New Analysis of Medicare Part D Regulations Online

Families USA, a national advocacy group, has posted a new Medicare Drug Benefit (“Part D”) analysis online at www.familiesusa.org/medicarecentral. On January 21, 2005, the Centers for Medicare and Medicaid Services (CMS) issued the final regulations for Title I of the Medicare Modernization Act (MMA). These regulations will govern the implementation and operation of Medicare's new drug benefit, set to begin on January 1, 2006.

Details Now Available

Who is eligible for low-income assistance under Part D?

Note that unlike for Medicare Discount cards, there is an ASSET TEST for low-income assistance under Part D.

There are two ways to qualify – either as a “dual eligible” or meeting income and asset tests. There are also different levels of assistance depending on income and assets:

All dual eligibles (individuals eligible for both Medicare and full Medicaid benefits) are eligible for low-income help.

Enrollees with incomes under 150% of poverty ($14,355 for an individual and $19,245 for a couple in 2005) and assets that do not exceed $10,000 for an individual or $20,000 for a couple in 2006 will also be eligible for low-income help, but the extent of that additional help will depend on income and assets. (Income eligibility will be calculated based on family size using the federal poverty level for the year.)

Full Subsidy (members will not have to pay any premiums for a basic plan) criteria:

Full dual eligibles- recipients of SSI benefits, or eligible for partial Medicaid assistance in the state in which they live (eligible as a Qualified Medicare Beneficiary, Specified Low Income Medicare Beneficiary, or Qualifying Individual). These individuals will not have to apply for low-income assistance-CMS will notify them that they are deemed automatically eligible for up to one year

OR

Income and asset qualified- annual incomes under 135% of poverty ($12,919 for an individual and $17,320 for a couple in 2005) and assets that do not exceed three times the amount allowed for SSI eligibility ($6,000 for an individual and $9,000 for a couple). Income eligibility will be calculated based on family size using the federal poverty level for the year. The asset limit will increase annually at the same rate as the percent increase in the Consumer Price Index.

Partial Subsidy- will have all or part of their premiums paid.

Member income under 150% of poverty ($14,355 for an individual and $19,245 for a couple in 2006) and assets that do not exceed $10,000 for an individual or $20,000 for a couple in 2006. The asset limit will increase every year by the same rate as the percent increase in the Consumer Price Index.

Comments

The low-income benefit is complex; there are multiple ways to qualify for added help and multiple benefit levels. Its complexity alone may dissuade many from applying. Additionally, applying for the subsidy and enrolling in a plan are two separate steps, making the process more difficult for the very groups that could most use help with drug costs.

While education is needed for all in Medicare, advocates should focus their efforts on informing low-income individuals (dual eligibles and others) about the benefit and the application process. Individuals can start applying for the subsidy in July 2005.

Unlike the Medicare drug discount card program, there is no guarantee under Medicare Part D that receiving low-income assistance will not affect eligibility for other public programs. It is possible that low-income individuals who previously had no prescription drug coverage could have their food stamp or public housing benefits change because their medical expenses will be lower.

Some states may have asset determinations that conflict with SSA's determinations, potentially creating some confusion and inequities. For example, some states do not have asset tests for Medicaid eligibility (CRC here: such as Massachusetts for most of the Under 65 population). In one of those states, an individual with $10,090 in assets and very little income might qualify for Medicaid if he or she applied for the drug benefit through the state but would not be eligible for any low-income help if he or she applied through SSA.

Dual eligibles will have the option of changing plans throughout the year. Others need to wait for an annual election period.

What if someone has retiree drug coverage they like and want to keep?

Medicare beneficiaries can keep their retiree health coverage in lieu of enrolling in a Medicare drug plan, as long as that coverage is still offered. Enrollment in retiree plans that Medicare considers "creditable" (plans that offer benefits equal to or greater than Medicare's basic benefit) means that late enrollment penalties will not apply.

Unanswered Questions

The final regulations leave many items unanswered-either because much is left up to the drug plans or because CMS will be publishing "guidance" that expands on-or fills in holes in-the regulations. A large advocacy coalition called the Medicare Consumer’s Working Group sent a letter in late 2004 to CMS detailing their concerns and recommendations. The text of the letter (114 pages)can be found at http://www.familiesusa.org/site/DocServer?docID=5141).

