Memorandum
|
To: |
Information
and Referral Advocates |
|
From: |
Daniel Brzovic |
|
Re: |
Medicare
prescription drug benefit (Medicare Part D) |
|
Date: |
November 11, 2006 |
|
|
|
This memo gives an overview
of the most basic provisions of the Medicare Part D program. Many of the items described in this memo are
described in more detail in other memos or other materials. The purpose of this memo is to give an
overview of the Part D program while focusing on how it applies to people with
disabilities, and particularly people who have both Medicare and Medi-Cal.
Following a brief
introduction to the program, this memo describes what people have to consider
in choosing a Medicare Part D prescription drug plan.
NOTE:
In no event should anyone at PAI advise an individual to choose a particular
drug plan, or choose a drug plan for them.
PAI staff should advise individuals of their options so that individuals
can choose the plan that is best for them.
There have been some changes
in the Medicare Part D program for 2007.
The following are some of the changes.
Open
Enrollment
Beneficiaries
who do not receive Medi-Cal can change plans between November 15 and December
1. The change will be effective on
January 1. Medi-Cal beneficiaries with
zero share of cost can change at any time effective the following month. Medi-Cal beneficiaries with a share of cost
who meet their share of cost at least four times per year can also change at
any time effective the following month.
Copayment
Amounts
Most
copayments have been increased based on increases in the cost of medical care
or the consumer price index.
|
Copayment |
2007 |
2006 |
|
Full benefit dual eligibles
(Zero share of cost Medi-Cal) Generic/Preferred
multi-source drug Brand
name drug |
$1.00 $3.10 |
$1.00 $3.00 |
|
All other beneficiaries who
have a copayment Generic/Preferred
multi-source drug Brand
name drug |
$2.15 $5.35 |
$2.00 $5.00 |
Deductible/Coinsurance
Amounts
Deductible
and coinsurance amounts have also been increased for the standard benefit and
the low-income subsidy based in increases in the cost of medical care.
|
|
2007 |
2006 |
|
Deductible (Standard
Benefit) |
$265 |
$250 |
|
Initial Coverage Limit
(Standard Benefit) |
$2,400 |
$2,250 |
|
Out-of-Pocket (OOP)
Threshold (Standard Benefit) (This is the “donut hole.”) |
$3,850 |
$3,600 |
|
Total Covered Part D
Spending at OOP Threshold (Standard Benefit) (Catastrophic benefit
begins after total drug spending reaches this amount) |
$5,451.25 |
$5,100 |
|
Deductible (Low-Income
Subsidy, Group 4) |
$53 |
$50 |
California
Benchmark Plans
These
are the plans that Low Income Subsidy (LIS) beneficiaries (including Medi-Cal
beneficiaries) are eligible for without payment of a premium.
New
benchmark plans will be offered by CIGNA Health Care (CIGNATURE Rx Value Plan)
and RxAmerica (Advantage Star Plan).
WellCare
is will be offering a new plan called the “Classic” plan. WellCare will continue to offer the
“Signature” plan.
Unicare
Medicare Rx Rewards plan beneficiaries will be shifted to the Medicare Rx
Rewards Value plan. Health Net Orange
Option (02) and Option (08) plan beneficiaries will be shifted to the Health
Net Orange Option 1 plan.
United
Healthcare has taken over PacifiCare.
PacifiCare Saver Plan beneficiaries will be shifted to United
Healthcare’s AARP Medicare Rx Plan – Saver.
United Health Rx and AARP Medicare Rx Plan beneficiaries will also be
shifted to AARP Medicare Rx Plan – Saver.
Beneficiaries with formulary exceptions for 2006 will have those
exceptions grandfathered in for 2007.
Medicare Part D is the new
Medicare prescription drug plan. It
provides additional outpatient prescription drug coverage for Medicare
beneficiaries. The program began
In the past, Medicare
generally provided drug coverage for people in the hospital, or in a skilled
nursing facility following a hospital stay.
This coverage is provided as part of the hospital or skilled nursing
facility benefit under Medicare Part A.
