1. 1 State Options for Supplementing Medicare Part D Drug Coverage Invitational Summit on Medicare Part D Implementation Issues Jack Hoadley Georgetown University Health Policy Institute October 7, 2004

2. 2 Our Projects Interview-based case studies of 14 SPAPs –RWJF funding –Project continues through at least the end of 2004 Interview-based study of Medicare drug discount cards –MedPAC funding –Mostly SHIPs and pharmacies

3. 3 Auto-enrollment works Working with a single card simplified the process Real savings for states and usually for beneficiaries Education and outreach challenging Coordination of benefits generally smooth Lessons from the Discount Card Experience

4. 4 Constraints: MMA and Proposed Rule Explicit recognition of SPAP role Expenses paid by SPAPs count toward TrOOP No preference for a single drug plan Avoid interference with plans’ cost management tools

5. 5 Unknowns about the Part D Benefit Final program rules Number and types of regions Number of competing plans per region Model therapeutic classification system Plan approaches to formularies and tiered cost sharing

6. 6 General Reactions from the Field Still early in the planning stage States vary considerably –How far along in planning –Likely future of state programs Will require major transition effort regardless

7. 7 Overall Options for Medicare Part D Fill in gaps in coverage and pay certain costs Maintain program as an alternative to Part D coverage Drop program altogether

8. 8 Options for Filling in Coverage Gaps Pay the premium Cover cost sharing Cover purchases in the doughnut hole Cover non-formulary drugs Cover out-of-network purchases Buy plan’s supplemental coverage

9. 9 Option: Pay the Plan Premium Relatively predictable amount Amount paid dependent on plan chosen Would all plans be eligible?

10. 10 Option: Cover Initial Cost Sharing Deductible –Generally a predictable amount –Helps only with low-end expenses –Relatively limited coordination of benefits Coinsurance –Costs unpredictable –Requires complex coordination of benefits –Impact on plan’s cost management approaches –If tiered, can SPAP fill in entire difference?

11. 11 Option: Cover the Doughnut Hole Helps those with higher costs and greater vulnerability Requires some coordination of benefits, but not per claim Less impact on plan’s cost management approaches Would SPAP apply its own review of drugs used?

12. 12 Option: Cover Non-Formulary Drugs Most complex coordination of benefits Greater impact on plan’s cost management approaches Interaction of plan’s and SPAP’s drug lists How would midyear formulary changes be handled?

13. 13 Option: Cover Non-Network Pharmacies Limited cost, but limited impact Would help with coverage for out-of-area travel Potential high expenses for nursing home residents What if non-network pharmacies are not in the SPAP network?

14. 14 Option: Buy Supplemental Coverage from Plan If available, pay premium for supplemental coverage Simpler way to provide coverage Dependent on whether and what plans offer

15. 15 Options for What Populations to Cover Current Medicaid beneficiaries Others under 135% of poverty Those between 135% and 150% of poverty Those at 150% and up, if SPAP-eligible Those at 150% and up, if not SPAP-eligible Disabled beneficiaries under age 65

16. 16 Working with Private Drug Plans Establishing relationships with multiple plans Different priorities How many plans will be in the region? How will coordination over cost management occur?

17. 17 Switching to Secondary Payer Role New roles for some states in coordination of benefits What happens to SPAP policies on DUR, prior authorization, etc.? Engineering the actual transition –Technical issues –Educating current enrollees

18. 18 Timing Issues January 1, 2005: CMS decision on regions Early 2005: Final rule published June 6, 2005: Drug plan bids due to CMS September 2005: CMS awards PDP contracts October 15, 2005: Information campaign begins November 15, 2005: Open season begins December 31, 2005: Medicaid drug coverage and Medicare discount cards end January 1, 2006: Part D benefit begins

19. 19 Final Thoughts Long year ahead, regardless Trying to keep beneficiaries first States will have varied responses How will politics intervene?