NCSL Tools for State Legislatures:
Medicare Prescription Drug Coverage

Access 2013 Part D data published by CMS at www.cms.gov/center/openenrollment.asp.
Monthly Premiums for Top 10 Prescription Drug Plans (PDPs) in 2013

Status report on Part D- MEDPAC, March 2013

• about 63 percent of Part D enrollees were in stand-alone prescription drug plans (PDPs)
• the remaining 37 percent were in Medicare Advantage–Prescription Drug plans (MA–PDs).
• In 2013, a total of 1,033 PDPs are offered nationwide along with 1,627 MA–PDs—about the same as in 2012.
• Beneficiaries will continue to have between 23 and 38 PDPs to choose from depending on the region, along with many MA–PDs.
• MA–PDs continue to be more likely than PDPs to offer enhanced benefits that include some coverage in the gap.
• For 2013, slightly more premium-free PDPs will be available to enrollees who receive the low-income subsidy (LIS).
• In most regions, LIS enrollees will continue to have many premium-free plans available. In two regions, Florida and Nevada, only two plans qualified as premium free in each region.
• Among those in Part D plans, 10.8 million low-income individuals (about 34 percent of Part D enrollees) received the LIS
• .In 2012, in addition to the nearly 65 percent of Medicare beneficiaries enrolled in Part D plans, another 9 percent received their drug coverage through employer-sponsored plans that receive Medicare’s retiree drug subsidy.
• CMS reports that, in 2010, about 17 percent received their drug coverage through other sources and 10 percent had no drug coverage or coverage less generous than Part D. Beneficiaries with no creditable coverage tended to be healthier, on average. More than half reported not joining Part D because they did not take enough medications to need such coverage.
• Between 2007 and 2011, Part D spending increased from $46.7 billion to $60 billion (an average annual growth of about 7 percent), and CMS expects it will have reached $62 billion in 2012. These expenditures include the direct monthly subsidy that plans receive for their Part D enrollees, reinsurance paid for very-high-cost enrollees, premiums and cost sharing for LIS enrollees, and payments to employers that continue to provide drug coverage to their Medicare beneficiary retirees.
• In 2011, LIS payments continued to be the largest single component of Part D spending, while Medicare’s reinsurance payments were the fastest growing component.
• Changes made by the Patient Protection and Affordable Care Act of 2010 to gradually close the coverage gap likely contributed to the higher growth for reinsurance payments between 2010 and 2011.
• While average costs for basic Part D benefits are expected to remain stable (growth of less than 1 percent) between 2012 and 2013, plan sponsors are expecting significant changes in costs for individual components:
  • a decrease of over 9 percent for the direct subsidy and
  • an increase of about 14 percent for the reinsurance component.
  • In 2013, the base beneficiary premium is about the same as in 2012 ($31).
     

Research & Commentary: Proposed Reforms Undermine Medicare Part D’s Success
Heartland Institute, April 30, 2013

The June 6 workshop examined the lessons from Part D, focusing on the roles of competition and changes in the marketplace in controlling costs for beneficiaries and taxpayers, how the benefit’s design affected beneficiaries, including those eligible for low-income subsidies, and what the experience suggests for future reforms

The workshop featured a panel of experts including James C. Capretta, fellow at the Ethics and Public Policy Center; Juliette Cubanski, associate director of the Foundation’s Program on Medicare Policy; Jack Hoadley, research professor at Georgetown University’s Health Policy Institute; Karen Ignagni, president and CEO of America’s Health Insurance Plans; and Marilyn Moon, senior vice president and health program director at the American Institutes for Research. Foundation Senior Vice President Tricia Neuman will moderate the discussion with the panel and audience.  Held June 6, 2012,    -   information online

A commercial perspective. The publisher Atlantic Information Services provided this overview in June, 2012 --  "It would be hard to think of a scenario more difficult for Medicare Advantage and Part D plans’ marketing than the 2012 Annual Election Period, but this fall’s 2013 AEP wins that distinction. Not only are plans still dealing with the same compressed and accelerated AEP time frame — Oct. 15 to Dec. 7 — that caused so many problems last year, but this year the bulk of the AEP marketing and sales time falls in the midst of intensely contested presidential and state election campaigns. That means local television advertising time, if it’s available at all, will be extremely costly, and beneficiaries’ attention will be hard to focus on health plan choices.