Medicare also provides coverage for medications that generally have to
be administered in a doctor’s office.
This coverage is provided as part of the Supplementary Medical Insurance
benefit under Medicare Part B. Those
parts of the Medicare program will not change, and Medicare Parts A and B will
continue to provide the drug coverage that Medicare has always provided just as
it did before.
People with Medicare HMOs
(Medicare Advantage plans) under Medicare Part C, such as Kaiser Senior
Advantage, Secure Horizons or Health Net, can receive their Part D drug
coverage through their HMO. There may be
an additional premium for the drug coverage for people in Medicare HMOs who do
not receive Medi-Cal or the Low Income Subsidy.
For Medi-Cal beneficiaries
who also receive Medicare (dual eligibles), most Medi-Cal drug coverage was
transferred entirely from Medi-Cal to Medicare Part D beginning
The Low Income Subsidy (LIS)
or “Extra Help” program pays premiums and most other drug costs for Medi-Cal
beneficiaries and others who meet the program’s income and resource guidelines.
It will be easier to
understand the Medicare Part D program if you have some basic information about
the Medicare program in general. There
are two useful publications that give a good basic overview of Medicare. The first publication is: “Understanding Changes in Prescription Drug
Coverage for People with Disabilities,” published by the Health Policy
Institute at
The prescription drug plan is
available to any Medicare beneficiary.
This includes people who are enrolled in both Medicare and Medi-Cal
(dual eligible beneficiaries).
NOTE:
Drug coverage for beneficiaries with Medi-Cal only (no Medicare) will
continue to be paid for by Medi-Cal. In
addition, some drugs that are excluded entirely from Medicare Part D coverage
will continue to be covered by Medi-Cal, even for Medi-Cal beneficiaries who
also have Medicare. (This is explained
in more detail later in this memo.)
The Medicare Part D
prescription drug benefit is provided through private health insurance
companies or private health maintenance organizations (HMOs). Most Medicare beneficiaries, including
Medicare beneficiaries who also have Medi-Cal, will have to choose a Medicare
Part D prescription drug plan in order to get the prescription drug
coverage. However, if you have
“creditable” health insurance coverage through an employee, retiree or
government health plan you do not need to sign up for Part D to continue your
drug coverage. “Creditable” coverage is
drug coverage that is provided through Medicare Part D or is as good as
coverage that is provided through Medicare Part D.
The prescription drug plans
vary from company. Many companies offer
more than one plan. There may be
differences in premiums, cost-sharing requirements, drug formularies, drug
utilization controls, and participating pharmacies. Plans can offer enhanced coverage upon
payment of a higher premium. People will
need to consider all of these things in order to choose the plan that is best
for them.
A majority of the members of
Congress that enacted this program seem to believe that drug prices are best
regulated through market forces rather than through direct government
intervention. Therefore (so the theory
goes) if the drug benefit is offered through competing private plans, the plans
will hold drug prices down.
If you have concerns about
the way the Medicare Part D program is set up (including the transfer of most
Medi-Cal drug coverage to Medicare Part D) you may want to contact your
representatives in Congress and let them know your concerns.
Medi-Cal beneficiaries. If you have
Medi-Cal as well as Medicare, you will have to enroll in a Medicare Part D
plan. Only a few categories of drugs are
covered under Medi-Cal for dual eligible beneficiaries. (This is explained in more detail later in
this memo.) If you have Medi-Cal and
became eligible for Medicare, most of your Medi-Cal drug coverage will end when
you become eligible for Medicare Part D.
Your Medi-Cal drug coverage will end when you become eligible for
Medicare Part D whether or not you are enrolled in a Medicare Part D drug
plan. Therefore, if you do not enroll in
a Medicare Part D drug plan you will have no coverage for most drugs.
If you have Medi-Cal and you
also have Medicare and you do not choose a plan yourself, you will be auto
enrolled in a Medicare Part D drug plan.
If you were not auto enrolled, check with your pharmacist. If you do not like the plan that you were
auto enrolled in, you can change to another plan.
