Download CMS Final Rule: Implementation of the Medicare Drug Benefit

CMS Final Rule: Implementation of the
Medicare Drug Benefit
An Overview
Background
The Medicare Prescription Drug Improvement and Modernization Act (MMA), which was
signed into law by President George W. Bush in December 2003, creates a market place for the
provision of outpatient medications to Medicare beneficiaries. Private health plans operating in
thirty four (34) Prescription Drug Plan (PDP) regions across the United States will compete by
offering a wide array of medication insurance policies to seniors and people with disabilities.
The Centers for Medicare and Medicaid Services (CMS) recently issued a 1,162 page final rule
implementing the MMA.
The regulation will significantly impact how National Council members prescribe medications
for consumers of mental health services particularly individuals who are eligible for both
Medicare and Medicaid. At a recent meeting of the Councils Public Policy Committee, it was
estimated that so-called dual eligibles comprise 35 to 40 percent of the average caseload of
typical National Council members. This fact sheet the first of several dedicated to the MMA will
focus on the dual eligible population.
Enrollment for the New Benefit
Beneficiaries can begin enrolling in the voluntary drug benefit known as Part D of Medicare on
November 15, 2005. A six (6) week enrollment process will then commence, concluding with
the new programs start up on January 1, 2006. On that date, Medicaid prescription drug
reimbursement for the 6.5 million dual eligibles will cease and these individuals will receive
ALL of their medications through the new Part D Medicare benefit. Once enrolled, these lowincome individuals will not be responsible for annual premiums, deductibles or co-payments. In
part because dual eligibles have a high incidence of mental illnesses and/or cognitive
impairments, the rule also establishes an automatic enrollment process for those who do not sign
up.
CMS itself will administer the auto-enrollment process, not state Medicaid agencies. Given the
challenges posed by this massive transition, CMS will attempt to automatically enroll dual
eligibles earlier than other beneficiaries, by October of 2005, to prevent them from losing
prescription drug coverage. The final rule includes several features of importance to behavioral
healthcare providers:
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CMS pledged to partner with existing stakeholders to conduct broad-based outreach and
education; provide clear and comprehensive information to beneficiaries; and refer
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individuals to either the 1-800-MEDICARE toll-free line or to Part D plans for additional
information.
Dual eligibles that fail to make their own choice of plans and are thereby included in the
auto-enrollment process will be randomly assigned to the lowest cost plan in the region.
Therefore, its appears that National Council members would benefit consumers by
helping them to take advantage of the voluntary enrollment period and steering them
clear of the automatic process.
PDPs are prohibited from disenrolling persons with mental illnesses if they fail to comply
with their psychotropic drug regimen; plans are also required to provide reasonable
accommodationsfor all persons with cognitive impairments during the initial enrollment
period. We [CMS] will determine the type of accommodation necessary after a case-bycase review&..
Formularies
The final MMA regulation authorizes PDPs to establish a list of medications that will be
available to Medicare beneficiaries otherwise know as drug formularies. There are several salient
features:
As a general rule, only two (2) drugs will be available in each therapeutic class. To the extent
that Medicaid currently provides better access to medications particularly atypical antipsychotics and anti-depressants this provision is likely to mean medication switching for many
dual eligibles.
PDPs are authorized to employ utilization management policiesencompassing prior
authorization, step therapy, and generic substitution.
CMS will review plan benefit packages including the particular drugs on the formulary, copayment systems and utilization management practices to ensure that PDPs dont discriminate
against people with mental illnesses.
Proposed Protections for Mental Health Consumers
Unfortunately, CMS chose to reject a number of National Council proposals filed with the
agency in October of last year that would have protected dual eligibles during their transition to
the new Medicare Part D benefit. Specifically, the agency was urged to adopt a model
implemented in over twenty (20) state Medicaid prescription drug programs that carved out all
psychotropic medications and exempted them from prior authorization and other utilization
management practices. While a mental health carve out was not included, the final rule does
require that people with HIV/AIDS will have access to, all or substantially all drugs in a
particular therapeutic class& In addition to requesting a carve out, the National Council argued
that consumers who are stabilized on a particular psychotropic medication should continue to
receive that drug upon the January 1 transition to their new Part D plan coverage; this proposal
became known as grandfathering.
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Consumer Protections Included in the Rules
In place of these patient protections, the rule outlines three (3) alternatives. First, CMS adopted a
rule that allows consumers to use the grievance and appeals process to obtain coverage of drugs
excluded from a plan formulary, provided that medical necessity can be proved. Second, the
final regulation mandates that each PDP establish an appropriate transition processfor new
enrollees, but it does not describe the specific components of that process in any detail. Third,
drug plans that enroll a disproportionately large number of dual eligibles will receive enhanced
risk adjusted payments that reflect the high medical costs associated with this vulnerable
population.
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