America, Pull Up a Chair—We've Got Something Good to Talk About

Medications Made Available to Seniors

Government document

By: Centers for Medicare & Medicaid Services

Date: 2005

Source: Medicare: The Official U.S. Government Site for People with Medicare. "America, Pull Up a Chair—We've Got Something Good To Talk About." 〈http://www.medicare.gov/medicarereform/drugbenefit.asp〉 (accessed November 18, 2005).

About the Author: Originally called the Health Care Financing Administration (HCFA), the Centers for Medicare & Medicaid Services (CMS) is a federal agency housed within the U.S. Department of Health and Human Services (DHHS). The mission of DHHS is protecting the health of, and providing essential human services to, all Americans. Although it is an agency of the U.S. government, DHHS works closely with state and county agencies and with private sector grant recipients. It has administrative oversight of more than 300 programs, ranging from health and social science research, disease prevention, wellness promotion, and improving maternal and infant health to prevention and treatment of substance abuse and domestic violence, comprehensive health care services for Native Americans, financial assistance and services to low-income and needy families, Head Start programs, emergency and disaster medical preparedness, and the Medicaid and Medicare Programs. In addition to the administrative oversight it provides, DHHS facilitates the collection of national health, epidemiological, and other essential data. The DHHS oversees and administers numerous federal and block grant programs, as well as the financial aspects of Medicare and Medicaid. The combined budget for DHHS represents about 25 percent of all federal spending. Medicare is the nation's largest health insurer; it processes more than $1 billion in claims per year. Medicare and Medicaid provide health insurance for approximately one quarter of the entire U.S. population.

INTRODUCTION

The Medicare and Medicaid programs were enacted as Title XVIII and Title XIX, respectively, of the Social Security Act. President Lyndon Baines Johnson signed them into law on July 20, 1965. By so doing, he gave health care coverage to nearly all Americans aged 65 or older, as well extended health care services and benefits to low-income children deprived of parental support, their caretaking relatives, the blind, and to individuals with disabilities. Senior citizens were the largest single population group living in poverty, and less than half had any access to insurance coverage prior to the initiation of Medicare. By mid-1966, Medicare had been implemented and had more than 19 million enrollees. At that time, the Social Security Administration (SSA) was the government body responsible for the oversight of Medicare, and the Social and Rehabilitation Service (SRS) was charged with oversight of the Medicaid. Both of those agencies were within the U.S. Department of Health, Education, and Welfare (HEW).

In 1967, the Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) benefit, a comprehensive health services program, was established for all Medicaid recipients below the age of twenty-one. In 1972, the Medicare benefit was extended to individuals below the age of sixty-five who were diagnosed with end stage renal (kidney) disease (ESRD) and to those with permanent disabilities. Medicaid eligibility for elderly, blind, and disabled residents of particular states could, for the first time, be linked to the new federal Supplemental Security Income program (SSI). Medicare was authorized to conduct demonstration programs for the first time.

In 1977, the Health Care Financing Administration was established within HEW. HCFA was given responsibility for the coordination of Medicare and Medicaid, although the SSA retained beneficiary enrollment and payment processing. In 1980, HEW was divided into two agencies: the Department of Education and the Department of Health and Human Services. HCFA fell under the auspices of DHHS. In 2001, DHHS Secretary Tommy Thompson changed the name of HCFA to the Centers for Medicare and Medicaid Services.

CMS administers the federal Medicare program and works in conjunction with the states to provide administrative oversight of the Medicaid program, the State Children's Health Insurance Program (SCHIP), and health insurance portability standards. CMS also has administrative oversight responsibility for the administrative simplification standards from the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the quality standards for long-term care and skilled nursing facilities via its survey and certification processes, and the quality standards for clinical laboratories under the auspices of the Clinical Laboratory Improvement Amendments.

The single most significant legislative change to Medicare since its creation in 1965 occurred on December 8, 2003, when President George W. Bush signed the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) into law. The 2003 legislation adds an outpatient prescription drug benefit to Medicare (Medicare Part D), improves health care access for Americans living in rural areas, and expands health care options to include such services as flu shots and mammograms.

The MMA created a prescription drug discount card that could be used until 2006; it also allows for competition among health plans. This competition encourages the different plans to be innovative in their programming and benefits and to offer greater flexibility of coverage. MMA covers new preventive benefits (among them the flu shots and mammograms previously mentioned) and institutes other broad changes. The major innovation, Medicare Part D (prescription drug plan), goes into effect on January 1, 2006. It is a voluntary outpatient prescription drug benefit and will be available to beneficiaries who participate in private drug plans as well as to those who choose Medicare Advantage Plans. Employers and retirement plans offering (retiree) drug coverage that is comparable to Medicare Part D will be eligible for a federal subsidy. A significant aspect of Medicare Part D is the consideration of beneficiary income in coverage determination. Beneficiaries whose incomes are less than 150 percent of the federal poverty limit will be eligible for financial assistance (subsidies) with the Part D program; those with higher incomes will pay premiums for Part D and will pay a higher share of the Medicare Part B premiums starting in 2007.

