Medicare Part D: Better understanding the nuances of the prescription drug benefit Rajul A. Patel, Pharm.D, Ph.D. TJL School of Pharmacy & Health Sciences University of the Pacific July 26 th , 2018
Today’s Agenda Part B vs. Part D coverage of prescription drugs 2019 Standard Part D Benefit Tiering, cost-sharing ceilings, specialty tier drugs Pharmacy Networks and how PBMs work
The Parts of Medicare Part A Part B Part C Part D Hospital Medical Medicare Medicare Insurance Insurance Advantage Prescription Plans (like Drug HMOs/PPOs) Coverage Includes Part A, Part B and sometimes Part D coverage
What does Part B cover? Covers outpatient medical services Physician visits Outpatient care Durable Medical Equipment (DME) Preventative services
Medicare Part B Physician Visits “Welcome to Medicare” visit Annual “Wellness” Visit (complete a “Health Risk Assessment”) Routine visits Outpatient care Ambulance service Dialysis ER services Mental health care (depression/anxiety) Lab services Diagnostic tests (e.g., x-rays, MRIs) Drugs* (in limited situations)
Medicare Part B Durable Medical Equipment (DME) Diabetes supplies Nebulizers Prosthetic/Orthotic items Oxygen Wheelchairs Walkers
Medicare Part B Preventative services Bone mineral density Cardiovascular Depression screening Diabetes screenings Eye exam* Mammograms Prostate screening Smoking Cessation Vaccinations …and many more
Drugs Billed to Part B Drugs used via a nebulizer at home Antigens administered for allergy testing Hemophilia clotting factors that are self- administered An injectable drug that is provided and administered by your doctor and NOT usually self-administered
Part B Part D
Medicare Part B vs. Part D Some drugs/drug categories may be covered by either Part B or Part D depending on the situation Drug classes where such uncertainty exists: Insulin Vaccines Hepatitis B vaccine Immunosuppressants Oral anti-cancer drugs Oral anti-emetic drugs Erythropoietin
Medicare Part B vs. Part D Coverage Determination Coverage category: Insulin Scenario: Beneficiary would like to fill their insulin Community pharmacy setting billing: Part B- Administered with an insulin pump Part D- All other situations
Medicare Part B vs. Part D Coverage Determination Coverage category: Vaccines Scenario: Prophylactic Vaccines Community pharmacy setting billing: Part B- flu, pneumococcal, and Hepatitis B (medium-high risk individuals) vaccines Part D- for all other vaccines
Medicare Part B vs. Part D Coverage Determination Coverage category: Hepatitis B vaccine Scenario: Beneficiary would like to receive the Hepatitis B vaccine series Community pharmacy setting billing: Part B- Medium/High risk beneficiary Part D- All other beneficiaries
Hepatitis B Risk Categories Intermediate risk groups Staff in institutions for the mentally handicapped Workers in health care professions who have frequent contact with blood/blood-derived body fluids during routine work. High risk: ESRD Hemophilia Clients of institutions for the mentally handicapped Those who live in the same household as a HBV carrier Homosexual men Illicit injectable drug abusers. Diabetes
Medicare Part B vs. Part D Coverage Determination Coverage category: Immunosuppressants Scenario: Drugs used for immunosuppressive therapy in a beneficiary that received a transplant from a Medicare-approved facility Community pharmacy setting billing: Part B- for Medicare covered transplant Part D- for all other situations
Medicare Part B vs. Part D Coverage Determination Coverage category: Oral chemotherapy agents used in cancer treatment Scenario: Oral chemotherapy drugs for which there is an infusible version of the drug Community pharmacy setting billing: Part B- for cancer treatment Part D- for all other indications
Medicare Part B vs. Part D Coverage Determination Coverage category: Oral anti-emetic drugs Scenario: Oral anti-nausea drugs used in cancer treatment as replacement for IV anti-emetic drugs before, at, or within 48 hours of chemotherapy Community pharmacy setting billing: Part B- within 48 hours of receiving chemo Part D- for all other situations
