PROVIDING HIV/AIDS CARE IN A CHANGING ENVIRONMENT — OCTOBER 2005
In December 2003, the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) was signed into law.1 The MMA updates the Medicare benefits package by adding a voluntary drug benefit that Medicare beneficiaries purchase from among a choice of competing private plans. Coverage starts January 1, 2006.
The MMA gives the estimated 80,000 people living with HIV/AIDS (PLWHA)
who are receiving Medicare benefits, along with roughly 42 million other
Medicare beneficiaries, a new source of prescription drug coverage through
the Medicare Part D program. Tens of thousands of Medicare-eligible PLWHA
will gain the security of comprehensive drug coverage for the first time.
Those with the lowest incomes and few assets will be eligible for the Extra
Help Program. For this group, the cost of Medicare coverage will be minimal.
Others, however, may face significant out-of-pocket expenses. Therein lies
the central task for Ryan White Comprehensive AIDS Resources Emergency Act
(CARE) Act programs: to ensure that their Medicare-eligible clients get
enrolled in Part D and to determine how to assist clients with significant
Part D cost obligations.
| Type of Cost Paid by Part D Enrollee* |
|
| Premium (average) | $32.20/month |
| Deductible | $250/year |
| Coinsurance# | 25% (from $251 to $2,250 of drug costs) |
| Coverage gap | 100% of costs from $2,251 to $5,100 |
| Catastrophic coverage | Copayment of 5% or $2 (preferred Rx) or $5 (nonpreferred Rx), whichever is greater Becomes effective after total drug costs reach $5,100 AND beneficiary has paid $3,600 in true out-of-pocket costs (TrOOP) |
* Those who qualify for Extra Help do not incur most of these costs. # The term coinsurance is used in Medicare Part D to refer to the beneficiary’s contribution toward prescription drug costs until the catastrophic coverage limit has been reached. |
|
The standard benefit under Part D includes monthly premiums and cost-sharing requirements (Figure 1). The MMA therefore established a low-income subsidy (LIS) program called Extra Help to ensure that prescription coverage is affordable for dual eligibles (people eligible for both Medicaid and Medicare) and other people with low incomes. Part D is really four benefits in one, and cost obligations vary according to the client’s income status and eligibility for other assistance programs. Establishing the Medicare drug coverage program—and its companion Extra Help assistance for low-income beneficiaries—is an enormous undertaking. The effort is being led primarily by the Centers for Medicare and Medicaid Services (CMS).
The Health Resources and Services Administration (HRSA), HIV/AIDS Bureau, is working with CMS to educate CARE Act programs about Part D and clarify policy issues, including how the two payer systems interface.
This issue of HRSA CAREAction provides an overview of Part D and essential steps for CARE Act programs as Part D is put in place in the coming months. Those steps include helping enroll clients in Part D, ensuring that they apply for Extra Help, and helping them sign up for the right prescription drug plan (either Medicare Advantage [MA-PD] or a stand-alone prescription drug plan [PDP]). Perhaps most challenging is determining how to fill gaps through CARE Act and other resources with an eye to cost comparisons and, most daunting, complex Part D rules that do not allow CARE Act contributions to count in moving clients through the out-of-pocket phases of Part D.
At the beginning of 2005, estimates were that 60,000 to 80,000 PLWHA were Medicare beneficiaries. They comprise two distinct groups:
Between 50,000 and 60,000 Medicare beneficiaries with HIV/AIDS are believed to be dually eligible (Figure 2).2 For the remainder of 2005, this group will receive comprehensive prescription drug coverage through Medicaid. Although dual eligibles will retain Medicaid coverage for other services, Medicaid coverage of their prescription drugs will end on December 31, 2005, and they will be transitioned to the Medicare Part D program. Medicaid drug coverage will continue for Medicaid beneficiaries who do not receive Medicare.
Dually eligible beneficiaries will automatically qualify for the Extra Help program and will be randomly assigned to a Medicare Part D plan. The type of Extra Help for which a dually eligible person qualifies depends on whether he or she is above or below the Federal Poverty Level (FPL).
About 30,000 Medicare beneficiaries with HIV/AIDS are not dually eligible. Most people in this group are believed to lack prescription drug coverage and to use AIDS drug assistance programs (ADAPs) as their primary source of HIV medications.
