Medicare Part D Task Force Statement of Purpose Revised 7/12/05

Transcription

1 Medicare Part D Task Force Statement of Purpose Revised 7/12/05 The purpose of the Medicare Part D Task Force is to: 1. meet the needs of Medicare eligibles who are rejected for coverage supplemental to Medicare in the private market by providing appropriate coverage at affordable rates, while maximizing access to federal dollars available under Part D; 2. design one or more new WSHIP plans supplementary to Medicare, for an effective date of January 1, 2006; 3. recommend necessary or desireable changes to legislation and interim operating mechanisms; 4. recommend whether to continue to offer WSHIP s current Plan 2 to new applicants, and 5. develop a communications and marketing plan, including information about whether each WSHIP plan qualifies as Part D creditable coverage, and an explanation of options to new applicants and current enrollees The Task Force will provide preliminary recommendations to the WSHIP Board on July 14, 2005 and final recommendations for Board approval on September 8, Barriers and Choices Revised 7/12/05 1. Under the current statute, any WSHIP plan supplementary to Medicare must pay 100% of the deductibles and copayment required under Medicare and 80% of covered services not paid by Medicare. The coverage gap is being characterized as a second deductible. Thus, without a change in the statute, if WSHIP chooses to offer a plan supplementary to Part D WSHIP must pay all of the $250 deductible and 25% coinsurance up to the coverage gap, 100% of services in the coverage gap and, assuming WSHIP Plan 2 is an SPAP, all of the 5% coinsurance in the catastrophic benefit. If WSHIP is not an SPAP, then the statute would require that we pay 100% of all covered services after the initial $2250 Part D benefit. The statute provide for an annual out of pocket maximum of $ Does allow WSHIP to require applicants to apply for low income waivers? Is this desirable? 3. Can WSHIP qualify and be designated as a State Pharmacy Assistance Program (SPAP)? 4. Should a WSHIP product supplementary to Part D cover drugs not on the Medicare formulary (barbiturates, benzodiazepines, etc)? Should it cover drugs not on a PDP formulary, perhaps with a preauthorization requirement? 5. Should WSHIP offer a new product that is supplementary to only Medicare A and B and covers only Part B drugs, allowing enrollees to obtain Part D on their own? Would this option be more advantageous to some WSHIP eligibles? 6. How should the process by which a person demonstrates eligibility for WSHIP s plan(s) supplementary to medicare be changed, including what evidence should be required of rejection for medical reasons, a requirement of restrictive riders, an up-rated premium, or

2 a pre-existing conditions limitation on a medicare supplemental insurance policy under chapter RCW?

3 Work Plan Revised 7/12/05 Task 1. Research legal requirements re: offer of Part D supp scope of Rx benefits TrOOP SPAP 2. Benefit design: A & B supplement (no D) A,B & D supplement 3. Preliminary rates 2006 Plan 2 (both current and proposed methodology) A & B supplement (no D) A, B & D (with and without non-formulary coverage) 4. Board briefing, consultation Completi Responsible on Date 7/5/05 Brad Berg 9/8/05 7/5/05 Committee/Kären Larson Liz Leif 7/14/05 Committee/Board 5. Board approval 9/8/05 Board 6. Draft revisions: Policy(ies) Application Benefit summary(ies) 9/12/05 Anne Mackie 7, File contract forms with OIC 9/16/05 Anne Mackie 8. Review rates 9/8/05 Board 9. Creditable coverage determination for all plans 9/1/05 Liz Leif Comments 10. Plan/implement administrative 4 th Q PBM requirements 11. Send notice of creditable coverage 11/15/05 Anne Mackie 12. Approves rates 11/10/05 Board 13. Introduce legislation, if needed 1/9/06 Kären Larson

