Lessons from Implementation of Medicare Rx Discount Cards in State Pharmacy Assistance Programs and Implications for Part D

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1 Lessons from Implementation of Medicare Rx Discount Cards in State Pharmacy Assistance Programs and Implications for Part D Kimberley Fox, Senior Policy Analyst Rutgers Center for State Health Policy For State Coverage Initiatives National Meeting Washington, D.C. February 4, 2005 kfox@ifh.rutgers.edu Acknowledgement Presentation based on study of state pharmacy assistance programs funded by The Commonwealth Fund. Telephone interviews in Spring 2004 with 17 state pharmacy assistance program directors re: Medicare coordination of benefit issues and discount card experience and follow-up discussions in Summer/Fall. Analysis and review of Part D proposed/final regulations Website with more detailed reports:

2 How Many States Have State Pharmacy Assistance Programs? No program enacted or operational Program enacted but not operational Program is operational Source: Trail T, Fox, K, Cantor, J, Silberberg, M, Crystal, S. State Pharmacy Assistance Programs: A Chartbook. Commonwealth Fund, New York, NY, publication forthcoming. Data from National Conference of State Legislatures web site: State Pharmaceutical Assistance Programs, 2003 Edition, August 27, Medicare Part D and Implications for State Pharmacy Assistance Programs New Medicare drug coverage available to SPAP enrollees, should they elect to enroll, could offset current state costs. CMS estimates that SPAPs will save approximately $600 million/ year. MMA explicitly recognizes SPAPs and grants those that meet their definition specific privileges Expenses paid by SPAP count toward TrOOP SPAP Transitional grants - $62.5 million/yr Requirements that Part D plans to coordinate benefits SPATC Commission created to address SPAP-specific concerns Qualifying SPAPs State-only funded Provides financial assistance for purchase of supplemental drug coverage Provides assistance to Part D eligible individuals in all Part D plans without discriminating based on the Part D plan in which they are enrolled. Meets COB requirements Doesn t change primary payer status of Part D plan

3 Options for SPAPs for Wrapping Around Medicare Part D Wrap-around gaps in Part D coverage Pay premiums Pay deductible Cover cost-sharing Cover doughnut hole Cover non-formulary drugs Out-of-network pharmacies Buy supplemental coverage from Part D plans Maintain separate state program as alternative to Part D coverage Drop program Medicare Part D and Implications for State Pharmacy Assistance Programs Greatest potential savings from low-income subsidies Contingent on enrollees enrolling in BOTH Part D plans and applying for lowincome subsidies. Lower cost-sharing than in most SPAPs but Part D formularies and pharmacy networks likely to be more limited. Of 1.5 million SPAP enrollees, most will not be eligible for the low-income subsidies as average income eligibility in these programs is 222% FPL/ and states do not require asset test. Basic Part D benefit likely to yield minimal savings for SPAPs Most SPAP benefits more generous than Part D Majority of SPAPs have lower cost-sharing; minority have upfront fees/deductibles. Most have open formularies and broad pharmacy networks. Indexing of premiums/deductibles will reduce SPAP savings over time. Higher administrative costs required to coordinate with Part D plans States deciding how to supplement the Part D benefit if at all

4 What is the Medicare Discount Card Program? 18 month program began June 2004 Privately administered by 27 card sponsors Voluntary Annual enrollment fee (up to $30) Estimated 10-25% discounts off retail price Different pharmacy networks and formularies that are subject to change weekly Medicaid enrollees ineligible (including Pharmacy Plus and 1115 waivers) Transitional Assistance in the Medicare Discount Card Program Administered by discount card sponsors/ eligibility determined by CMS One application for card and TA $600 credit/year for persons with incomes <135% FPL Enrollment fee paid by CMS 5-10% coinsurance SPAP eligible enrollees able to be autoenrolled effective 5/04. QMB/SLMB/QI1s income eligible/ quasi-autoenrollment effective 9/04.

5 Key Issues for States in Coordinating with Discount Card/Part D Plans to Maximize State Savings Getting low-income state pharmacy assistance enrollees to voluntarily enroll Mandate as condition of SPAP eligibility Automatic or facilitated enrollment Use financial or other incentives Coordinating education and outreach to enrollees Clear and uniform message to enrollees Getting regular information from CMS/PDPs to target outreach Identifying enrollees of M+C, or Medicare Advantage Key Issues for States in Coordinating with Discount Card/Part D Plans to Maximize State Savings Coordinating benefits with one or multiple plans Getting enrollment/ claims/benefit design information Developing a mechanism for billing the state the balance as the secondary payer Appealing coverage denials on behalf of beneficiaries Pharmacy education on point-of-sale coordination Audits/ oversight to avoid double-billing Rebate Issues Tracking Spending to Determine Appropriate State Payment ($600 credit/troop) Estimated versus actual savings achieved after administrative costs -

6 Estimated Percent of SPAP Enrollees Eligible for $600 Credit 100% 80% 60% 40% 20% 0% KS MN IN MI NC MO PA CT NV RI MA NY NJ WY IL* ME TOTAL Source: Fox, K, Crystal, S. Coordinating Medicare Prescription Drug Benefits with State Pharmacy Assistance Programs. New York, NY; The Commonwealth Fund, publication forthcoming. Based on interviews with SPAP directors in Spring *Includes disabled persons enrolled in state-only program. Enrollees in Illinois Senior Care Pharmacy Plus waiver program are ineligible for transitional assistance and the discount card. Number of States Mandating Enrollment in Medicare during Discount Card Period # of States Mandatory Voluntary Source: Fox, K, Crystal, S. Coordinating Medicare Prescription Drug Benefits with State Pharmacy Assistance Programs. New York, NY; The Commonwealth Fund, publication forthcoming. Based on interviews with SPAP directors in Spring 2004.

