Gimme a D!

January 1, 2006

The vastly publicized Medicare Part D prescription benefit plan has finally come to life. We offer a primer to help your patients (and staff) understand what it's all about.


The holiday lights have gone dark and the New Year's noisemakers have been tossed out with the tinsel. Let the real fun begin. Medicare Part D is now in effect.

Like the hype over HIPAA a few years back, news about Part D has saturated the media - a Google search turns up more than 11 million hits - and, once again, the extent to which physicians are tuned in runs the gamut. A highly unscientific poll of visitors to our Web site, www.PhysiciansPractice.com, revealed a near-even split among three camps: a third had heard some news about Medicare Part D but hadn't paid much attention; a third said they could probably explain Part D in a general way; another third considered themselves very familiar with the new drug coverage.

If you listen to officials at the Centers for Medicare & Medicaid Services, the Part D plan - in which existing Medicare-eligible patients can enroll voluntarily for prescription drug coverage offered by private companies - will be nothing but positive for the nation's 43 million Medicare beneficiaries and their physicians.

"This is going to make physicians' lives easier in certain ways, because their patients will have drugs at a lower cost, especially their low-income patients," says Jeffrey Kelman, an internist and chief medical officer for CMS' Center for Beneficiary Choices, which oversees the Part D program. "Physicians can prescribe with the knowledge that their patients can afford the drugs. It should improve compliance."

And noncompliance is no small problem among the elderly. Kelman points to statistics that show perhaps 20 percent of Medicare beneficiaries don't take their medicines as prescribed, and cost is believed to be one of the main causes.

Others aren't as charitable in their assessment of Part D: "If [my prescribing habits] change at all, it will be this way: I will prescribe what the damn government allows, whether or not it is in my best judgment and what is best for the patient," said one respondent to our Web poll.

About 30 percent of Cecil Wilson's patients are Medicare beneficiaries, and several months before Part D took effect, the Winter Park, Fla. internist was already fielding patients' questions - and realizing confusion was fairly widespread.

According to Wilson, "The discussions have been along the lines of, 'this looks really complicated. Would [Part D] make sense for me based on the medications I am taking? Which of these plans should I choose?'"

"I agree with them that it is complicated," says Wilson, a member of the American Medical Association's executive board. "But ... I encourage them to take the time to find out as much as they can about the program."

Whether you're a Part D expert or a neophyte, whether you embrace the change or cringe at the thought of it, chances are your patients, like Wilson's, will have questions - and you may be wondering how your practice will be affected.

Part D Primer

Here are the basics:

Who's eligible? - All Medicare beneficiaries with Part A coverage are eligible to join a Part D prescription drug plan. But they must choose a plan, enroll, and pay for it. Medicare is not billed; the benefit comes from private plans approved by the agency.

What are the plan choices? - Beneficiaries have a minimum of two plans to choose from. These are called "stand-alone plans," which offer drug coverage only. Beneficiaries can also obtain drug coverage - often more comprehensive - by joining a Medicare Advantage plan (formerly called Medicare + Choice).

When is enrollment? - Enrollment has been in full swing since November 15, 2005, and it's open until May 15, 2006. Coverage started on January 1 for those who joined in 2005. Those who join between now and May will have coverage effective the month after they sign up.


With some exceptions, those who don't sign up by May 15 will have to wait until the second open enrollment period, which begins November 15. For them, coverage starts January 1, 2007.

Most beneficiaries who wait until after May 15 to sign up will pay a higher premium equal to 1 percent extra for each month they waited.

Dual-eligibles - people enrolled in both Medicare and Medicaid - were "pre-enrolled" at random in a plan in their area, so if they didn't make a choice by December 31, 2005, they were automatically in this default plan.

What will it cost? - The average premium per drug plan is about $40 per person - there is no discount or special price for married couples.

Plan sponsors are permitted to impose an annual deductible per person, but it is limited to no more than $250; some may have a lower amount. After the deductible is met, the plan will pay 75 percent of the next $2,000 in costs, which would be equal to $1,500, while the beneficiary would pay $500.

After the $2,000 is met, there is no coverage until the beneficiary spends another $2,850 in out-of-pocket drug costs. This is the so-called "donut hole," or coverage gap. By this point, the beneficiary would have already spent a total of approximately $3,600 out of pocket: the $250 deductible, $500 in co payments, and $2,850 during the gap period. Dual-eligibles and those with other government subsidies such as Social Security Disability Insurance are not subject to the gap.

Once the $3,600 limit has been reached, Medicare pays 95 percent of drug costs, with the beneficiary paying 5 percent - or a $2 copayment for generics and $5 for brand- name medications - whichever is greater.

Financial Help is Available

For those patients whose budgets can't sustain the $3,600 price tag, there's help.

Dual-eligibles, for instance, do not have to pay to be part of a drug plan; CMS is picking up their premiums.

In addition to the 6.3 million dual-eligibles, CMS counts as needy another 8.1 million beneficiaries whose incomes fall below 150 percent of the federal poverty level (and meet other requirements) who are now eligible - but have to apply - for some financial assistance.

And some 11.8 million Medicare beneficiaries have a drug benefit through their retirement health coverage. They may want to pick up a Part D plan if that coverage is inferior to a standard Medicare drug plan. Employers are required to mail these beneficiaries a notice comparing the two plans.