4 WSHIP Part D Task Force Preliminary Recommendations to WSHIP Board of Directors 7/12/05 The WSHIP Part D Task Force met on May 31, June 21, and July 12, 2005 to review current WSHIP coverage supplementary to Medicare and consider how to change WSHIP benefit plans in light of the new Medicare Part D prescription drug coverage that will become available to Medicare eligibles on January 1, The following outlines the Task Force s preliminary recommendation based upon our research into the statutory and regulatory requirements of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) and RCW The recommendations were developed to be consistent with the Task Force Statement of Purpose. 1. We recommend that WSHIP conform to federal requirements to be a State Pharmaceutical Assistance Program (SPAP) Provide coverage supplementary to any Part D Prescription Drug Plan (PDP) Not use federal funding for any Medicare Part D supplementary coverage Coordinate benefits with the PDPs as required Accept any applicant with medical conditions that result in their being rejected, up-rated or having pre-existing condition limitations required by a member offering Medicare supplement coverage under RCW. 2. We recommend that WSHIP offer a new Comprehensive (Scenario 3 as an SPAP, Scenario 4 not an SPAP) benefit plan supplementary to Medicare Parts A, B and D including: Coverage at 80% for drugs not on the Part D formulary (barbiturates, benzodiazepines, etc.) Coverage at 100% for drugs not covered by the enrollee s PDP formulary after appeal rights have been exhausted (perhaps with a preauthorization requirement) NOTE: The preceding two bullets are the committee s attempt to include in the comprehensive benefit plan coverage for all drugs now covered by Plan 2. WSHIP pays 100% of deductible and coinsurance WSHIP pays 100% of coverage gap If WSHIP is not an SPAP, WSHIP pays 100% beyond coverage gap with an out-ofpocket maximum. The enrollee must pay the Parts B and D premiums Limited income rates will be available for qualified individuals.

5 3. We recommend that WSHIP offer a new Basic (Scenario 2) benefit plan supplementary to Medicare Parts A and B including: Coverage at 80% for Part B drugs Enrollees must pay the Part B premium Enrollees will have no supplementary coverage for Part D drugs, and may enroll in Part D on their own. 4. Since the current WSHIP Plan 2 (Scenario 1) is guaranteed renewable, we recommend that it be continued, and that enrollees under the plan be provided with information about the availability of the new benefit plans and a comparison of the costs and benefits of all. 5. A recommendation as to whether to continue to offer our current Plan 2 is still under consideration. At issue is whether it continues to be in compliance with RCW and federal law. 6. A recommendation to pursue legislative changes may be included pending further legal analysis.

6 WSHIP Impact of Medicare Part D Impact on WSHIP's Costs 2004 Plan 2 Costs Medical Drug Total Plan Paid $5,824,319 $12,540,948 $18,365,267 Members Paid $419,981 $423,773 $843,754 Total Allowed $6,244,299 $12,964,721 $19,209,020 Scenario 1: 10% trend, no change in benefits, pharmacy plan stays as is, no Part D, new methodology under age 65; assumes current membership, no growth. Medical Drug Total Plan Pays $7,135,621 $15,263,539 $22,399,161 Member Pays $419,981 $423,773 $843,754 Total Allowed $7,555,602 $15,687,312 $23,242,915 Member Premiums $2,036,056 $3,726,846 $5,762,902 Old Method Member Premiums $1,418,947 $2,701,083 $4,120,030 New Method Scenario 2: Only Part B drugs covered by WSHIP and members enroll in Part D; cost estimates not possible without estimate of potential enrollment. Scenario 3: Drugs are covered with a wraparound to cover Part D deductible and coinsurance and 100% of coverage gap. WSHIP is an SPAP and Medicare provides 95% coverage at the catastrophic level. Assumes all members move into this option. Medical Drug Total Does not consider drugs WSHIP Plan Pays $7,135,621 $5,852,098 $12,987,720 not covered by Medicare Member Pays $419,981 $0 $419,981 Total Allowed $7,555,602 $5,852,098 $13,407,700 Member Premiums $2,036,056 $2,026,957 $4,063,013 Old Method Member Premiums $1,418,947 $1,469,065 $2,888,012 New Method Medicare Medicare Pay $9,835,214 $9,835,214 Assumption = 71.2% of allowed Member Pays $0 $0 Total Allowed $9,835,214 $9,835,214 Member Premiums $418,950 $418,950 Assumption = $37.50 per month Combined Plans Pay $7,135,621 $15,687,312 $22,822,934 Member Pays $419,981 $0 $419,981 Total Allowed $7,555,602 $15,687,312 $23,242,915 Member Premiums $2,036,056 $2,445,907 $4,481,963 Old Method Member Premiums $1,418,947 $1,888,015 $3,306,962 New Method Compared to Scenario 1: $ % WSHIP's cost ($9,411,441) -42.0% Member cost sharing ($423,773) -50.2% Member premium ($1,280,939) -22.2% Old Method Member premium ($813,068) -19.7% New Method Medicare's cost $9,835,214 7/12/ Leif Associates