So what should plans do to avoid getting lost in the noise surrounding the elections? It’s not only the message that’s important. It’s also the media, the events, the technology and the right kinds of arrangements with outside sales agents. Then there is the whole question of getting marketing materials cleared by CMS in a timely manner and adapting to changes in what CMS will review and how it will conduct surveillance this year." [posted 6/21/2012]

The Medicare Plan Finder for 2012  was available as of October 1, 2011 at www.Medicare.gov, the federal agency's official website.  By inserting a zip code policymakers and enrollees can find out which Medicare Advantage (Part C) and Prescription Drug (Part D) plans are available in a particular areas. Also available online is Medicare’s Formulary Finder, which allows beneficiaries to insert their prescribed medications and zip code to see a display of plans offered locally that cover their drugs.

Due to provisions in the Affordable Care Act, as enacted, Medicare will begin to financially reward Medicare Advantage plans which achieve high quality ratings.  Part D plans will also continue to receive quality ratings. Beginning October 12, 2011, the Medicare Plan Finder will include each plan’s quality star rating for 2012.

2011 Medicare Enrollment Market Update  report finds that despite concerns about the effects of the 2010 health reform payment reductions on private Medicare Advantage plans, enrollment continued to rise this year and Medicare Advantage enrollees are paying lower premiums, on average, than they did in 2010. Preferred Provider Organizations gained more enrollees than any other plan type, while enrollment in Private Fee-for-Service plans continued to decline. Kaiser Familiy Foundation, 9/2011

Repealing PPACA Would Increase Medicare Beneficiaries' Prescription Drug Costs, Health Savings Needs

New modeling by the nonpartisan Employee Benefit Research Institute (EBRI) finds that Medicare beneficiaries with high levels of prescription drug use would have to save 30−40 percent more than they currently are to pay for higher drug costs if President Obama’s health reform law is repealed.  EBRI, 8/2011

Starting in 2011, the Affordable Care Act provides some senior and disabled Medicare patients with a 50 percent discount on out-of-pocket costs for brand-name prescription drugs. This applies when enrollees in Part-D Prescription Drug Plans reach the coverage gap or “donut hole” of $2,840 to $6,447 in spending. HHS data released in August shows that, so far, 898,938 people have used the discounts to save an average of $517 for a total of more than $461 million. Those savings will continue to increase until people with high drug costs get beyond the donut hole later this year.  Without the discount, users of costly drugs could have to spend a maximum out-of-pocket per person of $3,607.50 in 2011.

For a state breakdown on consumers’ out-of-pocket prescription drug cost savings while in the donut hole, click here. About a dozen states help some residents with prescription subsidies so this discount can save these states a modest amount as well.   

New HHS data also shows that 17,336,421 Original Medicare beneficiaries utilized free preventive services from Jan. 1, 2011 to July 2011. For a state-by-state breakdown on the use of free preventive services, click here.

The 2012 average Medicare prescription drug plan premium will be approximately $30, down from $30.76 in 2011. 

More information can be found at:

HHS News Release – August 4, 2011

“Better Health and Lower Costs for Medicare Beneficiaries,” by Donald M. Berwick, M.D., Administrator, Centers for Medicare & Medicaid Services, posted August 4, 2011.

Kaiser Health News’ Daily Report – August 5, 2011

2010: Savings to States on State Contributions for Prescription Drug Costs Due to FMAP Increase

In October 2010, HHS/CMS estimated that $3,789,514,581 in fiscal relief to States was provided through application of the ARRA FMAP increase when calculating State Contributions for prescription drug costs for full-benefit dual eligible individuals enrolled in Medicare Part D by the end of September, 2010.  Full state-by-state calculations online at http://www.hhs.gov/recovery/reports/state_savings_part_d.html.

Health Care on a Budget: The Financial Burden of Health Spending by Medicare Households

This report finds that Medicare beneficiaries devote significantly more of their household budgets to health care than non-Medicare households – on average 14.9 percent of Medicare beneficiaries’ household budgets go to medical expenses, roughly three times the share in non-Medicare households. This increased spending burden for Medicare beneficiaries is attributable to lower average budgets overall and health care costs that have grown faster than income.

How Much “Skin in the Game” is Enough? The Financial Burden of Health Spending for People on Medicare shows that out-of-pocket spending as a share of income is rising for people on Medicare, with one in four Medicare beneficiaries spending at least 30 percent of their incomes on health expenses. Those with incomes between one and three times the poverty level shoulder a greater health care spending burden than the poorest and highest-income recipients.

Projecting Income and Assets: What Might the Future Hold for the Next Generation of Medicare Beneficiaries? finds half of all people on Medicare were living on less than $21,000 in 2010, with significantly lower incomes among black and Hispanic beneficiaries than among white beneficiaries. By 2030, the new analysis projects fewer Medicare beneficiaries will be living at or near the poverty level, but much of this growth in income and assets will be concentrated among white beneficiaries. As a result, the projections suggest significant racial disparities in incomes and assets will persist for decades. This study was co-authored by researchers at the Foundation and the Urban Institute.

