Rutgers Center for State Health Policy June 28, 2005 Presentation to the Academy Health Kimberley...

Rutgers Center for State Health Policy June 28, 2005

Presentation to the Academy Health

Kimberley Fox, Senior Policy Analyst

Rutgers Center for State Health Policy

June 28, 2005

Wrapping Around the Part D Benefit: Implications for State Pharmacy Assistance

Programs and Low-Income Enrollees


Acknowledgement

Presentation based on:• Study of state pharmacy assistance programs funded by The

Commonwealth Fund • Longitudinal survey of SPAPs 2000-2004.• Telephone interviews in Spring/Fall 2004 with 17 states re:

Medicare coordination of benefit issues and discount card experience.

• Website with more detailed reports: http://www.cshp.rutgers.edu/

• Analysis of Part D regulations and operational guidance and SPAP eligibility data in one state.

Collaborating Faculty:• Stephen Crystal, PhD• Jasmine Sia, MD/MPH• Dorothy Gaboda, PhD


Presentation Outline

• Overview of SPAPs and how they compare with Medicare Part D

• Options, Opportunities, and Challenges for SPAPs to Wrap around Part D

• State Case Example


Program is operationalProgram enacted but not operationalNo program enacted or operational

* The District of Columbia’s direct benefit program is enacted but not operational.Source: National Conference of State Legislatures’ web site: State Pharmaceutical Assistance Programs, 2004 Edition, http://www.ncsl.org/programs/health/drugaid.htm. November 11, 2004.

*

How Many States Have State Pharmacy Assistance Programs (SPAPs)?


0%

100%

200%

300%

400%

500%

600%

MA RI NY NJ NV WI IL CT VT DE MI NC SC MO ME PA IN K S FL MN MD WY

Source: Trail, T., Fox, K., Cantor, J, Silberberg, M., Crystal, S. State Pharmacy Assistance Programs: A Chartbook. The Commonwealth Fund, New York, NY, August 2004.

*MD and MN also require an asset test

How SPAP Income Eligibility Compares with Medicare Part D and Low-Income Subsidies?

* *

Pe

rce

nt

of

FP

L

MMA Low-Income Subsidy Level

150%


How SPAP Benefits Compare with Part D and Low-Income Subsidies?

Caveat: Cost-sharing and benefits vary by state*Generally…

• Non-catastrophic Basic Part D cost-sharing > SPAP. • Medicare Full Low-Income Subsidies <= SPAPs. • Medicare Partial Low-Income Subsidies ??

Generally…• Part D drug formularies < SPAPs• Except states that limit coverage to drugs for certain

conditions (6) or that have PDLs (9). Part D private pharmacy networks <= SPAPs.

* For more details on current SPAP cost-sharing see: http://www.cmwf.org/programs/child/trail_spap_chtbk_758.pdf






SPAP Options/Opportunities under Medicare Part D

If SPAP enrollees enroll in Part D, could offset current state costs• CMS estimates that SPAPs will save approximately $600 million/ year.

Special privileges for “qualifying” SPAPs• Expenses paid by SPAP count toward TrOOP • Part D plans required to coordinate benefits/share data• SPAP Transitional grants - $62.5 million/yr• SPAP Transition Commission.

“Qualifying” SPAPs• State-only funded drug benefit/ not discount cards• Statutory language - “In determining eligibility and amount of assistance, provides

such assistance to such individuals in all Part D plans and does not discriminate based on the Part D plan in which they are enrolled.”

• Final rule interpretation – not only equal assistance, but cannot “steer.”

Supplemental coverage options for SPAPs• Pay full premium for basic benefit• Pay lump sum capped funds toward basic premium, supplemental premium, and/or

out-of-pocket costs.• Provide wrap-around secondary claim payment coverage.


Key Concerns/Choices for SPAPs

Maintaining/starting state program or terminating/restructuring benefit?

Qualified vs. non-qualified SPAP?

What/How to Wrap?• Premiums, deductibles/cost-sharing in and out of donut hole,

formularies, networks• Lump sum payment or secondary wrap

Getting SPAP Enrollees to Enroll in Part D/LIS• Mandate Part D/LIS enrollment• Authorized representative• Co-branding• Intelligent random assignment

COB Challenges Once Enrolled


Methodological Challenges in Assessing Potential Cost-Savings to SPAPs

Potential savings driven by enrollment rates in Part D and LIS and, once enrolled, proportion of expenses that will be charged/covered by primary source of payment - No benchmark experience• Medicare LIS means-testing totally new• Medicare Discount Card program had different rules (but when

states left voluntary only 25-50% estimated enrolled in TA, even lower percentage used it)

Current utilization/expenditures does not reflect future use/prices• Most SPAPs have used minimal cost containment tools

Much of Part D-specific information still unknown to states• Rebate levels – How much/how they will be passed on• Formularies • Cost-sharing across tiers


Rebates as a Percentage of Total SPAP Drug Expenditures, 2003

Source: Sia, J, Fox, K., Trail, T., Crystal, S. State Pharmacy Assistance Programs 2003: A Chartbook, The Commonwealth Fund, publication forthcoming.Notes: Florida, Maine, Michigan, Nevada, Rhode Island, South Carolina, and Wyoming did not provide data on rebate collection. Wisconsin only includes 10 months. Delaware does not include the privately funded Nemours program. Massachusetts includes ingredient cost and dispensing fee. * Indiana and Kansas reported 0% rebates collected.All States = Total rebates divided by total drug expenditures (N=15).