PRIMARY SOURCE

Because this new coverage is so important, the Centers for Medicare & Medicaid Services (CMS) wants to promote a national conversation to make sure that all people with Medicare, and those who care for them, understand this new coverage. This conversation will take place in many different places and in many different ways—it will occur across the kitchen table, in senior centers, at churches, between friends, neighbors, parents and their children, pharmacists and their customers. Because this new coverage is a vital addition to Medicare that will help people save money and live better, healthier lives, it's important to have information about it. It will extend the promise of modern drug treatment to everyone with Medicare. If you have Medicare, we strongly urge you to learn more about this new coverage. Right now, you can talk about this with many different people and start thinking about the coverage you want. And, if you have family and friends with Medicare, we ask that you help them learn more about it, too.

People are talking about Medicare prescription drug coverage right now in many different settings. To provide additional help and places for these conversations to occur, the Centers for Medicare & Medicaid Services (CMS) has created more than 140 community-based education networks and is working with nearly 10,000 local partners including the State Health Insurance Programs (SHIP) and Area Offices on Aging all across the country. These networks and partners provide a variety of services, from distributing materials to educational meetings to personalized counseling for people with Medicare. To help these groups and to help you, CMS has developed a variety of resources such as consumer brochures, on-line tools, and educational materials.

All of the CMS materials and on-line tools are available now. They are listed below as part of a four-step process to help you understand the process of choosing Medicare prescription drug coverage….

FOUR STEPS TO GET MEDICARE PRESCRIPTION DRUG COVERAGE

To help people with Medicare take advantage of the new Medicare prescription drug coverage, there are four steps you can think about while making a decision:

1. Getting Started The decision to get Medicare prescription drug coverage depends on how you pay for your drugs now and how you get your Medicare coverage. Most people with Medicare pay for drugs and get their Medicare in one of five ways:

• Original Medicare only, or Original Medicare and a Medigap ('supplement') Policy without drug coverage. The new Medicare drug coverage will cover half of the costs for you if you have this kind of coverage now. Enhanced options are available that provide more coverage.
• Original Medicare and a Medigap ('supplement') Policy with drug coverage. The new Medicare drug coverage will generally provide much more comprehensive coverage at a lower cost.
• Retiree or union coverage. In most cases, people with good retiree or union coverage can continue to get it, with new financial support from Medicare.
• Medicare Advantage Plan (like an HMO or PPO) or other Medicare Health Plan, which already include drug coverage and other extra benefits.
• Dual coverage from Medicare with Medicaid drug coverage. These people will automatically get comprehensive prescription drug coverage from Medicare, starting on January 1.

NOTE: If you have limited income and resources, but you don't have Medicaid, you may qualify for extra help that may pay for about 95% of your drug costs….

Because the way that Medicare drug coverage works depends on your current coverage, Medicare has specific information available to help you no matter what type of coverage you have….

2. Determining what matters most and reviewing plan options Once you decide that you want prescription drug coverage, think about what matters most to you. There are a range of plan options available, so you can focus on the kind of coverage you prefer. There are two ways you can get your Medicare drug coverage. You can add drug coverage to the traditional Medicare plan through a "stand alone" prescription drug plan. Or you can get drug coverage and the rest of your Medicare coverage through a Medicare Advantage plan, like an HMO or PPO, that typically provides more benefits at a significantly lower cost through a network of doctors and hospitals. No matter what type of plan you choose, you can choose a plan that reflects what you want in terms of cost, coverage and convenience.

• Cost: What you pay for the coverage, including premiums, deductible, and payments for your drugs.
• Coverage: What benefits are provided (like coverage in the "coverage gap" and other coverage enhancements), which drugs are covered and the rules (like prior authorization) for getting those drugs.
• Convenience: Which pharmacies are part of the plan and whether the plan has a mail-order option.

The Centers for Medicare & Medicaid Services has created an online resource, Landscape of Local Plans. This resource helps you find Medicare prescription drug plans by state or Medicare Advantage plans with prescription drug coverage by county. It lets you see the plans in your area that offer drug coverage, including basic information to help you find ones that meet your needs based on cost, coverage, and convenience.