For non–dually eligible people in particular, Medicare drug coverage should offer more stable and comprehensive drug coverage for HIV and non-HIV prescriptions. But some people may not qualify for Extra Help and may need assistance covering the out-of-pocket costs required under Part D. ADAPs are one such potential source of assistance, although regulations on treatment of CARE Act contributions (described below) must be considered by CARE Act programs in making decisions on what assistance to provide.
A percentage of the non–dually eligible population has been receiving retiree drug coverage or another form of prescription drug coverage (such as Veterans Administration [VA] benefits). If their current coverage meets Federal coverage standards provided under the new Medicare program, known as “creditable coverage,” they may continue using their existing insurance; if they need to enroll in Part D in the future, they can do so without penalty.
To help prepare for Medicare drug coverage, CARE Act programs need to take several steps. First, they must ensure that dual eligible beneficiaries understand that their drug coverage will transition from Medicaid to Medicare and that Extra Help programs are in place for all beneficiaries to help cover Part D costs. They also must educate clients on how to pick the right PDP. Those tasks, described below, are new responsibilities for CARE Act programs.
Because of the methods used to determine income and resources, some people may qualify for Extra Help even if they think they have too much income. Therefore, PLWHA with income even close to this level should be encouraged to apply for Extra Help. To apply for Extra Help, they should contact the Social Security Administration (SSA) or their State Medicaid office. Social Security will be equipped to handle the large volume of Extra Help applications; people who apply through their Medicaid office also must be screened for Medicaid eligibility and for Medicare Savings Programs.
Table 1 summarizes the cost obligations for beneficiaries in the different Part D categories.
It is in the best interest of all Medicare beneficiaries with HIV/AIDS to participate in the Part D prescription drug program. Indeed, as the payer of last resort, ADAPs and other CARE Act programs providing assistance with medications will require all eligible clients to participate in the Part D program.
The initial enrollment period for current Medicare beneficiaries runs from November 15, 2005, through May 15, 2006. Enrollment after May 15 (for current beneficiaries) will result in a late enrollment premium penalty for enrollees who do not currently have creditable coverage. The enrollment penalty will be 1 percent of the premium for every month after the initial enrollment period that they delay enrollment in the Part D program (unless the Secretary of Health and Human Services determines that it is necessary to charge a higher penalty). This penalty adds up: A 1-year delay would result in a 12 percent premium penalty—which will be levied for as long as the beneficiary remains enrolled in Medicare Part D.
In September 2005, CMS, having received a list of all dual eligibles from State Medicaid programs, began randomly assigning dual eligibles to a prescription drug plan whose premium is at or below the regional average premium (i.e., the “low-income benchmark premium”). CMS planned to notify dual eligibles in October 2005 of the plan in which they have been enrolled. Starting on November 15, 2005, dual eligibles were able to select their own Part D plans. Any selection they make before the end of December will become effective on January 1, 2006, and will cancel their enrollment in the plan to which they had been randomly assigned.4 In May 2006, CMS also will automatically enroll those who are eligible for Extra Help and have not chosen a drug plan. It is particularly important for PLWHA to review the plan to which they are auto-assigned and make sure it is the best choice for them. Medicare plans are permitted to operate formularies (list of drugs covered by the plan) that may restrict access to certain drugs. Many PLWHA have been stabilized on a particular treatment regimen (including drugs other than antiretrovirals), and some plans may not cover all the drugs they currently take. Plans also may restrict access to certain drugs in some circumstances.
Despite the expectation that plan formularies will be comprehensive, and despite significant assistance provided through the Extra Help program, circumstances remain in which gaps in coverage and barriers to access to drugs will arise (e.g., Medicare beneficiaries with HIV/AIDS who do not qualify for Extra Help and who cannot pay the required cost sharing and premiums). In many cases, cost-sharing responsibilities will be very high for PLWHA, even for those with incomes as low as $1,200 per month, because of the high cost of HIV medications and the need for multiple medications.