More Seniors to Receive One-Time Donut Hole Rebate Checks - HHS report, July 2010

The following material about the interim Part D prescription drug rebates created by the Affordable Care Act of 2010 was published by CMS on July 8, 2010.

The next round of more than 300,000 eligible seniors who have entered the Medicare Part D "donut hole" this year have been mailed their tax-free, one time rebate check for $250, according to HHS. These one-time rebate checks are the first step in closing the prescription drug coverage gap under the Affordable Care Act. The first round of checks was distributed in the middle of June. As qualifying Medicare recipients "fall into the donut hole," they will be sent a rebate check by Medicare.

The $250 checks are being mailed to those Medicare beneficiaries who entered the Medicare Part D donut hole, also known as the coverage gap, in the second quarter of 2010 and are not eligible for Medicare Extra Help (also known as the low-income subsidy (LIS)) or enrolled in a qualified retiree prescription drug plan. The donut hole is the period in the prescription drug benefit in which the beneficiary pays 100 percent of the cost of their drugs until they reach the catastrophic coverage phase.

Medicare Extra Help provides assistance to seniors so they don’t face higher costs or a coverage gap in their prescription drug coverage. Qualifying Medicare beneficiaries who entered the donut hole in the first quarter of 2010 who were not eligible for Medicare Extra Help received a check in the first round of rebates mailed in June. Going forward, a check for qualifying beneficiaries newly reaching the donut hole in 2010 will be mailed monthly.

"Seventy percent of the first round of the $250 rebate checks were cashed within a week of eligible Medicare recipients receiving them," said HHS Secretary Kathleen Sebelius. "The Affordable Care Act starts to close the donut hole this year, giving much-needed relief to millions of seniors. In 2011, the Affordable Care Act takes an additional step for Medicare beneficiaries in the donut hole by providing them with a 50 percent discount on their brand name medications. Every year from 2012 until 2020, the Affordable Care Act will take progressive steps to close the donut hole."
- Source: U.S. Department of Health and Human Services, July 8, 2010

Premiums for Medicare prescription drug plans to remain low in 2011 - HHS Announcement

The following material was released by CMS/HHS on August 18, 2010.
Affordable premiums complement new law’s increased beneficiary savings on drug costs

The Centers for Medicare & Medicaid Services (CMS) announced that average 2011 Medicare prescription drug plan premiums will remain similar to rates beneficiaries are currently paying this year. This, coupled with new discounts for brand-name drugs through the Affordable Care Act, will help make medications more affordable for Medicare beneficiaries in 2011 and beyond.

“Most Medicare prescription drug plan premiums should remain relatively stable next year, and all beneficiaries should compare their coverage under their current plan with the plans that will be offered in 2010 when that information becomes available in October,” said Jonathan Blum, deputy administrator of CMS’ Center for Medicare. “The Affordable Care Act improves the value of drug coverage people with Medicare will receive next year, providing discounts on brand name drugs and coverage of generics in the coverage gap, or donut hole.”

Based on the bids submitted by Part D plans for the 2011 plan year, CMS estimates that the average monthly premium that beneficiaries will pay for standard Part D coverage will be $30 -- a $1 increase from the current year (2010) average premium of $29.  General information about premiums and benefits for each Part D and Medicare Advantage (MA) plan will be announced in September on www.cms.gov, as well as the list of plans that will be available next year. More detailed information to help beneficiaries review their plan options will be posted at www.medicare.gov in October.

The premiums paid by Part D enrollees cover about 25 percent of the cost of basic Part D coverage. Enrollees with limited incomes may qualify for the low-income subsidy (LIS), or extra help, that typically covers some or all of the beneficiary’s premium, deductible, copayments and the cost of drugs in the coverage gap. Currently, more than 10 million beneficiaries are receiving LIS benefits. In 2011, the average value of the subsidy amount applied to the Part D benefit, premium and cost-sharing for those enrolled in the LIS program is estimated to be about $4,000.

Under new Affordable Care Act provisions, fewer individuals who receive LIS benefits will need to move to a new plan to avoid paying a premium. “The Affordable Care Act helps reduce disruption for this vulnerable population, so only about 500,000 beneficiaries will be re-assigned to new plans, compared to about 800,000 who were moved last year,” Blum said. “And this year, we’ll be providing those beneficiaries who are moved into a new plan with more information than ever before about how these plan changes may affect them. For most people with Medicare, we expect the process to be seamless.”   The national and regional premium data can be found at: http://www.cms.gov/MedicareAdvtgSpecRateStats/RSD/list.asp.

