| Medicare
Part D- Prescription Drug Assistance
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the Medicare Part D Brochure, NAMI National
Frequently
Asked Questions
Eligibility
| Dual
Eligibles | Enrollment
| Institutionalized
Patients | Medicaid
| Non-Dual
Eligibles | Subsidies
for Low Income | Prescription
Cost Sharing | Apply
for Low Income Assistance | Drug
Coverage | Formularies
(Preferred Drug List) | Drug
Coverage Change Notification | Supplemental
Coverage
| Out
of Pocket Expenses | Grievance
Process |
Exceptions Process | Beneficiary
Pharmacy Help
| Exceptions
Requests
| Prior
Authorization | Appeals
Process Levels
| Appeals
Triggers
| Appeals
Assistance | Due
Process for Dual Eligibles
| Links to further
Resources |
On January 1, 2006, the new Medicare drug benefit will go into effect.
The new benefit, part of the Medicare Modernization Act that Congress
passed in 2003, will offer voluntary coverage of outpatient prescription
medications that will be administered through private sector Prescription
Drug Plans (PDPs) and Medicare Advantage (MA) plans. Individuals
dually eligible for both Medicare and Medicaid will be required
to enroll in the new program—known as Medicare Part D—starting
on November 15, 2005. Those dual eligibles who do not enroll on
their own will be randomly “auto-enrolled” in a drug
plan.
Included below are a series of frequently asked questions designed
to help Medicare beneficiaries with mental illness and their families
better understand how the new program will affect them.
Who is eligible for the new Medicare
drug benefit?
All individuals eligible for either Medicare Part A or Medicare
Part B and “dual eligibles” who qualify for both Medicare
and Medicaid will be eligible for the new benefit. People with severe
mental illness are disproportionately represented in this dual-eligible
category by virtue of eligibility for both Supplemental Security
Income (SSI) and Social Security Disability Insurance (SSDI) and
Medicaid “spend-down” programs offered at the state
level. (back
to top)
How will dual eligibles with mental
illness be affected by the new Medicare drug benefit?
The most important change for dual eligibles is that starting January
1, 2006, they will begin receiving their prescription drug coverage
through Medicare, rather than Medicaid. Starting in January, state
Medicaid programs will no longer offer coverage for prescriptions
for persons who are dual eligible. It is expected that some states
will elect to cover certain drugs that are excluded from the new
Medicare drug benefit (including benzodiazepines), for which federal
Medicaid matching funds will be available. It is important to note
that individuals eligible only for Medicaid (including non-elderly
people with disabilities eligible for SSI) will continue to receive
drug coverage from their state Medicaid program.
Once enrolled in a Medicare drug plan, dual eligibles will not
have to pay a monthly premium, meet an annual deductible, or experience
any gap in coverage (the “doughnut hole” gap between
$2,250 and $3,600 of drug cost). Instead, dual eligibles will only
have to make minimal co-payments of $1 for a generic and $3 for
a brand-name prescription. Once co-payment costs rise above a catastrophic
limit of $5,100 (a limit expected to vary from state to state),
these minimal co-payments will be waived.
More information on Medicare drug coverage for dual eligibles is
available through the Kaiser Commission on Medicaid and the Uninsured
at www.kff.org/medicaid/loader.cfm.
(back
to top)
How will dual eligibles be enrolled
in Medicare Part D?
Starting in October 2005, Medicare will begin notifying dual-eligible
beneficiaries of the need to enroll in a Medicare drug plan. NAMI
is currently pressing Medicare to send copies of these marketing
and
enrollment materials to family members, agency case managers, and
representative payees. These initial enrollment materials will offer
dual eligibles a menu of plan options to choose from. These plan
options will describe which medications are covered under each available
plan and indicate whether or not specific medications are subject
to access restrictions, such as prior authorization or “fail-first”
requirements.
If dual eligibles do not enroll in a Medicare drug plan by the
start of the enrollment period on November 15, 2005, Medicare will
randomly “auto-enroll” them in a plan. Dual eligibles
will be able to switch plans at any time on or after January 1,
2006. (back
to top)
How does the new drug benefit
affect individuals who are institutionalized?
Institutionalized dual-eligible individuals will pay no cost sharing
for drugs covered under Part D. This means that dual eligibles residing
in nursing homes will have no cost sharing and can retain their
limited
personal needs allowances, as long as the plans available to them
cover their medications adequately. Non-dual eligible individuals
residing in long-term care facilities and other institutions will
receive cost-sharing subsidies based upon their level of income
and resources. Part D institutionalized individuals who up to now
have been using private sources to pay for their drugs will benefit
from Part D drug benefits through the catastrophic coverage available
for expenditures in excess of $5,100. (back
to top)
How can dual-eligible beneficiaries
know whether or not one of their medications that is currently covered
by their state Medicaid program will be covered by the Medicare
drug plan they are enrolling in?