| Standard Benefit No Subsidies | Dual Subsidy | Dual Subsidy/Full LIS | Partial LIS | |
|---|---|---|---|---|
| Beneficiaries | Dual eligibles below FPL | Dual eligibles above poverty OR SSI recipients OR On Medicare Savings Program OR Medicare beneficiaries at <135% of FPL* with assets <$7,500 single or $12,000 per couple |
Medicare beneficiaries at 135% to 150% of FPL with assets <$11,500 single or <$23,000 couple | |
| Premium | $32.20 (monthly average, varies by plan) | None† | None† | Sliding scale† |
| Deductible | $250 | None | None | $50 |
| Cost-sharing | 25% of drug costs (from $251 to $2,250) | $1/preferred Rx $3/nonpreferred Rx (up to $5,100 in total drug costs) | $2/preferred Rx $5/nonpreferred Rx (up to $5,100 in total drug costs) | 15% of drug cost (up to $5,100 in total drug costs) |
| Coverage gap | 100% of costs (from $2,251 to $5,100) +$3,600 TrOOP | No coverage gap | No coverage gap | No coverage gap |
| Catastrophic cost-sharing | 5% or $2 (generic Rx) $5 (brand name Rx), whichever is greater, for $5,101 and above | None | None | $2/preferred Rx $5/nonpreferred Rx |
| FPL, Federal Poverty Level; LIS, low-income subsidy; SSI,
Supplemental Security Income; TrOOP, true out-of-pocket costs. *The FPL is adjusted annually and varies by family size; the FPL is different for the contiguous United States (including the District of Columbia), Alaska, and Hawaii. Levels referenced are for the contiguous United States. The 2005 FPL (in terms of monthly income for a single individual) is $797.50; 135% of FPL is $1,076.63, and 150% of FPL is $1,196.25. †Premium subsidies cover only the cost of the regional average premium. Beneficiaries selecting a Part D plan with a higher than average premium are responsible for the premium level above the regional average. Sliding scale premiums are calculated on a linear basis, and people at 135% of poverty qualify for the full premium subsidy and people at 150% of poverty do not qualify for a premium subsidy. |
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Although Part D plans will cover all antiretroviral drugs, some beneficiaries may not be able to access every drug they need immediately because the specific drugs are not on their plan’s formulary. If the plan will not approve coverage in that individual case, the beneficiary must go through an exceptions-and-appeals process to get Part D to cover medically necessary drugs. In addition, some classes of drugs are not covered by Medicare Part D; the excluded drugs include the following categories:
Under Part D, out-of-pocket costs must be categorized as “true out-of-pocket” (TrOOP) costs in order to move to the catastrophic coverage level, where Medicare covers most or all drug costs. Key programs to consider, whose assistance counts toward TrOOP, are described below.
State Pharmacy Assistance Programs. State pharmacy assistance programs (SPAPs) are State programs that provide financial assistance to Medicare beneficiaries for purchasing prescription drugs. In the absence of Medicare prescription drug coverage, these programs have served as a low-cost way for participants to obtain prescription drugs. As of 2004, 29 States operated SPAPs, and 9 more States have passed legislation as a precursor to implementing such a program.6 To date, most SPAPs serve only people age 65 and older, although some States also cover nonelderly people with disabilities. SPAPs receive special treatment under Medicare Part D relative to other government programs because assistance counts toward TrOOP. This provision may spur more States to use SPAPs to cover nonelderly people with disabilities.
Charitable Sources. Medicare defines charitable organizations broadly and allows assistance from many charitable sources to count toward TrOOP. Not allowed to count toward TrOOP are contributions from charities that are connected to the Part D plan or sponsored by an employer or union.
Other Individuals (Family, Friends, Others). Medicare permits contributions from family members, friends, or other individuals to count as though they were made by the beneficiary. Therefore, any spending by family members (such as buying drugs for the beneficiary during the coverage gap or paying the copayment at the pharmacy) counts toward TrOOP.
Pharmacies That Waive Copayments. Copayments waived by a pharmacy count toward TrOOP if the pharmacy is not a federally funded safety-net provider (e.g., 340B pharmacies). Pharmacies can waive copayments as long as they do not advertise this help and base the decision to waive the copayment upon the person’s ability to pay.
