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The Medicare Part D Prescription Drug Benefit Understanding the Formulary Requirements and Related Implications Michael Sharp, R.Ph, Pharmacy Consultant.

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Presentation on theme: "The Medicare Part D Prescription Drug Benefit Understanding the Formulary Requirements and Related Implications Michael Sharp, R.Ph, Pharmacy Consultant."— Presentation transcript:

1 The Medicare Part D Prescription Drug Benefit Understanding the Formulary Requirements and Related Implications Michael Sharp, R.Ph, Pharmacy Consultant Office of Medicaid Policy and Planning, State of Indiana

2 Areas of Focus Basic benefit principles, fundamental formulary requirements and CMS review processes Basic benefit principles, fundamental formulary requirements and CMS review processes Exceptions/Appeals overview Exceptions/Appeals overview Formulary implications for dual-eligibles and the Indiana Medicaid approach Formulary implications for dual-eligibles and the Indiana Medicaid approach Implementation considerations, timeline and recommended resources Implementation considerations, timeline and recommended resources

3 Medicare Coverages Part A Hospital insurance for inpatient stays, some skilled nursing facility care, hospice care and home health care Part B Medical insurance for physician services, outpatient hospital care, durable medical equipment, some medical supplies and selected drugs Part C Medicare Advantage (MA-PD) for benefits through private health plans – old Medicare+Choice Part D Prescription drug benefit for persons eligible for Part A or enrolled in Part B

4 Medicare Prescription Drug Benefit, 2006 and Beyond Medicare Prescription Drug Benefit, 2006 and Beyond Beginning in 2006, beneficiaries have choice of: Beginning in 2006, beneficiaries have choice of: Traditional Medicare, with access to private drug-only plans (PDPs) Traditional Medicare, with access to private drug-only plans (PDPs) Medicare Advantage (MA-PD) plans for Medicare benefits and Rx drugs Medicare Advantage (MA-PD) plans for Medicare benefits and Rx drugs New plans provide “standard” prescription drug benefit or its “actuarial equivalent” New plans provide “standard” prescription drug benefit or its “actuarial equivalent” Plans have some flexibility to determine which drugs are covered and cost-sharing requirements, subject to certain constraints Plans have some flexibility to determine which drugs are covered and cost-sharing requirements, subject to certain constraints Premium and cost-sharing subsidies for low-income beneficiaries with incomes up to 150% poverty and modest assets Premium and cost-sharing subsidies for low-income beneficiaries with incomes up to 150% poverty and modest assets Medicaid will no longer pay for Medicare D covered drugs after December 31, 2005 Medicaid will no longer pay for Medicare D covered drugs after December 31, 2005

5 Medicare Prescription Drug Plans Must offer basic drug benefit Must offer basic drug benefit Standard benefit Standard benefit May offer supplemental benefits May offer supplemental benefits Alternative Benefit Alternative Benefit Enhanced benefit Enhanced benefit Can be flexible in benefit design Can be flexible in benefit design May look different than standard benefit May look different than standard benefit May have different co-pay or co-insurance May have different co-pay or co-insurance Cannot change actuarial equivalence Cannot change actuarial equivalence

6 Part D Sponsors – Risk-Bearing Entities Prescription Drug Plans (PDPs) Prescription Drug Plans (PDPs) Pharmacy Benefit Managers Pharmacy Benefit Managers Private Insurance Companies Private Insurance Companies Medicare Advantage-Prescription Drug (MA-PDs) Medicare Advantage-Prescription Drug (MA-PDs) Must offer at least 1 option for Rx coverage Must offer at least 1 option for Rx coverage May offer plans with no drug coverage for beneficiaries who decline Part D coverage May offer plans with no drug coverage for beneficiaries who decline Part D coverage May offer Special Needs Plans, focusing on Duals & selected diagnoses May offer Special Needs Plans, focusing on Duals & selected diagnoses

7 Formulary Coverage Fundamentals CMS says “clinically appropriate medications, at lowest possible cost” CMS says “clinically appropriate medications, at lowest possible cost” Formularies must not discriminate against: Formularies must not discriminate against: Individuals with HIV/AIDS, mental health and other cognitive disorders Individuals with HIV/AIDS, mental health and other cognitive disorders The Dual eligibles The Dual eligibles CMS utilizes the USP formulary classification model as the minimum benchmark for formulary appropriateness CMS utilizes the USP formulary classification model as the minimum benchmark for formulary appropriateness USP model consists of 146 therapeutic classifications and related pharmacologic categories USP model consists of 146 therapeutic classifications and related pharmacologic categories Plans must accommodate all medically necessary medications at all levels of care Plans must accommodate all medically necessary medications at all levels of care