Private and government
health plan beneficiaries. If you have health coverage in addition to
Medicare (such as coverage through employment, a retirement plan, a
union-sponsored plan, or a state or federal government plan) you may not need
to enroll in Medicare Part D. It depends
on whether or not your health plan provides “creditable” (Medicare Part D or as
good) drug coverage. Check with your
health plan. If you have Part D or other
creditable coverage through your health plan, ask for a notice of that in
writing.
If you have federal health
care coverage from the VA, TRICARE, or the Federal Employee Health Benefits
Program (FEHBP), you do not need to enroll in Medicare Part D. If you have a Medigap policy, it is probably
best for you to enroll in a Medicare Part D plan.
NOTE:
If you have health coverage that already provides Medicare Part D drug
coverage (including a retiree health plan that receives a federal subsidy to
provide drug coverage) you should be careful about enrolling in a Medicare Part
D plan. This is because you could
potentially be disenrolled from your entire health plan if you sign up for a
Medicare Part D prescription drug plan.
Check with your health plan.
Medicare HMO (Medicare
Advantage) beneficiaries. If you are part of a Medicare HMO (e.g.
Secure Horizons, Kaiser Senior Advantage, Health Net) you can be automatically
enrolled in your HMO’s Medicare Part D plan.
Check with your plan. You have a
right to disenroll from the Medicare Part D coverage.
Medicare-only
beneficiaries. If you do not have Medi-Cal, and you do not
have other health coverage, but you do have Medicare, enrollment in a Medicare
Part D prescription drug plan is completely voluntary. However, there is a penalty for late
enrollment. (See the following section.)
Medi-Cal beneficiaries. If you have
Medi-Cal as well as Medicare, you will have to enroll in a Medicare Part D plan
as soon as you become eligible for Medicare Part D. This is because most Medi-Cal drug coverage
for Medicare beneficiaries stops when the beneficiary becomes eligible for
Medicare Part D.
Health plan beneficiaries
with “creditable” coverage. If you have a health plan in addition to
Medicare (such as coverage through employment, a retirement plan, a
union-sponsored plan, or a state or federal government plan) you do not have to
enroll in a Medicare Part D plan as long as the drug coverage under your health
plan is “creditable coverage.”
“Creditable coverage” means that the drug coverage under your health
plan is either Medicare Part D coverage, or coverage at least as good as
Medicare Part D drug coverage. Your
employer or health plan will notify you if you have creditable coverage. If you do not get written notice of
creditable coverage, ask your employer or health plan for it. Keep the notice for your records.
All other Medicare
beneficiaries. If you currently have Medicare, but not
Medi-Cal or a health plan with creditable drug coverage, you can enroll in a
Medicare Part D plan during the same period in which you can enroll for
Medicare Part B. After that, you can
enroll between November 15 and December 31 for Part D coverage effective the
following January 1.
If you miss the initial
enrollment date, then your monthly premium for Part D coverage will go up 1%
for each month that you delay enrollment.
This is 1% of the national average premium. For people who receive Medi-Cal or the Low
Income Subsidy, 80% of the penalty is paid for by the Low Income Subsidy.
For people who do not receive
Medi-Cal or the Low Income Subsidy the 1% penalty is applied for months
beginning June, 2006. This is because
May 2006 was the last month in which people who were Medicare beneficiaries at
that time could enroll for that year.
For people who receive Medi-Cal or the Low Income Subsidy the penalty is
applied for months beginning January 2007.
The purpose of this premium
penalty is to encourage individuals to enroll in a Part D plan even if they do
not have high drug costs yet. So if you
do not have high drug costs, you may still want to consider whether enrolling
in a Medicare Part D plan is best for you because you may have higher drug
costs in the future, and the Part D plans will cost you more if you wait.
Consider the following: If an individual was a Medicare beneficiary in
2005 and did not enroll in a Medicare Part D drug plan by May 2006, that
individual would not be able to enroll until between
No. Medi-Cal is what is known as a payer of last
resort. Medi-Cal will require you to
keep your Medicare as a condition for receiving Medi-Cal.