This is the first week that you can see drug plan data. Some of the features of the Medicare Prescription Drug Plan Finder are not yet available. These features will allow you to further personalize your search for a drug plan that meets your needs. These features will be available well before you can choose to enroll in a plan on November 15. Right now, it is important to get ready to choose a plan by making a note of the drugs you take, the coverage features most important to you, and any specific pharmacies you prefer to use. The Landscape of Local Plans is a good resource for finding out about the plans in your area to get ready to make a choice.

3. Choosing a plan Beginning on November 15, people with Medicare can choose a prescription drug plan. There are many ways to choose a plan. You may rely on advice from people you know or trust, or choose a plan you are already familiar with, or use the Landscape of Local Plans located on medicare.gov to find a plan that meets your needs. All of the plan options must meet or exceed Medicare's standards for coverage, including coverage for medically necessary drugs.

If you want to make more specific plan comparisons based on what matters to you, you can get personalized information from the Medicare Prescriptions Drug Plan Finder….

… The Landscape of Local Plans is a good resource for finding out about the plans in your area to get ready to make a choice.

Once the Medicare Prescription Drug Plan Finder is fully operational, it will help you to personalize your search for a drug plan, and look at a side-by-side, personalized comparison of up to three plans at a time so you can find one that meets your needs. This list of plans provides a view of important plan information so you can compare plans based on cost, coverage and convenience.

• Cost: The Medicare Prescription Drug Plan Finder will show you a list of drug plans in your area, sorted by the plan with the lowest total cost for the drugs you take now. It can also help you narrow down the choices based on deductibles or premiums.
• Coverage: The Medicare Prescription Drug Plan Finder makes it easy for you to see what kind of coverage each plan offers and it gives you personalized information on plans that might meet your needs for you based on the coverage they offer and their other features.
• Convenience: The Medicare Prescription Drug Plan Finder can identify plans that are accepted by your preferred pharmacy and other nearby pharmacies, and plans that provide mail-order prescriptions.

The Medicare Prescription Drug Plan Finder will also help you if you aren't sure whether:

• You qualify for extra help paying for a Medicare drug plan,
• Your employer/union is continuing your current coverage with a Medicare subsidy, or
• You are already enrolled in a Medicare Advantage Health Plan or in a Medicare drug plan.

4. Enroll You can enroll in a plan starting November 15. Medicare will have an online Enrollment Center available on that date…. Coverage begins January 1, 2006 if you join a plan by December 31, 2005. The deadline to enroll to get coverage next year is May 15, 2006.

Other important information: If you work on behalf of a group of people with specific drug needs (like people with Lupus), Medicare has another tool that can help you. The Formulary Finder lets you enter a typical combination of drugs used by people with a certain condition to find out which plans in an area have formularies that cover these drugs.

SIGNIFICANCE

As of January 1, 2006, every person who has Medicare should be able to utilize the new Medicare Part D prescription benefit; the new benefit may serve not only to significantly lower out-of-pocket prescription costs for senior citizens and other Medicare beneficiaries in 2006, but may help to protect against higher prescription drug costs in the future. Each beneficiary can choose a drug plan (although the number of available plans varies from state to state, the average is at least a dozen choices). The Medicare Prescription Drug Coverage is an insurance plan, for which Medicare members will pay a monthly premium. This premium, too, varies—and is dependent upon income. People who live at or below the poverty level in their state are eligible for subsidies, reduced premiums, or programs in which they pay no premiums. It is important that individuals sign up for specific drug plans during the initial enrollment period, since penalties may be assessed for late enrollment.

There are two types of insurance plans offering Medicare Prescription Drug coverage. The first type is through Medicare Advantage Plans and other Medicare Health Plans, which enables people to get all of their (Medicare) health care services/coverage through a single plan. The second type of plan involves the Original Medicare Plan, some Medicare Cost Plans, and Medicare Private Fee-for-Service Plans. All of those programs are administered by insurance companies or other private payors who have been approved by, and contracted with, Medicare.

Although there are monthly premiums and prescription co-pays assessed by the new Medicare Part D, there are two extremely important differences from traditional insurance premiums. First, people with limited incomes and resources will be eligible for financial help in the form of reduced rates, subsidies and waivers, or no cost prescription drug coverage. Second, this insurance benefit coverage is not in any way impacted by the beneficiary's health status or the number of prescriptions used. No person will be denied coverage due to health status or ability to pay—a milestone in American prescription drug coverage.

