The Basics of Medicares Basic Drug Benefit January 26, 2006 Dee Mahan, Families USA Health Action 2006.

The Basics of Medicare’s Basic Drug Benefit

January 26, 2006

Dee Mahan, Families USA

Health Action 2006

A multiplicity of benefit levels

• “Basic” or “standard” benefit

• Low Income Subsidy (LIS) for non-duals, higher incomes or assets

• LIS for non-duals, lower incomes or assets

• LIS for dual eligibles, higher income

• LIS for dual eligibles, lower income

• LIS for dual-eligibles in residential care

With even more players

CMS PLANS (est. 250+)

Customer Service

TrOOP Facilitator

Carve-Out Drug Mgmt

In one zip code:47 PDPs 9 MA-PDs 6 PPO-PDs

Pharmacies

How did we get here?

• Program based on market competition with heavy subsidies

• “Medicare Drug Gold Rush”: “Profit from the Biggest New Benefit in the History of Medicare Part D Drug!!!”

• With limited manufacturer price pressures

Now that we’re here…..

• Help beneficiaries navigate the program

• Monitor what’s happening

• Work to make the program better

Picking a plan – Working through the questions

Low-income subsidy?

PDPs in my area

At low cost-sharing

And low drug prices

That covers my drugs

Convenient preferred pharmacy

If 0, try again with new drugs

With affordable premiums

START:

What drugs are covered?Medicare –vs- the PDPs

• “Part D” covered drugs– Drugs Medicaid must cover– Smoking cessation drugs– Certain vaccines – Insulin & supplies

• Drugs not covered by Part D– MOST optional Medicaid drugs, inc. OTC

drugs – Drugs covered by Parts A or B

What the plans cover

• Plans MUST cover– At least 2 drugs per USP class– 146 unique therapeutic categories and drug

classes– All or substantially all drugs in some

categories– Most plans cover a large percent of drugs

• Plans CAN cover– Non-covered drugs, e.g. OTC drugs

When can plans change what they cover?

• Not under cover of darkness– Not around enrollment – Required 60 days notice to affected

beneficiaries, pharmacists, providers

• What counts as a coverage change– Change in cost-sharing or tier – Changes in UR do not

What’s covered and what’s the benefit look like?

Actuaries have been busy.• The missing “basic benefit”

– In one region: 7 of 47 plans offer something resembling the “basic benefit”

– Up to five coverage tiers

– Multiple use restrictions

• But the doughnut hole is alive and well

Tiers and more tears

Plan A Plan A Premier

Plan B Plan C Plan D

Lipitor Tier 2:

$17.67

Tier 2:

$30.00

Tier 1:

$18.92

Tier 3:

$52.70

Tier 2:

$25.00

Zocor Tier 3:

$33.35

Tier 2:

$60.00

Not Covered

Tier 2:

$22.00

Tier 3:

$60.00

Protonix Tier 3: $26.43

Tier 3:

$30.00

Tier 1:

$26.56

Tier 2:

$22.00

Not Covered

Review of select plans in Region 5

Many ways to control costsPlan A Plan A

PremierPlan B Plan C Plan D

Lipitor Quantity limit

Quantity limit

No limit PA No limits

Zocor Quantity limit

Quantity limit

Not Covered

No limits No limits

Protonix Step therapy

Step therapy

Step therapy, PA

No limits Not covered

Review of select plans, Region 5

What if you strike out?

• Appeals and exceptions– Required of all plans– Specified requirements for turnaround in

emergency situations– Physician statement can automatically move a

request to an emergency determination

• Transition benefit if it works

Up-front costs most have to pay-Examples from one region

• Premiums– $6.44 to $68.97 per month

– Average premium: $37.86

• Deductibles– No deductible for 26 plans (55%)

– 17 (36%) at $250

There’s also the drug’s price

• Price matters– How far the benefit goes– Costs in the doughnut hole– In what the benefit costs overall

• Plans negotiate individually– Must pass on “some” discount– Prices vary by pharmacy – Prices can change anytime

Prices vary

Lowest Highest Median

Lipitor $59.82 $90.74 $69.65

Zocor $110.31 $153.62 $132.15

Protonix $90.00 $129.86 $105.68

Nov. Price Ranges, PDPs in one region; 30-day supply

Based on a review of all plans, Region 5, November 2005

And prices matterCost/Year, VA prices substituted for plan

prices, three Medicare recommended plans

Drugs profiled: Lipitor 10 mg, Plavix 75 mg, Fosamas 70 mg, Norvasc 5 mg and Protonix 40 mg. Select plans, Region 5, 11/05.

Cost to Consumer

Using Plan Prices

Using VA Prices

Difference

Plan A benefit $2,777 $1,020 $1,757

Plan B benefit $3,779 $1,218 $2,561

Plan C benefit $3,071 $1,994 $1,077

Finally, where can I get my Rx?

• Pharmacy networks

• Must accept willing providers

–Most have broad networks

–Smaller group of “preferred” pharmacies

Helping out

• Managing the marketing frenzy; avoiding fraud

• Deciding whether and when to enroll

• Picking a plan—the hard part

• Using the Plan Finder

• Double checking with the plans if you can

• Managing problems afterwards

Special considerations

• Employer sponsored coverage– Check before enrolling in Part D

• Drug company assistance programs– Can continue, with changes

• Low Income Subsidy– It’s own set of enrollment and access issues

What to expect moving forward

• Reduction in number of plans?– Business consolidations– Cost of maintaining if few enrollees

• Few immediate changes in program structure– Delay penalty, allow switches mid-year?– Price negotiations?– Duals fixes

Right now what are we getting?

• A "modest to moderate" decline in out-of-pocket spending for those who do not receive low-income subsidies– Racial minorities, near-poor, those with

severe chronic conditions saving least.

• Average out-of-pocket savings est. $196 in 2006