8 Medicare Prescription Covered Drugs Prescription drugs, biologicals and insulin Prescription drugs, biologicals and insulin Medical supplies associated with injection of insulin (syringes/swabs/etc) Medical supplies associated with injection of insulin (syringes/swabs/etc) Cases where a drug is not FDA approved for an indication but it has clinical literature to support its use Cases where a drug is not FDA approved for an indication but it has clinical literature to support its use Vaccines not covered by Part B Vaccines not covered by Part B Viagra, Levitra and Cialis Viagra, Levitra and Cialis Brand name and generic drugs will be included in each formulary* Brand name and generic drugs will be included in each formulary* *Less for generics or preferred Rx, more for brands. Multi- source brand name products can be excluded.

9 Formulary Requirements Plan formulary must be developed by a Pharmacy and Therapeutics Committee Plan formulary must be developed by a Pharmacy and Therapeutics Committee Formulary must include at least 2 drugs in each therapeutic category and pharmacologic class of covered Part D drugs and in certain categories, must contain “all or substantially all” of the following medications: Formulary must include at least 2 drugs in each therapeutic category and pharmacologic class of covered Part D drugs and in certain categories, must contain “all or substantially all” of the following medications: Antidepressants Antipsychotics Anticonvulsants Antiretrovirals Antineoplastics Immunosuppressants

10 Part D Drug Exclusions Drugs for Drugs for Anorexia, weight loss, or weight gain Anorexia, weight loss, or weight gain Fertility Fertility Cosmetic purposes or hair growth Cosmetic purposes or hair growth Symptomatic relief of cough and colds Symptomatic relief of cough and colds Prescription vitamins and mineral products Prescription vitamins and mineral products Except prenatal vitamins and fluoride preparations Except prenatal vitamins and fluoride preparations Non-prescription (OTC) drugs*, with the exception of OTC insulin Non-prescription (OTC) drugs*, with the exception of OTC insulin Barbiturates Barbiturates Benzodiazepines Benzodiazepines Outpatient drugs for which the manufacturer seeks to require that associated tests or monitoring services be purchased exclusively from the manufacturer or its designee as a condition of sale Outpatient drugs for which the manufacturer seeks to require that associated tests or monitoring services be purchased exclusively from the manufacturer or its designee as a condition of sale *Plans may choose to pay for OTC products as an administrative cost, with the member not incurring a co-pay, these products do not count towards formulary requirements.

11 Part D Drug Exclusions (cont) Part A Prescriptions Part A Prescriptions – In skilled nursing homes – up to 100 day stay Related to the terminal illness for hospice patients Related to the terminal illness for hospice patients Part B Outpatient Drugs Part B Outpatient Drugs Durable Medical Equipment Drugs (e.g., inhalation therapy, insulin w/pumps & some chemotherapeutics) Durable Medical Equipment Drugs (e.g., inhalation therapy, insulin w/pumps & some chemotherapeutics) Immunosuppressive Drugs Immunosuppressive Drugs Hemophilia Clotting Factors Hemophilia Clotting Factors Selected Oral Anti-Cancer Drugs Selected Oral Anti-Cancer Drugs Selected Oral Anti-Emetic Drugs, up to 48 hrs after chemotherapy administration Selected Oral Anti-Emetic Drugs, up to 48 hrs after chemotherapy administration Erythropoietin for persons on dialysis Erythropoietin for persons on dialysis Intravenous Immune Globulin, provided in the home Intravenous Immune Globulin, provided in the home

12 P&T Committee: Requirements Membership includes the following: Membership includes the following: The majority are practicing physicians and pharmacists. The majority are practicing physicians and pharmacists. Various clinical specialties that reflect the needs of the plan beneficiaries. Various clinical specialties that reflect the needs of the plan beneficiaries. At least one practicing physician and pharmacist who are experts in the care of the disabled or elderly. At least one practicing physician and pharmacist who are experts in the care of the disabled or elderly. CMS provides extensive guidance on the expectations surrounding the composition and activities of the P&T committee CMS provides extensive guidance on the expectations surrounding the composition and activities of the P&T committee

