UPDATE ON MEDICARE PART D -- 2010 by Dr. Craig Sterm, PharmD

MEDICARE MODERNIZATION ACT (MMA) PART D…2010 UPDATE : MEDICARE MODERNIZATION ACT (MMA) PART D… 2010 UPDATE Western Claims Conference Craig Stern, PharmD, MBA June 28, 2010

OUTLINE : OUTLINE Cost Projections 2010, 2011 Part D Benefit Updates Standard Catastrophic LICS Subsidies RDS EGWP Changes to Part D PPL changes AEP PDE TrOOP eRx MTM NDC Non-match List

Part D Cost Projections For 2010 and 2011 : Part D Cost Projections For 2010 and 2011 2010: Annual deductible has increased to $310 Initial coverage limit has increased to $2,830 Annual out-of-pocket has increased to $4,550 Retiree Drug Subsidy (RDS) has increased to $310 and $6300 for the cost threshold and cost limit amounts respectively 2011: Annual deductible will remain at $310 Initial coverage limit will increase to $2,840 Annual out-of-pocket cost will remain at $4,550 RDS will remain unchanged with the cost threshold and cost limit amounts at $310 and $6300 respectively Annual % increase in average per capita Part D spending which is used to update the deductible, initial coverage limit, and out-of-pocket threshold for the defined standard benefit for 2011 is 4.63 % http://www.rds.cms.hhs.gov/reference_materials/threshold_limit.htm http://www.q1medicare.com/PartD-The-2011-Medicare-Part-D-Outlook.php

PART D BENEFITS UPDATE : PART D BENEFITS UPDATE

STANDARD BENEFIT DESIGN : STANDARD BENEFIT DESIGN

CATASTROPHIC COVERAGE BENEFIT : CATASTROPHIC COVERAGE BENEFIT

CATASTROPHIC COVERAGE 2011 : CATASTROPHIC COVERAGE 2011 Greater of 5% or the values in the chart above 2010: Generics $2.50 for generic or preferred multisource drugs with a retail price under $50 5% for those with a retail price greater than $50. Brands $6.30 for drugs with a retail price under $130 5% for drugs with a retail price over $130. http://www.q1medicare.com/PartD-The-2011-Medicare-Part-D-Outlook.php

LOW INCOME BENEFIT DESIGN 2010 : LOW INCOME BENEFIT DESIGN 2010

CHANGES IN MEDICARE PART D BENEFIT : CHANGES IN MEDICARE PART D BENEFIT 2010: $250 rebate for spending in the coverage gap 2011: 50% discount on brand drugs in the gap 2011 for generics/2013 for brands: Coinsurance rate in gap decreases from 100% to 25% by 2020 2020: Brands: 50% discount + 25% federal subsidy (phase in start 2013) Generics: 75% discount (phase in start 2011) 2014 – 2019: Catastrophic coverage amt decreased Patient Protection and Affordable Care Act – P.L. 111 – 148, 3/23/10

ADDITIONAL CHANGES IN MEDICARE PART D BENEFIT : ADDITIONAL CHANGES IN MEDICARE PART D BENEFIT Indirect Medical Education (IME) costs will be phased out of Medicare Advantage plan payments in 2010. By 2011, a majority of private fee-for-service (PFFS) plans will be required to have a network. The PPO Stabilization Fund, established by MMA in the amount of $10 billion, will be phased out in 2013. These funding avenues were originally established to encourage PPOs and other managed care organizations to participate in Part D. Now that participation is assured, the need for this encouragement is diminished.

