Transitional Coverage Under Medicare Drug Benefit Expires
The 90-day transitional period under which private health plans administering the Medicare prescription drug benefit are required to cover all necessary, existing prescriptions for beneficiaries is scheduled to end today, the San Francisco Chronicle reports. Health plans originally agreed to offer 30 days of emergency coverage for drugs that beneficiaries had been taking but that would not be covered under their new plan.
In February, Medicare officials requested that the health plans extend the coverage period to 90 days, through the end of March. The additional time was intended to help beneficiaries find generic equivalents to their medications, request exceptions from coverage rules from their insurer or switch plans (Colliver, San Francisco Chronicle, 3/31).
The transitional period is ending only for individuals who enrolled in the drug benefit before March. Those who enroll today will receive a 30-day transitional period, according to Kelli Jo Greiner, manager of a state-funded hot line for Medicare drug benefit beneficiaries in Minnesota (Olson, St. Paul Pioneer Press, 3/31).
Some advocates are concerned that some beneficiaries might not be aware that they have been receiving their medications under the 90-day transitional period and that they will face difficulty obtaining needed medications beginning April 1.
"We are concerned there will be a serious problem in April as beneficiaries go to the pharmacies and discover their drugs are not covered," Marc Steinberg, senior health policy analyst for Families USA, said (San Francisco Chronicle, 3/31).
During a conference call organized by Families USA, advocates expressed particular concern about dual eligibles, whose drug coverage was switched automatically from Medicaid to Medicare when the Medicare drug benefit began. They said health plans have not adequately informed beneficiaries about the change in coverage and that there is a lack of a standardized form to appeal coverage decisions.
"It creates somewhat of a perfect storm," David Lipschutz, an attorney for California Health Advocates, said (Carey , CQ HealthBeat, 3/30). He added, "April is going to be a troublesome period because of a convergence of a number of factors."
According to the Chronicle, California on April 16 also is ending its emergency coverage of medications for dual eligibles. Of the 40 states that originally instituted such coverage at the launch of the Medicare drug benefit, only 17 are still filling prescriptions under the stopgap programs (San Francisco Chronicle, 3/31).
Texas is ending its emergency coverage program on April 1 (Markley, Houston Chronicle, 3/30). New York also is ending its emergency coverage program for dual eligibles (Yan, Long Island Newsday, 3/31).
Health plans have notified patients if they are receiving medications that will not be covered once the transition period ends, and insurers have improved telephone and customer service capacities to handle concerns, Medicare officials said.
"It's not like everybody took a vacation during this transition period," Jeff Flick, regional administrator for CMS, said. He added, "We have been working on these issues all along throughout the past three months so it doesn't come as a surprise to people in April."
Medicare officials also said computer systems that caused some confusion during the launch of the benefit have been upgraded, and they "do not anticipate any major problems April 1" (San Francisco Chronicle, 3/31).
CMS spokesperson Peter Ashkenaz said CMS is not considering extending the transition period again, adding, "We're monitoring [health plans'] performance and holding plans accountable." He also said CMS is "working closely with plans to develop and use standardized exceptions and appeals forms" (Carey , CQ HealthBeat, 3/30).
In related news, the Association of Community Pharmacists is pushing Congress to pass a "prompt-pay" bill that would require health plans to pay pharmacies for medications filled under Medicare within 14 days. The legislation comes after a number of pharmacists have said they are losing money under the Medicare drug benefit because of payment delays.
A poll of more than 40 rural pharmacies in North Carolina finds that the "combined effect of seniors switching to the Medicare drug benefit ... coupled with lower reimbursement rates ahead for Medicare prescriptions could force pharmacies in 11 states to close their doors," CQ HealthBeat reports (Carey , CQ HealthBeat, 3/30).
According to the Detroit News, many health plans have negotiated Medicare contracts with pharmacists that call for monthly payments. Medicaid typically reimburses pharmacists every two weeks (Terlep, Detroit News, 3/31).
Health plans are "always 30 days behind in their payments," Mike James, vice president of governmental affairs for the ACP Congressional Network, said (Carey , CQ HealthBeat, 3/30).
ACP Congressional Network spokesperson Crystal Wright said, "We're into March and people are telling us they haven't been paid yet for January. A situation is occurring where pharmacies are running their business at a financial loss" (Detroit News, 3/31). James added that even when pharmacists are paid, they lose money on each Medicare prescription because health plans are reimbursing at the cost of the drug plus a small amount, which often is less than the cost to the pharmacy of filling the prescription (Carey , CQ HealthBeat, 3/30).
According to the News, health plans say they are "running a more efficient system that's cutting down on overpayment to pharmacists and saving seniors an average of 35% on the drugs they buy."
Mark Merritt, president of the Pharmaceutical Care Management Association, said some pharmacists are behind on receiving payments but attributed the delays to problems in the rollout of the drug benefit. "People are saving money with this system," he said, adding, "The reality is that first and foremost you've got to take care of seniors, and that's what we're doing" (Detroit News, 3/31).
Phil Blando, a spokesperson for PCMA, which represents PBMs, said industry and government officials are working to address payment issues and that most PBMs are making payments to pharmacies within 10 to 30 days. "Without question, there have been early challenges to implement the program," Blando said.
CMS Administrator Mark McClellan also said that, although pharmacists are paid less per prescription than Medicaid pays, the increased volume of activity resulting from the launch of the Medicare drug benefit should offset the lower reimbursements (Carey , CQ HealthBeat, 3/30).
Three newspapers recently examined other issues relating to the Medicare drug benefit. Summaries appear below
AP/Cleveland Plain Dealer: The AP/Plain Dealer on Thursday examined how beneficiaries "are learning the hard way" how "insurers are using a broad range of tools to get customers to take the cheaper drugs they want them to take, and failure to follow their instructions can be costly." Many plans use prior authorization requirements, prescription limits or tiered coverage levels to control drugs costs, the AP/Plain Dealer reports. And while many commercial drug plans use similar systems the requirements under Medicare drug plans are unusually restrictive, some health consultants say. CMS Administrator Mark McClellan said beneficiaries and physicians can file appeals if they are denied coverage for a drug. He added that CMS hasn't "seen comments that [it] should do something vastly different from what [it is] doing now" (AP/Cleveland Plain Dealer, 3/30).
Dallas Morning News: The Morning News on Thursday examined why relatively few low-income beneficiaries have applied for additional financial assistance under the drug benefit, which includes lower copayments and reduced premiums or no premiums. An estimated 7.2 million beneficiaries qualify for the financial assistance, but only 1.5 million have applied and enrolled, the Morning News reports. Some advocates who work with seniors say many beneficiaries are unaware that they have to apply to Social Security to receive the subsidy. Other advocates say the application form is too complicated and that many beneficiaries are under the false impression that the value of their homes, cars or other assets would disqualify them from receiving financial aid (Moos, Dallas Morning News, 3/30).
- New York Times: The Times on Friday examined how large insurers have found that the best opportunity to earn "real money" through the drug benefit is by enrolling beneficiaries in Medicare Advantage plans, which produce higher profit margins than stand-alone prescription drug plans. For example, Humana -- which has 1.7 million members enrolled in the drug benefit -- estimates that profit margins for its stand-alone drug plans will be 1% to 3% before taxes, compared with 3% to 5% for its Medicare Advantage plans. According to the Times, the federal government pays insurers a monthly subsidy of $75 per beneficiary for stand-alone plans and $900 to $2,000 for a full Medicare Advantage policy (Freudenheim, New York Times, 3/31).