There are basically two kinds
of prescription drug plans available under Medicare Part D. There are stand-alone prescription drug plans
(PDPs), and Medicare Advantage prescription drug plans (MA-PDs).
Stand-alone prescription drug
plans are available for people who are enrolled in the traditional Medicare
program (Medicare Part A and Part B) or a Medicare HMO and who do not have Part
D or creditable drug coverage through their health plan.
Medicare Advantage
prescription drug plans are available for people who are enrolled in a Medicare
Advantage plan. A Medicare Advantage
plan is a Medicare managed care organization or HMO.
An individual in the
traditional Medicare program does not have to enroll in a Medicare Advantage
plan in order to get prescription drugs under Medicare. An individual in the traditional Medicare
program can enroll in a stand-alone prescription drug plan and remain in the
traditional Medicare program.
Yes. In
Nine of these plans are
available to Medicare beneficiaries who also have Medi-Cal and other low income
subsidy beneficiaries without payment of a premium. These are called “benchmark premium”
plans. These are the plans that have the
lowest premiums.
There are also a number of
Medicare HMO (Medicare Advantage) prescription drug plans (MA-PDs) that are
available as part of a beneficiary’s Medicare HMO coverage. These plans vary county-by-county just as
Medicare HMOs do. If a beneficiary is
enrolled in a Medicare HMO that offers an MA-PD plan, the beneficiary can
choose to enroll in that MA-PD plan.
These MA-PD prescription drug plans are available to Medi-Cal and other
low income subsidy beneficiaries without payment of the MA-PD premium.
The following is a list of the
nine stand-alone prescription drug plans that will enroll Medi-Cal and other
Low Income Subsidy (LIS) beneficiaries in 2007 without payment of a
premium. The list is current as of
There have been some changes
in the list since 2006. Unicare is no
longer offering a plan without payment of a premium. Individuals enrolled in the Unicare plan will
have to change to another plan, effective January 2007, in order to avoid
payment of a premium. CIGNA Health Care
has added a plan, CIGNATURE Rx Value Plan.
RxAmerica has added a plan, Advantage Star Plan by RxAmerica. WellCare has added a plan, WellCare classic.
Unicare is dividing its plan into two plans and assigning LIS beneficiaries to
the Medicare Rx Rewards Value plan.
Health Net is transferring all LIS beneficiaries to Health Net Orange
Option 1. Most confusing, United Health
Care is dividing its AARP Medicare Rx plan into two plans and is reassigning
LIS beneficiaries from its old Untied Health Rx and AARP Medicare Rx plans into
the new AARP Medicare Rx – Saver plan.
Because United has taken over PacifiCare, LIS beneficiaries in the
PacifiCare Saver Plan will also be transferred into the AARP Medicare Rx –
Saver plan. According to United, for
Medi-Cal and other LIS beneficiaries who are being reassigned into the AARP
Medicare Rx – Saver plan, all utilization management decisions and formulary
exceptions for 2006 will be grandfathered in for 2007.
|
Plan Name 2006 |
2007 Changes |
Plan Telephone Number |
Website |
|
Blue Cross – Blue Cross
MedicareRx Value |
No change |
1-866-892-5340 |
|
|
Not offered |
CIGNA Health Care –
CIGNATURE Rx Value Plan |
1-800-735-1459 |
http://www.cigna.com/health/consumer/medica
l/cignaturerx/1/7 |
|
Health Net – Health Net
|
Health Net |
1-800-935-6565 |
|
|
Humana Inc. – Humana PDP
Standard S5884-090 |
No change |
1-800-833-6578 |
|
|
PacifiCare – PacifiCare
Saver Plan |
Reassigned to United
Healthcare – AARP Medicare Rx Plan – Saver |
|
|
|
Not offered |
RxAmerica – Advantage Star
Plan by RxAmerica |
1-800-770-8014 |
|
|
Sierra Rx |
No change |
1-866-789-0565 |
|
|
Unicare – Medicare RX
Rewards |
Medicare RX Rewards Value |
1-888-892-5335 |
|
|
United Health Care – United
Health Rx |
Reassigned to United
Healthcare – AARP Medicare Rx Plan – Saver |
1888-556-7052 |
|
|
United Healthcare – AARP
Medicare Rx Plan |
United Healthcare – AARP
Medicare Rx Plan – Saver |
1-888-867-5564 |
|
|
Not offered |
WellCare – Classic |
1-888-423-5252 |
|
|
WellCare – Signature |
No change |
1-888-423-5252 |
The following are some
Medicare HMOs that offer Medicare prescription drug coverage.
