0. BCNEPA/FPH 2006 Seminar Medicare Before and After Part D
BCNEPA/FPH 2006 Seminar Medicare Before and After Part D April 26, 2006
Randy Grabiak
Highmark Senior Products
Medicare Part D Product Director

1. Agenda Trends in the Senior Market Part D Benefits & Guidelines
Plan Participation
Provider Challenges
Questions

2. Seniors’ Sources of Information
Trends in the Senior Market
Seniors’ Sources of Information
AMONG SENIORS: Percent who say they would be very likely to turn to each of the following for help in deciding whether to enroll in a Medicare drug plan…
Survey March 31 – April 3, 2005
Your doctor
Your pharmacist
A Social Security office, website or phone number
Friends or family members
A Medicare mailing, website or phone number
A health insurance company
A local seniors’ group or community organization
An employer or union
49%
33%
27%
27%
23%
21%
18% 8%
Survey October 13 – 31, 2005
Medicare
Your doctor
Your pharmacist
Social Security
Friends or family members
A local seniors’ group or community organization
Medicaid
An employer or union
33%
32%
25%
24%
20%
16%
14% 9%
Source: *Kaiser Family Foundation Health Poll Report Survey (conducted Mar. 31-April 3, 2005)
**Kaiser Family Foundation/Harvard School of Public Health (conducted October 13-31, 2005)

3. Health Insurance Trends Prior to Part D
Trends in the Senior Market
Health Insurance Trends Prior to Part D
To offset the growing out-of-pocket expense, many beneficiaries have turned to various forms of private or public supplemental coverage to help defray the cost of prescription drugs
However, more than a third still have no prescription drug coverage
Lack of drug coverage can have adverse affects
Sources of Prescription Drug Coverage

4. Health Care Delivery and Expenditure Trends
Trends in the Senior Market
Health Care Delivery and Expenditure Trends
Seniors are particularly vulnerable to the increased cost of prescription drugs because:
Drug usage increases with age
Prior to Part D Medicare did not cover most prescription drugs
Source: Ageworks, a division of the Ethel Percy Andrus Gerontology Center, USC

5. Trends in the Senior Market
The Need for Drug Coverage
Medicare Beneficiaries’ Out-of-Pocket Prescription Drug Spending,
Average annual out-of-pocket drug
costs among the Medicare population:
Projected:
* Without Medicare drug benefit.
SOURCE: Actuarial Research Corporation analysis for The Kaiser Family Foundation, June 2003 and November 2004.

6. Recent Trends in the Senior Market
Part D is Projected to Reduce Average Out-of-Pocket Spending but the Extent of the Reduction is Likely to Vary
Part D Participants Who Receive Low-Income Subsidies (8.7 million)
All Other Part D Participants (20.3 million)
Average Change: - 37%
SOURCE: Actuarial Research Corporation analysis for the Kaiser Family Foundation, November 2004.

7. Decisions for Beneficiaries
Part D Benefits & Guidelines
Decisions for Beneficiaries
Enroll in Part D Plan
Traditional Medicare
Medicare Advantage
Part D Prescription Drug Plan
HMO (Local)
PPO (Local v. Regional)
Private FFS
No Part D coverage
Apply for Low-Income Subsidy
Dual Eligibles
Social Security Office
Medicaid Office
Meet Income and Asset Test?
If yes, qualify for:
Below 100% FPL:
No premium or deductible, $1/generic Rx, $3/brand name Rx, pay nothing after $5,100 in Rx costs
Below 135% FPL: Subsidy for premium, no deductible, $2/generic Rx, $5/brand name Rx, pay nothing after $5,100 in Rx costs
Below 150% FPL: Subsidy for premium on sliding scale, $50 deductible, 15% coinsurance to $5,100 in Rx costs, $2/generic Rx, $5/brand name Rx after $5,100

8. Medicare Prescription Drug Benefit
Part D Benefits & Guidelines
Medicare Prescription Drug Benefit
2006 Standard Medicare Part D Coverage

9. Part D Plans Plan Participation
To participate in the program, sponsors must offer Medicare Part D benefits to all beneficiaries in one or more of the 34 PDP regions established by CMS