If the retirement coverage is deemed as good or better than Part D (so-called "creditable" coverage), then the beneficiary will most likely stick with the employer plan. Should the employer drop or alter the coverage, the beneficiary will be able to pick up Part D at some future date without paying the late penalty.

Another 11 million beneficiaries are believed to be without "adequate" drug coverage - these are the folks who might be most urgently hunting for a plan, and peppering you and your staff with questions about Part D.

CMS mailed letters to beneficiaries who may be eligible for financial assistance. If you have patients you think might qualify or who could use help paying for premiums, have them call 800 772 1213.

Get Familiar with Formularies

Like commercial insurance plans with drug coverage, Part D plans have medication formularies. Medicare set some broad formulary rules for plans to follow but did not mandate a list of drugs that had to be offered. It did require that at least two drugs in each class be offered, in cases where there were at least two. Biologics, insulin, and smoking cessation medications are also covered.

Typically, the formularies are set up with tiered copayments based on whether a drug is a generic or on a preferred list. CMS also allowed plan sponsors to impose a "step" system, meaning the patient would have to try and fail on a certain drug before the plan would cover the second-line medication.

Plans have the option of dropping (and adding) medications. In this case, however, CMS must approve the change, which it would do for "medically sensible reasons," CMS' Kelman says - for example, that a more effective drug has come on the market or that the Food and Drug Administration has pulled a drug.

When pressed, Kelman admits that CMS might allow a plan to drop a medication if the case was made that it was too costly. However, chemotherapy drugs and certain HIV/AIDS medications cannot be dropped.

Plans would have to mail providers and all members a notice 60 days before any change in the formulary.

Some physicians make a point of learning the formularies of their commercial patients' plans, particularly if their payers reward them for formulary compliance. With Part D, many patients are likely to rely on you to know what is on their formulary, and you may not know unless you make a point to find out. Some PDA and e-prescribing programs should already have Part D plan formularies loaded. At the very least, you can have someone on staff print out the formularies for the plans in your area from plan Web sites, especially if you often prescribe medications that may be new and particularly pricey.

How You Can Help

CMS urges practices to learn as much as they can to help their patients understand their options and make good decisions. Of course, it's up to you to decide how involved you want to be.

Here are some suggestions:

  • Create an expert - If you have a large population of Medicare patients, start by assigning one person in your office the task of being your Part D "expert" to serve as a resource to both patients and your staff - just as many practices do to help patients apply for discount drug programs offered by the manufacturers. Note that practices are not permitted to actually enroll patients in plans - they must complete the applications and submit them on their own.

  • Make contact - Some offices may be in the habit of contacting their Medicare carrier or fiscal intermediary with Medicare questions. But "that is not a route we are recommending," Kelman says, instead advising practices to go straight to Medicare at 1-800-MEDICARE. Be sure to have a list of questions so that you don't have to call more than once, and write down the answers you get. Get the name of the person you speak to in case you have more questions later, or receive conflicting information that you need to double-check.

Log On for Help

There are numerous resources on the Internet, including:

  • www.medicare.gov/MPDPF for a list of specific plans in each state. CMS awarded contracts to 10 firms that are offering coverage throughout the nation. Snowbirds and others who travel frequently may want to choose one of these.

  • http://plancompare.medicare.gov/formularyfinder/selectstate.asp will match available plans with patients' medications. If your patients ask for help choosing a plan, you can recommend that they start out by making a list of all their medications and how much they pay for them. This can help determine if the drugs they take are covered by plans in the area.

Finally, CMS has established a network of agencies serving the aging and other community organizations that have been trained to help beneficiaries. To locate such an organization in your ZIP code, call 800 677 1116, or go to

www.eldercare.gov/Eldercare/Public/medicare.asp

.

View From the Trenches

The impact of Part D on your practice will depend in large measure on how many Medicare beneficiaries you treat, and, of course, how many end up enrolling for the benefit.

Wilson, the Florida physician, says it's important to encourage patients not to take too long to decide. "We ... talk about the fact that if they don't choose [by May 15], the delay will cost them 1 percent per month in additional premium." He says he explains the basics of the benefit to patients, and then refers them to the Web for more help, recommending that they use the calculator tools.

"I tell my patients who are computer savvy, and a fair number of them are, to go online and plug in their medications, and see what plans are available. If they are not computer literate, I suggest that maybe their children or grandchildren can help them," Wilson says.


John Mach, MD, chief executive officer of a health plan based in Minnetonka, Minn., has high expectations for the impact Part D will have, especially for lower income patients. But he hopes, too, that it will spur physicians to become more price-sensitive and more willing to discuss the cost of medications with Medicare patients.

"Part of me hopes that this will be a stimulus for physicians to get more engaged on the cost-effectiveness of medications," Mach says. "I hope physicians will have that one extra question on their list - 'Are you going to have trouble paying for this medication?'"

Mach runs Evercare, Inc., a plan for the aged and disabled; it has 80,000 members in 23 states. But he well remembers prescribing dilemmas from his days in practice. "If patients had no [drug] coverage, we would have to make a lot of tradeoffs, give samples, and whatever you might have had around the office. If you are making decisions based on what samples you have in the office, that's not a good way to treat patients."

And he adds that learning formularies for Part D plans "is an obligation that we have to uphold for our patients of a Medicare age. We don't want them to be surprised at the drugstore," he says.

Theresa Defino is an editor of Physicians Practice. She can be reached at tdefino@physicianspractice.com.

This article originally appeared in the January 2006 issue of Physicians Practice.