incomes or assets LIS for dual eligibles, higher income LIS for dual eligibles, lower income LIS for dual-eligibles in residential care

With even more players CMS PLANS (est. 250+) Customer Service TrOOP Facilitator Carve-Out Drug Mgmt In one zip code: 47 PDPs 9 MA-PDs 6 PPO-PDs Pharmacies

How did we get here? Program based on market competition with heavy subsidies Medicare Drug Gold Rush: Profit from the Biggest New Benefit in the History of Medicare Part D Drug!!! With limited manufacturer price pressures

Now that were here….. Help beneficiaries navigate the program Monitor whats happening Work to make the program better

Picking a plan – Working through the questions Low-income subsidy? PDPs in my area At low cost- sharing And low drug prices That covers my drugs Convenient preferred pharmacy If 0, try again with new drugs With affordable premiums START:

What drugs are covered? Medicare –vs- the PDPs Part D covered drugs –Drugs Medicaid must cover –Smoking cessation drugs –Certain vaccines –Insulin & supplies Drugs not covered by Part D –MOST optional Medicaid drugs, inc. OTC drugs –Drugs covered by Parts A or B

What the plans cover Plans MUST cover –At least 2 drugs per USP class –146 unique therapeutic categories and drug classes –All or substantially all drugs in some categories –Most plans cover a large percent of drugs Plans CAN cover –Non-covered drugs, e.g. OTC drugs

When can plans change what they cover? Not under cover of darkness –Not around enrollment –Required 60 days notice to affected beneficiaries, pharmacists, providers What counts as a coverage change –Change in cost-sharing or tier –Changes in UR do not

Whats covered and whats the benefit look like? Actuaries have been busy. The missing basic benefit –In one region: 7 of 47 plans offer something resembling the basic benefit –Up to five coverage tiers –Multiple use restrictions But the doughnut hole is alive and well

Tiers and more tears Plan APlan A Premier Plan BPlan CPlan D Lipitor Tier 2: $17.67 Tier 2: $30.00 Tier 1: $18.92 Tier 3: $52.70 Tier 2: $25.00 Zocor Tier 3: $33.35 Tier 2: $60.00 Not Covered Tier 2: $22.00 Tier 3: $60.00 Protonix Tier 3: $26.43 Tier 3: $30.00 Tier 1: $26.56 Tier 2: $22.00 Not Covered Review of select plans in Region 5

Many ways to control costs Plan APlan A Premier Plan BPlan CPlan D Lipitor Quantity limit No limitPANo limits Zocor Quantity limit Not Covered No limits Protonix Step therapy Step therapy, PA No limitsNot covered Review of select plans, Region 5

What if you strike out? Appeals and exceptions –Required of all plans –Specified requirements for turnaround in emergency situations –Physician statement can automatically move a request to an emergency determination Transition benefit if it works

Up-front costs most have to pay- Examples from one region Premiums –$6.44 to $68.97 per month –Average premium: $37.86 Deductibles –No deductible for 26 plans (55%) –17 (36%) at $250

Theres also the drugs price Price matters –How far the benefit goes –Costs in the doughnut hole –In what the benefit costs overall Plans negotiate individually –Must pass on some discount –Prices vary by pharmacy –Prices can change anytime

Prices vary LowestHighestMedian Lipitor$59.82$90.74$69.65 Zocor$110.31$153.62$ Protonix$90.00$129.86$ Nov. Price Ranges, PDPs in one region; 30-day supply Based on a review of all plans, Region 5, November 2005

And prices matter Cost/Year, VA prices substituted for plan prices, three Medicare recommended plans Drugs profiled: Lipitor 10 mg, Plavix 75 mg, Fosamas 70 mg, Norvasc 5 mg and Protonix 40 mg. Select plans, Region 5, 11/05. Cost to Consumer Using Plan Prices Using VA Prices Difference Plan A benefit $2,777$1,020$1,757 Plan B benefit $3,779$1,218$2,561 Plan C benefit $3,071$1,994$1,077

Finally, where can I get my Rx? Pharmacy networks Must accept willing providers –Most have broad networks –Smaller group of preferred pharmacies

Helping out Managing the marketing frenzy; avoiding fraud Deciding whether and when to enroll Picking a planthe hard part Using the Plan Finder Double checking with the plans if you can Managing problems afterwards

Special considerations Employer sponsored coverage –Check before enrolling in Part D Drug company assistance programs –Can continue, with changes Low Income Subsidy –Its own set of enrollment and access issues

What to expect moving forward Reduction in number of plans? –Business consolidations –Cost of maintaining if few enrollees Few immediate changes in program structure –Delay penalty, allow switches mid-year? –Price negotiations? –Duals fixes

Right now what are we getting? A "modest to moderate" decline in out-of- pocket spending for those who do not receive low-income subsidies –Racial minorities, near-poor, those with severe chronic conditions saving least. Average out-of-pocket savings est. $196 in 2006