1 Cost Sharing for Low-Income Beneficiaries and Supplementing Part D Examples from Pharmacy Plus Medicaid Demonstration Programs Summit for State Health.

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Presentation transcript:

1 Cost Sharing for Low-Income Beneficiaries and Supplementing Part D Examples from Pharmacy Plus Medicaid Demonstration Programs Summit for State Health Policy Makers: Medicare Part D Implementation October 7, 2004 Cindy Parks Thomas Brandeis University Schneider Institute for Health Policy Dan Gilden, JEN Associates

2 Background Brandeis/JEN Evaluation of the Impact of Pharmacy Plus Waivers in Illinois and Wisconsin on Medicare and Medicaid (CMS /TO2) Analysis of cost sharing and plan design strategies in two waiver states (HCFO ) Comparing two states with different member cost sharing, but same enrollment criteria Cost sharing analysis is adapted to inform Medicare Part D wrap-around options for states for this population (up to 200% FPL, not covered by Medicaid) This analysis of beneficiary cost sharing does not reflect overall impact of Medicare Part D on states

3 Pharmacy Plus Waiver Demonstrations: State Waiver Designs and Part D Income by FPL Illinois No enrollment fee No asset test Wisconsin Enrollment fee $30, No asset test Medicare Part D 2006 Income-based Premium + Asset test (Cost share Indexed) <100%No deductible No copay up to $1750 rx costs >$1750: 20% copay No deductible Copay: $5generic/ $15 brand Asset test <$6000 No premium No deductible/ no donut Copay $1/$3 to $5100 rx cost %Copay: $1 generic/ $4 brand >$1750: copay +20% Asset test <$10,000 No premium No deductible/ no donut Copay $2/$5 to $5100 rx cost %Asset test Sliding scale premium Deductible $50/no donut 15% coins to $5100 rx cost Standard Part D benefit: %Deductible $500 Copay: $5 generic/ $15 brand $420 premium Deductible $250 25% coins to $2250 Full pay (donut) $2250 to $5100 5% coins after $5100 (160% fpl)

4 Prescription Drug Cost Sharing Ranges by Program Design and by Income Level Note: Analysis of members enrolled full 12 months, program year 1, Before rebates.

5 Cost Sharing/Wrap Around Coverage Will Affect Patterns of Rx Use for Low Income Seniors Illinois $1/$4 copayments Wisconsin $5/$15 copayments/deductible FPL Total Rxs/ mm 1 Total Allowed Rx Expenditures/ mm Percent Generic rx Total Rxs/mm Total Allowed Rx Expenditures/ mm Percent Generic rx <100% 3.8$ %3.3$ % 100 – 135% 3.9$ %3.7$ % 135 – 150% 3.9$ %3.8$ % % 3.9$ %3.9$ % *Illinois enrollee sample and Wisconsin controls, matched for age, gender, race, income urban/rural, medical diagnoses and prior year Medicare Part A and B utilization 1 mm=member month Average expenditures and use for matched sample across states*

6 Cost Sharing Example: Matched sample, Women age 70-84, urban, white, with CHF diagnosis* Illinois $1/$4 copayments Wisconsin $5/$15 copayments, deductible FPL Total Rxs/yr Total allowed Rx Expenditures/yr Out of pocket Total Rxs/yr Total Allowed Rx Expenditures/yr Out of pocket <100%64$2484$32458$1872$ – 135% 65$2556$42061$2100$ – 150% 68$2748$44465$2196$ – 200% 68$2688$43265$2316$780 *Illinois enrollee sample and Wisconsin controls, matched for age, gender, race, income urban/rural, medical diagnoses and prior year Medicare Part A and B utilization Annual allowed spending ( )

7 Note: Hypothetical case, with 2003 analysis based on allowed charges for state program members enrolled full 12 months, program year 1 before rebates. Total Enrollee Prescription Drug Spending Distributions Can Change Considerably by 2006

8 Medicare Part D: Potential Cost Sharing Faced by “Average Use” Beneficiary Age 65+ FPLMedicare Part D cost sharing under hypothetical program in 2006 – includes premiums If qualifying for subsidies <100% $ – 135% $ – 150% Sliding premium + $ – 200% Standard benefit** $1275 for “average” rx user (<$2250) >$2734 average for “high users” (48% could spend >$2250) 2003 utilization and generic use rates, 10% annual growth from 2003; Excludes out of plan drugs. Assets not accounted for: a large proportion of individuals with incomes <150% FPL do not qualify for Part D subsidies

9 Summary Cost sharing and wrap around approach will have an impact on patterns of prescription use for low income seniors Current Rx spending distributions can change considerably by 2006 With Part D standard benefit, beneficiaries below 150%, who qualify for subsidies will gain, all others now covered will pay more in transition to Part D High cost to supplement Part D; most expenditures are in cost sharing and donut, not catastrophic portion or the predictable deductible Wrap around is only partial cost. Additional costs to states: greater wrap around expenses at 200+ % FPL income levels - higher cost sharing, greater rx use, outreach; additional assistance for non-covered drugs or out of plan use