Income-Relating Medicare Part D Premiums: How Medicare Beneficiaries Will Be Affected?

A December 2010 brief examines the changes in Medicare premiums for Medicare beneficiaries with higher incomes that were enacted as part of the 2010 health reform law. Some recent proposals to reduce the nation’s long-term deficit include provisions that call for higher-income Medicare beneficiaries to pay still more of Medicare’s costs.

Part B Premiums. The health reform law modifies a requirement implemented in 2007 that upper-income Part B enrollees pay higher monthly Part B premiums. The change freezes the income thresholds that determine which Medicare Part B enrollees are required to pay the income-related Part B premium, at 2010 levels ($85,000 for individuals and $170,000 for couples). Until now, the income thresholds increased annually so that the higher premiums were paid by about 5 percent of the Medicare population.

Part D Premiums. The health reform law also imposes a new income-related premium for beneficiaries enrolled in Part D plans, applying the same fixed income thresholds that are applied to Part B premiums. The income-related Part D payments will be calculated based on the national average monthly Part D premium in a given year ($32.34 in 2011). The total amount that higher-income Part D enrollees pay will depend on the premium of the plan they select and their income.

Three percent of all Part D enrollees (1.2 million beneficiaries) will be subject to the new income-related Part D premium in 2011, rising to 9 percent (4.2 million beneficiaries) in 2019.

This analysis was conducted by researchers at the Kaiser Family Foundation and Actuarial Research Corporation, released 12/13/2010 . It is available online.

2010 Pharmaceuticals Part D Resources  (provided in part by Kaiser Family Foundation, 11/9/09)

 The Kaiser Family Foundation is issuing a collection of new and updated analyses examining critical elements of the private plan options available to Medicare beneficiaries in 2010.

Medicare beneficiaries continue to have a wide range of options to choose from, with an average of 33 Medicare Advantage plans and 46 stand-alone Part D drug plans available to seniors and disabled Medicare beneficiaries.

For both types of plans, beneficiaries could face substantial increases in their premiums if they stay in the same plan for 2010. For example, for Medicare Advantage enrollees who stay in the same plan in 2010, monthly premiums will increase by 32 percent on average, with a steeper 78 percent average increase for enrollees in private fee-for-service plans who do not switch plans.

Among the stand-alone Part D plans, relatively few help beneficiaries with the costs of their medications while in the coverage gap, or “doughnut hole,” and those that do usually cover only generics, or a small number of brand-name drugs. One third of the few plans that offer gap coverage charge more for generic drugs in the gap than they do for the same drugs in the initial coverage period. Health reform legislation now pending in both chambers of Congress includes provisions aimed at easing the potential impact of the coverage gap on Medicare beneficiaries.

Kaiser’s new and update resources include:

• Medicare Advantage 2010 Data Spotlight: Plan Availability and Premiums, authored by a team of researchers at Mathematica Policy Research Inc. and the Kaiser Family Foundation.

• Medicare Part D 2010 Data Spotlight: The Coverage Gap, authored by a team of researchers at Georgetown University, NORC and the Kaiser Family Foundation. The team also has updated Medicare Part D Spotlight: Part D Plan Availability in 2010and Key Changes Since 2006 released initially last month.

• Updated fact sheets on Medicare Advantage and on the Medicare Prescription Drug Benefit.

Analysis Finds Average Monthly Medicare Drug Plan Premiums To Rise 11 Percent In 2010 If Beneficiaries Stay In Their Current Stand-Alone Drug Plans.  Monthly premiums for Medicare beneficiaries who are enrolled in Part D stand-alone prescription drug plans will rise 11 percent on average to $38.85 in 2010 if beneficiaries stay in their current plans, according to a new Kaiser Family Foundation analysis of the 2010 Part D plan offerings. Average monthly premiums have gone up by 50 percent for stand-alone Part D prescription drug plans since the launch of Medicare’s drug benefit in 2006, when monthly premiums averaged $25.93, the analysis finds.

The Medicare Drug Benefit: Update on the Low-Income Subsidy

The Medicare drug benefit (Medicare "Part D"), provides federal subsidies to pay premiums and cost sharing for low-income beneficiaries---almost 10 million in 2009. Yet there are several policy issues concerning these low-income beneficiaries under Part D. First, over 2 million individuals who may qualify for the subsidies have not enrolled. Second, in some states, low-income beneficiaries have little choice of plans (while non low-income beneficiaries have dozens of choices), unless they pay out-of-pocket for premium amounts above what the subsidy covers. And third, millions of those who have enrolled in the benefit face the prospect each year of switching drug plans or paying more to keep their current drug plan. Published by National Health Policy Forum, August 2009.