The materials that will be available in advance of the initial
enrollment period are expected to allow for an understandable comparison
of each plan and which drugs are either on or off their formulary
list or subject to any restriction on access (such as prior authorization,
“fail-first” requirements, etc.). If a drug is off a
plan’s formulary, the plan will be required to cover at least
an initial 30-day prescription for a dual eligible—during
which the beneficiary can seek an exception to the exclusion of
the drug
from coverage.
In addition, Medicare has advised plans that for dual eligibles
they will be expected to cover every drug within six so-called vulnerable
therapeutic categories. Among these six categories are antipsychotics,
anticonvulsants, and antidepressants. (back
to top)
How will non-dual eligibles sign up for
Medicare drug coverage?
Individuals who are not dual eligible will have to elect to participate
in the new Medicare drug benefit. As with dual eligibles, they can
begin signing up after November 15, 2005. Enrollment will be available
through the mail, the Internet (at www.medicare.gov), by phone (at
1-800-MEDICARE), or at local Social Security offices. In addition,
state health insurance programs (known as SHIPs) will be facilitating
enrollment.
The initial open enrollment period will run through May 2006. After
June 2006, those Medicare beneficiaries who are not dual eligible,
or eligible for the low-income subsidies described below, will face
a late enrollment penalty that will continue with them for the remainder
of their eligibility. (back
to top)
Are subsidies available to low-income
beneficiaries who are not dual eligibles?
Yes. For Medicare beneficiaries whose incomes are between 100%
and 135% of poverty (up to $12,920 for individuals and $17,321 for
couples in 2005) and whose resources are below $6,000 (or below
$9,000 for a couple), subsidies will be available that will result
in their having to pay no monthly premium and $3 for a generic and
$5 for a brand-name prescription. Beneficiaries between 135% and
150% of poverty (up to $14,355 for individuals and $19,245 for couples
in 2005) will face sliding-scale premiums and 15% co-insurance.
In addition, they will have only limited cost sharing once drug
spending surpasses the $3,600 catastrophic limit of $2 for a generic
and $5 for a brand-name drug. (back
to top)
Cost-sharing Requirements in the New
Medicare Drug Benefit:
Map courtesy NAMI National (back
to top)
How can I apply for low-income assistance?
It is important to note that the process for applying for low-income
subsidies is separate and distinct from the application for drug
coverage under Medicare Part D. Applying for the low-income subsidy
will not enroll an individual in a Medicare drug plan. It is merely
a process of qualifying someone for the subsidy itself. This process
of applying for and pre-qualifying for the subsidy is already open.
Beneficiaries can apply on-line at www.medicare.gov
or by calling 1-800-MEDICARE, or they may apply
at a local Social Security office or through their state Medicaid
agency. When applying, it is critically important that low-income
beneficiaries (and their family members) inquire as to whether or
not they are also eligible for other assistance programs such as
the Medicare Savings Plan (MSP).
Once an individual qualifies for low-income subsidies, he or she
can then sign up for drug coverage. Those eligible for low-income
subsidies will not be subject to any late enrollment penalties.
(back
to top)
What drugs will each Medicare drug
plan be required to cover?
Medicare drug plans will be required to cover at least two medications
within each therapeutic category. Plans will have discretion in
deciding the breadth of the therapeutic classes they elect to cover.
It is expected that most plans will be following model therapeutic
categories recommended
by the U.S. Pharmacopeia that Medicare will deem to be sufficient.
At the same time, the law does provide for a strong anti-discrimination
standard to prevent adverse selection. This standard allows the
Secretary of Health and Human Services (HHS) the authority to demand
that drug plans not use restrictive coverage policies for the purpose
of discouraging beneficiaries with chronic illnesses or disabilities
from enrolling.
As noted above, HHS is already insisting that drug plans offer
coverage of every available drug within six distinct therapeutic
classes commonly prescribed to the most vulnerable Medicare beneficiaries.
These include antipsychotics, anticonvulsants, and antidepressants.
(back
to top)
What are formularies, and who
decides what medications are on a plan’s formulary?
A formulary is a list of medications that are available to drug
plan enrollees. Plan enrollees (and their doctors) are generally
not able to access drugs excluded from a formulary unless they are
able to successfully petition for an exception through a grievance
or appeal. In addition, most drug plans “tier” medications
within a formulary by requiring higher co-payments for some or by
subjecting them to a prior authorization requirement. Under the
Medicare drug program, plans using a formulary will have to establish
a Pharmacy and Therapeutics (P&T) Committee to develop and review
the list. The law does not specify how often formularies have to
be reviewed by P&T Committees. (back
to top)
Will drug plans be required
to notify enrollees regarding formulary and coverage changes?
