REACH National Medicare Training Program Speaker Name Group Name Date

2 Medicare Modernization Act of 2003 Module 9

3 Medicare Today 41 million beneficiaries growing to over 62 million in 2020 $284 billion in expenditures growing to $898 billion in 2020 Need to adapt to new health care delivery models Need for supplemental coverage

4 Medicare Today Current commercial market: 70% in PPOs or POS plans 25% in HMOs 5% in fee-for-service Medicare market: 90% in fee-for-service 10% in Medicare Advantage plans

5 Clear Need For Reform People with Medicare want: –More choices and better benefits –Health care delivery options –Improved access to care

6 Medicare Modernization Act of 2003 (MMA) 2004 Drug discount card Medicare + Choice now Medicare Advantage Moratorium on therapy caps until 1/1/ Prescription drug plans Two new Medigap policies Part B deductible increases with premium 2005 Drug discount card New preventive services Part B deductible increases to $110

7 Session Topics Medicare-approved drug discount cards ( ) Medicare prescription drug plans (2006) New preventive services (2005) Medicare Advantage plans (2004) Increased access to care in rural America (2004) MMA demonstration projects (2004) Other important provisions

8 Session Topics Medicare-approved drug discount cards Medicare prescription drug plans New preventive services Medicare Advantage plans Increased access to care in rural America MMA demonstration projects Other important provisions

9 Medicare-Approved Drug Discount Cards Estimated savings of 15-30% on many drugs Effective June 2004 Temporary and voluntary “Medicare-Approved” seal Drug Discount Cards

10 Approved Drug Card Companies Decide which drugs to discount Decide pharmacy network Charge up to a $30 annual enrollment fee May offer mail order in addition to retail pharmacies Must have a customer service system with a toll-free number Drug Discount Cards

11 Enrolling In and Changing Cards Apply directly to card company Can enroll anytime Can change during Coordinated Election Period –November 15 - December 31, 2004 –Effective January 1, 2005 May change for special circumstances Drug Discount Cards

12 $600 Credit Provides immediate relief to certain people with lower incomes –No more than $12,569 for a single person –No more than $16,862 for a married couple –No asset limits –QMBs, SLMBs, and QIs deemed income-eligible Coinsurance based on income (5% or 10%) Cannot use for over-the-counter drugs Drug Discount Cards

13 Applying for $600 Credit Choose a discount card Apply to the company offering your card Can apply for credit at any time –Amount will be prorated in 2005 Unused amounts carry over to next year Need not reapply in 2005 Drug Discount Cards

14 Let’s meet Fred…. Has card with $600 credit Normally pays $100 retail XYZ Pharmacy Card offers negotiated price of $75 Fred pays coinsurance based on $75 –$75.00 x 5% = $3.75 Remainder is deducted from the $600 credit –$ $3.75 = $71.25 –$600 - $71.25 = $ credit remaining Drug Discount Cards

15 State Pharmacy Assistance Programs Can coordinate with the Medicare-approved drug discount card Can educate members with lower incomes on $600 credit Can pay coinsurance for lower-income members Can pay enrollment fee for lower-income members Drug Discount Cards

16 Session Topics Medicare-approved drug discount cards Medicare prescription drug plans New preventive services Medicare Advantage plans Increased access to care in rural America MMA demonstration projects Other important provisions

17 Medicare Prescription Drug Plans Available January 2006 Offered through private prescription drug plans (PDPs) Can be offered by Medicare Advantage plans Prescription Drug Plans

18 Eligibility and Enrollment Must be entitled to Part A and/or enrolled in Part B Enrollment is voluntary Enrollment penalties for persons who wait –Exception for those covered under other comparable insurance Prescription Drug Plans

19 Eligibility and Enrollment Initial enrollment –November 15, May 15, 2006 Subsequent years –Open enrollment November 15 - December 31 Will not be enrolled automatically –Exception: Medicaid recipients with drug coverage Prescription Drug Plans

20 Your Costs in 2006 Generally about a $35 monthly premium $250 deductible 25% of drug costs from $250 to $2,250 –Medicare pays 75% 100% of drug costs from $2,250 to $5,100 After you spend $3,600, Medicare pays approximately 95% Prescription Drug Plans

21 Let’s look at a case study Aaron has a Medicare prescription drug plan and takes five prescription drugs. His Medicare prescription drug plan includes all of his drugs in its formulary. Aaron has paid his $35 premium from January through May and has met his $250 deductible. How much in drug costs does Aaron have to incur before he reaches the catastrophic limit? Prescription Drug Plans

22 Lower-Income Assistance Group 1 –Full benefit dual eligibles with incomes below 100% FPL Group 2 –Full benefit dual eligibles and non-dual eligible beneficiaries with incomes of 100%-135% FPL and limited resources ($6,000 per individual and $9,000 married couple) Group 3 –Beneficiaries with incomes of 135%-150% FPL and limited resources ($10,000 individual and $20,000 married couple) Prescription Drug Plans

23 Lower-Income Assistance Prescription Drug Plans Group 1 (below 100% FPL) Group 2 ( % FPL) Group 3 ( % FPL) Premium $35/month $0 Sliding scale based on income Deductible $250/year $1/$3 co-pay$0$50 Coinsurance up to $3,600 out of pocket $1/$3 co-pay$2/$5 co-pay15% coinsurance Catastrophic 5% or $2/$5 co-pays $0 $2/$5 co-pay

