Understanding Changes in Prescription Drug Coverage for People with Disabilities on Medicare
Jeffrey S. Crowley, Health Policy Institute, Georgetown University
with Bob Williams, Advancing Independence
Overview of Medicare Part D Drug Coverage Program
The Medicare Part D program is the new part of Medicare that provides prescription drug coverage. The law that created the Part D program was called the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. This is sometimes abbreviated as the Medicare Modernization Act or the MMA. If people refer to MMA prescription drug coverage, they are talking about the Part D program.
Extra Help is a component of the Medicare Part D program that provides financial assistance to dual eligibles and other low-income Medicare beneficiaries (with countable income up to 150% of the federal poverty level, $1,196 in monthly income for a single individual in 2005) to assist with the costs of obtaining prescription drug coverage. The benefits of the Extra Help program—and how to apply—will be described in greater detail later in the guide.
Key aspects of the Part D program relate to who can purchase coverage, what the program covers, and whether individuals can be guaranteed that their plan will cover the drugs their health care providers prescribe.
Who can purchase Part D prescription drug coverage?
All Medicare beneficiaries are eligible to participate in the Part D program. This includes persons entitled to Medicare Part A coverage and anyone enrolled in the Part B program.
What benefits does the Part D program provide?
Part D prescription drug coverage provides coverage for prescription drugs and biologicals (such as insulin). Part D drug coverage generally cannot cover over-the-counter drugs (drugs that can be purchased without a prescription), drugs already covered by other parts of the Medicare program, and “Medicaid excludable drugs”, except for products used to help people quit smoking. While the cost-sharing responsibilities of Medicare beneficiaries changes as their annual drug costs rise, there is no upper limit on the amount of drug coverage an individual has—no Medicare beneficiary can be told that they have exceeded the coverage limit for prescription drugs under the Part D program.
What drugs are covered by other parts of the Medicare program?
Part D prescription drug plans are prohibited from covering drugs covered by other parts of Medicare. As a general rule, drugs that are covered by other parts of Medicare include prescription medications provided during a stay in a hospital or skilled nursing facility which are paid for by the Part A program and limited circumstances when the Part B program covers prescription drugs. In general, the Part B program can pay for outpatient prescription drugs in the following circumstances:
- Drugs billed by physicians and typically provided in physicians offices (such as chemotherapy drugs);
- Drugs billed by pharmacy suppliers and administered through durable medical equipment (DME), such as respiratory drugs given through a nebulizer;
- Drugs billed by pharmacy suppliers and self-administered by the patient (such as immunosuppressive drugs and some oral anti-cancer drugs);
- Separately billable drugs provided in Hospital Outpatient Departments; and,
- Separately billable End Stage Renal Disease (ESRD) drugs such as erythropoietin (EPO).
What happens if there is confusion over whether Part D or another part of Medicare should pay?
There may be some cases when there is confusion over whether Parts A or B will pay for a drug or whether Part D should provide coverage for the drug. Part D cannot pay for drugs when Part A or B should pay, even if an individual is unable to get Part A or B coverage for the drug. In cases where there is a dispute over which part of Medicare is responsible for coverage of a specific drug, see the following document from the Centers for Medicare and Medicaid Services (CMS) which provides guidance and scenarios for deciding which Part of Medicare is responsible for coverage.
What are the “Medicaid excludable drugs”?
Part D prescription drug plans are prohibited from covering Medicaid excludable drugs under standard coverage plans, with the exception of smoking cessation products. Medicare plan sponsors that offer standard coverage plans, however, can offer enhanced coverage plans for a higher premium, and these plans are permitted to cover the Medicaid excludable drugs.
The following are Medicaid excludable drugs:
- drugs when used for anorexia, weight loss, or weight gain;
- drugs when used to promote fertility;
- drugs when used for cosmetic purposes or hair growth;
- drugs when used for the symptomatic relief of coughs and colds;
- drugs when used to promote smoking cessation (can be covered by Part D plans);
- prescription vitamins and mineral products, except prenatal vitamins and fluoride preparations;
- nonprescription drugs;
- covered outpatient drugs which the manufacturer seeks to require as a condition of sale that associated tests or monitoring services be purchased exclusively from the manufacturer or its designee;
- barbiturates; and,
These listed exclusions were enacted into law in the Omnibus Budget Reconciliation Act of 1990 and are sometimes referred to as “OBRA exclusions” or “OBRA-90” exclusions.
