State Responses to Medicare Part D

1. State Responses to Medicare Part D Presented by: Kimberley Fox, Senior Policy Analyst, Institute for Health Policy Academy Health Annual Research Meeting Seattle, WA June 2006

2. Survey Methods • Funded by the National Pharmaceutical Council • Literature and document review • Fall 2005 survey w/ telephone follow-up • Snapshot of states’ plans for adapting programs to MMA • 24 existing SPAP programs • 14 Medicaid agencies (representing 66% of Medicaid drug spend), 11 in states with SPAPs. • Response rate: @96% • Findings reflect responses at time of survey completion. Muskie School of Public Service

3. State Responsibilities/Options Under Part D Medicaid • Assist w/ transitioning duals • Clawback payments • LIS application and MSP screening responsibilities. • May fill Part D gaps with state-only dollars State Pharmacy Assistance Programs (SPAP) • May fill Part D gaps • Qualified SPAP expenditures count toward TROOP • Part D plans must coordinate • Transitional grant funding available Muskie School of Public Service

4. Key Differences between Part D and State Pharmacy Coverage Medicaid • May face higher copayments • Loss of guaranteed access if they can’t afford copayments • No coverage of excluded drugs under Part D • Formularies may not include drugs covered under Medicaid • Loss of coverage of denied drugs during appeal • More limited pharmacy networks. State Pharmacy Assistance Programs (SPAPs) • Tighter formularies/ more limited pharmacy networks • LIS eligible – potentially lower cost-sharing • Non-LIS eligible – • Up-front costs such as premiums and deductibles previously not required in many programs • Higher cost-sharing before and in the donut hole (varies by state). Muskie School of Public Service

5. Part D Transitional Enrollment Issues for SPAP Enrollees and Duals • Duals • Medicaid drug coverage ends Jan 2006 • All duals ‘deemed eligible’ for low income subsidies • Randomly assigned to below benchmark PDPs by CMS – Nov 2005 • State Medicaid agencies can conduct formulary matches to recommend more appropriate plans. • SPAP Enrollees • Most not deemed eligible for LIS, must apply (exc. MSPs) • All enrollees must voluntarily enroll in PDP/MA-PD • Qualified SPAPs cannot auto-enroll enrollees into a preferred plan • Various options to ‘facilitate’ LIS application/Part D enrollment Muskie School of Public Service

6. SPAP and Medicaid Part D Gap-filling Options • Medicaid • Premium assistance above LIS benchmark • Copayments • Off-formulary/PDP denied drugs or during appeals • Non-Part D covered drugs (eligible for FFP) • SPAP • Premium assistance (LIS or full premium) • Wrap around full/partial LIS or non-LIS out-of-pocket costs • Deductibles, copayments, donut hole, • Off-formulary/PDP denied drugs or out-of-network pharmacies • Non-Part D covered drugs Muskie School of Public Service

7. Filling Part D Gaps for Duals: Selected Medicaid Plans 2006 NY NY NJ NJ NY,NJ NY,NJ NJ NJ Source: Part D Survey of SPAP and Medicaid Directors, Fall 2005. Muskie School of Public Service

8. Medicaid Transition Plans for Part D Enrollment, 2005 Source: Part D Survey of SPAP and Medicaid Directors, Fall 2005. Muskie School of Public Service

9. SPAP Plans Once Part D Begins, 2006 Muskie School of Public Service

10. Specific Part D Gaps Filled by SPAPs, 2006 Source: Part D Survey of SPAP and Medicaid Directors, Fall 2005. Muskie School of Public Service

11. More than Half of SPAP Enrollees Will Not Qualify for Full LIS*N=26 programs/23 states *Percentages based on estimates by state officials from income data, generally do not include assets. Source: Part D Survey of SPAP and Medicaid Directors, Fall 2005. Muskie School of Public Service

12. SPAP Efforts to Enroll Members in LIS, 2005 N=17 *For LIS and/or Part D Enrollment Source: Part D Survey of SPAP and Medicaid Directors, Fall 2005. Muskie School of Public Service

13. SPAP Efforts to Enroll Members in Part D Plans, 2005 N=17 *For LIS and/or Part D Enrollment Source: Part D Survey of SPAP and Medicaid Directors, Fall 2005. Muskie School of Public Service

14. Few States Expanding SPAPs to New Groups Source: Part D Survey of SPAP and Medicaid Directors, Fall 2005. Muskie School of Public Service

15. Summary of State Actions • Short-term emergency coverage (Medicaid/ some SPAPs) • Medicaid largely not filling Part D gaps for duals over time, except Part D excluded drugs. • SPAPs holding existing enrollees harmless, but not expanding benefits/eligibility • Only a few states starting new SPAPs • States generally exercising caution… wait and see approach. Muskie School of Public Service

16. Policy Implications/ Discussion • Differences in State D-Gap plans for duals and SPAP enrollees • Larger cost-sharing differences for non-LIS SPAP enrollees relative to prior coverage than for duals. • Large potential savings to SPAP as secondary payer; little savings and potential short-term losses from the clawback for Medicaid. • Formularies – to wrap or not to wrap. • Don’t want to encourage Part D plans to limit formularies to narrowest possible standard • Adverse effects from reduced drug coverage as a result of restricted formularies may result in more cost to the state if that leads to use of more expensive medical services. • States may want to reserve the right to cover in limited circumstances where likelihood of adverse events is higher. At minimum, could help duals appeal. • Reconsideration of federal match (?) • SPAPs Can Do More to Maximize SPAP Savings allowing them to potentially fill more gaps or expand eligibility. • Monitor state coverage decisions on duals and SPAP enrollees. Muskie School of Public Service

17. Further Information • For copies of this presentation: • kfox@usm.maine.edu • Full report of survey findings available at: http://muskie.usm.maine.edu/m_view_publication.jsp?id=3409 Muskie School of Public Service