Transcript Medicare Part D

Medicare Part D
Overview of Options, Creditable Coverage, Required
Notices, COB and Health Care Reform
Medicare Part D
Objectives Today
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Medicare Part D Options
Creditable Coverage
Required Notices of Plan Sponsors
Coordination of Benefits
Impact of Health Care Reform Legislation
Employer Response to Medicare Part D
Medicare Part D
Medicare Prescription Drug, Improvement &
Modernization Act of 2003 (MMA)
•MMA added a prescription drug program to Medicare
(Part D of Medicare) available Jan. 1, 2006
•Centers for Medicare & Medicaid Services (CMS)
released final rules in January 2005
– CMS website: www.cms.gov
•MMA provides options for plan sponsors to provide
retiree prescription drug coverage
Medicare Part D
Part D Options for Plan Sponsors
• Retiree Drug Subsidy
– Retain current plan designs that are at least actuarially
equivalent to standard Part D drug benefit
• Supplement standard Medicare drug benefit
– Separate supplemental plans / coordinate benefits with Part D
– Pay for enhanced coverage through Part D plan
– Assist retirees in paying for Part D premium
Medicare Part D
Retiree Drug Subsidy
• Pays 28% of retiree’s drug costs between $320 and
$6500 in 2012 ($325 and $6600 in 2013) (tax-free*)
• Retiree Drug Subsidy Process:
– Calendar year plans submit applications by 9/30 of each year; noncalendar year plans by 90 days prior to beginning of each plan year
– Actuarial attestation that plan meets MMA’s actuarial equivalence
standard
– Disclose Creditable Coverage status of plan
– Submit and update enrollment information about
retirees/dependents
– Electronically submit aggregate data about drug costs at year end
*Employers receive Retiree Drug Subsidy payments tax-free. Employers may also
take a tax deduction for their prescription drug costs, even amounts attributable to the
subsidy. Under the health care reform law, effective for tax years beginning after Dec.
31, 2012, plan sponsors will no longer be able to take a deduction for the subsidy
amount.
Medicare Part D
Supplement Standard Medicare Drug Benefit
• Set up separate supplemental plans and coordinate
benefits with coverage offered by Part D plans in which
retirees are enrolled
• Pay for enhanced coverage through Part D plan to
subsidize cost sharing and provide additional benefits;
use waivers to allow employers to provide more
flexible benefits and to limit enrollment to retirees
• Assist retirees in paying for some or all of Part D
beneficiary premium
Medicare Part D
Creditable Coverage Definition
• Coverage is creditable if actuarial value of coverage
equals or exceeds actuarial value of standard
Medicare prescription drug coverage
– Whether the expected amount of paid claims under entity’s
prescription drug coverage is at least as much as expected
amount of paid claims under standard Medicare coverage
• Same as “gross test” for first prong of Retiree Drug
Subsidy
• Plans with multiple benefits options – apply actuarial
value test separately for each option
Medicare Part D
Creditable Coverage Disclosure Notices:
• Part D eligible individuals must be provided with
Creditable Coverage Disclosure Notice
– Creditable or Non-Creditable
– CMS model forms are available for use (not required)
• Must contain the following information:
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Whether coverage is creditable or not, and explanation
Rights of beneficiary to notice
Coverage options of beneficiary
General information about workings of Medicare drug plan
Medicare Part D
Creditable Coverage Disclosure Notices:
• Form and Manner of Disclosure
– May be provided with other plan participant
information materials (for example, enrollment or
renewal materials) if disclosures are “prominent and
conspicuous”
– Single notice to covered Medicare individual and
dependents under same plan at same address
– Electronic notice only if certain detailed
requirements met
Medicare Part D
Creditable Coverage Disclosure Notices:
• Timing of Disclosure Notice
– At a minimum, disclosure must be made:
• Prior to Medicare Part D Annual Coordinated Election
Period (10/15 – 12/7) of each year*
• Prior to individual’s Initial Enrollment Period
• Prior to effective date of coverage for eligible individual
• Whenever prescription drug coverage ends or changes
and is not creditable or becomes creditable
• Upon beneficiary request
* Prior to 2011, the Annual Coordinated Election Period was from November 15 to December 31 of
each year.
Medicare Part D
Creditable Coverage Disclosure Notices:
• CMS must be provided with Creditable Coverage
Disclosure Notice from plan sponsor
– Creditable or Non-Creditable
– Completion of electronic disclosure form on CMS website is
sole means of compliance
– Sponsor that has been approved for Retiree Drug Subsidy is
exempt, as are entities that contract with Medicare directly or
with a Part D plan
– Notice must be provided on annual basis or upon any change
that affects whether coverage is creditable
Medicare Part D
Coordination of Benefits
• Part D plans are required to coordinate benefits with
entities providing prescription drug coverage (including
group health plans)
• Group health plans, though not required, may wish to
respond to requests for information from Part D
plans/enrollees to avoid adverse employee relations
– Be prepared for questions from Part D eligible individuals
about interaction of employer-provided plans with Part D plans
– Establish procedures for responding to requests for
information from Part D plans / CMS
Medicare Part D
Enforcement and Penalties
• MMA provides no provisions for CMS to enforce
penalties/sanctions against employers that fail to
comply with Disclosure Notice or COB requirements
(other than not qualifying for Retiree Drug Subsidy)
• Other laws, such as ERISA (for example, fiduciary
obligations) or the Medicare secondary payer rules,
may provide related penalties/sanctions
• Issue of lack of enforcement against employers may
be reopened at later date
Medicare Part D
Impact of 2010 Health Care Reform Law
• The Annual Coordinated Election Period will run from
October 15 through December 7 of each year, starting
in the fall of 2011
• Part D covered drugs are expanding to include more
drugs
• “Donut Hole” is closing – the coverage gap will
decrease each year starting in 2011, until it is
eliminated in 2020
Medicare Part D
Impact of 2010 Health Care Reform Law
• Part D premium subsidy for high-income beneficiaries
is reduced, starting in January 2011 – certain
beneficiaries are subject to income-related premium
• Employers will lose ability to deduct the 28% retiree
subsidy from their taxes, effective for tax years
beginning after Dec. 31, 2012
• Coverage gap discount program is available for drugs
dispensed on or after Jan. 1, 2011
Medicare Part D
Select Items to Consider in Employer
Response to Medicare Part D
•Determine whether to pursue options to provide
retiree prescription drug coverage
– Consider effect of health care reform issues
•Plan language should be reviewed regarding plan
design goals, and compliance with notice and COB
•Determine whether group health plan currently has (or
may have) Part D eligible individuals in plan
•Determine whether plan sponsors are required to
provide Disclosure Notices to Individuals/CMS
Medicare Part D
Select Items to Consider in Client
Response to Medicare Part D
•Determine if coverage is creditable or non-creditable
and decide what notices to use
•Decide how to distribute notices
– Third party service provider
– Blanket delivery or only to Part D eligible individuals
– Separate mailings or electronically
•Comply with COB requirements with Part D plans and
respond to requests for information
Medicare Part D
Model CMS Forms
• Two Model Notices from Entity to Beneficiary:
– Creditable Coverage, or
– Non-Creditable Coverage
Model notices are not required to be used, but then must
meet content standards provided in regulations
• Notice from Entity to CMS – electronic disclosure form
regarding creditable coverage status only available on
CMS webpage at:
www.cms.gov/CreditableCoverage/45_CCDisclosureForm.
asp
Medicare Part D
More Information
•For more information regarding Medicare Part D, visit
www.cms.gov
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Medicare Part D
Discussion
Medicare Part D
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