REPORT OF COUNCIL ON SOCIOECONOMICS
CSE Report 1-A-06
Subject: Implementation of Medicare Part D
Presented by: Susan M. Strate, MD, Chair
On Jan. 1, the Center for Medicare and Medicaid Services launched Medicare Part D, the new prescription drug option for all Medicare enrollees. As of late March, CMS reported that more than 25 million enrollees were included in the program, though the vast majority of those are patients who were automatically enrolled or who have equivalent coverage from another program offered through an employer or government plan, such as TriCare, pointing to continued trepidation by many beneficiaries to voluntarily enroll.
Under the new program, patients have two options to obtain coverage: remain in traditional Medicare for health care coverage, but enroll in a Prescription Drug Plan (PDA) to obtain outpatient prescription drugs; or, if locally available, enroll in a Medicare Advantage Plan, such as an HMO or PPO, that is responsible for providing both health insurance and drug coverage. (For detailed information on Medicare Part D enrollment, coverage, premiums, and benefit appeals/exceptions processes, please visit the Medicare Part D section on the TMA Web site at www.texmed.org.)
The initial open enrollment will continue through May 15. Medicare beneficiaries who do not enroll during this time will have another opportunity to sign up beginning in November. However, with some exceptions, patients who wait to enroll will be subjected to higher monthly premiums, with premiums progressively increasing for each month they wait. The penalty remains in place the duration of coverage.
Implementation Issues
As might be expected with the initiation of such a large program, problems have been widely reported. Most of the problems have been administrative in nature, including inaccurate health plan databases, delayed delivery of identification cards, untimely patient enrollment in plans, and confusion regarding each plan's drug formulary. While to date TMA has not received any complaints demonstrating patient harm as a result of the problems, the media has reported patients leaving pharmacies without some or all of their needed prescriptions.
Of most concern has been the impact of the transition on dually-eligible patients - patients who qualify for both Medicare and Medicaid - who were automatically enrolled in a Part D plan on Jan. 1, 2006, unless they had previously selected a plan on their own. In Texas, some 320,000 patients are in this category, which includes patients residing in nursing homes, state schools, and other long-term care institutions, as well as Medicaid patients with disabilities who live in the community. Congress mandated that this population be included within the program, relieving state Medicaid programs of providing drug coverage (though states must continue to pay 80 percent of the costs under what is known as the "clawback" provision). Prior to initiation of Part D, most dually-eligible patients received prescription drug coverage via Medicaid wherein they had access to an open formulary and one "plan" to choose from instead of many.
Because all dual eligibles have very limited incomes, thus making any sizeable out-of-pocket drug expenditures prohibitive, and most have a constellation of chronic conditions that require ongoing prescription drug use, disruptions in coverage can be devastating. When it became apparent early in the implementation that the transition process was not working well, Texas, along with numerous other states, reinstated coverage to assure that dual eligibles continued to receive needed medications. As of March 2, the Texas back up plan had reimbursed pharmacists more than $4 million in claims for some 40,000 individual clients. CMS will reimburse Texas for all claims incurred for these patients as well as the additional administrative costs.
To address underlying operational problems with Part D, CMS has taken a number of corrective actions, including more rapid transfer of data to health plans, frequent monitoring of health plan performance regarding customer service, addition of staff to answer calls at Medicare and health plan help lines, expanded outreach and enrollment events to educate Medicare beneficiaries about how to use the new drug benefit, and expanded educational initiatives targeting physicians, providers, and community organizations.
The back up plan operated by Texas and other states concluded on March 31. As of this writing, it was too early to tell whether CMS' series of corrective actions had overcome the issues that necessitated the need for the plan in the first place.
Additionally, on April 1, for patients whose coverage began on Jan. 1 or Feb.1 of this year, Part D plans were no longer required to pay for drugs not included in their formularies. CMS rules require all Part D plans to provide a 30-day refill of drugs not otherwise covered in order to give patients time to switch to alternative treatments. For patients who enrolled at the beginning of the year, CMS extended the transition period through March 31. At the end of this period, if patients have not switched to another medication, they will have to pay out-of-pocket to continue using a noncovered prescription drug. Part D rules specify that patients can request an exception, which in most cases will require the assistance of their physician.
One complaint from physicians has been that the Part D appeals/exception process varies by plan. CMS already is working with the American Medical Association to devise a more standardized process to help minimize the administrative burden of the process.
TMA Activities
TMA is in regular communication with senior CMS officials about ongoing issues with Part D to address physician concerns (though as noted above, actual physician calls to TMA relating to Part D have been limited). TMA also participates in CMS regional meetings on the issue and meets regularly with staff from the Texas Health and Human Services Commission relating to the unique issues facing dually-eligible patients.
The TMA Web site includes a dedicated section on Part D to give physicians and office managers comprehensive resources relating to enrollment, plan selection, coverage, costs, and appeals/exceptions processes. To keep physicians apprised of changes to the program, TMA distributes material via the Web site, monthly magazine, and electronic newsletter. In addition, TMA just concluded its annual Medicare seminar series which included a half day of training specific to Part D.
There are some issues relating to Part D that will require Congressional action, namely excluding certain drug classes from inclusion in the formulary. TMA is working with the American Medical Association to address these issues.
TMA House of Delegates: TexMed 2006