0%

5%

10%

15%

20%

25%

30%

VT NY MD CT NJ DE PA MN MO IL MA WI NC IN K S All

States

* *

Reb

ate

s as

Perc

en

tag

e o

f D

rug

Exp

en

dit

ure

s

65


$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

1999 2000 2001 2002 2003

Annual

Cost

Per

Enro

llee

Old Programs

New Programs

Old Programs1999 N = 122000 N = 102001 N = 112002 N = 102003 N = 11

Trends in Annual SPAP Drug Expenditures Per End-of-Year Enrollee, 1999 to 2003

Notes: Old programs are those established prior to 1999 (N = 12), and new programs are those established since 1999 (N = 10). Only programs operational for at least one full year were included in the analysis. Averages represent data from all states that reported for that year – see Legends.

New Programs1999 N = 12000 N = 22001 N = 62002 N = 72003 N = 10

71





• State Case Example


Methods for Estimating LIS Eligibility

Analyzed 2003 eligibility data for SPAP enrollees with incomes below 350% FPL in two distinct programs within one state with different cost-sharing requirements.

Assigned enrollees to Medicare benefit category – basic benefit, partial low-income subsidy, full low-income subsidy• Estimated assets using income/dividends – assumed 4% interest

rate


Enrollee Characteristics

Program 1 Program 2 Average Income $14,205 $26,500 Average Age 70.2 75.9 Percent Demographics: <65/Disabled 15% 5% 65-74 46% 38% 75-84 28% 43% 85+ 8% 14% Male 29% 38% Female 71% 62% Married 20% 56% Widowed 51% 32% Single 29% 12% *Enrolled during any portion of the year. Percentages may not always add to 100% due to rounding error. Source: SPAP 2003 Eligibility Data, 2003.


Majority of SPAP Enrollees Will Not Qualify for Low Income Subsidies

Source: SPAP eligibility data. 2003. Includes all persons enrolled for any portion of the calendar year.

020000

4000060000

80000100000

120000140000

160000180000

Full Subsidy Eligible Partial SubsidyEligible

Not LIS eligible

# of

Enr

olle

es


Disabled SPAP Enrollees More Likely to Qualify for Low-Income Subsidies

Source: SPAP eligibility data, 2003. Persons enrolled for any portion of the calendar year.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Total Disabled >65

% o

f T

otal

Enr

olle

es b

y LI

S E

ligib

ility

Not LIS eligible

Partial Subsidy Eligible

Full Subsidy Eligible


LIS Asset Test Greater Barrier for >65 Income Eligible SPAP Enrollees

Source: SPAP eligibility data, 2003. Includes all persons enrolled for any portion of the calendar year.

<135% FPL 135%-150%FPL

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Over 65 Disabled Over 65 Disabled

Does not meet LIS assets

Assets below $10k/$20k

Assets below $6k/$9k


Comparison of SPAP Enrollee* Characteristics by LIS Eligibility

Full Subsidy

Partial Subsidy

LIS Income but not Asset Eligible

Other Part D Only

Average Income $10,115 $13,401 $11,706 $20,114 Average Age 67.6 69.0 74.5 72.7 Percent Demographics+:

Disabled 23% 16% 4% 10% Over 65 77% 84% 96% 90% 65-74 60% 64% 48% 51% 75-84 31% 30% 38% 38% 85+ 9% 6% 13% 10% Male 29% 30% 17% 33% Female 71% 70% 83% 67% Married 13% 21% 13% 34% Widowed 47% 51% 62% 45% Other Single 40% 28% 26% 20% *Enrolled during any portion of the year. +Percentages may not add to 100% due to rounding. Source: SPAP 2003 Eligibility Data.


Summary/Policy Implications

• SPAPs have unique opportunities to wrap around the Medicare benefit but face administrative hurdles.

• Many low to moderate income SPAP enrollees may not be eligible for Part D full low income subsidies and could benefit from additional assistance.

• State savings (and ability to wrap or expand to other populations) reliant on getting eligible persons enrolled in LIS and Part D plans.

Transition period of enrolling existing beneficiaries into Part D and LIS likely to be difficult

State budget problems and Part D/SPAP administrative complexities could ‘crowd-out’ many existing programs.

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