7 State Strategies for Getting SPAP Eligible Persons Enrolled in TA # of States Autoenrollment in Preferred Card Autoenrollment in Multiple Cards Faciliated Enrollment Voluntary Enrollment Source: Fox, K, Crystal, S. Coordinating Medicare Prescription Drug Benefits with State Pharmacy Assistance Programs. New York, NY; The Commonwealth Fund, publication forthcoming. State Strategies for Enrolling Members in Transitional Assistance Autoenrollment in Preferred Card (10 states) Authorized representative status Expedited RFP or Expansion of Existing Contract Opt-out letters different methods for response High participation rates (80-90%) in short period Significant state savings reported Autoenrollment in Multiple Cards (1 state) Authorized representative status RFI to card sponsors data sharing agreement Opt-out letters Start-up delays, file-sharing inconsistencies High participation rates after 6-7 months Savings still being determined

8 State Strategies for Enrolling Members in Transitional Assistance (cont.) Facilitated Enrollment w/ One or Multiple Cards (1) Expedited RFP or Expansion of Existing Contract Pre-populating applications Outcome One state shifted to autoenrollment due to low enrollment rates, no data yet available for other state. Voluntary Enrollment by Individual Members (5) Outreach varies Letter to benes Use of SHIPs Outcome Much lower enrollment rates (2%-40%) in states that had data from CMS. Minimal savings to state Two states shifted from voluntary model to autoenroll or facilitate enrollment due to low enrollment rates. Many of those enrolled are not using the $600 credit. Use of Incentives by SPAPs to Encourage Enrollment State pays all or portion of the 5-10% coinsurance (10 states) Preceded autoenrollment allowance Post autoenrollment maintained to discourage opt-out Outcome difficult to measure Waiving other SPAP requirements/ Increasing SPAP Benefit Waiving SPAP enrollment fees Counting $600 toward state deductible Waiving reapplication for SPAP during discount card period Increasing state benefit cap SPAP pays first, discount card used only if state does not pay Incremental impact of Incentives vs. other approaches unknown Most states using incentives were also autoenrolling. Increasing benefit may have had an impact in voluntary enrollment states.

9 Enrollment Lessons from Medicare Discount Card / Implications for Part D Autoenrollment into one card the most efficient mode for getting people enrolled. Transparent to enrollees Nearly 100% of enrollment in transitional assistance is due to SPAP and M+C autoenrollment into one card. Final Part D regulations prohibit autoenrollment in preferred plans for SPAPs to be qualified. Random autoenrollment into all Part D plans (like for duals) allowed for SPAP enrollees that have not enrolled by initial enrollment period or at SPAP enrollment Participation rates in states that left enrollment voluntary extremely low resulting in much less state savings Voluntary enrollment may be enhanced by offering incentives, but degree of impact unknown. Non-discrimination interpretation in Part D regulations essentially mandates voluntary model to be a qualified SPAP. Enrollment Lessons from Medicare Discount Card / Implications for Part D Single application process for discount card and TA minimized burden and facilitated enrollment Two-steps required under Part D to apply for subsidies and enroll in Part D plans expect even lower enrollment in subsidies. Asset test requirement will also reduce participation in Part D subsidies as SPAPs will have to collect new information from enrollees. Final Part D regulations do not allow SPAPs to determine Part D low-income subsidy eligibility unless Medicaid agency. No explicit process defined for informing SPAPs of enrollment and lowincome subsidy eligibility in final regs. Further guidance pending. SPAPs can apply for low-income subsidy on behalf of enrollee if authorized representative but must complete SSA application.

10 COB Lessons from Medicare Discount Card / Implications for Part D States that worked with one card achieved greatest savings Facilitated data sharing/communication Working with multiple plans required much greater administrative oversight (CT) Final Part D regulations do not allow qualifying SPAPs to steer into a preferred card, only allow for co-branding (?) Regs do allow SPAPs to have qualifying and non-qualifying components. Enrollment in subsidy does not guarantee cost avoidance/ need pharmacy buy-in Many states identified mid-year or later that TA enrollees had not spent any of their $600 credit. Tracking pharmacy non-compliance simplified with one card Even more coordination required under Part D, all claims adjudication will be at the point-of-sale by pharmacists. COB Lessons from Medicare Discount Card / Implications for Part D Administrative hassles could deter some states from providing gap-filling coverage particularly smaller programs Several states did not even attempt to coordinate with the discount cards to get the $600 even though most of their enrollees were eligible and autoenrollment was allowed. Final Part D regulations define much more complex COB process for Part D. Prohibition on working with one Part D plan or selecting the plan that would result in the greatest state savings will at minimum reduce state savings to be spent on supplementing additional persons and at worst, result in crowdout of current state programs.

11 Decisions Ahead for SPAPs Redefining the SPAP benefit as a secondary payer Capitation or wrap-around and what to wrap? Comparability issues with duals Wrap for all SPAP enrollees or only non-subsidy eligible? Benefits/ costs of qualifying/ non-qualifying SPAP Mandating Medicare enrollment as a condition of eligibility What populations? All or low-income subsidy only? Giving SPAP authorized representative status Gathering info to facilitate enrollment into low-income subsidies by Jan 2006 Collecting asset information on SPAP application/recertification Identifying SPAP enrollees that are/could be automatically eligible for lowincome subsidies (i.e. QMB, SLMB, QI1)