1. 1 State Perspectives on Medicare Part D: Lessons from Pharmacy Plus Programs Cindy Parks Thomas Donald Shepard Christine E. Bishop Daniel M. Gilden Brandeis University Schneider Institute for Health Policy and Jen Associates, Inc. Academy Health Annual Research Meeting June 27, 2006

2. 2 Lessons from Wisconsin SeniorCare Response to Medicare Part D

3. 3 Background Pharmacy Plus Medicaid Waivers: Expanded pharmacy coverage for low-income seniors –Most eliminated after Part D Study based on Brandeis/CMS evaluation of Pharmacy Plus Programs in Illinois and Wisconsin and RWJ HCFO Grant # 50507 –Program design and outcomes Case study of Wisconsin SeniorCare: Program maintained after Medicare Part D implemented –Interviews with state officials in 2005/2006 –Program data early 2006 –AARP Sellers Feinberg financial analysis

4. 4 Wisconsin SeniorCare and Part D Benefits Income by FPL Wisconsin SC Enrollment fee $30, No asset test Medicare Part D 2006 std. benefit Income-based Premium + Asset test (Cost share Indexed) <100%No deductible Copay: $5generic/ $15 brand No premium No deductible/ no gap Copay $1/$3 to $5100 rx cost 100-135%No premium No deductible/ no gap Copay $2/$5 to $5100 rx cost 135-150%Sliding scale premium Deductible $50/no gap 15% coins to $5100 rx cost Standard Part D benefit: 150-200%Deductible $500 Copay: $5 generic/ $15 brand $420 premium Deductible $250 25% coins to $2250 Full pay (gap) $2250 to $5100 5% coins after $5100 (160% fpl) State only program: 200-240% FPL: $850 deductible, same copays.

5. 5 Wisconsin SeniorCare: A Better Benefit than Part D for Most Source: Wisconsin Department of Health and Family Services, 2006 Out-of-pocket Costs for Wisconsin SeniorCare Versus Standard Part D

6. 6 Wisconsin Challenge CMS recommended to states: –Eliminate Pharmacy Plus programs –Convert to SPAP so out of pocket costs would contribute to catastrophic Wi. SeniorCare member analysis 2004 –<135%FPL and full subsidy would be better off in Part D –<150% FPL and partial subsidy better off in SeniorCare –All others better off in SeniorCare (estimated 94%)

7. 7 Wisconsin Choices for Pharmacy Assistance Maintain SeniorCare waiver through June 2007 Convert SeniorCare to state program for Medicare Part D wraparound Convert SeniorCare to state pharmacy assistance program and allow choice Eliminate all state pharmacy assistance for low-income seniors

8. 8 Important Factors Very popular program since 2002 –Legislative –Public support –Wisconsin aging network well established Medicaid matching costs Other revenue sources State costs Differences in member out-of-pocket spending

9. 9 Qualifying for the Low-income Subsidy Estimates of how many income-eligible seniors would qualify for LIS: –Congressional Budget Office 2003: 88% –Congressional Budget Office July 2004: 45% –CMS 2005: 57% –Wisconsin SeniorCare estimate 2005: 20% based on: Percent in Medicaid meeting asset test; Wisconsin DHFS survey Actual percent qualifying: 18-19%

10. 10 Estimated Cost to Wisconsin for Wraparound Coverage for SeniorCare Members Source: Wisconsin Department of Health and Family Services and Sellers Feinberg, 2006 Donut Hole: $72 million Total = $137.3 million dollars cost to State to wrap around program

11. 11 Estimated Savings to Federal Government for Extending SeniorCare With Medicare Part D Fiscal Year 2003-04 ($ in millions)SeniorCareMedicare Part D Drug and Out-of- Pocket Costs  Pharmacy Billed Amount (Retail Price)$204.4  Less SeniorCare Discount Price Savings (AWP & MAC) 36.8  Less Other Participant Insurance Payments 1.3  Less Senior Out-of-Pocket Costs$55.2$137.3 Subtotal - Costs$111.1$67.1 Program Funding  Federal Funds$41.5$67.1  State Funds38.2  Manufacturer Rebates31.2 Subtotal - Funding$110.9$67.1 Source: Wisconsin Department of Health and Family Services and Sellers Feinberg, 2006

12. 12 Enrollment Process into Wisconsin SeniorCare versus Part D SeniorCare now creditable coverage RFP for wraparound coverage: no plans responded Assist in outreach 2800 members were autoenrolled to Part D and had to be disenrolled 85% re-enrollment rates in SeniorCare Still about 1000 members who qualify for LIS Plan also wraps around Part D –Uncovered classes and –SeniorCare covered drugs

13. 13 Wisconsin State Part D Market 844,272 Medicare beneficiaries –294,740 <200% FPL 107,200 dual eligibles 187,542 income eligible for SC waiver –32% of processed LIS applications approved Market –Least expensive PDP: $11/month (average $36) –80% have no coverage in gap –64% have no deductible (35% of low cost plans) Source: Kaiser Family Foundation, 2006

14. 14 Wisconsin SeniorCare Enrollment Estimates

15. 15 Enrollment in SeniorCare Increased After Jan 2006 Source: Wisconsin Department of Health and Family Services, 2006

16. 16 Number of SeniorCare Prescriptions per Member Before and After January 2006 0 0.2 0.4 0.6 0.8 1 1.2 JulyAug Sept Oct Nov Dec Jan FebMar <160% FPL 160 to 200% FPL 200 to 240% FPL >240% FPL Average number of prescriptions per member per week Source: Wisconsin Department of Health and Family Services, 2006

17. 17 Average Cost per Prescription for SeniorCare Before and After January 2006 Source: Wisconsin Department of Health and Family Services, 2006

18. 18 Some Design Lessons for States for Part D Wraparound Coverage Differences in cost sharing matter: –Higher copays decrease rx use –Higher copays, tier differences, and utilization management increase generic use Gaps in coverage matter: –Cap at $1750 lowers spending by 30% –Deductible affects enrollment: sicker members enroll –Deductible affects spending: 17% lower spending during deductible period More generous coverage decreases the income effect of lower use for lower income members For the very poor (<100% of federal poverty), non- financial barriers also exist Formularies can result in very different use and expenditures

19. 19 Lessons from Wisconsin State Response to Part D Useful approach to compare state program with Medicare Part D Members who may be better off in Medicare Part D stayed in SeniorCare –Popular familiar program –Considerable outreach –Inertia/ confusion regarding new program Transition enrollment problems –Erroneously autoenrolled into Part D Must have popular support: Full funding for SeniorCare for 2006 This is a unique state situation (waiver extension) but lesson for state programs