13 Formulary Review: Rationale Medicare Modernization Act requires CMS to review formularies and related processes to ensure: Medicare Modernization Act requires CMS to review formularies and related processes to ensure: Beneficiaries have access to a broad range of medically appropriate drugs to treat all disease states, and Beneficiaries have access to a broad range of medically appropriate drugs to treat all disease states, and Formulary design does not discriminate or substantially discourage enrollment of certain groups Formulary design does not discriminate or substantially discourage enrollment of certain groups

14 Formulary Review: CMS Validations Checks for appropriate utilization management strategies Checks for appropriate utilization management strategies Checks for two drugs per USP category and class Checks for two drugs per USP category and class Checks for Key Drug Types as defined by USP Checks for Key Drug Types as defined by USP Checks for the most common drugs used in the LTC population Checks for the most common drugs used in the LTC population Checks “all or substantially all” requirement Checks “all or substantially all” requirement

15 Formulary Considerations Safety and Efficacy Safety and Efficacy Cost-effectiveness* Cost-effectiveness* In general, formulary design will be similar to that of commercial plans today, with the added benefit of CMS oversight for adherence to published guidelines. In general, formulary design will be similar to that of commercial plans today, with the added benefit of CMS oversight for adherence to published guidelines. *The federal government can’t negotiate or mandate pharmacy payment rates or manufacturer rebate levels

16 Provision of Notice Regarding Formulary Changes Prior to removing/changing drug from formulary the plan must: Prior to removing/changing drug from formulary the plan must: Provide 60 days notice to prescribers, network pharmacies, pharmacists and other health plans Provide 60 days notice to prescribers, network pharmacies, pharmacists and other health plans CMS will review and approve modifications CMS will review and approve modifications For enrollees, must provide either: For enrollees, must provide either: Direct written notice at least 60 days prior to date the change becomes effective, or Direct written notice at least 60 days prior to date the change becomes effective, or At the time a refill is requested, provide a 60 day supply of drug and written notice At the time a refill is requested, provide a 60 day supply of drug and written notice

17 Exception Requests Enrollees or their authorized representative may request an exception when: A non-formulary drug is prescribed and is medically necessary A non-formulary drug is prescribed and is medically necessary The cost-sharing status of a drug an enrollee is using changes The cost-sharing status of a drug an enrollee is using changes A drug covered under a more expensive cost-sharing tier is prescribed because the drug covered under the less expensive cost-sharing tier is medically inappropriate A drug covered under a more expensive cost-sharing tier is prescribed because the drug covered under the less expensive cost-sharing tier is medically inappropriate The enrollee is using a drug that has been removed from the formulary The enrollee is using a drug that has been removed from the formulary Ensures access to medically necessary Medicare D covered prescription drugs Ensures access to medically necessary Medicare D covered prescription drugs

18 Cost and Utilization Controls Prior Authorization Prior Authorization Step Therapy Step Therapy Quantity Limits Quantity Limits Frequency Limits Frequency Limits Generic Substitution Generic Substitution Drug Utilization Review-Prospective and Retrospective Drug Utilization Review-Prospective and Retrospective Tiered formulary design Tiered formulary design

19 Appeal Processes 1 st Step: Plan Re-determination 1 st Step: Plan Re-determination 7 days to respond 7 days to respond 72 hours, if expedited 72 hours, if expedited 2 nd Step: IRE Reconsideration 2 nd Step: IRE Reconsideration Independent Review Entity (IRE), CMS contractor, which reviews plan redeterminations Independent Review Entity (IRE), CMS contractor, which reviews plan redeterminations 7 days to respond 7 days to respond 72 hours, if expedited 72 hours, if expedited 3 rd Step: Administrative Law Judge 3 rd Step: Administrative Law Judge Must satisfy minimum amount requirement Must satisfy minimum amount requirement 4 th Step – Medicare Appeals Council 4 th Step – Medicare Appeals Council 5 th Step – Federal District Court 5 th Step – Federal District Court

20 Characteristics of Medicare Population Percentage of Total Medicare Population Nursing Home/Assisted Living Resident Under Age 65 & Disabled Dual Eligible Cognitive Impairment Rural Fair to Poor Health 1+ Functional Limitation Low-Income < 150% FPL Excludes Part A only beneficiaries Sources: Kaiser Family Foundation based on Medicare Current Beneficiary Survey, and Low income estimate from CBO, July 2004

21 Issues for the Duals What happens, when they … Ignore notices regarding Rx changes Ignore notices regarding Rx changes Don’t know how to use their assigned plan Don’t know how to use their assigned plan Learn the drug Medicaid paid for isn’t covered by their new Medicare plan Learn the drug Medicaid paid for isn’t covered by their new Medicare plan Have higher out of pocket costs for copays, non - covered drugs Have higher out of pocket costs for copays, non - covered drugs

