Presentation on theme: "The Medicare Part D Prescription Drug Benefit"— Presentation transcript:
1The Medicare Part D Prescription Drug Benefit Understanding the Formulary Requirements and Related ImplicationsWelcome and thank you for allowing me to discuss the formulary implications related to the Part D implementation. My name is Mike Sharp, I am a pharmacy consultant for the Indiana Medicaid program. I am suspecting that a great deal of this presentation will be review for many of you. Given this is the case, I will move the through the presentation fairly quickly in lieu of the group responding to the questions you may have.Michael Sharp, R.Ph, Pharmacy ConsultantOffice of Medicaid Policy and Planning, State of Indiana
2Areas of FocusBasic benefit principles, fundamental formulary requirements and CMS review processesExceptions/Appeals overviewFormulary implications for dual-eligibles and the Indiana Medicaid approachImplementation considerations, timeline and recommended resourcesToday, I will focus on a brief overview of the following areas-Go to slide
3Medicare Coverages Part A Hospital insurance for inpatient stays, some skilled nursing facility care, hospice care and home health carePart BMedical insurance for physician services, outpatient hospital care, durable medical equipment, some medical supplies and selected drugsPart CMedicare Advantage (MA-PD) for benefits through private health plans – old Medicare+ChoicePart DPrescription drug benefit for persons eligible for Part A or enrolled in Part BWe are all familiar we Part A and Part B. Coverage does not change at all with respect to these coverages. There has been a great deal of discussion with respect to potential overlap between Part B and D. Part B drugs continue to remain part B drugs until the benefits are changed through legislation.Prescription drug coverage will be provided by plans in partipating in Part C and Part D. The difference between these is that a Part D PDP is a fee-for service model which only manages a members prescription drug coverage, whereas MA-PDs provide complete medical coverage for the patient including prescription drug coverage. Part C plans may have specific benefit packages available for those who choose not to participate in the prescription program.
4Medicare Prescription Drug Benefit, 2006 and Beyond Beginning in 2006, beneficiaries have choice of: Traditional Medicare, with access to private drug-only plans (PDPs)Medicare Advantage (MA-PD) plans for Medicare benefits and Rx drugsNew 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 constraintsPremium and cost-sharing subsidies for low-income beneficiaries with incomes up to 150% poverty and modest assetsMedicaid will no longer pay for Medicare D covered drugs after December 31, 2005First of all, this benefit is a massive undertaking. A benefit is being made available to a population that has either had a different benefit in place or no drug benefit at all. Here are a few basics that I felt were important to share. I personally find that I learn something new every day and guidance clarifications continue to be released by CMS as questions arise.Go to 1st two bullets on slideGrace and the others will presenting further information on beneficiary subsidies so I will not discuss here.For those members who are eligible for Medicare and Medicaid, commonly referred to as dual eligibles, Medicaid will no longer be paying for Medicare Part D covered drugs. I will discuss this further later in the presentation.
5Medicare Prescription Drug Plans Must offer basic drug benefitStandard benefitMay offer supplemental benefitsAlternative BenefitEnhanced benefitCan be flexible in benefit designMay look different than standard benefitMay have different co-pay or co-insuranceCannot change actuarial equivalenceMedicare prescription drug plans, or PDPs, must offer a basic drug coverage that we call a standard benefit. They may choose to offer supplemental benefits through enhanced alternative coverage for an additional premium.The PDPs have flexibility in how they design their prescription drug coverage. For example, they can establish a formulary to designate specific drugs that will be available within each class of therapeutic medications, or they can have cost-sharing structures other than the standard benefit structure.The coverage variances across the various PDP’s will obviously present additional complexity that will require additional comprehension.