|
Plan Name |
Plan Telephone Number |
Website |
|
Health Net of |
1-800-275-4737 |
|
|
Secure Horizons |
1-800-698-7505 |
|
|
Kaiser |
1-800-579-7085 |
http://prospectivemembers.kaiserpermanente.org/kpweb/medicare/entrypage.do
|
Costs will vary. Some beneficiaries will have to pay a monthly
premium. In 2007, the premium will be
about $24 per month on average. The benchmark
premium for Medi-Cal and low income subsidy beneficiaries will be around
$20. (These amounts are less than the
2006 amounts.) Medi-Cal and most other
Low Income Subsidy program beneficiaries will not have to pay the premium. (See next section for more information.)
The Medicare Part D premium
is in addition to the Medicare Part B premium, which will be $93.50 in
2007. The Medicare Part B premium is
paid directly by Medi-Cal (or deducted from your Social Security check if you
do not receive Medi-Cal). The Medicare
Part D premium can also be deducted from your Social Security check if you want. If you receive Medi-Cal, the premium will be
paid for you by the federal government as part of the low income subsidy
program. If you do not receive Medi-Cal,
you will be billed for the premium by your Part D insurance company.
Additional drugs or benefits
(or reduced deductibles/coinsurance/copayments) can be obtained from some plans
by payment of a supplemental premium.
Medi-Cal and other Low Income Subsidy beneficiaries can pay this
additional supplemental premium out-of-pocket in order to obtain the additional
drugs or benefits. The additional
benefits will vary by plan.
In addition to the Medicare
Part D premium, some beneficiaries will also have an annual deductible,
coinsurance (or copayment), and a coverage gap (donut hole). These beneficiaries will have drug coverage
with payment of an annual deductible and coinsurance (or copayments) up to an
initial coverage limit. They will then
have to pay $3,850 total out-of-pocket (including deductible and coinsurance/copayments)
before they receive catastrophic drug coverage.
Catastrophic drug coverage will pay for 95% of drug coverage.
Medi-Cal and most other Low
Income Subsidy program beneficiaries will not have to pay deductibles or
coinsurance, and will not have a coverage gap (donut hole). These beneficiaries will have to pay only
copayments of $1 to $5.35. Full benefit
Medi-Cal beneficiaries in long term care will pay nothing for covered
drugs. (See next section for a
description of the low-income subsidy, or “extra help” program.)
The Low Income Subsidy (LIS)
or Extra Help program, as it is being called, provides an additional subsidy
from the federal government for people with Medi-Cal and for other people with
limited resources, and with incomes up to 150% of the federal poverty level (
Dual eligible beneficiaries
do not have to apply for the LIS or Extra Help.
They are enrolled automatically.
Medicare beneficiaries who do not receive Medi-Cal, but who have limited
resources, and incomes up to 150% of the
The
The following people are
eligible for the low income subsidy:
Group
1
1.
All Medi-Cal beneficiaries with zero share of cost,
except 250% Working Disabled beneficiaries.
This includes SSI recipients; 1619(b); Pickle; zero share of cost DAC;
133% Aged and Disabled
2.
Full-benefit dual eligibles with incomes at or below
100% federal poverty level (
Group
2
Full-benefit
dual eligibles above 100% of
Group
3
1.