22 Formularies – Transition Process Drug plans that want to serve Medicare beneficiaries enrolling in the new prescription drug benefit next year must meet strict standards to assure that older and disabled Americans will be able to make the transition to the new coverage smoothly. Mark B. McClellan, March 16, 2005, CMS Press Release Plans have flexibility, but CMS guidance expects: –1-time transition supply for new enrollees Ambulatory 30 days Nursing Home 90 to 180 days –1-time temporary emergency supply for others For changes in level of care (nursing home, acute hospital, hospital, etc.) or during appeals

23 Indiana Medicaid: Specific Approach for Dual Eligibles Indiana Medicaid will continue to cover Medicare D excluded drugs to the extent that they are covered in the Medicaid program today. Current dual population estimated at 100,000 lives. Indiana Medicaid will continue to cover Medicare D excluded drugs to the extent that they are covered in the Medicaid program today. Current dual population estimated at 100,000 lives. Examples: Examples: Over the counter drugs on the Indiana Medicaid formulary Over the counter drugs on the Indiana Medicaid formulary Agents for treating symptoms of cough/colds and prescription vitamins Agents for treating symptoms of cough/colds and prescription vitamins Barbiturates and benzodiazepines Barbiturates and benzodiazepines

24 “You choose a prescription drug plan and pay a monthly $35 premium. Okay, now it gets a little complex…” “You choose a prescription drug plan and pay a monthly $35 premium. Okay, now it gets a little complex…” - Reader’s Digest, April 2004 Everyone Agrees: It’s Difficult to Comprehend all the Details

25 Do Not Enroll in Part D Plan No Rx Coverage (late enrollment penalty) “Creditable” Employer Plan (no low-income subsidies) Medigap Coverage (but not “creditable” = late enrollment penalty) Enroll in Part D Plan Medicare Advantage HMO PPO (regional) Private Fee-for-Service Traditional Medicare Prescription Drug-Only Plan (PDP) Decisions to be Made: Premiums Covered Drugs Cost-Sharing Apply for Low-Income Subsidy If Dual Eligible Auto-Enrolled Social Security Medicaid If meet income and asset test, qualify for subsidy: Below 100% FPL ($9,570 in 2005) Below 135% FPL ($12,920 in 2005) Assets $6,000/single; $9,000/couple Below 150% FPL ($14,355 in 2005) Assets $10,000/single; $20,000/couple Medicare Beneficiary Decisions for Medicare Beneficiaries Source:

26 26 “ Unfortunately, you have what we call ‘no insurance.’ ”

27 Issues for Practicing Physicians Assisting beneficiaries with understanding the new coverage available Assisting beneficiaries with understanding the new coverage available Motivating patients to take action and apply for the benefit that comes closest to meeting their needs Motivating patients to take action and apply for the benefit that comes closest to meeting their needs Navigating multiple drug formularies Navigating multiple drug formularies Coordinating prior authorizations & appeals Coordinating prior authorizations & appeals Comprehending the ongoing changes that will likely occur Comprehending the ongoing changes that will likely occur

28 Medicare Prescription Drug Benefit Positive Effects Enhancement of existing Medicare benefit package Enhancement of existing Medicare benefit package Access to subsidized prescription drug coverage Access to subsidized prescription drug coverage Improved availability and compliance with treatment regimens Improved availability and compliance with treatment regimens Improved health and reduction of adverse health effects Improved health and reduction of adverse health effects

29 January 21, Final Rule Published January 21, Final Rule Published June 6 - Bid submission June 6 - Bid submission July - Finalization pharmacy contracts July - Finalization pharmacy contracts September 14 - PDPs announced September 14 - PDPs announced October 1 - Marketing begins October 1 - Marketing begins October 13 - Prescription Drug Plan Finder Tool rollout October 13 - Prescription Drug Plan Finder Tool rollout November 15 - Enrollment begins November 15 - Enrollment begins January 1, Benefit begins January 1, Benefit begins May 15, 2006 – Last day to enroll before late enrollment penalty May 15, 2006 – Last day to enroll before late enrollment penalty Medicare Prescription Drug Benefit Timeline

30 Sources of Information CMS Website CMS Website Medicare Medicare Social Security Administration Social Security Administration [Look under Medicare Outreach] [Look under Medicare Outreach] Kaiser Family Foundation Kaiser Family Foundation United States Pharmacopoeia (USP) United States Pharmacopoeia (USP)


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