7 WSHIP Impact of Medicare Part D Scenario 4: Drugs are covered with a wraparound to cover Part D deductible and coinsurance and 100% of coverage gap. WSHIP is not an SPAP and Medicare does not provide coverage at the catastrophic level. Assumes all members move into this option. Medical Drug Total Does not consider drugs WSHIP Plan Pays $7,135,621 $14,115,687 $21,251,309 not covered by Medicare Member Pays $419,981 $0 $419,981 Total Allowed $7,555,602 $14,115,687 $21,671,290 Member Premiums $2,036,056 $2,536,249 $4,572,305 Old Method Member Premiums $1,418,947 $1,838,182 $3,257,128 New Method Medicare Medicare Pay $1,571,625 $1,571,625 Assumption = $1,500 Member Pays $0 $0 Total Allowed $1,571,625 $1,571,625 Member Premiums $418,950 $418,950 Assumption = $37.50 per month Combined Plans Pay $7,135,621 $15,687,312 $22,822,934 Member Pays $419,981 $0 $419,981 Total Allowed $7,555,602 $15,687,312 $23,242,915 Member Premiums $2,036,056 $2,955,199 $4,991,255 Old Method Member Premiums $1,418,947 $2,257,132 $3,676,078 New Method Compared to Scenario 1: $ % WSHIP's cost ($1,147,852) -5.1% Member cost sharing ($423,773) -50.2% Member premium ($771,647) -13.4% Old Method Member premium ($443,951) -10.8% New Method Medicare's cost $1,571,625 Summary of Estimated 2006 Cost Per Member, Drugs Only Scenario 1 Scenario 2 Scenario 3 Scenario 4 Total Annual Claim Cost $14,972 $14,972 $14,972 $14,972 Medicare Payment $0 $9,387 $9,387 $1,500 Member Cost Share $404 $4,201 $0 $0 Member WSHIP Premium $3,557 $338 $1,935 $2,421 Old Method Member Medicare Premium $0 $450 $450 $450 Total Member Cost $3,961 $4,989 $2,385 $2,871 WSHIP Cost $14,568 $1,384 $5,585 $13,472 7/12/ Leif Associates

8 WSHIP Impact of Medicare Part D Member Examples (Old Method Rates) Annual Drug Premium (Incl Part D Prem) Annual Drug Costs Scenario 1 Scenario 2 Scenario 3 Scenario 4 Threshold % Reaching Current Plan 2 Enrollee Age $3,489 $781 $2,348 $2,824 $0 100% $781 92% $2,348 80% $2,824 78% $3,489 74% Current Plan 2 Enrollee Age $5,096 $934 $3,222 $3,918 $0 100% $934 91% $3,222 63% $3,918 60% $5,096 49% Current Plan 2 Enrollee Age $4,134 $843 $2,698 $3,263 $0 100% $843 93% $2,698 74% $3,263 67% $4,134 55% 7/12/ Leif Associates