Medicare Part D

Medicare Part D is a prescription drug benefit for people with .

PROGRAM SPECIFICS

The drug benefit will not be part of the Original Medicare program (Part A and B), but rather will be offered through private insurance plans {Link without Title} that will be reimbursed by the plan (MA) that covers prescriptions drugs (MA-PD). There will be 34 PDP regions and 26 MA regions in the U.S. The drug plans will control drug costs through a system of tiered formularies in which lower cost drugs are assigned to lower tiers and thus are easier to prescribe.

SIZE OF THE PROGRAM

It is expected that eleven million will be covered by Medicare Part D. Of those, six million people will be eligible for both Medicare Part D and .

ENROLLMENT

Enrollment for most beneficiaries is voluntary. The initial enrollment period takes place from November 15, 2005 till May 15, 2006. However, if a person does not enroll by the May 15 deadline, there will be a 1 % per month penalty based on the average cost of the premium until one does enroll, which some critics have argued is improperly coercive. {Link without Title} . On January 1, 2006, beneficiaries eligible for both Medicaid and Medicare (dual eligibles) will lose their Medicaid coverage for prescription drugs.

COSTS TO BENEFICIARIES

The MMA establishes a standard drug benefit that Part D plans may offer {Link without Title} . The standard benefit is defined in terms of the benefit structure and not in terms of the drugs that must be covered. In 2006, this standard benefit requires payment of a $250 deductible. The beneficiary then pays 25% of the cost of a covered Part D prescription drug up to an initial coverage limit of $2250. Once the initial coverage limit is reached, the beneficiary is subject to another deductible, known as the “doughnut hole,” in which they must pay the full cost of medicine. When total out-of-pocket expenses on formulary drugs for the year, including the deductible and initial coinsurance, reach $3600 the beneficiary pays $2 for a generic or preferred drug and $5 for other drugs, or 5% coinsurance, whichever is greater. This limit is equivalent to a total drug cost of $5100. Note that the $3600 amount is calculated on a yearly basis; a beneficiary who amasses $3600 in out-of-pocket costs on December 31 of one year will have to start all over again on January 1.

FORMULARIES

Part D plans are not required to pay for all covered Part D drugs {Link without Title} . They may establish their own formularies, or list of covered drugs for which they will make payment, as long as the formulary and benefit structure are not found by CMS to discourage enrollment by certain Medicare beneficiaries. Part D plans that follow the formulary classes and categories established by the United States Pharmacopoeia will pass the first discrimination test. Plans can change the drugs on their formulary during the course of the year with 60 days notice to affected parties.

IMPLEMENTATION ISSUES

The Medicare Part D marketplace is an evolving, dynamic environment with multiple players attempting to achieve individual goals.

Plan and Health Care Provider goals are not aligned: PDP's and MA's are rewarded for focusing on low cost drugs to all beneficiaries, while Providers are rewarded for quality of care – sometimes involving expensive technologies.

Plans are charged with conflicting goals: They must offer access to a wide variety of drugs that beneficiary doctors prescribe, but also offer restrictive formularies and hence lower prices and premiums.

More conflicting goals: Plans are required to have a tiered exemptions process for beneficiaries to get a higher-tier drug at a lower cost, but plans must grant exception when medically necessary. However, the rule denies beneficiaries the right to request a tiering exception for certain high-cost drugs.

In short, the most confusing part of Medicare Plan D is the lack of standardization. Drugs appearing on Tier 2 in one plan may be on Tier 3 in another. Furthermore, Tier 2 drugs may have a different co-pay with different plans. Also, there are plans with no deductibles and the coinsurance for the most expensive drugs varies widely. In addition, some plans may insist on step therapy, which is means that the patient must use generics first before the company will pay for higher priced drugs. There is an appeal process, however,the burden is on the subscriber as the insurer will not pay for the desired drug during the appeal process.

Information About

Medicare Part D