Part Ds Low-Income Benefits: Theory and Reality Marc Steinberg, Families USA Health Action 2006 January 26, 2006 ** Washington, DC (202)

Low-Income Provisions Premiums and co-payments heavily subsidized Enrollment automatic for dual eligibles and some others (in theory) Voluntary enrollment for others

Dual Eligibles: Medicares Neediest 6.2 Million Full Dual Eligibles Qualify for Medicare based on age or disability Qualify for Medicaid based on income Poorer and sicker than average beneficiaries 60% live below poverty Medicaid covered Rx prior to January 1, 2006

Dual Eligibles v. Other Medicare Beneficiaries, 2002 source: Kaiser Family Foundation, based on CMS data

Dual and non-dual beneficiaries by race/ethnicity, 2002 source: MedPAC, 2005 Race/EthnicityNon-dual eligiblesDual eligibles White, non- Hispanic 84%55% Black, non- Hispanic 7%22% Hispanic6%15% Other3%8%

Dual eligible coverage Status/ Income2006 Co-paymentsInflator In InstitutionsNoneN/A Income up to 100% FPL $1 generics/ $3 non-generics Consumer Price Index Income over 100% FPL $2 generics/ $5 non-generics Drug price inflation Premiums: Avg. basic premium in region covered No copays after total drug costs reach $5,100 (in 2006)

Subsidy-eligible plans Subsidy equal to average BASIC benefit Limited choice: Florida: 43 PDPs, 6 full subsidy Maryland/DC: 47 PDPs, 15 full subsidy Different utilization patterns for duals may not be reflected in formularies

Changes from Medicaid for dual eligibles Higher co-pays in about half the states; indexed to inflation Co-pays not automatically waived Formularies with utilization management Duals can change plans monthly Some drugs not covered under Part D More restrictive appeals

Automatic enrollment of dual eligibles – The Theory Automatically assigned to low-cost standard plan in region before January 1, 2006 Random assignment for those who do not choose Right to change plans at any time Those in Medicare Advantage (MA) assigned to that MA-PD Plans should provide all current meds for 30 days during initial transition POS backup system

Automatic enrollment of duals – The Reality Conflict with retiree coverage Enrollment or subsidy info missing at pharmacy Transitional benefits limited or non- existent Little information on exceptions/appeals Data exchanges slow Plans unresponsive

Duals transition: Emergency response Many thousands dont get prescriptions Pharmacists give short-term fill 20+ states have filled gaps Reimbursement of states and individuals unclear

Non-dual Low-Income Coverage (Extra Help) Subsidy ASubsidy B Income 135% FPL150% FPL Assets $7,500 individual $12,000 couple $11,500 individual $23,000 couple Copays $2 generic / $ 5 non-generic in 2006 (indexed) 15% coinsurance to catastrophic maximum Premiums Avg. basic premium covered Sliding scale

Concerns for non-dual low- income beneficiaries Enrollment voluntary Must sign up for Extra Help Separate process than choosing plan Exception: Medicare savings programs Get subsidy automatically Enrollment into plan automatic after May 15 Major outreach needed – Social Security Administration is lead agency

Problems with subsidy enrollment Small Enrollment so far 1 mill/ million eligible Tough population to reach MSP experience: 60% enrollment typical SSA enrollment process Includes life insurance and in-kind income Slow processing Medicaid agencies not participating actively Contrary to law and expectation

Conclusion: Agenda for improvement Short term: make it work Correct enrollment for all low-income Transitional benefits – penalize plans Standardize exceptions and appeals Make states whole Smooth transition for future duals Long term: fix the program Liberalize / drop asset test for subsidy Protection for duals