Medicare Part B vs. Part D Coverage Determination Coverage category: Erythropoietin Scenario: Treatment of anemia for a person with ESRD who is on dialysis Community pharmacy setting billing: Part B- treatment of anemia for beneficiaries with chronic renal failure undergoing dialysis Part D- for all other situations
Standard Coverage Plan sponsors contract with Medicare to provide prescription drug benefits At minimum, plan sponsors must offer a plan that is equivalent (“actuarially equivalent”) to the “standard benefit plan” Yearly deductible Co-insurance (or co-pays) Coverage gap Catastrophic coverage
Standard Benefit Package- Effective January 1 st 2019 Out-of-pocket spending Medicare Part D Benefit ( 4) Pt. pays 5% of drug costs ‘Catastrophic Coverage’ $7,653.75 (3) Pt. pays % of drug costs $2,950 Gap (“donut hole”) ‘Coverage Gap’ (Donut Hole) $3,820 (2) Pt. pays 25% of drug costs $415 (1) Pt. pays $415 deductible $0 Total Drug Costs ->
Deductible (2019) Definition: $ that must be spent by the patient before coverage begins Yearly deductible- MAXIMUM allowable amount $415 (2019) $405 (2018) $400 (2017) $360 (2016) $320 (2015)
“25% Coinsurance” (2019) Definition (Coinsurance): a % of the drug’s cost that the patient must pay 25% coinsurance payment for plan covered drugs after the annual deductible is met Up to the next $3,405 in covered drug expenses
“25% Coinsurance” (2019) In this window (from $415 to $3,820), the beneficiary is responsible for up to $851.25 and the plan sponsor would responsible for the rest (up to $2,553.75) Patient: 25% of $3,405 ($3,820 - $415) = $851.25 Plan: 75% of $3,405 ($3,820 - $415)= $2,553.75
Co-payment Definition: a set $ amount that you pay Tiered co-pays (EXAMPLE) CMS 2019 Threshold Values Maximum co-pay: $100 Maximum co-insurance: 50%
Specialty Tier Unique, high-cost drugs >$670/month Co-insurance range: 25%-33%
Coverage Gap (2019) ‘Donut hole’ Once total drug costs (patient + plan) reach $3,820, up to the next $3,833.75 in covered drug expenses occur during the coverage gap phase
Coverage Gap (2019) Once total drug costs (patient + plan) reach $3,820, up to the next $3,833.75 in covered drug expenses occur during the coverage gap (aka ‘Donut Hole’) phase So , the ‘Donut Hole’ occurs when total drug costs are between $3,820 - $7,653.75 2018 65% discount off covered brand name drugs 56% discount off covered generic drugs 2019 75% discount off covered brand name drugs 63% discount off covered g eneric drugs
Closing the Gap Brands Generics
Catastrophic Coverage (2019) Before catastrophic coverage kicks in, beneficiaries: Must reach the $5,100 TrOOP threshold OR Total drug costs (patient + plan) must reach $7,653.75 During catastrophic coverage, the patient pays 5% of the covered drug cost or $3.40 for covered generic drugs or $8.50 for covered brand name drugs
Dissecting the 2019 Standard Benefit- Patient vs. Plan $415 $3,820 $7,653.75 Total Drug $0 Costs 25% Catastrophic Coinsurance Coverage Deductible Coverage Gap (Next $3,405) Patient Pays Plan Pays
The Choices… Each MA-PD and PDP can have its own: Monthly premium Deductible Cost sharing structure Co-insurance, Co-pays Formulary Tiers Restrictions processes (Utilization Management Techniques) Pharmacy Networks
Pharmacy Benefit Management (PBM) Pharmacy services are often carved out because: Pharmacy is an easily defined benefit Pharmacy has a defined patient population High or rising costs Inappropriate utilization PBMs often manage the prescription drug benefit for PDP and MA-PD plan sponsors
Key PBM Activities for Part D Plans Benefit Design Network Maintenance Rebate Contracting Customer Service Formulary Management Creating Pharmacy Networks Utilization management Mail/Specialty pharmacy Claims Processing Star Rating Measures Drug Utilization Review
Pharmacy Network Definition: A contracted group of pharmacies that provide incentivized rates to a managed care organization/PBM, thus lowering costs for those entities and patients. Standard vs. Preferred Pharmacy contracts Lower reimbursement rates e.g., (AWP - 12%) + dispensing fee Increased volume of business
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