The MMA does allow plans to change a formulary (i.e., discontinue
coverage of a medication, place it in a higher tier, etc.) in the
middle of a plan year. However, when doing so, they must provide
at least 60 days notice to doctors and pharmacists. During this
period, plan enrollees will be able to seek either an exception
for access to the excluded drug or the ability to continue coverage
at a lower co-payment (an exception from a higher tier co-payment).
(back
to top)
Is supplemental coverage available?
Yes. Enrollees with limited incomes are eligible for comprehensive
coverage with no gap (i.e., no “doughnut hole”) in coverage.
For most enrollees at 150% of poverty and below (up to $14,355 for
individuals and $19,245 for couples in 2005), there are a number
of options available:
• state pharmacy assistance programs;
• charitable assistance;
• supplemental coverage with Part D;
• certain programs offered by pharmaceutical manufacturers
(most existing programs offered by drug makers are expected to
continue, so long as they are deemed charitable organizations);
and
• employer and union programs (back
to top)
What are true out-of-pocket costs
(TrOOP)?
The new Medicare drug benefit creates a distinction between all
enrollee out-of-pocket expenses and those that will be counted towards
the annual Part D out-of-pocket threshold—the latter being
known as “true” out-ofpocket (TrOOP) costs. These are
costs actually paid by the beneficiary, by another person on behalf
of the enrollee, or by a qualified State Pharmacy Assistance Program
(SPAP) and not reimbursed by a third party (e.g., a supplemental
insurance plan sponsored through a retirement plan) that will count
toward the TrOOP threshold. Meeting this TrOOP threshold is critically
important as it determines the start of catastrophic coverage and
moves an individual through the “doughnut-hole” gap
in coverage. Most third-party assistance, such as that from employers
and unions, is not going to count toward the TrOOP threshold. Likewise,
most out-of-pocket payments from drugs excluded from Part D coverage
will not count towards TrOOP. (back
to top)
What exception, grievance, and
appeals procedures are available for the Medicare drug plan?
The MMA requires all drug plans to put in place extensive procedures
to allow plan enrollees to see exceptions from denials of coverage
and appeal adverse decisions. These procedures are somewhat complicated,
and concerns are already being raised that they will be difficult
for vulnerable beneficiaries to navigate. Below is a detailed description
of the exception, grievance, and appeal procedures in the Medicare
drug benefit regulations that were issued in early 2005. For more
information on these procedures, see the Center for Medicare
Advocacy’s fact sheet, Medicare Part D Appeals: A Mixed Bag
for Beneficiaries, at http://www.medicareadvocacy.org/Reform_PartDAppeals.htm.
(back
to top)
What exceptions processes will
Medicare drug plans be required to have in place?
Prescription drug plans (PDPs) and Medicare Advantage (MA) plans
will be required to have an exceptions process for enrollees to
request that a formulary drug be provided at a lower tier for cost-sharing
(thereby reducing the co-pay), or that a non-formulary drug be covered
by the plan. Because exception requests are coverage determinations
and are governed by the rules for coverage determinations, plans
will be required to act within the time frame for standard coverage
determinations
(72 hours) or expedited coverage determinations (24 hours).
Plans will be able to grant exception requests to change the cost-sharing
tier if it is determined that the non-preferred drug is medically
necessary and that the preferred drug would not be as effective,
or would have adverse consequences. In addition, the exceptions
process must be able to address situations in which a formulary’s
tiered co-pay structure changes during the year and an enrollee
is using a drug affected by the change. However, a plan does not
have to cover non-preferred drugs at
the lower, generic drug co-pay level if the plan maintains a separate
tier dedicated to generic drugs.
Further, if the plan maintains a formulary co-pay tier in which
it places very high-cost and unique items (e.g., certain biologics),
it may exclude these very high-cost or unique drugs from its exceptions
process. Participants may not use a plan’s cost-sharing exceptions
process to lower the co-payment for non-formulary drugs for which
they have received coverage through the non-formulary drug exceptions
process.
Plans must also grant an exception if they determine that a prescribed
drug is medically necessary, consistent with the physician’s
statement, and that the drug would be covered but for the fact that
it is an off-formulary drug. For this purpose, “formulary”
includes the application of cost-saving tools, such as dose restrictions,
step therapy, and therapeutic substitution requirements—all
of which would result in non-coverage of an otherwise coverable
Part D drug.