10. Highmark’s Medicare Approved Drug Plans
Plan Participation
Highmark’s Medicare Approved Drug Plans
BlueRx Benefits
Basic
Plus
Complete
Formulary
Closed
Incentive
Monthly Premium
$26.55
$33.67
$47.46
Deductible
$0.00
Initial Coverage
From deductible amount to $2,250 in total drug costs (member and plan)
Generic
$10 Copay
Brand
$30 Copay
$25/$45 Copay
$8 Copay
$20/$40 Copay
Coverage Gap
From $2,251 in total drug costs (member and plan) to $3,600 out-of-pocket (member)
No Coverage
$8 Copay for Unlimited Generics
Catastrophic Coverage
Over $3,600 out-of-pocket (member)
Greater of $2 Copay or 5% Coinsurance
Greater of $5 Copay or 5% Coinsurance
To Request Additional Information, please call

11. Highmark’s Medicare Advantage Drug Plan Options
Standard Part D
Enhanced Part D
FreedomBlue
Formulary
Closed
Deductible
$0.00
Initial Coverage
From deductible amount to $2,250 in total drug costs (member and plan)
Generic
$10 Copay*
Brand
$30 Copay*
$8 Copay*
$20 Copay*
Coverage Gap
From $2,251 in total drug costs (member and plan) to $3,600 out-of-pocket (member)
No Coverage
$8 Coverage for Generics*
Catastrophic Coverage
Over $3,600 out-of-pocket (member)
Greater of $2 Copay * or 5% Coinsurance
Greater of $5 Copay* or 5% Coinsurance
Greater of $2 Copay* or 5% Coinsurance
Greater of $5 Copay* or 5% Coinsurance
Greater of $5 Copay* or 5% Coinsurance
Greater of $2 Copay* or 5% Coinsurance
Greater of $5 Copay* or 5% Coinsurance
* Based on 1-34 Day supply. Copayment for day supply (Retail) or 1-90 day supply (Mail Service) is 2.5 times 1-34 day supply.

12. Medicare Prescription Drug Plan Cost Estimator (BlueRx Basic)
Part D Benefits & Guidelines
Medicare Prescription Drug Plan Cost Estimator (BlueRx Basic)
Estimated Savings Report:
Current Annual Drug Spend
$1,440.00
$120.00/Month
Est. Annual Medicare Drug Spend $
$66.55/Month
Est. Annual Savings: $
$53.45/Month
Cost Breakdown:
Description
Cost with Medicare
Minimum Annual Premium*
$318.60
$ /Month
Cost Share applied toward the $250 Deductible
$0.00
Annual Cost Share **
$480.00
$40.00/Month
*BlueRx Basic Plan
** Assumption: 4 generic prescriptions/month

13. *Excludes primary residence and automobiles
Part D Benefits & Guidelines
Low-Income Subsidy
Medicare will provide premium and cost-sharing subsidies to assist low-income beneficiaries
Dual eligibles will be automatically assigned to a PDP and auto-enrolled if they do not choose another plan
Benefit: Reduction of premium, deductible & cost-sharing
Process: Requires completion of SSA form
Eligibility:
Income
Assets*
Single
$14,355
$11,500
Married
$19,245
$23,000
*Excludes primary residence and automobiles

14. Medicare’s Low Income Subsidy Benefit Design
Part D Benefits & Guidelines
Medicare’s Low Income Subsidy Benefit Design
Title
Income
Assets
Premium
Deductible
Initial Benefit
Coverage Gap
Catastrophic
Coverage
(1) Full-Benefit
Dual Eligible Non-
Institutionalized
Up to 100% FPL
Medicaid Eligible
$0.00
$1 generic
$3 brand
(2) Full-Benefit
Above 100% FPL
$2 generic
$5 brand
(2) Other Low-Income
Beneficiary
Below 135% FPL
Not Above
$6,000 (single)
$9,000 (couple)
(3) Other Low-Income
Between
$6,000 & $10,000 (single)
$9,000 & $20,000 (couple)
$50
15% co- insurance
At or above 135% FPL but below 150% FPL
Not above
$10,000 (single)
$20,000 (couple)
Sliding Scale up to 100%
(4) Full-Benefit
Dual Eligible
Irrelevant

