SLIDE 1 Medicare Part D:
Better understanding the nuances
- f the prescription drug benefit
Rajul A. Patel, Pharm.D, Ph.D. TJL School of Pharmacy & Health Sciences University of the Pacific July 26th, 2018
SLIDE 2
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
SLIDE 3 The Parts of Medicare
Part A Hospital Insurance Part B Medical Insurance Part C Medicare Advantage Plans (like HMOs/PPOs)
Includes Part A, Part B and sometimes Part D coverage
Part D Medicare Prescription Drug Coverage
SLIDE 4
Covers outpatient medical services
Physician visits Outpatient care Durable Medical Equipment (DME) Preventative services
What does Part B cover?
SLIDE 5 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
SLIDE 6 Durable Medical Equipment (DME)
Diabetes supplies
Nebulizers Prosthetic/Orthotic items Oxygen Wheelchairs Walkers
Medicare Part B
SLIDE 7 Preventative services
Bone mineral density Cardiovascular Depression screening Diabetes screenings Eye exam* Mammograms Prostate screening Smoking Cessation Vaccinations …and many more
Medicare Part B
SLIDE 8
SLIDE 9
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
SLIDE 10
Part B Part D
SLIDE 11 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
SLIDE 12
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
SLIDE 13
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
SLIDE 14
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
Medicare Part B vs. Part D Coverage Determination
SLIDE 15 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
Hepatitis B Risk Categories
SLIDE 16 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
SLIDE 17
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
SLIDE 18 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
SLIDE 19
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
Medicare Part B vs. Part D Coverage Determination
SLIDE 20
SLIDE 21
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
SLIDE 22 Standard Benefit Package- Effective January 1st 2019
$2,950 Gap (“donut hole”)
$415 $3,820 $7,653.75
Out-of-pocket spending Medicare Part D Benefit
$0
Total Drug Costs ->
(1) Pt. pays $415 deductible (2) Pt. pays 25% of drug costs (3) Pt. pays % of drug costs ‘Coverage Gap’ (Donut Hole)
(4) Pt. pays 5% of drug costs
‘Catastrophic Coverage’
SLIDE 23 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)
SLIDE 24 “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
SLIDE 25
“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
SLIDE 26 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%
SLIDE 27
Specialty Tier
Unique, high-cost drugs >$670/month Co-insurance range: 25%-33%
SLIDE 28
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
SLIDE 29 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 generic drugs
SLIDE 30
Closing the Gap
Generics Brands
SLIDE 31 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
SLIDE 32 Deductible 25% Coinsurance (Next $3,405) Coverage Gap Catastrophic Coverage Patient Pays Plan Pays
Dissecting the 2019 Standard Benefit- Patient vs. Plan
Total Drug Costs $0 $415 $7,653.75 $3,820
SLIDE 33 The Choices…
Each MA-PD and PDP can have its
Monthly premium Deductible Cost sharing structure
Co-insurance, Co-pays
Formulary
Tiers
Restrictions processes (Utilization
Management Techniques)
Pharmacy Networks
SLIDE 34
SLIDE 35 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
SLIDE 36 Key PBM Activities for Part D Plans
Benefit Design Rebate Contracting Formulary Management Utilization management Claims Processing Drug Utilization Review Network Maintenance Customer Service Creating Pharmacy Networks Mail/Specialty pharmacy Star Rating Measures
SLIDE 37 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
SLIDE 38 Reimburse
Payers
- Medicare/MA-PDs
- Employer-
sponsored plans
Beneficiaries
Provide service
Providers
- Hospitals
- Physician practices
Co-pay or Co-insurance Fixed PMPM
Employers
Share Premium Premium Reimburse PBM Provide drugs/device Supply drugs/device
Retail Pharmacies Mail order Pharmacies Specialty Pharmacies
Services rendered Funding (Payment) Influence
Marketing
Drug Company
Rebate contracts Co-pay or Co-insurance
SLIDE 39 Payers
Consumers (Members) Provide drugs/device Retail Pharmacies Co-pay
Services rendered Funding (Payment) Influence
DRUG COMPANY PBM
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