Medicare Part D will change the type of assistance Medicare beneficiaries with HIV/AIDS may need from the CARE Act, but it will not eliminate a critical role for ADAPs and other programs in ensuring appropriate access to prescription drug coverage. Medicare beneficiaries with HIV/AIDS who do not qualify for Extra Help face potentially high out-of-pocket costs during the initial coverage period (because of premiums, deductibles, and cost-sharing) and during the coverage gap. CARE Act funds (including ADAP) do not count toward TrOOP, thereby creating a potential disincentive for States to provide assistance with those costs. As a result, a person on expensive HIV/AIDS therapies and receiving CARE Act assistance with cost-sharing could be stuck in the “coverage gap” and never reach catastrophic coverage (where Medicare covers most costs).
Planning for the role of ADAPs and other CARE Act programs in providing assistance to Medicare beneficiaries with HIV/AIDS is challenging because the specific gaps and barriers to access cannot be precisely known until there is real-world experience with Part D drug plan formularies, prior authorization requirements, and exceptions-and-appeals processes. Nonetheless, ADAPs may consider a variety of approaches to ensure that access to prescription drug coverage is not interrupted.
ADAP programs may use funds to pay all or part of a Part D beneficiary’s prescription drug costs (i.e., premium, deductible, coinsurance, or copayments) if the beneficiary meets the State’s ADAP eligibility criteria; however, ADAPs are not required to cover those costs. Grantees have flexibility in this matter, and they are encouraged to develop policies regarding coverage of some or all costs after considering the ADAP program’s structure; costs; resources; Medicare beneficiary need; and competing access issues, such as waiting lists and the number of uninsured PLWHA in the State. In developing their policies, grantees should keep several factors in mind, the most central being that most Medicare beneficiaries living with HIV/AIDS will qualify for a full or partial low-income subsidy to help cover their prescription drug benefit costs.
Determining ADAP outlays for beneficiaries who do not qualify for Extra Help will be a complex process. ADAP expenditures do not count as TrOOP and therefore do not help the client meet the out-of-pocket costs required to reach the catastrophic level of coverage. Therefore, when these clients’ drug costs reach the Medicare Part D coverage gap (i.e., the point at which the client is responsible for the full cost of drugs), grantees should assess the relative merits of providing their HIV/AIDS medications through ADAP for the remainder of the year. If ADAP funds are used to cover the Medicare Part D premium (reminder: premiums are not part of the TrOOP calculations) for any ADAP-eligible clients in a given fiscal year, then ADAP should cover that cost for the entire year so that the client will still be enrolled in Part D and be able to use Part D for HIV/AIDS prescriptions the following year without incurring a penalty.
Tracking how ADAP costs relate to Part D involves complex cost calculations. But ADAPs and other CARE Act programs face other cost considerations and potentially high administrative burdens in determining how best to interface with Part D. Consider the following issues:
In addition to variables such as the cost of drugs, number of drugs, and whether the drugs are preferred or generic, several other factors will influence out-of-pocket costs, including the level of Extra Help that beneficiaries will receive and the monthly premium charged by their individual plan.
Figure 3 compares monthly Part D costs for Medicare-eligible individuals under various eligibility categories and income scenarios. Shown is monthly out-ofpocket spending, taking into consideration premiums, deductibles, and applicable cost-sharing. Spending is rounded to whole dollar amounts.
Figure 3. Beneficiary Payment for Part D by Eligibility Category and Month
FPL, Federal Poverty Level; MSP, Medicare
Savings plan; SSI, Supplemental Security Income.
Note: Assumes $1,300/month drug costs, three preferred and three generic
drugs, and premiums of $32.20/month.
*Asset limits of $7,500/$12,000 (single/couple) for Medicare only<135%FPL
and of $11,500/$23,000 for partial subsidy (135-150%FPL).
Under Medicaid, pharmacists are required by law to dispense a temporary supply of a drug in emergency situations if payment authorization is initially denied, and they must provide the drug if the customer cannot pay copayments. No similar protection exists under Part D. Given the clinical importance of maintaining uninterrupted access to antiretroviral therapy, some ADAPs may wish to consider developing programs to dispense one-time emergency supplies of drugs, cover copayments, or coordinate with other CARE Act programs to manage these situations.
The absence of a requirement that Part D plans dispense drugs while the resolution of an appeal is pending holds the potential for treatment interruptions. Other programs for low-income individuals have developed systems to pay for drugs for which coverage is initially denied by a plan; such programs then work with individuals to pursue exceptions or appeals to recoup the funding that was advanced by the program. These have been called “pay-and-chase” programs. Although such arrangements raise numerous technical and logistical challenges, Part D does not prohibit such actions.