• State-Specific Medicare Drug Plan Information Now Available

• 2010 Medicare Part D Monthly Base Beneficiary Premium is $31.94

• “Medicare’s Practical Guide to the E-Prescribing Incentive Program” is now available online.  The guide explains the e-prescribing incentive program, how eligible professionals can participate, and how to choose a qualified e-prescribing system.
  By adopting e-prescribing through Medicare’s program, eligible professionals can save time, enhance office and pharmacy productivity, and improve patient safety and quality of care while earning incentives from Medicare.
  For additional information about e-prescribing, you can also visit:
  -www.cms.hhs.gov/PQRI. Select “E-prescribing Incentive Program”;
  -www.cms.hhs.gov/eprescribing. (for information on Part D e-prescribing standards that will be effective April 1, 2009); and
  -www.ehealthinitiative.org to download “A Clinician’s Guide to Electronic Prescribing.”

• HRSA: Part D Information for 340B Pharmacy Providers - HHS archive of features applying to pharmacy purchases from 340 qualified pharmacies, clinics and hospitals.

• CMS Retiree Drug Subsidy (RDS) Program - Guidelines applying to employers who cover their retirees and may obtain a 28 percent reimbursement from the Medicare Part D federal program. For the 2012 plan years, see Cost Threshold and Cost Limit Amounts  and the Parameters for Medicare Part D Plans.

• Guide for State Legislators- PublishedArchive copy from May 2005 -PDF

• Rx Sessions at NCSL Fall Forum in San Antonio, Texas - December 7, 2006.   
  Update on State Actions Related to Medicare Part D Prescription Drug Coverage
       On January 1, 2007, the second year of Medicare pharmaceutical benefits began.  Many states continue to play a significant role for seniors and persons with disabilities needing medicines - by providing "wrap around" subsidies for premiums and coverage gaps, by problem-solving and by sponsoring programs for those not eligible for Medicare.  New commercial plan designs, questions about state "clawback" payments, Medicaid program responses and possible actions in Congress all loom as legislators prepare to tackle state pharmaceutical budgets and policy.  Four experts share news and trends.

  • Steven McAdoo, Deputy Regional Administrator, Centers for Medicare and Medicaid Services (CMS Region 6), Dallas, Texas | PowerPoint [3.8 Mb]

  • Richard Cauchi, Health Program Director, NCSL Staff, Colorado  | PowerPoint

  • Joy Johnson Wilson, Health Policy Director, NCSL staff, Washington, DC

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  Annual Meeting Rx Sessions  - held August 16, 2006 in Nashville, TN.

  • "Medicare Prescription Drug Coverage and the States" - Even with the Medicare Part D Program well underway, states continue to play important roles in prescription drug coverage for millions of low-income people.  In addition to supplementing the new federal coverage, many states are modifying their State Pharmaceutical Assistance Programs and making adjustments to Medicaid and other Rx programs.   

      * Assemblymember Richard Gottfried, Chair, Assembly Health Committee, New York State

      * Gloria Parker, Associate Regional Administrator, Centers for Medicare and Medicaid Services, Region Four, Atlanta, Georgia  PowerPoint Online
      * Edward Belkin, VP for Communications and Public Affairs, Pharmaceutical Research and Manufacturers of America, D.C.  PowerPoint Online  
      * Moderator: Senator Judy Lee, North Dakota
     

  • "Prescription Drug Discounts: from 340B to Consumer Cards." 
    * Harry Hagel, Senior Director, HRSA Pharmacy Services Support Center, Washington, DC  PowerPoint Online

• Medicare Part D: State Updates.  NCSL SPRING FORUM- RX Session:  held Friday, April 7, 2006 in Washington DC. As part of their ongoing efforts to help Medicare.  Speakers:
  * Joseph Fine and Cora Tracy, [PowerPoint download  / slides] - Centers for Medicare and Medicaid Services, Baltimore, MD.
  * Richard Cauchi and Donna Folkemer, [PowerPoint download / slides] -NCSL staff Directors, Denver and Washington, DC.

• "Legislators and Medicare Prescription Benefit" -Web-assisted audio conference: 11/7/05
  * Speakers: Leslie Norwalk, Deputy Administrator, CMS  [PowerPoint]
  * Rep. Betty Boyd (CO), Vice-Chair of NCSL Health Committee  [PowerPoint]
  * Donna Folkemer, Director, NCSL Forum for State Health Policy Leadership.