6Part D Sponsors – Risk-Bearing Entities Prescription Drug Plans (PDPs)Pharmacy Benefit ManagersPrivate Insurance CompaniesMedicare Advantage-Prescription Drug (MA-PDs)Must offer at least 1 option for Rx coverageMay offer plans with no drug coverage for beneficiaries who decline Part D coverageMay offer Special Needs Plans, focusing on Duals & selected diagnosesI want to make it clear that the Medicare Part D benefit is provided by risk bearing plans. The benefit is, by all means, an insurance vehicle. These plans have no intent on losing money. There is a high level of risk for these plans, depending on the population characteristics of the members that voluntarily enroll or auto-enrolled in the plans.Go to slide for brief overview
7Formulary Coverage Fundamentals CMS says “clinically appropriate medications, at lowest possible cost”Formularies must not discriminate against:Individuals with HIV/AIDS, mental health and other cognitive disordersThe Dual eligiblesCMS utilizes the USP formulary classification model as the minimum benchmark for formulary appropriatenessUSP model consists of 146 therapeutic classifications and related pharmacologic categoriesPlans must accommodate all medically necessary medications at all levels of careSlide first,The USP formulary classification model is comprehensive and serves as the minimum threshold for plan formularies.(I have provided documentation for your review on the USP model-these were handed out earlier)The basic premise here is that plans may not discriminate for any reason whatsoever• Guaranteed issue – Prescription drug plans and the Medicare Advantage plans generally have to accept all eligible enrollees who reside in their service area, regardless of age or health status.• Uniform benefits and premiums –Plans must provide all enrollees with the same benefits and charge a uniform premium.
8Medicare Prescription Covered Drugs Prescription drugs, biologicals and insulinMedical 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 useVaccines not covered by Part BViagra, Levitra and CialisBrand 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.A covered drug would include prescription drugs, biological products, and RX/OTC insulin. Medical supplies associated with the injection of insulin, such as syringes, needles, alcohol swabs, and gauze, are covered. (Used needle containers are not covered insulin supplies.)A Medicare-covered prescription drug must be available only by prescription, approved by the Food and Drug Administration (FDA), used and sold in the United States, and used for a medically accepted indication. The indications does not have to be the approved, labeled indication IF the indication it is being used for is medically accepted.Go to slide for Vaccines and a special reference to the erectile dysfunction agents which are somewhat controversial in terms of coverage policy.There will be brand name and generic drugs on each formulary, however, multi-source drugs with equivalentally rated generics do not have to be included on the formulary. Undoubtedly, plans will place emphasis on high utilization of generic drug products.Not all “covered drugs” eligible for Medicare D coverage will be covered by the PDP or MA-PD plan. I prefer to consider medications in three categories. Medicare D covered drugs are either Formulary drugs or non-formulary drugs and those that remain after that are considered Medicare D excluded drugs. I will address the excluded drugs shortly.
9Formulary Requirements Plan formulary must be developed by a Pharmacy and Therapeutics CommitteeFormulary 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:Each plan will develop their formulary and are required to meet certain standards. The formularies are then submitted to CMS electronically and reviewed via a formulary management review tool. The formulary must include drugs in each therapeutic category and pharmacologic class of covered drugs per using the USP model as a baseline. (Category or class mean the same – depends on classification system used by Plan.)CMS’ expectations are that best practice formularies contain all or substantially all the drugs within the following classes: antidepressants, antipsychotics, anticonvulsants, antiretrovirals, immunosuppressants, and antineoplastics. Following common best practices, CMS will check to see that beneficiaries who are being treated with these classes of medications have uninterrupted access to all drugs in that class via formulary inclusion, utilization management tools, or exceptions processes. I will not attempt to define the term “access”. Each one of us probably have a different view of what the term actually means.Recent conversations with CMS indicate that they will allow utilization controls if a patient is “new” to a specific therapy contained within 5 of the 6 classes, with antiretrovirals being the exception.When medically necessary, beneficiaries should be permitted to continue utilizing a drug that is providing clinically beneficial outcomes. In cases where practices may deviate from the above, plans must provide justification to support their utilization control practices.Please note exceptions to 2 drugs per class rule: if one is clinically superior or only one drug availableNote specific exceptions. Celexa vs Lexapro,AntidepressantsAntipsychoticsAnticonvulsantsAntiretroviralsAntineoplasticsImmunosuppressants
10Part D Drug Exclusions Drugs for Anorexia, weight loss, or weight gain FertilityCosmetic purposes or hair growthSymptomatic relief of cough and coldsPrescription vitamins and mineral productsExcept prenatal vitamins and fluoride preparationsNon-prescription (OTC) drugs*, with the exception of OTC insulinBarbituratesBenzodiazepinesOutpatient 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.Recall earlier that I mentioned drugs that are deemed to be excluded from the Medicare D benefit. The drugs excluded from Medicare prescription drug coverage are the same drugs that were excluded under the transitional Medicare-approved drug discount cards. These drugs are excluded by statute. These include:Go to slideGo to slide. NoteDrugs used for wasting syndromes or morbid obesity may be included on the PDP formulary.
