1. Medicare Part D Prescription Drug Benefit Highlights Presentation Developed for the Academy of Managed Care Pharmacy Updated: February 2015

2. Medicare – The Basics Federal health insurance program administered by the Centers for Medicare & Medicaid Services (CMS) Program covers individuals: – 65 years of age and older – under age 65 with qualifying disabilities – under age 65 with End Stage Renal Disease (ESRD) – Under age 65 with Lou Gehrig’s disease

3. Original Medicare Medicare Part A: – free premium for most people – covers hospital stays, skilled nursing facility, home health care, hospice – limited drug coverage (drugs given during Medicare- covered stays)

4. Original Medicare (continued) Medicare Part B: – premium, deductibles and coinsurance paid by member – covers doctors’ visits, outpatient medical and surgical services, durable medical equipment (DME) – provides benefits for some drugs, including certain chemotherapy drugs, certain drug injections given during an office visit, and drugs that are given at a dialysis facility

5. Medigap Insurance sold to individual members Fills in the gaps (i.e. deductibles & coinsurance) of Original Medicare plan Often referred to as supplemental or complementary to the Original Medicare plan

6. Medicare Modernization Act of 2003 Federal legislation signed into law on December 8, 2003 Created a new prescription drug benefit (Medicare Part D) beginning in January 2006 – available to those members eligible for Medicare Part A or Part B and elderly Medicaid beneficiaries – voluntary benefit – coverage available through private insurance companies and Managed Care Organizations

7. Medicare Part D Overview PDP: Stand-alone Prescription Drug Plan (provides drug coverage only) MA-PD: Medicare Advantage + Prescription Drug (provides medical and drug coverage) Members select and enroll in plans annually (open enrollment Oct – Dec) Monthly premiums paid to plan

8. Medicare Part D – Late enrollment penalty Calculated by multiplying 1% of the “national base beneficiary premium” ($ 32.42 in 2014) times the number of full, uncovered months that a beneficiary was eligible but didn't sign up for Part D. National base premium may increase each year and penalty may concurrently increase Extra help beneficiaries do not need to pay penalties

9. Medicare Part D – Formulary CMS set guidelines – formularies must cover beneficiaries in both community and long-term care settings – minimum coverage criteria: two drugs per therapeutic category/class (based on USP or other model formulary) – majority of drugs in 6 key classes are covered: antidepressants, antipsychotics, anticonvulsants, antiretroviral, immunosuppressant, antineoplastics – some drug classes are specifically excluded

10. Medicare Part D – Formulary (continued) Per CMS, the following drug classes are excluded from coverage under Part D: – OTC – Part B drugs – Excluded drug categories: weight loss/weight gain fertility agents agents for cosmetic purposes or hair growth agents for symptomatic relief of cough and colds prescription vitamins and minerals (except prenatal and fluoride preparations) erectile dysfunction barbiturates benzodiazepines Enhanced plans can provide additional coverage for select barbiturates and benzodiazepines

11. Medicare Part D – Formulary (continued) Drug formularies are specific to each plan (i.e. coverage will vary from plan to plan) Copayment or co-insurance set by each plan Restrictions on coverage set by plan – prior authorization (PA) – step therapy (ST) – quantity limits (QL) Upcoming drug maintenance and negative formulary changes (CMS requires 60 day member notification) – Includes PA, QL, and ST notifications

12. Medicare Part D – 2015 Standard Benefit Limits Members responsible for: monthly premium (set by plan) annual deductible health plan drug coverage (co-pay/co-insurance set by plan) Initial Coverage or Total Drug Cost (TDS) of $2,960 (set by CMS). Made up of deductible, cost share, allowed drug amount. Once TDS Is met, member falls into Coverage gap where member pays 45% of plan’s cost for Brand name drugs

13. Medicare Part D – 2012 Standard Benefit Limits Coverage gap*: member responsible for 45% of approved cost for brand drugs and 65% of approved cost for generic drugs Member continues to pay out-of-pocket until True Out-Of-Pocket (TrOOP) reaches $4700 (set by CMS). Deductible, cost share and member spend in coverage gap all contribute to TrOOP. Once TrOOP is met, member falls into Catastrophic Coverage where member pays greater of 5% or $2.60 (generic) or $6.50 (brand) *An enhanced benefit may provide for additional coverage in the gap

14. Medicare Part D – Low income Dual eligible: Medicaid beneficiaries eligible for Medicare Social Security Extra help or Supplemental Social Security – 2015: Copay no more than $2.65 generic/$6.60 brand

15. Medicare Part D – Explanation of Benefits (EOB) Part D members receive a monthly EOB which allows members to monitor their benefit status Provides monthly claim details – total drug spend (TDS) – total true out-of-pocket (TrOOP) – negative drug formulary changes

16. Medicare Part D – B versus D Benefit Certain medications may be covered under Medicare Part B or D depending on the circumstances (i.e. place of administration, administration via DME, etc) Medications that are covered under Medicare Part B are not a benefit under Part D plans Plans generally use administrative edits (PA) to stop claims on potential Part B drugs to allow determination of appropriate payer

17. Medicare Part D – B versus D Benefit In general, Part B covers the following: – drugs requiring a DME for administration (e.g. albuterol via nebulizer, insulin via infusion pump) – immunosuppressive drugs (for a Medicare covered transplant) – certain oral drugs for cancer treatment (contain same active ingredient or pro-drug as injectable dosage form) – certain oral anti-emetic drugs (used as full therapeutic replacement for IV anti-emetic drugs within 48 hours of chemo)

18. Medicare Part D – B versus D Benefit Part B coverage (continued): – certain vaccines (e.g. influenza, pneumococcal) – drugs for ESRD (e.g. erythropoietin) – drugs furnished “incident to” a physician’s service: drugs that are administered predominantly by a physician or under their direct supervision “incident to” a professional service

19. Medicare Part D – B versus D Benefit A descriptive summary of Part B versus Part D coverage issues is available at: https://www.cms.gov/PrescriptionDrugCovGe nIn/Downloads/PartBandPartDdoc_07.27.05.p df A reference table for frequent B/D coverage determination scenarios is available at: https://www.cms.gov/pharmacy/downloads/ partsbdcoverageissues.pdf

20. Medicare Part D – Drug plan coverage rules Prior authorization: Patient and/or prescriber must contact plan before certain prescriptions can be filled. Determined by the plans. Quantity limits: Limits on how much medication may be obtained at a time. Step therapy: Plans may require patients to try lower cost, or similar drugs before covering prescribed drug.

21. Medicare Part D: coverage Commercial vaccines not covered under Part B when medically necessary to cover illness Outpatient/ED settings: Plan may cover certain drugs not covered under Part B

22. Medicare Part D – Additional Resources www.cms.gov – Centers for Medicaid & Medicare Services www.cms.gov www.medicare.gov – official U.S. government site for Medicare, compare health and drug plans www.medicare.gov

23. Thank you to AMCP member Bethanie Stein for updating this presentation for 2015.