MSP (Medicare
Savings Program) dual eligibles (QMB, SLMB, QI1)
(“MSP”
is a limited benefit Medi-Cal program for people with incomes below 135% of
2.
Medicare only
beneficiaries with incomes below 135% of
Group
4
Medicare
only beneficiaries with incomes below 150% of
The following chart shows
what people who receive the low income subsidy will have to pay for their
Medicare Part D drugs in 2007:
|
|
Group 1 |
Group 2 |
Group 3 |
Group 4 |
|
Premium |
$0 (you pay nothing) |
$0 (you pay nothing) |
$0 (you pay nothing) |
Sliding scale based on
income |
|
Deductible |
$0 (you pay nothing) |
$0 (you pay nothing) |
$0 (you pay nothing) |
$53 ($50 in 2006) |
|
Coinsurance/ copayment (up to $3,600 out of
pocket) |
copay: $1.00 generic $3.10 brand $0 |
copay: $2.15 generic $5.35 brand $0 |
copay: $2.15 generic $5.35 brand |
15% coinsurance |
|
Catastrophic coverage |
$0 (you pay nothing) |
$0 (you pay nothing) |
$0 (you pay nothing) |
copay: $2.15 generic $5.35 brand |
One way is to apply for the
low income subsidy as described in the previous section. However, you can be automatically enrolled
under some circumstances. If you
incurred your share of cost at least once during the year, you will be
automatically enrolled for the remainder of the year. If you incurred your share of cost at least
once in July or later, you will be automatically enrolled for the following
year as well.
Although you will be
automatically enrolled in the low income subsidy, you will still have to enroll
in a Medicare Part D prescription drug plan.
You will have to pay the premium out of pocket for each month that you
are not enrolled in the low income subsidy.
You are eligible until your income, resources,
household size, or marital status change so that you are over the eligibility
amounts. (A Social Security cost of
living increase does not count as a change.)
You must report any changes to the Social Security Administration.
If you receive Medi-Cal with zero share of cost, there
will be no review as long as you continue to receive Medi-Cal. If you have a share of cost for Medi-Cal and
you incurred your share of cost at least once in July or later, you will be
automatically enrolled for the following year as well. If you no longer qualified for Medi-Cal in
July or later, Medicare will mail you a new application for the Low Income
Subsidy. You should reapply for the Low
Income Subsidy as soon as possible in order to be eligible next year.
If you do not receive Medi-Cal and you began receiving
the Low Income Subsidy before May, your eligibility for the following year will
not be reviewed unless there has been a change in your income, resources and
household size. You will receive a
letter from the Social Security Administration listing these amounts for the
current calendar year. If these amounts
have not increased and your marital status has not changed, you should do
nothing. You will remain eligible for
the Low Income Subsidy in the following calendar year. If any of these amounts have changed, you
should notify the Social Security Administration. You will need to return the one-page letter that came with the
notice from the Social Security Administration within 15 days. Social Security
will then mail you a form called “Social Security Administration Review of Your
Eligibility for Extra Help” (Form 1026B). If you fill out and return the form
within 30 days, any change to the amount of the Low Income Subsidy you qualify
for will be effective in January 2007 unless your marital status changed. Changes in marital status may result in
changes to the amount of the Low Income Subsidy in the following month. Some people will receive Form 1026B because
Social Security has information that there was a change in resources or
income. Return the form to Social
Security within 30 days.
The following is the standard
plan for people who do not receive Medi-Cal or Low Income Subsidy. This is the minimum federal requirement. This standard plan may be changed by the
actual Part D plans. Part D plans must
provide actuarially equivalent benefits.
Most plans do this by replacing the deductible and coinsurance with
copayments. The copayments vary
depending on which tier a particular drug is on.
|
Medicare Standard Drug Benefit – 2007 (For people who DO NOT receive Medi-Cal or
Low-Income Subsidy) |
|||
|
Drug coverage category |
If your total drug costs in calendar year 2007 are: |
Medicare drug plan pays: |
And you pay (assuming no other drug coverage): |