11Part D Drug Exclusions (cont) Part A Prescriptions– In skilled nursing homes – up to 100 day stayRelated to the terminal illness for hospice patientsPart B Outpatient DrugsDurable Medical Equipment Drugs (e.g., inhalation therapy, insulin w/pumps & some chemotherapeutics)Immunosuppressive DrugsHemophilia Clotting FactorsSelected Oral Anti-Cancer DrugsSelected Oral Anti-Emetic Drugs, up to 48 hrs after chemotherapy administrationErythropoietin for persons on dialysisIntravenous Immune Globulin, provided in the homeTo continue with Part D exclusions, we al must consider the drugs covered under Medicare Part A or Part B are not covered and should not be billed through Part D mechanisms.Go to slide…these include
12P&T Committee: Requirements Membership includes the following:The majority are practicing physicians and pharmacists.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.CMS provides extensive guidance on the expectations surrounding the composition and activities of the P&T committeeLets step back and provide a little more background on the P & T Committee.The majority are practicing physicians and pharmacists.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.CMS has chosen NOT to define what an “expert” in the care of the disabled and elderly it. At this point, it is left up to the Plans.Formulary protections – As I mentioned earlier, plan formularies must include at least two drugs from every therapeutic category and class, with only a few exceptions. They must also develop the formulary with the help of a pharmacy and therapeutic committee consisting of practicing pharmacists, physicians, and experts in geriatric and disabled care, using best practices that have worked in prescription drug coverage for seniors and beneficiaries with a disability. This committee is to use best scientific evidence on drug safety and efficacy, including side effects, to enhance quality while controlling costs.
13Formulary Review: Rationale 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, andFormulary design does not discriminate or substantially discourage enrollment of certain groupsMedicare DPrinciple #1 – Rely on Existing Best Practices: CMS’ review will rely on widely best practices for existing drug benefits serving millions of seniors and people disabilities, to ensure appropriate access for Medicare beneficiaries.Principle #2 -- Provide Access to Medically Necessary Drugs: CMS will require plans provide access to Part D drugs determined to be medically necessary.Principle #3 -- Flexibility: CMS will allow plans to be flexible in their benefit promote real beneficiary choice while protecting beneficiaries from discrimination.Principle #4 – Administrative Efficiency: CMS will develop a streamlined process effective reviews of plan offerings within a compressed period of time.
14Formulary Review: CMS Validations Checks for appropriate utilization management strategiesChecks for two drugs per USP category and classChecks for Key Drug Types as defined by USPChecks for the most common drugs used in the LTC populationChecks “all or substantially all” requirementCMS has develop a fairly sophisticated processes for reviewing plan formularies. Plans are required to submit their formulary electronically via an NDC based format that CMS imports into a health plan management system. Utilization control mechanisms are reviewed as well as an automated formulary review by comparing the formulary file submitted to that of the USP. CMS reviews and discusses outliers with the plan prior to approving the plan initially, as well as an ongoing formulary changes.I consider this to be an added safeguard that is not currently taking place in the private sector.If you reference the USP document I provided, you will see the various USP categories and classes in addition to the Key Drug types.Looking for among other things:appropriate variety of medsnon-discriminatory designappropriate tiering. Possibility of 10 tiers but expect on average.