The typical beneficiary nationally will pay about $32.20 per month for prescription drug coverage, ranging from a low of $3-4 to a high of nearly $100 monthly. Individuals can choose to pay monthly premiums by having them deducted directly from their social security checks, by electronic debit directly from a bank account, or by direct billing. A beneficiary will have the pay the first $250 of prescription medication costs per year—the universal deductible. Medicare will then pay 75 percent of the next $2,000 worth of prescription medications on the plan's formulary. After that, there is a gap in coverage that has come to be called the "donut hole," in which beneficiaries will be responsible for 100 percent of the costs for all prescription medications until they have paid another $2,850 in out-of-pocket costs. After that point, Medicare will begin paying approximately 95 percent of the costs for all remaining prescription drugs for the rest of the calendar year. This is known as catastrophic coverage. The total out-of-pocket costs for drugs on the plan's list is capped at $3,600 per year.

All drug plans will be required to provide coverage that is at least as comprehensive as the standard coverage set by Medicare. Plans may use their own discretion in creating extended or enhanced plans, with broader or more inclusive covered drug lists. Those plans also may charge a higher standard monthly premium for their coverage. Individuals who have certified (by Medicare) comparable coverage via their employers or a retirement plan may not need to join a Medicare Prescription Drug Plan.

The Medicare Drug Plans will cover generic and brand name drugs, but they will only cover drugs available by prescription, biologicals, and insulin. Over-the-counter medications will not be covered. The plans also will cover all medical supplies associated with the injection of insulin, such as syringes, needles, alcohol wipes, and gauze pads. Medicare-covered prescription drugs must available only by prescription, be approved by the Food and Drug Administration (FDA), be used and sold in the United States, and be used for medically accepted indications. Not all Medicare "covered drugs" will be covered by any one prescription drug plan (PDP) or Medicare Advantage Prescription Drug (MA-PD) plan, as each plan is responsible for developing its own formulary (list of preferred drugs covered by the plan). Medicare has placed specific requirements on the plan formularies. They must be developed by a Pharmacy and Therapeutics Committee, the majority of whose members must be either physicians or practicing pharmacists, and the formulary must include drugs in each therapeutic category and covered drug class.

There are some types of prescription medications that are completely excluded from Medicare Part D coverage. These medications also are excluded under the Medicare-approved drug discount card. They are excluded by statute, and they are drugs used for: anorexia; weight loss; weight gain; fertility; cosmetic purposes; hair growth; symptomatic relief of coughs and colds; prescription vitamins and mineral products with the exception of prenatal vitamins and fluoride preparations; non-prescription, or over-the-counter, drugs; barbiturates; and benzodiazepines.

Plans may choose to cover any or all of the excluded drugs at their own cost, or they may choose to share the cost with their enrollees. There is another group of non-covered drugs—the medications and biologicals covered under Medicare Part A or Part B (unless the individual enrollee does not meet the coverage requirements under Medicare Part A or Part B). Some examples of pharmaceuticals or biologicals in this category are post-transplant immunosuppressive drugs, certain oral anti-cancer drugs, and hemophilia clotting factors.

As of January 1, 2006, roughly 42 million Americans will be eligible for Medicare's Part D Prescription Drug Coverage. The belief, and the expectation, is that the competition among prescription drug plans will both drive down the cost of prescription medications and keep the costs from spiraling upward in the future. Although there will be premiums assessed for these plans, there will be financial assistance and zero-cost coverage available for those minimally or unable to afford premium costs. The program is designed to deliver discounted drug prices and to pay all but 5 percent of prescription drug costs in excess of $3,600 per calendar year. Federal Medicare officials believe that the new Medicare Part D will save enrollees an average of $1,200 on their prescription drug purchases during 2006.

FURTHER RESOURCES

Web sites

Center for Medicare Advocacy, Inc. "Medicare Part D: Prescription Drug Coverage." 〈http://www.medicareadvocacy.org/CHOICES/ChoicesPartD.htm#howsitwork〉 (accessed November 19, 2005).

Centers for Medicare & Medicaid Services. "CMS/HCFA History." 〈http://www.cms.hhs.gov/about/history/〉 (accessed November 17, 2005).

The New York Times on the Web. "Confusion is Rife About Drug Plan as Sign-Up Nears." 〈http://www.nytimes.com/2005/11/13/national/13drug.html〉 (accessed November 13, 2005).

SeniorAmericanInsurance. "Medicare Part D Prescription Coverage for Seniors." http://www.seniorlifeinsurance.net/medicare_part_d.html?OVRAW=medicare%20part%20d&OVKEY=medicare%20part%20d&OVMTC=standard〉 (accessed November 15, 2005).

washingtonpost.com. "Medicare's Part D as Plan B." 〈http://www.washingtonpost.com/wp-dyn/content/article/2005/11/12/AR2005111200173.html〉 (accessed November 13, 2005).