WORKING WITH PRIVATE SECTOR PARTNERS TO MAXIMIZE MEDICARE SAVINGS PROGRAM AND PART D ENROLLMENT

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1 WORKING WITH PRIVATE SECTOR PARTNERS TO MAXIMIZE MEDICARE SAVINGS PROGRAM AND PART D ENROLLMENT James M. Verdier Mathematica Policy Research, Inc. State Solutions Invitational Summit May 12, 2005 Washington, DC

2 Introduction and Overview! Medicare Part D brings in many new private sector players Prescription drug plans (PDPs( PDPs) Medicare Advantage prescription drug plans (MA- PDs) MA Special Needs Plans (SNPs( SNPs)! A large portion of their initial enrollment will be full dual eligibles,, whose drug costs are very high 1! Will likely be interested in enrolling higher-income income MSP eligibles Their drug costs are somewhat lower Relatively easy to market to But will low cost sharing levels for full duals and other MSP eligibles make plans uneasy? " Takes away a cost containment tool

3 Enrollment of Duals and MSP Eligibles in Part D! Medicare Part D takes over responsibility for Rx drugs for dual eligibles on January 1, 2006 Medicaid will no longer provide Rx coverage for duals (with very limited exceptions)! Huge beneficiary outreach and education challenge for CMS, SSA, advocates, states, Part D plans, and others! Full-benefit dual eligibles will be auto-enrolled in PDPs and MA-PDs in October-December 2005! Other MSP and Low-Income Subsidy (LIS) eligibles will have facilitated enrollment starting in Spring

4 Enrollment of Duals and MSP Eligibles in Part D (Cont.)! PDPs,, MA-PDs PDs,, and SNPs will be marketing to and enrolling duals and MSP eligibles,, to varying degrees (42 CFR sec , et seq.)! PDPs have widest scope for marketing; only full- benefit duals are auto-assigned assigned Will likely welcome help in marketing to and enrolling other MSP eligibles! LIS covers full premium up to 135% FPL, partial premium up to 150% Also covers most Part D deductibles, coinsurance (donut hole), and copays! LIS is a major inducement for beneficiaries to enroll in MSPs 3

5 Impact of LIS on Incentives of Part D Plans to Enroll MSP Eligibles! Dual eligible Rx drug costs are very high, especially for under-65 disabled duals! Part D plans have limited tools for cost containment (formularies, beneficiary cost sharing)! LIS largely removes cost sharing as a cost containment tool for MSP eligibles! CMS risk adjustment may compensate plans adequately for these extra costs, but Rx data for risk adjustment are limited for first year! CMS risk sharing and risk corridors will prevent major PDP and MA-PD losses (and gains) in 2006 and

6 Characteristics of Dual Eligibles! Over 6 million full dual eligibles 15-20% of both Medicare and Medicaid enrollees! Over one-third are under age 65 and disabled! Over 20 percent say their health is poor! One-third have 3+ ADL limits! Over half live alone (31%) or in a nursing facility (23%)! 62% have incomes below poverty! 62% never graduated from high school 5 SOURCE: MedPAC Report to the Congress, June 2004, p. 76

7 Dual Eligible Rx Drug Use! Medicaid reimbursement for Rx drugs for dual eligibles in 1999 Over half of total Medicaid Rx drug costs! Average annual Medicaid reimbursement for dual eligibles in 1999 All duals: $1629 Under-65 disabled duals: $2,143 Non-dual adults: $372! 12% of under-65 duals had annual Medicaid Rx reimbursement of over $5,000 in 1999 Less than 4% of 65+ duals had costs this high Accounted for over half of under-65 dual Rx costs 6 SOURCE: CMS-MPR MPR data at: cms.hhs.gov/researchers/projects/medicaid_rx/

8 Dual Eligible Rx Drug Use (Cont.)! Annual Medicaid Rx reimbursement for all-year dual eligible nursing facility residents in 1999 All $2, , , , ,752! Dual eligibles in nursing facilities (all-year and part- year) accounted for 14 percent of total Medicaid Rx reimbursement in 1999 SOURCE: CMS-MPR MPR data at: cms.hhs.gov/researchers/projects/medicaid_rx/ 7

9 Rx Drug Use by Higher-Income MSP Eligibles! No good data currently available Medicaid Rx data covers only full duals Other Rx data (Federal Employee Health Benefit plan) includes few MSP eligibles! CMS risk adjustment formula pays plans higher amounts for most MSP eligibles than for other Medicare enrollees Below 135% FPL and low assets: 8% more % 150% FPL and higher assets: 5% more Institutionalized also get more (8-21%)! Part D plans could view this as an incentive to enroll more MSP eligibles 8

10 Conclusion! Part D brings new private-sector players to the MSP enrollment table! May have greater incentives than Medicaid agencies to assist in enrollment of MSP eligibles,, especially those who are not full duals! But they are not eleemosynary institutions Must ultimately be a business case for them to do so 9