1. Medicare Part D Elena Chan PharmD candidate, UCSF
Tiffany Jew PharmD, MBA candidate, USC

2. Overview Background on Medicare The MMA Medicare Part D
Enrollment/Eligibility
Coverage
Benefit Design
Formulary
Coordination of Care
Medication Therapy Management

3. Background on Medicare
Medicare is health insurance for Americans:
65 years or older
Younger than 65 with disabilities or end-stage renal disease
2 types of Medicare Coverage:
Original Medicare Plan
Medicare Advantage

4. Original Medicare Plan
Medicare Part D
Prescription Drug Plan + +
Part A = medically necessary = hospitalizations, skilled nursing facilities, home health, hospice, & blood
Part B = medically necessary and preventative = ambulance, blood work, labs, CA screening, DM screens,vaccinations (does not cover routine medical check-ups, physicals)
A Medigap policy is health insurance sold by private insurance companies
to fill “gaps” in Original Medicare Plan coverage. Medigap policies help
pay your share (coinsurance, copayments, or deductibles) of the costs of
Medicare-covered services, and some policies cover certain costs not
covered by the Original Medicare Plan. If you are in the Original Medicare
Plan and have a Medigap policy, then Medicare and your Medigap policy
will both pay their shares of covered health care costs. Insurance companies
can only sell you a “standardized” Medigap policy. These Medigap policies
must all have specific benefits.
Automatically enrolled in original plan unless you enroll in Medicare Advantage
Fee for service plan -- just present your Medicare card
Monthly premiums for Part A+B depends on income and if you paid Medicare taxes:
Part A premium usually $0
Part B premium no more than $161/month

5. Prescription Drug Plan
Medicare Advantage
Medicare Part D
Prescription Drug Plan +
Provide the same Part A and Part B coverage but may have extra benefits like dental, eye, or prescription drug plans
Premiums differ by plan
Have to stay “in network” as determined by HMO or PPO

6. Medicare Modernization Act (MMA)
Signed into law Dec 2003
“Medicare Part D” was added
Voluntary out-patient prescription drug plan to begin Jan 2006
Can be added to Medicare (original and Advantage)

7. Part A Coverage Inpatient/hospital charges
“Medically necessary” - anything needed to diagnose or treat a condition
Critical care
SNF’s, but not LTC
Home health
Hospice
Blood

8. Part B Coverage Ambulatory/Outpatient Care Medically necessary
Ambulance, blood, am care surg, lab tests, MD services, DME, ER, dialysis, mental health
Medicare-covered preventatives: lab tests, screenings, vaccinations to help diagnose or prevent disease
Some drugs covered: immunosuppressants, clotting factors for hemophilia, some vaccines, erythropoetin…

9. Part C Coverage Also known as Medicare Advantage
Combines the coverage of part A and B, but like an HMO or PPO

10. Part D Coverage Adding Rx Drug Benefit to Original Medicare
Adding Rx Drug Benefit to Medicare Advantage (MA):
May already be included in MA
Administered by private plans that are reimbursed by CMS
Formularies are 1st reviewed by CMS
Covers drugs in the most commonly used therapeutic classes
Most generics covered
Doesn’t cover drugs already paid by Part A and B

11. Part D Eligibility and Enrollment
Anyone who qualifies for Medicare can get part D
Optional to enroll, but if you do not enroll when you are first eligible you pay a penalty if you sign up later
2 ways to get Part D:
Join Medicare Prescription Drug Plan
Join Medicare Advantage that includes a drug plan

12. Part D Benefit Design
2007 Costs
Out of Pocket $
For the Year
Premium
$25/month
$300
Deductible
$265
Coinsurance
25% of drug costs up to $2400
$534
Donut Hole
100% of drug costs until you’ve paid $3850
$3051
Catastrophic Coverage
5% of drug costs for the rest of the year --
Total out of pocket costs before catastrophic coverage = $4150

13. An example of Benefit Design

14. Medicare Part D Requirements
Since Part D benefits administered by private companies, CMS requires the following for reimbursement:
Formulary must cover 146 therapeutic categories commonly used by this population as determined by CMS
Formulary must cover at least 2 drugs in each of these 146 therapeutic classes
Except: must cover all or almost all antidepressants, antipsychotics, anticonvulsants, anticancer, immunosuppressants, and HIV/AIDS meds
If generic available, it must be on formulary
All rebates must go back to the payer
Prior authorizations, step-therapy, generic sub, preferred brands OK
CMS must review and approve all formularies in advance
AUDITS

15. Some Common Formulary Restrictions
Prior Authorization: doctor must show that the medication is medically necessary before it is covered
Quantity limits: limits how many pills you can get at a time
Step therapy: one or more lower cost drugs must be tried before step-up therapy drug is covered
Non-Formulary Drugs: BZD’s, barbiturates, weight loss/gain drugs, erectile dysfunction meds, cough/cold meds, OTC’s, fertility drugs…

16. Formulary Tier Copays

17. Coordination of Care
What if a person has coverage other than Medicare?
Medicaid: state benefit
Dual eligibility- Medicare beneficiary currently receiving Medicaid benefits
Medicaid drug coverage for Medicare eligibles terminated December 31, 2005
Auto-enrolled into qualifying plans October 2005

18. Coordination of Care Third Party Insurance
Any other insurance will kick in before Medicare is charged
Other insurers:
-FEHBP (Federal Employee Health Benefits Program), VA, TRICARE (active duty service, retirees, family), Medigap

19. MediGap
In original medicare plan, fills in gaps in coverage for part A and B
Can’t have drug coverage from both MediGap and Medicare Part D coverage- one must be removed
MediGap coverage is not as good as Medicare Part D for drug coverage
Under Medicare Advantage, MediGap won’t work- doesn’t pay deductibles, copays/coinsurance

20. Medication Therapy Management
MMA requires that Part D plans have an MTM program
Clinician (pharmacist) reviews patients’ medication therapy
Focus on patients with chronic diseases or on a multitude of Part D medications
CMS allows for MTM reimbursement
Benefits include optimization of therapy, improved outcomes, and close monitoring of side effects

21. Conclusion Enroll in Medicare Part D if:
You have Medicare but do not have prescription drug benefits
You qualify for limited income assistance
You spend a lot on prescription drugs
Enroll by Dec 8th for coverage beginning Jan 1st; there are late enrollment penalties
Research the different options available to you
Part D as well as most drug benefits are subject to change year to year

22. Additional Resources www.medicare.gov www.healthdecisions.org/guide