15Formulary Considerations Safety and EfficacyCost-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.*The federal government can’t negotiate or mandate pharmacy payment rates or manufacturer rebate levelsIn summary, the PDP’s and MA-PDs will be relying on the same P&T committee practices that occur today. Formulary development and utilization management strategies will continously undergo a rigorous review by CMS, thus resulting in assurances that plans provide a benefit that meets the intent of the legislation.As a side note of interest. The federal government is not permitted to be involved in rate setting or rebate determinations.
16Provision of Notice Regarding Formulary Changes Prior to removing/changing drug from formulary the plan must:Provide 60 days notice to prescribers, network pharmacies, pharmacists and other health plansCMS will review and approve modificationsFor enrollees, must provide either:Direct written notice at least 60 days prior to date the change becomes effective, orAt the time a refill is requested, provide a 60 day supply of drug and written noticeFormularies will change from time to time. P&T committees must meet at least quarterly and review newly approved drugs within 90days. A formulary status decision must be made within 6 months after the drug has been on the US market.The Plans must provide 60 days notice to CMS, prescribers, network pharmacies, and pharmacists when formulary or tier change is likely to occur, the pharmacy will likely be authorized to fill a 60 day supply of medication for the patient.Traditionally, notifications of this nature have largely been ignored, and I would suspect this will continue, particularly if the Indiana/Kentucky regions ends up with a multitude of available plans.
17Exception RequestsEnrollees or their authorized representative may request an exception when:A non-formulary drug is prescribed and is medically necessaryThe cost-sharing status of a drug an enrollee is using changesA drug covered under a more expensive cost-sharing tier is prescribed because the drug covered under the less expensive cost-sharing tier is medically inappropriateThe enrollee is using a drug that has been removed from the formularyEnsures access to medically necessary Medicare D covered prescription drugsThis slides depicts situations where CMS has determined that an exception request process must be available. It is important, as a health care provider, to be aware of the situations that warrant the pursuance of an exception request. These are also referred to as initial coverage determinations.Here are some specific situations that would warrant the pursuance of an exception request.Go to slideThe exception process is a type of coverage determination that is unique to the drug benefit, was created to ensure enrollees receive the drugs they need. An exception process allows an enrollee to request, under certain conditions, a non-formulary drug to be covered, or a non-preferred drug to be covered under the terms applicable for a preferred drug.
18Cost and Utilization Controls Prior AuthorizationStep TherapyQuantity LimitsFrequency LimitsGeneric SubstitutionDrug Utilization Review-Prospective and RetrospectiveTiered formulary designAs I mentioned earlier, these prescription drug plans are “at risk”. The majority of plans will be utilizing pharmacy benefit management tools that are identical to those utilized today. These include: reference slide.Some of these tools will require prescribers and pharmacists to contact the PDP to obtain prior approval prior to paying for a particular drug. At this point in time, it is not possible to determine how difficult the overrides will be able to obtain. I would speculate that the majority of plans will be extremely flexible out of the gate. Again, these processes will be very similar to those that prescribers and pharmacists must go through today in the commercial and medicaid arena.