Although Medicaid generally cannot receive federal funding for prescription drugs for Medicare beneficiaries, this prohibition does not apply to excludable drugs. Indeed, if a state covers these excludable drugs for other Medicaid beneficiaries, then they must cover them for dual eligibles, when they are medically necessary.
What types of plans will provide Part D prescription drug coverage?
The Medicare Part D program does not provide a Medicare benefit directly. Rather, it creates a right for Medicare beneficiaries to purchase prescription drug coverage from a Medicare prescription drug plan. Prescription drug plans can be stand alone plans or individuals can enroll in a Medicare Part C managed care plan (now called Medicare Advantage health plans).
What are prescription drug stand alone plans?
Stand-alone plans are programs offered by insurers or other entities that provide coverage for only prescription drugs, and no other health care services. For Medicare beneficiaries wishing to participate in the traditional Medicare program, they should select a stand-alone plan to receive their prescription drug coverage.
What are Medicare Advantage plans?
Medicare Advantage plans combine the benefits of the other parts of Medicare into a health plan that takes responsibility for providing all Medicare benefits.
There are important trade-offs to think about when considering enrolling in a Medicare Advantage plan. Some plans offer premiums and cost-sharing that is lower than in traditional Medicare. Some plans offer expanded benefits. Typically, plans are able to do this, in part, by tightly managing the benefits. This could mean that if an individual enrolls in a Medicare Advantage plan they will not be permitted to see all of the doctors they want.
While deciding whether to enroll in a Medicare Advantage plan is a personal choice, the program’s history serving people with disabilities and chronic conditions has produced mixed results. Individuals with disabilities considering enrolling in a Medicare Advantage plan should weigh this decision with care.
Will Medicare beneficiaries be able to get their drugs from the pharmacy they choose?
As a general rule, any pharmacy could decide to participate in a Part D plan’s network, but plans can offer favorable terms for individuals to use a preferred pharmacy. It is also possible that an individual’s regular pharmacy is not in the network of a particular plan. For some individuals, this may be an important criterion in selecting a Part D plan. This may be especially true for people with mobility limitations as well as those living in rural communities or other areas where pharmacies are few and far between. In some instances, even these types of difficulties can lessened if a Part D plan allows for mail-order delivery of prescription drugs.
What is a drug formulary and how is it used?
Part D prescription drug plans are permitted to operate formularies, which are lists of drugs covered by a plan. This means that plans can choose to cover some, but not all FDA approved prescription drugs. Part D plans can also have tiered formularies where preferred drugs have a lower level of cost-sharing and drugs the plan considers non-preferred can have a higher level of cost-sharing. In some cases, plans can charge very high levels of cost sharing for non-preferred drugs.
Some beneficiaries, however, are not required to pay high cost sharing. Dual eligibles and low-income people receiving Extra Help (i.e. financial assistance with cost-sharing for dual eligibles and people below 150% of the poverty level) are generally protected from this higher cost-sharing.
To get all of the drugs they need, Medicare beneficiaries with disabilities need to know the plan rules and know how to ask for an exception or appeal if drugs are denied or if the cost-sharing makes the drugs unaffordable.
What must a Part D formulary cover?
In developing a formulary, drugs are grouped into classes of drugs which work in the same way or which are used to treat the same condition. As a general rule, Part D plans are only required to cover two drugs in each class. For example, there are at least 14 drugs in the antihistamine class (i.e. drugs used to treat allergies), and plan formularies, at a minimum, must only cover two of these.
What happens when a drug is not on a Part D plan’s formulary?
A Part D plan may not have a drug prescribed by an individual’s physician on the formulary—or they may charge a high level of cost-sharing. In some cases, the drug on the formulary that is used to treat the same condition (or the preferred drug with a lower level of cost-sharing) is perfectly acceptable. In others, substituted drugs on the formulary may have interactions with other drugs an individual is taking, they may not work effectively, they may produce unacceptable side-effects, or they may pose safety risks. Therefore, individuals, alone, should not try to make these determinations. If an individual is told that a drug prescribed by their physician is not on the formulary—of if they are told that the cost-sharing is at a high level, they should ask their pharmacist for options and recommendations, and they should check with their physician.
If an individual needs a drug they are denied—or to request that a non-preferred drug be provided at the preferred level of cost-sharing, individuals can request an “exception” to the plan’s formulary or cost-sharing policy. To be successful at an exception, though, the physician or other provider who prescribed the drug must agree that the specific drug is necessary and that a substituted drug is not appropriate. Exceptions and appeals procedures will be described in more detail later in this guide.
Which classes of drugs are given special treatment under the Part D program?
