Medicare Drug Benefit Update: LIS and Dual Eligible Reassignment for 2008
November 14, 2007
In 2003, Congress directed that low-income beneficiaries who are dually eligible for both Medicare and Medicaid or that qualify for the Part D low income subsidy, or LIS (under 150% of the federal poverty level), would be able to enroll in Part D plans (at little or no monthly premium) that are at or below a regional average cost (defined as the “benchmark” level). As a result, if a dual eligible individual or LIS beneficiary is enrolled in a prescription drug plan for 2007 that is moving above the “benchmark” level in their region for 2008, they will be reassigned to a different plan to ensure that they do not face any premium increase.
The number of dual eligibles and LIS switching plans in 2008 rose dramatically as a result of changes in the way the Centers for Medicare and Medicaid Services (CMS) made the calculation for regional benchmark levels. For 2007, there was a $2 de minimus adjustment, i.e. if a plan moved above the benchmark level by $2 or less, all dual eligible and LIS beneficiaries could stay in the plan. However, for 2008, CMS adjusted this de minimus amount down to $1. As a result, only 250,000 dual eligibles and LIS recipients were automatically reassigned in 2007. By contrast, 2.1 million dual eligibles and LIS recipients will be automatically reassigned for 2008.
It is important to note that 965,000 of these low-income beneficiaries will be shifted to a different plan within the same corporate sponsor organization, e.g. from United-AARP Preferred to United-AARP Standard. However, 1.2 million are being switched to a new plan in a new organization.
Obligations of Plans Receiving Dual Eligibles and LIS By Automatic Assignment
Part D plans that are taking dual eligibles and LIS upon reassignment will be required to meet a number of requirements with respect to drug coverage for these individuals. They must:
- provide an automatic 30-day refill of any existing prescription WITHOUT imposing utilization management such as prior authorization, step therapy or quantity limits, and
- provide a 90-day transition period for any current or new prescription before attempting to enforce any existing utilization management technique such as prior authorization or step therapy.
In addition, it is important to note that any dual eligible beneficiary that wishes to switch to a different Part D plan can do so, at no cost, at any time during 2008, so long as the plan is at or below the regional “benchmark” level.
How are Enrollees Subject to Reassignment Being Notified?
During the week of October 29, CMS sent letters to all dual eligibles and LIS recipients that are being reassigned as January 1, 2008. This letter was printed on blue paper and included the name of the new plan, a reminder that their coverage was continued with no monthly premium (for dual eligibles), what their co-payments will be for 2008, local pharmacies in the new plan’s network, and (most importantly) any new coverage rules such as prior authorization and step therapy. The blue letter also detailed information about refills during the initial coverage period through the end of March 2008.
Tips for Dual Eligible Beneficiaries Subject to Plan Reassignment
Any dual eligible or LIS recipient that received the blue reassignment letter from CMS needs to first read it carefully and contact their new prescription drug plan as soon as possible – every Part D plan is required to maintain an 800 customer assistance number. It is critical to:
- Check to make sure that all prescribed medications are on the new plan’s formulary – all Medicare drug plans are required to have “all or substantially all” antipsychotics, antidepressants and anticonvulsants on their formularies (lists of covered drugs),
- Inquire as to whether the new plan has any utilization management policies in place for any medications currently prescribed (prior authorization, step therapy, quantity limits),
- Remind the new plan that they are required to refill any currently prescribed medication within the first 30 days of coverage after January 1, 2008, and
- Remind them that they cannot impose utilization management within the first 90 days of coverage.
It is also critical that all physicians prescribing to the dual eligible or LIS individual be notified before January 1 of the plan switch. Likewise, the pharmacy that fills prescriptions for the dual eligible should be notified to see if they are part of the new plan’s network.
Finally, it is STRONGLY recommended that you obtain refills of as many medications as possible in the final days and weeks of December 2007 to avoid problems at the pharmacy counter in the early days of January 2008 as enrollment in the new prescription drug plan is verified and new membership cards arrive in the mail.
"Choosers" Will Stay With Current Plans
There is also a category of dual eligibles and LIS recipients known as "choosers" that will remain in the drug plan they had for 2007. These are individuals who made an affirmative decision to switch to a different plan in 2007 – because of medications on the plan’s formulary, convenience of a network pharmacy, etc. CMS is honoring this decision and keeping these "choosers" in the same plan for 2008 – REGARDLESS of whether or not the plan moved above the regional "benchmark" level.
These "choosers" (440,000 dual eligibles and LIS) are likely to face increased monthly premiums in 2008 since the beneficiary is legally liable for the cost of any premium above the "benchmark" level. However, as with all other dual eligibles and LIS recipients, they can avoid this added cost by switching to a plan below the regional benchmark, even after January 1, 2008.
During the week of October 29, these "choosers" were sent a tan letter from CMS informing them that they are being kept in their current plan, but at a higher monthly premium and can avoid the higher cost by switching to a different plan.
Cost Sharing for Dual Eligibles and LIS for 2008
For most dual eligibles and LIS recipients, the only cost that is required of them for drug coverage is a mandatory co-payment for each prescription. A little noticed provision in the law specifies that these co-payment levels are to be adjusted for inflation each year. For 2008, the $1 generic/$3 brand name cost sharing for dual eligibles in the law will be adjusted to $1.05 generic and $3.10 brand name. For most LIS recipients, the $2 generic/$5 brand name co-payments will be $2.25 generic and $5.60 brand name.