1. 2009 Updates to Medicare Part D By Carly J. Paoli, MPH 13 March 2009 Managed Care Rotation Pro Pharma

2. Objectives  Review Medicare as a health plan How does Part D fit in? What does(n’t) Part D cover? Who are dual eligibles? What is LIS?  Explain the Updates  Predict the impact of the changes

3. What is Medicare?  A public health insurance program administered by the US government  Eligible participants: US citizens or permanent legal residents (≥5 continuous years in the US) 65 years or older (or those who are disabled) Who receive social security

4. Parts to Medicare  Part A Hospital care No additional fees  Part B Medical care Optional coverage Premium taken out of SS check  Part C Gap care (e.g Medicare Advantage) Optional coverage Additional fees according to the plan selected  Part D Prescription drug coverage Optional coverage Fees vary according to the plan

5. Part D  Enacted as part of the Medicare Prescription Drug, Improvement and Modernization Act (MMA) in 2003 Went into effect on 1/1/2006  Paid for by the US government but administered by private plans through subsidies  Patients ca choose either: A stand alone prescription drug plan (PDP) OR A Medicare Advantage prescription drug (MA-PD) plan that would package their Part D benefits into their pre-existing Medicare Advantage plan (Part C)

6. Part D  Covers prescription medications according to each plan’s formulary  Part D has some excluded drugs that no plan will be reimbursed for  Part D does not cover drugs that are already covered by Part B Some vaccines (e.g influenza & pneumoccocal) Home infusion drugs (e.g. morphine & anti- biotic infusions)

7. Timeline  October 1, 2008 Medicare Part D prescription drug plan marketing activities can begin  November 15 to December 31, 2008: Annual Coordinated Election Period  January 1, 2009: 2009 Medicare Part D plan becomes effective  January 1 to March 31, 2009 Coordinating Special Enrollment Period (or SEP)  This special period is available for those people who enrolled into a Medicare Advantage Plan with Prescription Drug coverage (MA-PDs) and now wish to disenroll back to original Medicare coverage and a Prescription Drug Plan

8. 5% 95% Catastrophic Benefit 100% 75%25% $295 Deductible Monthly Premium $2,700.01 - $6,153.75 $295.01 - $2,700 $.01 - $295 Over $6,153.75 Drug Costs Beneficiary Costs Part D Plan Part D Standard Benefit No Extra Help (LIS)

9. 2006200720082009 Deductible$250$265$275$295 Initial Coverage Limit$2250$2400$2510$2700 Total Covered Part D Drug Out-of-Pocket Spending including the Coverage Gap $5100$5451$5726 $6153 Out-of-Pocket Threshold$3600$3850$4050$4350 Catastrophic Coverage Benefit: Generic/Preferred Multi-Source Drug$2.00$2.15$2.25$2.40 Other Drugs$5.00$5.35$5.60$6.00 Part D Standard Benefit Design Parameters

10. Dual Eligibles Part D Full Benefit Dual Eligible Parameters:2006200720082009 Copayments for Institutionalized Beneficiaries$0.00 Maximum Copayments for Non-Institutionalized Beneficiaries Up to or at 100% FPL: Up to Out-of-Pocket Threshold Generic/Preferred Multi-Source Drug$1.00 $1.05$1.10 Other$3.00$3.10 $3.20 Above Out-of-Pocket Threshold$0.00 Over 100% FPL: Up to Out-of-Pocket Threshold Generic/Preferred Multi-Source Drug$2.00$2.15$2.25$2.40 Other$5.00$5.35$5.60$6.00 Above Out-of-Pocket Threshold$0.00

11. Low Income Subsidy (LIS) Part D Non-Full Benefit Dual Eligible Full Subsidy Parameters: 2006200720082009 Resources < $6,290 (individuals) or < $9,440 (couples) Maximum Copayments up to Out-of-Pocket Threshold Generic/Preferred Multi-Source Drug$2.00$2.15$2.25$2.40 Other$5.00$5.35$5.60$6.00 Maximum Copay above Out-of-Pocket Threshold$0.00 Resources between $6,290-$10,490 (individuals) or $9,440-$20,970 (couples) Deductible$50$53$56$60 Coinsurance up to Out-of-Pocket Threshold15% Maximum Copayments above Out-of-Pocket Threshold Generic/Preferred Multi-Source Drug$2.00$2.15$2.25$2.40 Other$5.00$5.35$5.60$6.00

