Q&A: Dual Eligibles and Medicare Part D Prescription Drugs

Executive Summary

This Q&A addresses questions about the implementation of the Medicare Part D prescription drug benefit and its interaction with Medicaid rules on prescription drugs. It also offers tips and strategies for advocates.

Question: I have a number of clients who are dual eligibles, that is, eligible for both Medicare and Medicaid. How will they be impacted by the Medicare Part D prescription drug benefit? Is there anything I can do before it is implemented in January 2006?

Answer: The new Medicare Prescription Drug benefit will have a huge impact on dual eligibles, moving them into federally-regulated, private prescription drug plans and possibly imposing greater cost-sharing and a more limited array of drugs to cover their health care needs. There are several advocacy steps you can (and should) take now? before Medicare Part D goes into effect.

Background on Medicare Prescription Drug Benefit
 
On January 1, 2006, Medicare will begin providing payment for outpatient prescription drugs through private plans. This change comes as a result of the enactment of the Medicare Prescription Drug, Improvement and Modernization Act of 2003.1 The Medicare Modernization Act will fundamentally alter the Medicare program for 35 million elderly Americans and will also have a dramatic impact on the over six million seniors and individuals with disabilities who receive Medicaid as well as Medicare benefits and are known as dual eligibles. The law adds coverage of outpatient prescription drugs to Medicare, but also terminates federal funding of Medicaid prescription drug coverage for all dual eligibles.

Medicare Part D, as the Medicare prescription drug benefit is called, will provide coverage of medications through prescription drug plans. What drugs will be covered, however, depends on the plan. While there are certain federal requirements on plans, they have been given broad flexibility to choose which drugs to include in their formularies. Moreover, plans are allowed to limit the number of drugs available in a therapeutic class to two and may even define what constitutes a therapeutic class for purposes of developing their formularies.

In obtaining medications through Medicare Part D, beneficiaries can challenge plan decisions to deny coverage of a particular prescription drug on its formulary. Beneficiaries can also appeal denials of coverage for those drugs not on the formulary if the prescribing physician has determined that no drugs on the formulary are as effective as the prescribed drug or if the drugs in the formulary have adverse side-effects for that particular beneficiary.
 
While Medicare Part D will pay for prescription drugs, many beneficiaries are likely to have significant cost-sharing obligations. Dual eligibles and other low-income Medicare beneficiaries may apply for subsidies to pay many of these costs. Beneficiaries who are not eligible for low-income subsidies will have to pay the first $250 in prescription drug costs, known as their deductible. They will also have to pay for 25% of total drug costs between $250 and $2250 and 100% of drug costs between $2250 and $5100, the latter of which is commonly referred to as ?the donut hole.? Dual eligibles, however, will not be affected by the donut hole. Additionally, beneficiaries who are not low-income will have to pay the higher of $2 for generic drugs and $5 for brand name drugs or 5% coinsurance after they reach the $3600 out-of-pocket limit.

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