SUBSIDIES : SUBSIDIES

RETIREE DRUG SUBSIDY (RDS) : RETIREE DRUG SUBSIDY (RDS) Amount of subsidy available is adjusted annually by law and has increased every year. 2010: up to $1,677.20 is available per retiree (RDS Fact Sheet, 2010) http://rds.cms.hhs.gov/reference_materials/rdsfactsheet.pdf

EGWP : EGWP EGWP = Employer Group Waiver Plan EGWP = retirement subsidization by CMS Options for EGWP: Direct Contract EGWP = employers and unions contract directly with CMS to provide plan benefits and receive payments directly from the government '800' series EGWP = employers and unions contract with CMS using a third party Part D sponsor. The third party acts as a 'middle man' who performs the administrative and financial functions

EGWP vs. RDS : EGWP vs. RDS Cost Savings – 15%-20% of gross subsidies under RDS (28% between $295 -$6000) compared to 19% -35% under EGWP Risk avoidance – Shift risk to Part-D Plan Sponsor Minimal disruption to the membership – the current pharmacy plan design can be maintained Tax savings – Tax obligations treated equally with taxable entities Direct monthly subsidy – The direct monthly subsidy on basis of the number of enrollees GASB 43/45 liability – reduced Administrative functions -- by Insurance Co (up to 25% cost savings) Catastrophic coverage – covered by Part D benefit (once the beneficiary reaches $4,350 in out of pocket expenses, he/she pays no more than 5% coinsurance)

BENEFITS OF 800 SERIES EGWP : BENEFITS OF 800 SERIES EGWP Third party manages the administrative and financial functions The employer and union group has no direct covenant to CMS The low premium of employer and union group directs to a greater 'cost savings' (up to 25%). No compliance or regulatory burdens Least administrative burden vs. RDS Plans can be designed to the individual group’s needs 3rd party part D sponsor bears the total risk Third party Part-D sponsors familiar with the regulatory requirements of CMS

PART D CHANGES : PART D CHANGES

ANNUAL COORDINATED ELECTION PERIOD (AEP) : ANNUAL COORDINATED ELECTION PERIOD (AEP) The AEP is also known as the annual open enrollment period.. Effective in 2011, the annual coordinated election period (AEP) will be moved and extended to October 15 to December 7 for the 2012 plan year. http://www.hapnetwork.org/assets/pdfs/2011-fact-sheet.pdf

LATE ENROLLMENT PENALTY : LATE ENROLLMENT PENALTY Higher premium – based on an increase of at least 1 % of the base beneficiary premium (i.e., $31.94 for 2010) / month for every month that they waited to enroll. This premium may change each year. For example, if John Doe is without creditable coverage for 18 months, his penalty is 18 percent (1 percent × 18 months) multiplied by $31.94 (base beneficiary premium) = $5.75. This amount would then be added to the monthly premium, for example $20.00. In this example, John Doe would pay a higher premium of $20.00 + $5.75 = $25.75. The fees will be reflected in higher monthly premiums for the beneficiary's lifetime. However, if a Medicare beneficiary has a creditable coverage equivalent to or better than Part D (e.g., employer or retirement plan), this penalty does not apply. http://questions.medicare.gov/app/answers/detail/a_id/2255

PDE : PDE Medicare Part D Prescription drug events (PDEs) = data from Rx claims that are reported to CMS by prescription drug plans (PDPs) and Medicare Advantage Plans (MA-PDs). PDE data used by CMS for: Reporting to Congress and the public on the overall statistics Reconciliation of payments by plan sponsors Evaluations of the program Making legislative proposals Conducting demonstration projects. MIPPA 2009: Regulations clarified in stating that PDEs may be used for research, to improve public health and for congressional oversight.

PDE DATAFLOW : PDE DATAFLOW 2008 PDE Regional Training Participant Guide Dataflow: Pharmacy Provider TrOOP (true out-of-pocket) Cost Facilitator Plan PDE Record Prescription Drug Front-End System (PDFS) PDFS Response Report Drug Data Processing System (DDPS) DDPS Return File DDPS Transaction Summary Error Report Integrated Data Repository (IDR) Cumulative Beneficiary Summary Report P2P Reports Payment Reconciliation System (PRS)

TrOOP -- 2010 : TrOOP -- 2010

TrOOP EXAMPLE 2010 : TrOOP EXAMPLE 2010

ePrescribing : ePrescribing CMS defines electronic prescribing, or e-Prescribing, as a prescriber's ability to electronically send an accurate, error-free and understandable prescription directly to a pharmacy from the point-of-care. Formulary and benefit transactions Medication history transactions Fill Status notifications Incentive payments 2010: 2% in 2009 and 2010 1% in 2011 and 2012 0.5% in 2013 2011 practitioners required to use these qualified e-prescribing systems Fail to e-prescribe by 2011 reduced payments by 1% in 2012, 1.5% in 2013, and 2% after * 73 Fed. Reg. 18918-18942 (Apr. 7, 2008)