19Appeal Processes 1st Step: Plan Re-determination 7 days to respond 72 hours, if expedited2nd Step: IRE ReconsiderationIndependent Review Entity (IRE), CMS contractor, which reviews plan redeterminations3rd Step: Administrative Law JudgeMust satisfy minimum amount requirement4th Step – Medicare Appeals Council5th Step – Federal District CourtGiven the fact that cost and utilization controls exist, it is guaranteed that PA processes will be in place, and from time to time, these PA determinations will not be acceptable.In instances where grievances, coverage determinations or appeals are necessary, new drug benefit includes rights and protections similar to those beneficiary rights and protections assured in other parts of Medicare, so all beneficiaries have access to medically necessary treatments.Plans are required to have a timely and straightforward grievance, coverage determination and appeals processes that provide plan enrollees with access to medically necessary Medicare-covered drugs. Physicians and appointed representatives, such as a family member, can help beneficiaries file a grievance or request a coverage determination or an appeal. As required in the MMA, the enrollee or an appointed representative can file an external appeal if the response to the initial exception request is not acceptable. As an initial step, enrollees may request their plan to make a coverage determination in certain circumstances, such as when their plan does not pay for a Part D drug.
20Characteristics of Medicare Population Nursing Home/Assisted Living ResidentUnder Age 65 & DisabledDual EligibleCognitive ImpairmentRuralFair to Poor Health 1+ Functional LimitationLow-Income < 150% FPL Excludes Part A only beneficiariesThis slide is very informative. It lists the various characteristics of the Medicare population that will be exposed to the new drug benefit. I want to focus on the dual eligible population here. These are folks that have both Medicare and Medicaid. There are approximately 7 million dual eligibles across the country and around 100,000 duals residing in Indiana who currently have their drug coverage provided by Medicaid.Percentage of Total Medicare PopulationSources: Kaiser Family Foundation based on Medicare Current Beneficiary Survey, and Low income estimate from CBO, July 2004
21Issues for the Duals What happens, when they … Ignore notices regarding Rx changesDon’t know how to use their assigned planLearn the drug Medicaid paid for isn’t covered by their new Medicare planHave higher out of pocket costs for copays, non - covered drugsThe Medicare Part D benefit is a major change for the dual eligibles. If there is a positive here, it is that they will be automatically enrolled into a PDP if they do not make a choice of one. The coverage will not be as generous as what is supplied by Medicaid today. The group here today has discussed and will discuss further the communication efforts taking place to inform and educate these recipients and the health care community. What happens when……Refer to slideRemember the formulary classifications from earlier…..formulary, non-formulary, excluded?
22Formularies – Transition Process Plans have flexibility, but CMS guidance expects:1-time transition supply for new enrolleesAmbulatory 30 daysNursing Home 90 to 180 days1-time temporary emergency supply for othersFor changes in level of care (nursing home, acute hospital, hospital, etc.) or during appealsThe non-covered drus will present transition issues that will be extremely critical to the initial success and uptake of the benefit. CMS has issued guidance to assure that transitional and “emergency” supplies be made available to recipients of the benefit.Refer to slide for supply numbersDrug 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
23Indiana 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.Examples:Over the counter drugs on the Indiana Medicaid formularyAgents for treating symptoms of cough/colds and prescription vitaminsBarbiturates and benzodiazepinesThe State of Indiana will assure that the 100,000 or so IN dual eligibles continue to receive drugs that are excluded by Medicare D to the extent that the medications are currently covered in the FFS Medicaid program today. These medications include medications such as: See slide
24Everyone Agrees: It’s Difficult to Comprehend all the Details “You choose a prescription drug plan and pay a monthly $35 premium. Okay, now it gets a little complex…”- Reader’s Digest, April 2004I found this interesting quote and thought it was appropriate for this presentation. I think we can all understand what the benefit is, but now, the trick is getting these folks signed up.
