Transcript File - Sharp-RX

The Medicare Part D
Prescription Drug
Benefit
Understanding the Formulary Requirements and
Related Implications
Michael Sharp, R.Ph, Pharmacy Consultant
Office of Medicaid Policy and Planning, State of Indiana
[email protected]
Areas of Focus
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Basic benefit principles, fundamental formulary
requirements and CMS review processes
Exceptions/Appeals overview
Formulary implications for dual-eligibles and the
Indiana Medicaid approach
Implementation considerations, timeline and
recommended resources
Medicare Coverages
Part A
Hospital insurance for inpatient stays, some skilled
nursing facility care, hospice care and home
health care
Part B
Medical insurance for physician services, outpatient
hospital care, durable medical equipment, some
medical supplies and selected drugs
Part C
Medicare Advantage (MA-PD) for benefits through
private health plans – old Medicare+Choice
Part D
Prescription drug benefit for persons eligible for Part
A or enrolled in Part B
Medicare Prescription Drug Benefit,
2006 and Beyond
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Beginning in 2006, beneficiaries have choice of:
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Traditional Medicare, with access to private drug-only plans (PDPs)
Medicare Advantage (MA-PD) plans for Medicare benefits and Rx
drugs
New plans provide “standard” prescription drug benefit or its
“actuarial equivalent”
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Plans have some flexibility to determine which drugs are covered
and cost-sharing requirements, subject to certain constraints
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Premium and cost-sharing subsidies for low-income beneficiaries
with incomes up to 150% poverty and modest assets
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Medicaid will no longer pay for Medicare D covered drugs after
December 31, 2005
Medicare Prescription
Drug Plans
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Must offer basic drug benefit
 Standard benefit
May offer supplemental benefits
 Alternative Benefit
 Enhanced benefit
Can be flexible in benefit design
 May look different than standard benefit
 May have different co-pay or co-insurance
 Cannot change actuarial equivalence
Part D Sponsors –
Risk-Bearing Entities
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Prescription Drug Plans (PDPs)
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Pharmacy Benefit Managers
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Private Insurance Companies
Medicare Advantage-Prescription Drug (MA-PDs)
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Must offer at least 1 option for Rx coverage
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May offer plans with no drug coverage for beneficiaries who
decline Part D coverage
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May offer Special Needs Plans, focusing on Duals &
selected diagnoses
Formulary Coverage
Fundamentals

CMS says “clinically appropriate medications, at lowest possible cost”
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Formularies must not discriminate against:
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Individuals with HIV/AIDS, mental health and other cognitive
disorders
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The Dual eligibles
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CMS utilizes the USP formulary classification model as the minimum
benchmark for formulary appropriateness
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USP model consists of 146 therapeutic classifications and related
pharmacologic categories
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Plans must accommodate all medically necessary medications at all levels
of care
Medicare Prescription
Covered Drugs
Prescription drugs, biologicals and insulin
 Medical supplies associated with injection of insulin
(syringes/swabs/etc)
 Cases where a drug is not FDA approved for an indication
but it has clinical literature to support its use
 Vaccines not covered by Part B
 Viagra, Levitra and Cialis
 Brand name and generic drugs will be included in each
formulary*
*Less for generics or preferred Rx, more for brands. Multisource brand name products can be excluded.
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Formulary Requirements
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Plan formulary must be developed by a Pharmacy and
Therapeutics Committee
Formulary must include at least 2 drugs in each therapeutic
category and pharmacologic class of covered Part D drugs
and in certain categories, must contain “all or substantially
all” of the following medications:
• Antidepressants
• Antipsychotics
• Anticonvulsants
• Antiretrovirals
• Antineoplastics
• Immunosuppressants
Part D Drug Exclusions
Drugs for
 Anorexia, weight loss, or weight gain
 Fertility
 Cosmetic purposes or hair growth
 Symptomatic relief of cough and colds
 Prescription vitamins and mineral products
 Except prenatal vitamins and fluoride preparations
 Non-prescription (OTC) drugs*, with the exception of OTC insulin
 Barbiturates
 Benzodiazepines
 Outpatient drugs for which the manufacturer seeks to require that
associated tests or monitoring services be purchased exclusively from the
manufacturer or its designee as a condition of sale
*Plans may choose to pay for OTC products as an administrative cost, with
the member not incurring a co-pay, these products do not count towards
formulary requirements.