MTM 2010 : MTM 2010 Opt-out method of enrollment only Target beneficiaries at least quarterly Target beneficiaries who: Have multiple chronic diseases (sponsors cannot require more than 3 chronic diseases as the minimum number of multiple chronic diseases, and sponsors must target at least 4 of the following seven core chronic conditions):  Hypertension, Heart Failure, Diabetes, Dyslipidemia, Respiratory Disease (such as Asthma, Chronic Obstructive Pulmonary Disease (COPD), or Chronic Lung disorders), Bone Disease-Arthritis (such as Osteoporosis, Osteoarthritis, or Rheumatoid Arthritis), Mental Health (such as Depression, Schizophrenia, Bipolar Disorder, or Chronic and disabling disorders). Are taking multiple Part D drugs (sponsors cannot require more than 8 Part D drugs as the minimum number of multiple covered Part D drugs). Annual costs existing cost threshold, $4,000, will be lowered to $3,000   Offer a minimum level of MTM services, including: interventions for both beneficiaries and prescribers; an annual comprehensive medication review for the beneficiary, which includes a review of medications, interactive, person-to-person consultation, and an individualized, written summary of interactive consultation; and quarterly targeted medication reviews. Measure and report details on the number of comprehensive medication reviews, number of targeted medication reviews, number of prescriber interventions, and the change in therapy directly resulting from the interventions. All Part D sponsors must establish an MTM program per these requirements. The MTM requirement does not apply to MA Private Fee for Service (MA-PFFS) organizations. However, considering MA-PFFS organizations have an equal responsibility to provide a quality Part D product, CMS encourages MA-PFFS organizations to establish an MTM program to improve quality for Medicare beneficiaries.

FDA NON-MATCH LIST : FDA NON-MATCH LIST CMS published a list of 'Non-matched' NDCs that will not be eligible for reimbursement under Part D plans starting January 1, 2010. Affected NDCs is found at the following link on the CMS website at: www.cms.hhs.gov/PrescriptionDrugCovContra/03_RxContracting_FormularyGuidance.asp. CMS will use this updated list to establish new edits beginning on or around January 1, 2010 that will reject prescription drug event (PDE) submissions from Part D sponsors for NDCs identified on the list. The Non-matched NDC list was developed as part of an ongoing joint initiative between CMS and FDA to increase transparency and clarity with respect to the regulatory status of marketed prescription drug products. CMS also provided clarifications to the use of the drug list that are quoted here from http://www.nhia.org/Members/documents/20091021CMSMemotoPlansonNDCs.pdf This list cannot be used to determine a drug’s status as approved or unapproved

USEFUL SITES : USEFUL SITES Drugs in at least one Retailer Discount Drug Program http://www.q1medicare.com/PartD-DrugSearchBrandGenericEquivalent.php?letter=RxSavings Top 200 Drugs http://www.q1medicare.com/PartD-DrugSearchBrandGenericEquivalent.php?letter=200 Top 100 Medicare Drugs http://www.q1medicare.com/PartD-DrugSearchBrandGenericEquivalent.php?letter=100 PDP- Facts 2010 Medicare Part D Plan Statistics – Region (State) and National http://www.q1medicare.com/PartD-MedicarePartDPlanStatisticsState.php PDP- Facts 2010 Medicare Part D Plan Statistics – Region California http://www.q1medicare.com/PartD-MedicarePartDPlanStatisticsState.php?crit=CA Discount Drug Programs Search List by   http://www.q1medicare.com/PartD-DrugSearchBrandGenericEquivalent.php?letter=Retailer Compare Medicare Part D Plan 2009/2010 http://www.q1medicare.com/PartD-SearchPDPCompare-PartDPlanFinder.php LICS -- http://www.medicareadvocacy.org/Print/FAQ_PartD.htm

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