1. Adam J. Falk, Esq. FELDESMAN TUCKER LEIFER FIDELL LLP Legal issues for Medicaid Plans Under Part D in Serving Dual Eligibles MEDICAID HEALTH PLANS OF AMERICA Medicare Part D: The First 100 Days, Washington, DC April 19, 2006

2. Feldesman Tucker Leifer Fidell LLP Dual Eligibles 7.5 million low-income seniors and people with disabilities who are enrolled in both Medicare and Medicaid Dual eligibles rely on Medicaid to pay Medicare premiums and cost-sharing and to cover benefits not covered by Medicare As of January 1, 2006, prescription drug coverage for dual eligibles has shifted from Medicaid to Medicare Part D.

3. Feldesman Tucker Leifer Fidell LLP Transitioning to Medicare Drug Coverage Over 6 million dual eligibles were randomly assigned to Part D plans offering coverage below the benchmark premium. Medicare fully subsidizes the Part D premium Medicare subsidizes Part D co-payments so that co-payment amounts do not exceed $1 or $3 for generics and $2 or $5 for brand name drugs

4. Feldesman Tucker Leifer Fidell LLP Transition Issues Beneficiaries charged incorrect cost-sharing amounts Pharmacies lacked billing information to bill Part D plans Beneficiaries not aware they were assigned to a Part D plan Beneficiary having difficulty contacting plans for help

5. Feldesman Tucker Leifer Fidell LLP Delivery Combinations for Dual Eligibles after January 1, 2006 Medicare Fee-for Service + PDP Managed Care Plan (MA-PD) Fee-for-Service + PDP Managed Care Plan X (MA-PD) Managed Care Plan Y (MA-PD) Medicaid Fee-for-Service Managed Care Managed Care Plan X Managed Care Plan Z

6. Feldesman Tucker Leifer Fidell LLP Coordination between Part D and Medicaid Claims data on Part D drugs may no longer be available to Medicaid plan No ability to assure appropriate drug utilization  PDPs are not at risk for hospitalization and has no incentive to cover / manage medications  PDP must provide Medication Therapy Management (MTM) for targeted beneficiaries.

7. Feldesman Tucker Leifer Fidell LLP What if dual- eligible is not enrolled in a Part D plan? State prohibited from drawing federal Medicaid funds (FFP) for Medicare drugs for dual-eligibles even if not enrolled in a Medicare plan. State Medicaid capitation payment will not include costs for Part D drugs for dual- eligibles.

8. Feldesman Tucker Leifer Fidell LLP Part D Stop Gap Coverage In light of transition issues, a number of states agreed to reimburse pharmacy providers for the cost of prescriptions for who were not able to receive drugs.  Typically limited benefit, e.g., one claim for 30-day supply  Some limited to All Medicare beneficiaries vs. LIS-eligible beneficiaries CMS announced that it will reimburse states for Part D drug costs provided through March 8, 2006 within four weeks of receipt of clean claims.  Demonstration authority under section 402 of the Social Security Amendments of 1967, as amended.  Includes dual-eligibles and low-income subsidy (LIS) entitled individuals  Includes reimbursement for Part D drugs as well as certain administrative costs

9. Feldesman Tucker Leifer Fidell LLP Myth: Medicare Pays for All Drugs for Dual Eligibles Fact: Medicaid continues to pay cost-sharing for Medicare Part B covered drugs. Fact: Medicaid will continue to pay for a few categories of drugs not covered by Medicare (to the extent drugs are covered under state Medicaid program):  Nonprescription drugs (OTC meds)  Barbiturates  Benzodiazepines  Drugs for anorexia, weight loss, and weight gain. Fact: Medicaid cannot pay for a drug whose class is covered by Medicare but not included a particular Part D plan’s formulary.

10. Feldesman Tucker Leifer Fidell LLP Processing Drug Claims for Dual Eligibles Claims for Part D drugs should be rejected  (Rejected to bill Part D plan) Claims for non-Part D drugs covered by Medicaid should be either  Paid (if costs included in capitation payment) or  Submitted to State FFS

11. Feldesman Tucker Leifer Fidell LLP Options for payment of Part D Co-Pays for dual eligibles State wrap-around (no FFP) State Pharmaceutical Assistance Program (SPAP) Medicaid HMO wrap-around (self-funded) Pharmacy waivers

12. Feldesman Tucker Leifer Fidell LLP Waiver of Part D Co-Payments Under new anti-kickback safe harbor established by the MMA, pharmacies may waive applicable co- payment  For dual-eligibles, pharmacy may routinely waive or reduce cost-sharing as long as done in an unadvertised manner  For non-dual eligibles, pharmacy may waive or reduce cost-sharing on a non-routine basis after determining that a beneficiary is in financial need or after failing to collect the cost-sharing portion, provided it is also done in an unadvertised manner

13. Feldesman Tucker Leifer Fidell LLP TrOOP Medicare excluded drugs do not count towards TrOOP Non-formulary drugs do not count towards TrOOP Payments made on behalf of recipients by another federal program (e.g., Medicaid) do not count towards TrOOP.

14. Feldesman Tucker Leifer Fidell LLP Adam J. Falk, Esq. Feldesman Tucker Leifer Fidell LLP (202) 466-8960 afalk@ftlf.com