Q&A: EPSDT and the Medicare Prescription Drug Benefit

Executive Summary

Individuals dually eligible for Medicare and Medicaid receive their prescription drug coverage through Medicare Part D. This Q&A addresses problems that can arise where the Part D coverage needs to wrap-around with Medicaids EPSDT benefit for children.

Question: My client is a child who is enrolled in Medicaid and Medicare. She regularly receives kidney dialysis, which is covered by Medicare. What impact will Medicare Part D benefits have on prescription drugs she currently takes, which are covered by Medicaid and EPSDT? 
Answer: Beginning January 1, 2006, your client will no longer obtain prescription drugs through her Medicaid coverage. Instead, she will receive her medications from Medicare Part D. Her Medicare Part D plan should cover all medically necessary prescription drugs, other than those explicitly excluded from the Part D benefit. However, the plan?s formulary may not cover your client?s drugs, as the plan is required to cover only two drugs in each therapeutic class. For that reason, advocate assistance will be critical in enabling your client to obtain the medications she needs. 
Medicare Coverage of Kidney Dialysis
Medicare is a federal program that provides health care coverage to senior citizens and individuals with disabilities. Additionally, Medicare covers individuals with End Stage Renal Disease (ESRD), which is permanent kidney failure requiring dialysis or kidney transplantation.2 For those with ESRD, Medicare provides coverage of inpatient dialysis treatments as well as coverage of outpatient dialysis treatments, home dialysis treatments, doctors? services, selfdialysis training and certain home supportive services. Inpatient services are generally covered through Part A, Medicare?s hospital insurance, and outpatient services are provided through Part B, its medical insurance.3 While many individuals with ESRD do not have to pay a premium for Part A, they do have to pay a Part B premium.4 Medicare beneficiaries who also have private insurance or Medicaid coverage can have either coverage pay their Part B premiums.5 Beneficiaries with ESRD who enroll in Medicare Parts A and B are entitled to the current full Medicare benefits.6
Medicaid and EPSDT
The Medicaid program is a cooperative state-federal program that covers health care for categories of low-income individuals. All Medicaid beneficiaries under the age of 21 are entitled to receive Early and Periodic, Screening, Diagnostic and Treatment (EPSDT).7
In addition to providing comprehensive screening services, EPSDT provides coverage of diagnostic and treatment services for any diseases or conditions children may have.8 Its treatment mandate is broad. The Medicaid Act explicitly requires that states provide through EPSDT ?necessary health care, diagnostic services, treatment, and other measures . . . to correct or ameliorate defects and physical and mental illnesses and conditions discovered by the screening services, whether or not such services are covered under the State plan.?9 This means that children with ESRD needing prescription drugs and other optional services can obtain them through Medicaid even if their state does not cover the benefits for adult beneficiaries.

Coverage of Prescription Drugs Through Medicare Part D
Beginning January 1, 2006, Medicare will provide payment for outpatient prescription drugs through private plans. Authorization for this change came from the Medicare Prescription Drug Improvement and Modernization Act of 2003.10 As a result of the enactment of the Medicare Modernization Act (MMA), six million seniors and individuals with disabilities who are dually eligible for Medicare and Medicaid benefits will now obtain prescription drug coverage through Medicare. While initiating a prescription drug benefit under Medicare, the law will also terminate federal funding of Medicaid prescription drug coverage for drugs available to all dual eligibles under Medicare.11
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