24 Electronic Prescribing Medication errors reduced Prescription automatically transmitted to pharmacy Standard to be established and piloted in 2006 Will alert to adverse drug interactions and less costly alternatives Will be voluntary for doctors Prescription Drug Plans

25 Session Topics Medicare-approved drug discount cards Medicare prescription drug plans New preventive services Medicare Advantage plans Increased access to care in rural America MMA demonstration projects Other important provisions

26 New Preventive Services “Welcome to Medicare” physical exam Diabetes screening tests Cardiovascular screening blood tests New Preventive Services

27 “Welcome to Medicare” Physical Exam Height and weight measurement Blood pressure Electrocardiogram (EKG) Education and counseling Referral for other preventive services Coverage for a limited time New Preventive Services

28 Diabetes Screening Effective January 1, 2005 For persons at risk—risk factors include High blood pressure High cholesterol Overweight Family history of diabetes Over 65 years of age Includes fasting plasma glucose test Frequency limits apply No deductible or coinsurance New Preventive Services

29 Cardiovascular Screening Effective January 1, 2005 Blood tests for early detection of cardiovascular disease Cholesterol levels Frequency limits apply No deductible or coinsurance New Preventive Services

30 Session Topics Medicare-approved drug discount cards Medicare prescription drug plans New preventive services Medicare Advantage plans Increased access to care in rural America MMA demonstration projects Other important provisions

31 Medicare Advantage Plans Better benefits and more choices Improved access to doctors and care for people with Medicare Reduced premiums and copays or improved benefits PFFS enrollees will pay more for going to non-contract providers Medicare Advantage Plans

32 Specialized Plans Certain MA plans can limit enrollment to special needs population –Institutionalized beneficiaries –Dual eligibles –Possibly other “special needs” groups Design options to best serve these populations Medicare Advantage Plans

33 New Plan Options New plan choices in 2006 Most important new option—Regional Preferred Provider Organizations (PPO) Medicare Advantage Plans

34 Session Topics Medicare-approved drug discount cards Medicare prescription drug plans New preventive services Medicare Advantage plans Increased access to care in rural America MMA demonstration projects Other important provisions

35 Helping Rural America Improve beneficiaries’ access to quality doctors, ambulance service, and home health care where they live Nearly $25 billion in increased reimbursement Access to Care in Rural America

36 Payment Increases to Hospitals Standardizes reimbursement for hospitals Modifies disproportionate share hospital payments Increases payment to Critical Access Hospitals Access to Care in Rural America

37 Session Topics Medicare-approved drug discount cards Medicare prescription drug plans New preventive services Medicare Advantage plans Increased access to care in rural America MMA demonstration projects Other important provisions

38 MMA Demonstration Projects Competitive Acquisition Demonstration for Clinical Labs Demonstration Project for Use of Recovery Audit Contractors Rural Hospice Demonstration Project Rural Community Hospital Demonstration Frontier Extended Stay Clinic Demonstration Demonstration Projects

39 MMA Demonstration Projects Demonstration of Case-Mix Adjusted Payment for Renal Dialysis Services Demonstration Project for Coverage of Certain Prescription Drugs and Biologicals Medicare Health Care Quality Demonstration Project Demonstration Project for Consumer-Directed Chronic Outpatient Services Demonstration Projects

40 MMA Demonstration Projects Medicare Care Management Performance Demonstration Demonstration of Coverage of Chiropractic Services Under Medicare Demonstration Project to Clarify the Definition of Homebound Demonstration Project for Medical Adult Day- Care Services Beneficiary Outreach Demonstration Program Demonstration Projects

41 Session Topics Medicare-approved drug discount cards Medicare prescription drug plans New preventive services Medicare Advantage plans Increased access to care in rural America MMA demonstration projects Other important provisions

42 Protections for Retirees Retirees concerned about losing their EGHP New law works to stabilize the erosion Employer must qualify for subsidy Subsidy will pay 28% of drug costs per beneficiary enrolled in EGHP –Of costs between $250 and $5,000 Other MMA Provisions

43 Appeals Process Reform Transfer of hearing functions Increase timeframes for decision-making Other MMA Provisions

44 Changes to Part B Deductible $100 since 1991 Increases to $110 in 2005 Updated based on Medicare expenditures, 2006 on Other MMA Provisions

45 Changes to Part B Premium Prior to MMA, standard Part B premium Current premium is based on 25% of program spending in a year Beginning 2007 through 2011, premium based on beneficiary income No effect if income below $80,000 Other MMA Provisions

46 Therapy Limits Limits created by the BBA 1997 Moratorium effective until 2003 Moratorium reinstated through 2005 Other MMA Provisions

47 Health Savings Accounts Tax-advantaged savings accounts for medical expenses Available to anyone under 65 Must have a high deductible health plan –At least $1,000 deductible for individual –At least $2,000 deductible for family Yearly contributions are limited Distributions for medical expenses not taxed Other MMA Provisions

48 Communicating with the Public Medicare beneficiaries Health care providers Governors, state legislators, and local officials Congress Advocates Other stakeholders Other MMA Provisions

49 For More Information Visit Call MEDICARE ( ) –TTY Call a SHIP counselor –See Medicare & You handbook for phone number Visit

REACH National Medicare Training Program Thank you!