2008 Medicare Part D: Pharmacist's Survival Guide. Ronnie DePue, R.Ph., CGP

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1 2008 Medicare Part D: Pharmacist's Survival Guide Ronnie DePue, R.Ph., CGP

2 Objectives At the completion of this program, the participant will be able to: 1. Give an overview of the Medicare Prescription Drug benefit for Explain formulary design and utilization management techniques for Summarize coverage requirements for vaccines and their administration by plan sponsors in 2008

3 Introduction The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) provided the legislative framework for prescription drug coverage for more than 44 million Medicare beneficiaries, including seniors over the age of 65 and those with disabilities. The drug benefit, which began on January 1, 2006, is provided by private at risk entities called Prescription Drug Plans (PDP). Plans that offer prescription drug benefits in addition to Medicare Advantage (Medical benefits) are called MA-PD plans.

4 Introduction Individuals qualify for enrollment into the Part D program if they are eligible or enrolled in Medicare Part A and or Part B. Participation by eligible individuals in a Part D program is voluntary. If a beneficiary delays enrollment beyond their initial enrollment period, they will be penalized 1% of the plan premium for each month of delay.

5 Introduction It is estimated that more than 90% of Medicare beneficiaries now have drug coverage Beneficiary satisfaction with Medicare Part D has consistently been at or above 75 percent. Enrollment in this elective program continues to grow, expenditures related to the program are increasing at a rate below original estimates

6 Standard Benefit Design Benefit Parameters Annual Deductible $265 $275 Initial Coverage Period 25% coinsurance for costs from $265 to $2,400 True Out of Pocket (TrOOP) 25% coinsurance for costs from $275 to $2,510 $3,850 $4,050 Catastrophic Threshold $5, $5, Catastrophic Copayments Greater of $2.15/$5.35 or 5% Greater of $2.25/$5.60 or 5%

7 Low Income Subsidy Copayments Part D Full Benefit Dual Eligible Parameters: Copayments for Institutionalized Beneficiaries $0.00 $0.00 $0.00 Maximum Copayments for Non-Institutionalized Beneficiaries Up to or at 100% FPL: Up to Out-of-Pocket Threshold Generic $1.00 $1.00 $1.05 Brand $3.00 $3.10 $3.10 Above Out-of-Pocket Threshold $0.00 $0.00 $0.00 Over 100% FPL: Up to Out-of-Pocket Threshold Generic $2.00 $2.15 $2.25 Brand $5.00 $5.35 $5.60 Above Out-of-Pocket Threshold $0.00 $0.00 $0.00 Part D Non-Full Benefit Dual Eligible Full Subsidy Parameters: Resources < $6,120 (individuals) or < $9,190 (couples) Maximum Copayments up to Out-of-Pocket Threshold Generic $2.00 $2.15 $2.25 Brand $5.00 $5.35 $5.60 Above Out-of-Pocket Threshold $0.00 $0.00 $0.00 Resources between $6,120-$20,210 (individuals) or $9,190-$20,410 (couples) Deductible $50.00 $53.00 $56.00 Coinsurance up to Out-of-Pocket Threshold 15% 15% 15% Maximum Copayments above Out-of-Pocket Threshold Generic $2.00 $2.15 $2.25 Brand $5.00 $5.35 $5.60

8 Standard Benefit Design Annual updates to the standard benefit design are statutory requirements of the Social Security Act and will continue through the life of the program. These changes are tied to two statutorily defined indexes, the annual percentage increase in average expenditures for Part D drugs per eligible beneficiary (annual percentage increase) and the Consumer Price Index (CPI)

9 Standard Benefit Design Part D sponsors can offer the standard benefit design, described in detail above, or PDPs may vary their design as long as it is at least actuarially equivalent to the basic coverage. Plan sponors may offer a wide variation of coverage plans which could waive the deductible, charge copayments rather than coinsurance or offer a combination of both Many plans will be offering enhanced benefits which may include drug coverage in the coverage gap, excluded drug coverage or a free first fill program.

10 Formulary Development Each PDP must have a Medicare P&T committee that meets CMS defined specifications: P&T committee members must come from various clinical specialties that adequately represent the needs of plan beneficiaries A majority of the P&T committee members must be practicing physicians, practicing pharmacists or both. At least one P&T committee practicing pharmacist and one practicing physician must be an expert in the care of elderly or disabled persons. At least one P&T committee practicing pharmacist and one practicing physician must be independent and free of conflict with respect to the PDP and pharmaceutical manufacturers.