The appeals process under Medicare Part D is designed to provide access to an administrative law judge within 7 days—an unusually speedy time frame relative to other Medicare appeals processes—but one that is nevertheless clinically inappropriate for people living with HIV/AIDS. Therefore, even though ADAP programs would be at risk if they are unable to be reimbursed for drugs dispensed pending an appeal, and even though this spending would not count toward TrOOP, ADAP programs may wish to think creatively about ways to ensure continued access to treatment, such as during periods when a beneficiary is appealing a denial of drugs by their Part D plan.
The implementation of Medicare prescription drug coverage is an important opportunity for improving access to prescription drugs—and it will change the role of ADAPs for Medicare beneficiaries from the primary purchaser of prescription drugs to a critical supplement to Medicare Part D plans. Whether it involves educating beneficiaries, training staff, helping people seek assistance with costs that count toward TrOOP, making plans to assist with cost-sharing, or all of the above, all CARE Act grantees play an important role in making Medicare drug coverage a success for PLWHA.
True out-of-pocket spending (TrOOP) refers to spending by individuals and other sources that counts toward meeting the catastrophic level of coverage.
A philosophical principle underpinning the MMA is that all beneficiaries should be responsible for a share of the cost of the prescription drugs they receive. Dual eligibles residing in institutions are exempt from cost-sharing because, as a condition of eligibility for institutional care, they have already contributed all of their personal resources to the cost of their care. Dual eligibles and others residing in the community are required to pay some level of cost-sharing.
Payments made by the following entities count toward TrOOP costs:
CARE Act funds (including ADAP) do not count toward TrOOP, thereby creating a potential disincentive for States to provide assistance with those costs.
The Medicare Prescription Drug, Improvement, and Modernization Act generally requires prescription drug formularies to cover at least two drugs in each drug class. Medicare has established a higher standard of coverage, however, for six specific classes. Plans are required to cover all drugs in the following classes:
HRSA’s HIV/AIDS Bureau has a series of questions and answers (Q&As) that outline not only the basics about Part D but also policy directions for CARE Act programs in such areas as ensuring that Medicare-eligible clients enroll in Part D; avoiding ADAP disenrollment for Medicare eligibles; CARE Act funding not counting as TrOOP; and allowing 340B rebates to be sought when funds are used to pay Part D costs. The Q&As can be accessed at www.hrsa.gov/medicare/HIV/qa.htm or http://answers.hrsa.gov (search under Medicare).
The following Federal resources are available for understanding issues related to the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) and Part D prescription drug coverage:
Centers for Medicare and Medicaid Services
HRSA HIV/AIDS Bureau
Many HIV/AIDS organizations are also developing materials to assist organizations, case managers, and people living with HIV/AIDS with understanding the rollout of Medicare Part D drug coverage. For more information, contact your local, State, or national organizations.
To obtain information on Medicare plan options and enrollment materials: www.medicare.gov. Toll free: 800-MEDICARE. (800-633-4227) TTY: 877-486-2048.
To locate Social Security Offices: www.socialsecurity.gov/locator. Toll-free: 800-772-1213. TTY: 800-325-0778.
To find the nearest Medicaid office, contact the State Medicaid agency.
In this Issue
The New Medicare Drug Plan: Implications for People Living With HIV/AIDS -
Overview of the Medicare Part D Drug Coverage Program -
What Counts Toward True Out-of-Pocket Costs? -
Special Requirements for Formulary Inclusion of Antiretrovirals -
Publisher U.S. Department of Health and Human Services Health Resources and Services Administration HIV/AIDS Bureau
Editor Richard Seaton, Impact Marketing and Communications
All information herein is in the public domain and may be reproduced without permission. Citation of the source is appreciated.
Please forward comments, letters, and questions to:
Health Resources and Services
Administration, HIV/AIDS Bureau
5600 Fishers Lane, Suite 7-05
Rockville, MD 20857
Telephone: 301.443.1993
Additional copies are available from the HRSA Information Center, 888.ASK.HRSA, and may be downloaded from the Web at http://hab.hrsa.gov/publications.htm