A sampling of concerns from the Medicare Consumer’s Working Group letter:

• The sheer size and complexity of these regulations (approximately 1,000 pages) is testament to the fact that this new law is terribly confusing to most Medicare beneficiaries—and confusion will make enrollment and use of the new program very difficult, particularly for the lower income, the sicker, and those with English literacy problems.
• (The regulations) do not adequately address the need for targeted and hands-on outreach, particularly outreach to low-income beneficiaries, beneficiaries with mental illness, and other populations with special needs.
• The proposed rule does not address eligibility for those who qualify for Medicaid after aspenddown.
• (The regulations fail) to adequately address how drug coverage for the 6.4 million Medicare beneficiaries with full Medicaid coverage or “dual eligibles” will be transferred to Medicare on January 1, 2006. There are issues both of timing and of the mechanics of operationalizing the enrollment process. (It) does not address either in any way that will ensure that these 6.4 million beneficiaries do not confront a loss of benefits or a gap in drug coverage, either of which could have disastrous health consequences.
• Timing. Automatic enrollment of dual eligibles will not begin until the end of the initial enrollment period on May 15, 2006. However, states’ Medicaid drug benefit for dual eligibles will end on January 1, 2006. Given the difficulty of reaching this population coupled with inadequate provisions for outreach and education…, it is a near certainty that a substantial number of dual eligibles will face a several month gap in coverage between the end of Medicaid’s drug benefit and automatic enrollment.
• As proposed…”duals” would be forced to enroll (or be automatically enrolled) in the “benchmark” or average cost plans in their areas because the low-income subsidy they will receive will only cover the premium for these plans. The formularies for these plans will not be as comprehensive as the drug coverage these individuals currently have through Medicaid. Even in states that have restricted access to drugs in Medicaid programs with preferred drug lists and prior authorization requirements, most of these states have exempted selected conditions, such as mental illness, from these restrictions. Without access to the coverage they need, dual eligibles will be forced to switch medications. In the treatment of HIV/AIDS, such switches can be deadly. We believe the same is true for a number of other illnesses and categories (including mental illness).
• Disenrollment for disruptive or threatening behavior.

We have a number of very serious concerns regarding provisions in the proposed regulations to allow Medicare drug plans to involuntarily disenroll beneficiaries for behavior that is "disruptive, unruly, abusive, uncooperative, or threatening". These provisions create enormous opportunities for discrimination against individuals with mental illnesses, Alzheimer’s disease, and other cognitive conditions. Those who are disenrolled will suffer severe hardship as they would not be allowed to enroll in another drug plan until the next annual enrollment period and as a result they could also be subject to a late enrollment penalty, increasing their premiums for the rest of their lives. Plans must be required to develop mechanisms for accommodating the special needs of these individuals, and CMS must provide safeguards to ensure that they do not lose access to drug coverage.

• Cost-sharing subsidies from AIDS Drug Assistance Programs (ADAPs) do not count as incurred costs.

We strongly recommend that the final rule count cost-sharing subsidies from AIDS Drug Assistance Programs (ADAPs) as incurred costs towards the catastrophic threshold.

• Access to accepted “off label” use.

We (disagree with) the CMS position that plans should not be required to include classes of drugs if there is no FDA approved drug with an on-label indication for each class, when there are FDA-approved drugs with commonly accepted off-label uses that would fall within a class. Further, we do not believe it is appropriate for prescribers to be given the new burden to “document and justify off-label use in their Part D enrollees’ clinical records.” Off-label prescribing has become a common—and accepted—practice across the field of medicine. For example no drugs that are currently used in the treatment of lupus (a serious, life-threatening auto-immune disorder) have the treatment of lupus as an on-label indication. For the treatment of mania, certain anti-convulsants and calcium channel blockers have proven effective and certain anti-convulsants have proven effective for treatment of bipolar disorder, although these uses are not FDA-approved on-label indications.

• The need to limit and prohibit unacceptable cost containment strategies.

We have serious concerns that the proposed regulation contains no restrictions on the ability of plans to use cost-containment tools such as dispensing limits, or prior authorization. Indeed, the preamble to the proposed regulation appears to specifically encourage plans to use such cost management tools, without constraint, to limit the scope of the prescription drug benefit.

• Payments to Employers who offer Retiree Drug Plans.

These were instituted to encourage employers to retain retiree drug plans. In considering allowable costs for a qualified retiree prescription drug plan, CMS must apply a test that considers only an employer’s financial contribution to retiree prescription drug coverage, not of any payments by the Retiree.

We believe one of the best ways to ensure a fair and equitable use of the subsidy amounts is to make the information on employer costs and reimbursements from Medicare public data which employee organizations and advocates can monitor.

-For more information please contact Families USA by e-mail, medicareaction@familiesusa.org.

03/2005