Although the Medicare regulations include some criteria for plans
to consider when evaluating an exception request, each PDP will
have substantial flexibility to establish its own criteria and develop
its own exceptions process. At the same time, Medicare will require
plans to consider whether the requested drug is therapeutically
equivalent to a drug on the plan’s formulary, as well as the
number of drugs on the formulary within the same class and category
as the requested drug. Additionally, the regulations leave it up
to a plan’s discretion as to whether it will continue coverage
after an exception has been granted into subsequent plan years.
(back
to top)
What should a beneficiary do
if a pharmacist or provider says the drug is not on the drug plan’s
formulary?
Enrollees should first contact their plan to request an exception
when they find out that their drug is not on the formulary or is
not in the “preferred” cost-sharing tier level.
If the plan denies an exception, then the enrollee can appeal the
plan’s decision. In general, the appeals system follows the
Medicare Advantage process, which includes access to independent
reviews of plan decisions. Enrollees, prescribing physicians, or
enrollees’ appointed representatives can begin the appeals
process. (back
to top)
Who can request an exception?
The consumer/plan enrollee, or his or her prescribing physician,
may file a request for an exception. If the prescribing physician
files the request, it must be filed with an oral or written supporting
statement that the preferred drug on the formulary is not as effective
for the consumer as the requested drug, or that the preferred drug
has adverse effects, or both. (back
to top)
Can a drug plan accept a prior authorization
request over the phone, or can a plan require a written copy?
The regulations do not specify requirements for a PDP's drug utilization
management activities, such as prior authorization, so long as they
are reasonable and appropriate. If a PDP chooses to accept oral
requests, the final rule does provide that the PDP may require submission
of subsequent written supporting statements. (back
to top)
What are the levels and processes
for coverage determinations and appeals?
- The appeals process begins when the PDP or Medicare Advantage
Prescription Drug Plan (MA-PD) issues a coverage determination.
- Next, the plan enrollee may request a redetermination of an
unfavorable coverage determination, and then the redetermination
will be performed by the PDP.
- Individuals who remain dissatisfied after the redetermination
can request a further review, known as a reconsideration; the
reconsideration will then be performed by an “independent
review entity”
(IRE).
- The enrollee may appeal to an administrative law judge (ALJ)
following an IRE review, and then to the Medicare Appeals Council,
and finally to federal court.
An expedited review is available if the standards set out in Medicare
Part C (Medicare Advantage Program) are met. Plans must notify enrollees
of initial coverage determinations as quickly as the enrollee’s
health condition merits, and must notify the enrollee no later than
72 hours after receipt of the request. Plans then have seven days
in which to notify enrollees of a redetermination decision. Plans
must act on requests for expedited coverage determinations no later
than 24 hours after receiving the request, and must act on expedited
redeterminations within 72 hours. An enrollee must file a request
for a reconsideration with the PDP or MA-PD. The plan then forwards
the enrollee’s request to the
IRE within 24 hours if it does not act in a timely manner on the
redetermination request. The Part D regulations require the IRE
to issue its reconsideration decision within the same time frames
noted above for issuing a redetermination. (back
to top)
What triggers a right
to appeal?
Coverage determinations that trigger appeal rights include a PDP’s
decision not to pay for a medication because the drug is:
- not on the plan’s formulary;
- not considered medically necessary;
- furnished by an out-of-network pharmacy; or
- not a drug for which Medicare will pay under Part D.
Likewise, an appeal is allowed when a coverage determination is
not provided in a timely manner; when that delay would adversely
impact the health of the enrollee; when a request for an exception
is rejected; and if the individual is dissatisfied with a decision
regarding the co-payment required for a drug. (back
to top)
Can the prescribing doctor or another
person assist me with an appeal?
Yes, assistance can come from a provider, a family member, or another
person able to assist with an appeal. (back
to top)
Will a dual eligible have the
same due process rights under Medicare Part D as Medicaid?
Unfortunately, the regulations appear to exclude the current Medicaid
protection that in most states allows for continued coverage of
a prescription pending an appeal. Many dual-eligible enrollees will
likely lose this important protection when they move into Part D
coverage. Although some plans may choose to give their enrollees
a 60-day supply of a prescription when there is a formulary change,
instead of sending notice 60 days in advance, it is not required.
Since the pharmacy will only be
required to post notice or give a general notice to call the plan
for further information, it appears that enrollees who want the
60-day supply will have to first contact the plan and then return
to the pharmacy to get their medicine. (back
to top)
Links to Detailed Information
on the New Medicare Drug Benefit
More information about prescription drug savings for Medicare beneficiaries
is available at:
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