11 Formulary Development P&T committees are responsible for approving all plan utilization management measures (prior authorization, step therapy, quantity limits, and formulary inclusion/exclusion decisions). All new to the market medications, or existing medications with new indications, must be reviewed by the committee within 90 days and a coverage policy decision made within 180 days of release. For drugs in the six protected classes (described in more detail later), an expedited review is required where a coverage policy decision must be made within 90 days

12 Formulary Design Plan sponsors are required to design their formularies based on the USP classification system, or a similar classification system which covers a broad range of medications used to treat all disease states. The minimum requirement is that two drugs from each category and class be covered, regardless of the classification system For 2008, CMS no longer requires at least one medication from each of the key drug types be included on a plan s formulary

13 Formulary Design Outlier tests: Formulary Key Drug Types Top 200 Commonly Prescribed Medicare Drugs Expanded Number of Treatment Guidelines

14 Formulary Design To protect the most vulnerable Part D participants, CMS has defined six protected drug classes. These six protected classes are: Anticonvulsants Antineoplastics HIV medications Antidepressants Antipsychotics Immunosuppressants

15 Formulary Design Plans can establish limits on the medications in the 6 protected classes through the use of formulary cost sharing levels, step therapy, prior authorization and quantity limits Prior authorization will apply to new starts only and not patients established on a medication

16 Formulary Design Certain medications are excluded from Medicare Part D coverage. These medications are: Anorexia, weight loss, or weight gain Fertility Cosmetic purposes or hair growth Cough and cold products Prescription vitamins and mineral products Except prenatal vitamin and fluoride preparations Non-prescription drugs Barbiturates Benzodiazepines Erectile Dysfunction Drugs Medicare Part B Drugs DESI drugs that the FDA has deemed less than effective

17 Formulary Design CMS reviews all utilization management techniques employed by a PDP to ensure that it does not discriminate against any disease state, or discourage enrollment of particular members with specific disease states. CMS also verifies that a PDP s clinical controls are based on current sound medical evidence and current best pharmacy practices in widespread use today.

18 Utilization Management As a part of formulary design, PDPs are allowed to have utilization measures that will help steer drug usage towards cost effective therapies, where appropriate These utilization measures are part of best practice standards commonly used by managed care organizations today. Some examples of utilization measures are prior authorization, step therapy, quantity limits, tiered copay structures and specialty tiers.

19 Utilization Management Prior Authorization: A process in which safe and appropriate use of a medication is verified prior to dispensing. This process does not always require other medications to be tried first. Information is gathered on what condition is being treated, relevant lab values, and other patient specific information. This process is intended to ensure that the member s treating physicians are following current medical guidelines and to assist the treating physicians in obtaining the best possible patient health outcomes for their patient.

20 Utilization Management Step Therapy: A process where the patient is required to try other similar medication(s) first The pharmacy claims system will perform a search and look for prerequisite therapy. In general, if the system finds the medication(s) in the patient's recent history which should be tried first, the claim will pay without any action required by the prescriber or pharmacist If the prerequisite medication is not found in the patient's recent claim history, the claim will reject

21 Utilization Management Quantity Limits: A process to ensure that the optimum dosing is achieved in a cost effective manner Certain medications with long half lives or extended release mechanisms are appropriately dosed at once daily intervals Dosing these medications twice daily, offers no clinical advantage and may double the price of the prescription Quantity limits generally follow manufacturers recommended dosing schedules and place a cap on the number of units that can be dispensed for a given interval

22 Utilization Management Tiered Co-pay Structures: A formulary design feature that progressively increases the amount a beneficiary must pay for a medication as the tier level increases. Typically generic medications are on the lowest or first tier and have the lowest beneficiary co-pay As the tier level increases so does the copayment the patient pays for each prescription.

23 Utilization Management Specialty Tiers: Allowed by CMS for medications that typically exceed $600 per month, on average in 2008 Can contain any drug type (Brand, Generic, Oral, Injectable) Plans may have only one specialty tier per formulary, but may charge up to 33% in cost sharing or coinsurance on the price of the prescription in the initial coverage phase This tier is exempt from cost sharing exceptions.

24 Medicare Covered Vaccines Beginning on January 1, 2008, the administration fees associated with Medicare Part D covered vaccines will be covered under the Part D benefit CMS views vaccines and their administration as having an intrinsic relationship, citing one cannot exist without the other The vaccine price, the dispensing fee and the administration cost will collectively be considered the negotiated vaccine price. The vaccine price, the dispensing fee and the administration cost will collectively be considered the negotiated vaccine price.

25 Medicare Covered Vaccines Excellent opportunity for Pharmacists Beneficiary Challenges: Not all states allow pharmacists to administer vaccines Not all pharmacies are willing to vaccinate Member reimbursement issues when pharmacy does not administer

26 Conclusion The Medicare Prescription Drug Benefit is an evolving program, and 2008 will be no exception Changes in the standard benefit dollar thresholds, LIS copay amounts, the dollar amount for inclusion on a plan s specialty tier, and reimbursement for the administration of Part D vaccines are just a few of the changes for the upcoming year that will have the most impact on pharmacists and beneficiaries

27 Conclusion Pharmacists and Pharmacy technicians have assumed the role as subject matter experts on the Medicare Prescription Drug Program for beneficiaries as well as other health care providers. It is imperative that as sources of this information, we stay current with the latest program developments and CMS guidance.

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