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Part D Drug Exclusions (cont)
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Part A Prescriptions
– In skilled nursing homes – up to 100 day stay
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Related to the terminal illness for hospice patients
Part B Outpatient Drugs
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Durable Medical Equipment Drugs (e.g., inhalation therapy, insulin
w/pumps & some chemotherapeutics)
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Immunosuppressive Drugs
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Hemophilia Clotting Factors
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Selected Oral Anti-Cancer Drugs
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Selected Oral Anti-Emetic Drugs, up to 48 hrs after chemotherapy
administration
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Erythropoietin for persons on dialysis
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Intravenous Immune Globulin, provided in the home
P&T Committee: Requirements
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Membership includes the following:
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The majority are practicing physicians and
pharmacists.
Various clinical specialties that reflect the needs of
the plan beneficiaries.
At least one practicing physician and pharmacist who
are experts in the care of the disabled or elderly.
CMS provides extensive guidance on the
expectations surrounding the composition and
activities of the P&T committee
Formulary Review: Rationale

Medicare Modernization Act requires CMS to
review formularies and related processes to
ensure:
Beneficiaries have access to a broad range of
medically appropriate drugs to treat all disease states,
and
 Formulary design does not discriminate or
substantially discourage enrollment of certain
groups
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Formulary Review: CMS Validations
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Checks for appropriate utilization management
strategies
Checks for two drugs per USP category and
class
Checks for Key Drug Types as defined by USP
Checks for the most common drugs used in the
LTC population
Checks “all or substantially all” requirement
Formulary Considerations
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Safety and Efficacy
Cost-effectiveness*
In general, formulary design will be similar to
that of commercial plans today, with the added
benefit of CMS oversight for adherence to
published guidelines.
*The federal government can’t negotiate or mandate pharmacy
payment rates or manufacturer rebate levels
Provision of Notice Regarding
Formulary Changes
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Prior to removing/changing drug from
formulary the plan must:
Provide 60 days notice to prescribers, network
pharmacies, pharmacists and other health plans
 CMS will review and approve modifications
 For enrollees, must provide either:
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 Direct
written notice at least 60 days prior to date the
change becomes effective, or
 At the time a refill is requested, provide a 60 day
supply of drug and written notice
Exception Requests
Enrollees or their authorized representative may request an
exception when:
 A non-formulary drug is prescribed and is medically
necessary
 The cost-sharing status of a drug an enrollee is using
changes
 A drug covered under a more expensive cost-sharing tier
is prescribed because the drug covered under the less
expensive cost-sharing tier is medically inappropriate
 The enrollee is using a drug that has been removed from
the formulary
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Ensures access to medically necessary Medicare D
covered prescription drugs
Cost and Utilization Controls
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Prior Authorization
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Step Therapy
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Quantity Limits
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Frequency Limits
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Generic Substitution
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Drug Utilization Review-Prospective and Retrospective
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Tiered formulary design
Appeal Processes
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1st Step: Plan Re-determination
 7 days to respond
 72 hours, if expedited
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2nd Step: IRE Reconsideration
 Independent Review Entity (IRE), CMS contractor, which
reviews plan redeterminations
 7 days to respond
 72 hours, if expedited
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3rd Step: Administrative Law Judge
 Must satisfy minimum amount requirement
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4th Step – Medicare Appeals Council
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5th Step – Federal District Court
Characteristics of Medicare Population
Nursing Home/Assisted Living Resident
Under Age 65 & Disabled
Dual Eligible
Cognitive Impairment
Rural
Fair to Poor Health
1+ Functional Limitation
Low-Income < 150% FPL
6%
14%
18%
23%
24%
29%
31%
39%
Excludes Part A only beneficiaries
Percentage of Total Medicare Population
Sources: Kaiser Family Foundation based on Medicare Current Beneficiary Survey, 1997-2002
and Low income estimate from CBO, July 2004
Issues for the Duals
What happens, when they …
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Ignore notices regarding Rx changes
Don’t know how to use their assigned plan
Learn the drug Medicaid paid for isn’t covered by their new
Medicare plan
Have higher out of pocket costs for copays, non - covered
drugs
Formularies –
Transition Process
• Plans have flexibility, but CMS guidance expects:
– 1-time transition supply for new enrollees
Ambulatory
30 days
Nursing Home 90 to 180 days
– 1-time temporary emergency supply for others
For changes in level of care (nursing home, acute hospital, hospital, etc.) or
during appeals
Drug plans that want to serve Medicare beneficiaries enrolling
in the new prescription drug benefit next year must meet strict
standards to assure that older and disabled Americans will be
able to make the transition to the new coverage smoothly.