12. Catastrophic Benefit Co- Pays 15%85% $60 Deductible Sliding Scale Premiums $60.01- $6,153.75 $.01 -$60 Over $6,153.75 Drug Costs Beneficiary Costs Part D Plan Part D Partial Extra Help (LIS) Lower Premiums Lower Deductible Lower Coinsurance No Doughnut Hole will vary

13. Facilities with Exceptions  Patients who are covered under the VA, Indian Health Services and other state programs should not to switch to Medicare Part D It is usually best for the patient to keep these benefits as long as he/she still qualifies b/c the coverage is typically better It is possible to have both benefits at the same time If that patient ever needs Medicare Part D in the future, he/she will not be penalized if signing up late

14. Compliance  As part of the MMA, all Part D plans are mandated to provide Medication Therapy Management (MTM) programs  MTM services do not have to be offered to all members but do have to offered to those members who have: Multiple chronic diseases Multiple covered Part D medications Likelihood of incurring annual costs exceeding $4,000 for covered part D drugs

15. 2009 Updates  Dual eligibles have fewer choices of plans in which premiums are fully subsidized Down from nine plans in 2008 to six in 2009  Many plans have raised their monthly premiums 80% of beneficiaries in standalone PDPs Whereas 94% of beneficiaries in gap plans will see no change or a decrease in premiums  Beneficiaries whose income or assets are just above the limit for the LIS will likely face high out-of-pocket prescription costs in relation to their income Because they have to pay the regular fee structure

16. 2009 Updates  MIPPA (Medicare Improvements for Patients and Providers Act) 2008 Delays implementation of AMP until 9/09 Prohibits and limits certain sales and marketing activities by Part C & D plans Prohibits an increase in monthly premiums for LIS beneficiaries due to late enrollment Medicare Enrollment Assistance Permits coverage of barbiturates and benzodiazepines for treatment of epilepsy, cancer, or chronic mental health disorder as of 1/1/13

17. Impact  We have yet to see the impact of the increasing costs of Medicare Part D this year but as many have forecasted there may be an undue burden upon beneficiaries who do not meet LIS cut-offs  Despite increasing costs, a Harris Interactive Poll recently found that 87% of seniors were happy with their plans in 2008 Up from 75% in 2007

18. References 1) http://www.medicare-partd.com/PartD-The-2009-Medicare- Part-D- Outlook.php#M6CC9BD6CD06945999559DF5AF3438C35 http://www.medicare-partd.com/PartD-The-2009-Medicare- Part-D- Outlook.php#M6CC9BD6CD06945999559DF5AF3438C35 2) www.medicare.gov www.medicare.gov 3) www.medicare.com www.medicare.com 4) www.cms.gov www.cms.gov 5) http://209.85.173.132/search?q=cache:7nyHyThfDKEJ:www.d hs.state.mn.us/main/idcplg%3FIdcService%3DGET_FILE%26R evisionSelectionMethod%3DLatestReleased%26Rendition%3DP rimary%26allowInterrupt%3D1%26dDocName%3Ddhs16_143 247+medicare+part+d+2009+updates&cd=2&hl=en&ct=clnk& gl=us 6) http://www.pharmacist.com/AM/Template.cfm?Section=Issues &CONTENTID=16988&TEMPLATE=/CM/ContentDisplay.cfm 7) http://www.avalerehealth.net/wm/show.php?c=1&id=796 http://www.avalerehealth.net/wm/show.php?c=1&id=796 8) http://www.piperreport.com/archives/2007/07/pharmaceutical _pricing_new_federal_rules_on_average_manufacturer_price_ and.html http://www.piperreport.com/archives/2007/07/pharmaceutical _pricing_new_federal_rules_on_average_manufacturer_price_ and.html 9) http://www.sbsun.com/pointofview/ci_11890564 http://www.sbsun.com/pointofview/ci_11890564

19. Questions?