As previously stated, the MMA generally requires prescription drug plans that operate formularies to cover at least two drugs in each drug class. Federal officials have established a higher standard of coverage, however, for six specific classes. Plans are required to cover “all or substantially all” of the drugs in the following classes:
- Anticancer drugs (i.e., antineoplastics);
- Immunosuppressants; and
- HIV/AIDS drugs (i.e., antiretrovirals).
For drugs other than HIV/AIDS drugs, Part D plans are permitted to use utilization management tools such as prior authorization (requiring a patient to provide clinical evidence or other justification before a specific drug is covered) and step therapy (requiring a patient to try certain drugs or therapies in a particular order) with new users, but not with patients who already are using the drugs. For HIV/AIDS drugs, with one exception (enfuvirtide, also known as Fuzeon), Part D plans may not subject any users to prior authorization or step therapy requirements. New Fuzeon users may be subject to prior authorization (but not step therapy) requirements.
Although Federal officials have not articulated explicit coverage requirements for other classes, a plan typically will cover more than two drugs in a number of categories in order to provide a suitable range of drugs currently used to treat various disorders.
Can a Part D plan change the drugs available on their formulary?
Part D plans are permitted to change the drugs on the formulary at any time with federal approval. Except for emergency circumstances, however, they must give their enrollees notice 60 days before removing a drug. For enrollees taking a drug, the notice must be in writing. In the notice, plans must include information on the exception and appeals processes. Beneficiaries may appeal to continue to receive coverage for the drug. In addition, Part D plans are limited in the changes they can make between September 15, 2005 and January 1, 2006. In general, plans may not remove drugs during this period, although they may add drugs that are newly available.
Can a dual eligible do anything to retain Medicaid drug coverage?
No. It is not possible for a Medicare beneficiary to continue to receive their prescription drugs from Medicaid, except for the limited number of “Medicaid excludable” drugs discussed earlier.
If an individual is currently on a treatment regimen, can they continue getting the same drugs under a Part D plan?
Part D plans are required to establish an appropriate transition process in order to address the needs of individuals who are stabilized on certain drug regimens. Federal officials have recommended, but have not required plans to provide a temporary “first fill” supply of a drug so that they can access their drugs and be given a certain amount of time to make any necessary switches in treatment regimens.
Federal officials are requiring that Part D plans dispense a temporary supply of non-formulary drugs for residents of nursing homes and other long-term care facilities.
When can individuals switch plans?
As a general rule, Medicare beneficiaries can switch plans once per year during an annual coordinated election period. This will run from November 15 – December 31st for enrollment changes for the next calendar year. There are certain circumstances when individuals have a right to change their enrollment during the year at a time other than the annual coordinated election period. These circumstances are called special enrollment periods. They include circumstances such as when an individual moves to another region and they need to enroll in a plan operating in their new region, or if they had creditable retiree coverage that stops providing them coverage.
Dual eligibles have a special protection in that they always qualify for a special enrollment period. This means that dual eligibles can switch plans at any time throughout the year.
Are there special issues for people with disabilities in nursing homes or other long-term care facilities?
It is essential that Medicare beneficiaries residing in nursing homes or other long-term care facilities, such as skilled nursing facilities and intermediate care facilities for persons with mental retardation (ICF-MRs), select a plan that includes a long-term pharmacy (a specialized pharmacy that provides drugs to residents of long-term care facilities) serving the institution where they reside. The Part D program has special provisions that allow individuals to access a non-network pharmacy, such as in case an individual travels outside of their region. It is important to note that these out-of-network provisions cannot be used by residents of long-term care facilities to access a non-network long-term care pharmacy.
Table of Contents
- Overview of the Medicare Part D Drug Coverage Program
- Paying for Medicare Drug Coverage
- Action Steps for People with Disabilities
- Action Steps for Disability Organizations
- Key Contacts and Other Resources
- Consumer Drug Information worksheet (PDF)
- Consumer Plan Selection Worksheet (PDF)
- Understanding Changes in Prescription Drug Coverage for People with Disabilities on Medicare (Full Guide, PDF)
- Understanding Changes in Prescription Drug Coverage for People with Disabilities on Medicare (Full Guide, Word Document, Minimal Formatting for Readers)
Note: PDF files require the most recent version (7 or higher) of the free Adobe Reader.
This consumer guide was developed with financial support from the Pharmaceutical Research and Manufacturers of America (PhRMA). Copyright © 2005 by Advancing Independence. Permission to duplicate is granted and encouraged. Please acknowledge the source. Please direct questions to email@example.com.