25Decisions for Medicare Beneficiaries Medicare BeneficiaryDo Not Enroll in Part D PlanEnroll in Part D PlanMedicare AdvantageHMOPPO (regional)Private Fee-for-ServiceTraditional MedicarePrescription Drug-Only Plan (PDP)Apply for Low-Income SubsidyNo Rx Coverage (late enrollment penalty)If Dual Eligible Auto-Enrolled“Creditable”Employer Plan(no low-incomesubsidies)Social SecurityMedicaidDecisions to be Made:PremiumsCovered DrugsCost-SharingAnytime I see a slide like this, I get a little concerned. These folks have lots of choices and decisions to make. They will come to their physician, nurse and their pharmacist for advice.Information – Plans must provide a wide range of information to beneficiaries, including how the formulary works, what the plan benefits are, and how the plan’s medication therapy management program works. They must also provide information on the grievance, coverage determinations, reconsiderations, exception process, as well as appeals rights and procedures. Information on how the plans have performed in this area must be provided, upon request. Medicare will also provide standardized information on drug payments, participating pharmacies, less expensive generic medicines and other information that can be used by beneficiaries to get the most out of their drug coverage. Medicare support will be available through MEDICARE customer service line, personal counseling from state health insurance assistance programs (SHIPs) and other beneficiary support organizations and the Internet.If meet income and asset test, qualify for subsidy:Medigap Coverage(but not “creditable”= late enrollment penalty)Below 100% FPL ($9,570 in 2005)Below 135% FPL ($12,920 in 2005) Assets $6,000/single; $9,000/coupleBelow 150% FPL ($14,355 in 2005) Assets $10,000/single; $20,000/coupleSource:
26“ Unfortunately, you have what we call ‘no insurance.’ ” This is exactly what you don’t what to happen. Remember the Part D benefit is an insurance benefit. It is extremely valuable to have when a patient has the need be on several medications chronically. It provides a financial safeguard.
27Issues for Practicing Physicians Assisting beneficiaries with understanding the new coverage availableMotivating patients to take action and apply for the benefit that comes closest to meeting their needsNavigating multiple drug formulariesCoordinating prior authorizations & appealsComprehending the ongoing changes that will likely occurPhysicians and pharmacies will be caught in the middle, time is already constrained. Encourage the use of a single pharmacy, with this benefit, there is little incentive to price shop, assess current drug history by asking patient to get pharmacy printouts of past purchases. Motivate these folks or their caregivers to understand the benefits available and get signed up.There is no question in my mind that prescribers and pharmacists will spend more time navigating drug formularies, seeking PA, and explaining the coverage policies to these beneficiaries.Understanding the fundamental elements of the benefit and using the resources some of the others will present today will go along way in making your life easier as a practitioner. Associates and staff should also become knowledgeable. I encourage pharmacies and physician practices to have a Medicare Part D in house “expert”. The more we know and understand, the more we can share with those who the program intends to benefit.
28Medicare Prescription Drug Benefit Positive Effects Enhancement of existing Medicare benefit packageAccess to subsidized prescription drug coverageImproved availability and compliance with treatment regimensImproved health and reduction of adverse health effectsThe last three slides list a few of the obvious positive benefits of the program, some important timeframes to be aware of, and some resources to get more additional information. In the interest of time and duplicity, I will conclude my portion of the presentation at this time. I hope you have found the information informative and look forward to the questions you may have.Thank you.
29Medicare Prescription Drug Benefit Timeline January 21, Final Rule PublishedJune 6 - Bid submissionJuly - Finalization pharmacy contractsSeptember 14 - PDPs announcedOctober 1 - Marketing beginsOctober 13 - Prescription Drug Plan Finder Tool rolloutNovember 15 - Enrollment beginsJanuary 1, Benefit beginsMay 15, 2006 – Last day to enroll before late enrollment penaltyThese are some very important timelines that will be of interest you.June 6 - Formularies approved or disapprovedCMS is reviewing all PDP marketing materials for approval in June 2005.July 15 - final contracts with retail pharmacies in network to be obtained.August 1 - final retail pharmacy network to be transmitted.We were anticipating that we would be made aware of the specific plans in the Indiana and Kentucky region this week. However, CMS has indicated that the official announcement will be made next week.October 13 - Prescription Drug Plan Finder ToolPDPs can begin marketing in October 2005.Enrollment begins November 15January 1, 2006 – Benefit begins
30Sources of Information CMS Website1-800-MedicareSocial Security Administration[Look under Medicare Outreach]Kaiser Family FoundationUnited States Pharmacopoeia (USP)