15. The Donut Hole’s Impact to Out of Pocket Expenses
Part D Benefits & Guidelines
The Donut Hole’s Impact to Out of Pocket Expenses

16. Late Enrollment Penalty
Part D Benefits & Guidelines
Late Enrollment Penalty
Medicare Part D is an entitlement but enrollment is voluntary
Low-income subsidy provides additional cost savings
Waiting to enroll until after May 15, 2006 may come at a penalty
Nov 15, 2005
May 15, 2006
January 2007
January 2008
Sign up & pay = $34.78/Month**
Sign up & pay = $32.20/Month*
Sign up & pay = $38.95/Month**
*Amount based on $32.20 national average monthly beneficiary premium (CMS, August 2005).
**Assumes national average premium does not increase annually

17. National Part D Enrollment not meeting HHS Projections
39.1 million beneficiaries would enroll in 2006 of which 10 million would have creditable
coverage under a qualified plan such as an employer or union sponsored plan.
29.3 million would be enrolled in a Part D plan.
Additional 11.4 million will need to sign up for a stand alone or MAPD plan in order to reach the
29.3 million member target.
*Projected Part D Enrollment = 29.3M
30.0
*Includes MAPD & Stand Alone PDP
17.9 million
20.0
15.8 million
14.3 million
11.6 million
6.4 mil
4.9 mil
3.6 mil
1 mil
Enrolled in Stand Alone PDPs
10.0
4.7 mil
5.1 mil
4.4 mil
4.5 mil
Enrolled in MA-PD
6.2 mil
6.4 mil
6.2 mil
6.2 mil
Dual Eligible Auto Assigned from CMS
0.0
Dec 2005
Jan 2006
Feb 2006
Mar 2006
Actual Part D Enrollment
Source: Projected: HHS, Medicare Drug Benefit Final Rule 1/28/05. Actual: HHS 12/22/05, 1/17/06 , 2/22/06, & 3/23/06

18. Formulary Covered Drugs Statutory Exclusions Provider Challenges
Antidepressants
Antipsychotics
Anticonvulsants
Antiretrovirals
Immunosuppressants
Antineoplastics.
Over the counter medications
Weight gain and loss drugs
Fertility and cosmetic/hair growth drugs
Drugs to relieve cold symptoms
Some vitamins and minerals
Barbiturates, and benzodiazepines
Prescription Drug Plans Must:
Assure a broad access to drugs
Require two drugs per Categories & Classes
Must comply with USP model guidelines

19. Formulary Provider Challenges
Drug coverage can differ based on how the drug is prescribed dispensed or administered to the patient
Inhalation DME supply drugs – solution for inhalation via nebulizer only
Oral Anti-cancer agents
Diabetic test strips & lancets
Influenza, pneumococcal, Hepatitis B vaccines

20. Exceptions & Appeals Process
Provider Challenges
Exceptions & Appeals Process
Plans must have a drug transition process in place to assure a seamless transition for patients
A 90 day period may be needed for patients taking non formulary drugs
For rapid transitions, beneficiaries may need to use a plan’s exceptions & appeals process
Establish an adequate exceptions process to help LTC residents who need non formulary drugs
Provide a one time temporary or emergency supply to ensure that there is no coverage gap during the exceptions process

21. Medication Therapy Management
Provider Challenges
Medication Therapy Management
MTM programs must be designed to assure that covered medications will be used appropriately by targeted beneficiaries. A plan’s MTM services must be developed in cooperation with licensed and practicing pharmacists and physicians.
Optimize therapeutic outcomes
Improve medication use
Reduce risk of adverse events & interactions
Increase patient’s adherence & compliance with regimens

22. Key Date
May 15, 2006 – The last day that current Medicare eligible beneficiaries can join a drug plan without paying a penalty.

23. Message Points for Providers
Patients will ask you for advice
One plan does not fit all Medicare beneficiaries
Evaluate Drug Benefit Cost Sharing
Encourage patients to look into low income subsidies
Premium Penalty for delay in signing up
Advise to compare formularies and pharmacy networks
Know where to tell patients to turn for more information

24. Where to Turn for More information:
Highmark
Medicare
1-800-MEDICARE
&
Social Security Administration