Mark B. McClellan, March 16, 2005, CMS Press Release
Indiana Medicaid: Specific
Approach for Dual Eligibles
Indiana Medicaid will continue to cover Medicare D
excluded drugs to the extent that they are covered in
the Medicaid program today. Current dual population
estimated at 100,000 lives.
Examples:
 Over the counter drugs on the Indiana Medicaid
formulary
 Agents for treating symptoms of cough/colds and
prescription vitamins
 Barbiturates and benzodiazepines
Everyone Agrees:
It’s Difficult to Comprehend all the
Details
“You choose a prescription drug plan and
pay a monthly $35 premium. Okay, now it
gets a little complex…”
- Reader’s Digest, April 2004
Decisions for Medicare Beneficiaries
Do Not Enroll
in Part D Plan
No Rx Coverage
(late enrollment
penalty)
“Creditable”
Employer Plan
(no low-income
subsidies)
Medicare
Beneficiary
Apply for Low-Income
Subsidy
Enroll in Part D Plan
Medicare
Advantage
•HMO
If Dual Eligible
Auto-Enrolled
•PPO (regional)
Traditional
Medicare
•Prescription
Drug-Only
Plan (PDP)
•Private
Fee-for-Service
Social
Security
Medicaid
Decisions to be Made:
Medigap Coverage
(but not “creditable”
= late enrollment
penalty)
Source:
www.kff.org
If meet income and asset
test, qualify for subsidy:
Below 100% FPL
($9,570 in 2005)
• Premiums
• Covered Drugs
• Cost-Sharing
Below 135% FPL
($12,920 in 2005)
Assets $6,000/single;
$9,000/couple
Below 150% FPL
($14,355 in 2005)
Assets $10,000/single;
$20,000/couple
“ Unfortunately, you have
what we call ‘no insurance.’ ”
26
Issues for Practicing Physicians
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Assisting beneficiaries with understanding the new
coverage available
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Motivating patients to take action and apply for the benefit
that comes closest to meeting their needs
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Navigating multiple drug formularies
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Coordinating prior authorizations & appeals
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Comprehending the ongoing changes that will likely occur
Medicare Prescription
Drug Benefit Positive Effects
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Enhancement of existing Medicare benefit package
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Access to subsidized prescription drug coverage
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Improved availability and compliance with treatment
regimens
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Improved health and reduction of adverse health
effects
Medicare Prescription Drug
Benefit Timeline
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January 21, 2005 - Final Rule Published
June 6 - Bid submission
July - Finalization pharmacy contracts
September 14 - PDPs announced
October 1 - Marketing begins
October 13 - Prescription Drug Plan Finder Tool rollout
November 15 - Enrollment begins
January 1, 2006 - Benefit begins
May 15, 2006 – Last day to enroll before late enrollment penalty
Sources of Information
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CMS Website
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www.cms.hhs.gov/medicarereform/pdbma
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www.hhs.gov/medlearn/drugcoverage.asp
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www.cms.hhs.gov/medicarereform/factsheets.asp
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www.cms.hhs.gov/medicarereform/drugcoveragefaqs.asp
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www.cms.hhs.gov/partnerships/news/mma/default.asp
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www.cms.hhs.gov/mailinglist
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www.cms.hhs.gov/providers
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http://www.cms.hhs.gov/medlearn/drugcoverage.asp#train
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1-800-Medicare
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Social Security Administration
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www.ssa.gov [Look under Medicare Outreach]
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Kaiser Family Foundation
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www.kff.org/rxdrugs/index.cfm
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United States Pharmacopoeia (USP)
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www.usp.org/HealthcareInfo/mmg/