October 11, 2007
Getting Ready for the Medicare Drug Benefit in 2007
CMS Announces Drug Plan Offerings the New Plan Year Beginning on January 1,
The Centers for Medicare and Medicaid Services (CMS) this past week announced
new prescription drug plan offerings for 2007, initiating an open season process
that will continue until the new plan year begins on January 1.
For 2007, there will be as 50 to 60 drug plan choices in most states, on average
10 to 15 more than were available in 2006. In most states, average monthly premiums
will be below what they were in 2006, with the average national premium falling
to $24 per month – down substantially from the standard monthly premium
of $37 that was set forth by Congress in 2003.
In addition to lower than predicted prices, some plans are planning to offer
enhanced benefits in 2007, including elimination of cost sharing for generic
Two national plans – United-AARP and Wellpoint – will be offering
coverage of benzodiazepines (medications commonly prescribed for acute mania
in bipolar disorder and anxiety disorders) that were excluded in 2006. This
coverage is only being offered in so-called “enhanced” plans that
require a supplemental premium, i.e. coverage beyond a basic drug plan.
Open Season Starts Officially on November 15
The process for selecting a Medicare prescription drug plan (PDP) mirrors the
process that has existing for more than 25 years for the Federal Employees Health
Benefits program – an “Open Season” in the fall during which
participants select from a menu of plan options, with coverage going into effect
on January 1.
As noted above, CMS has already posted available plan options available in
each state. By next week, CMS will be posting all available information, including
each plan’s formulary (list of covered drugs), cost sharing information
and utilization management policies (prior authorization, step therapy and quantity
limits applied to specific medications).
Beginning on November 15, and running through December 31, Medicare beneficiaries
will be able to enroll in a plan for 2007. CMS is requiring every drug plan
to have enrollment and coverage effective by January 1 for anyone who enrolls
by December 8 – in other words, an enrollment decision by December 8 can
guarantee seamless coverage available during the first week of January.
It is important to note that most beneficiaries who want to stay with
the coverage they had for 2006 will not have to re-enroll for 2007
(there are some key exceptions for certain low-income dual eligible beneficiaries,
see below). Others may want to change coverage as a result of changes in coverage
policy, cost sharing or removal of a drug from a formulary for 2007.
How To Find the Medicare Drug Plans Available in Your State
CMS has already posted charts for plans available in each state with monthly
premiums, deductibles, gaps in coverage and whether or not plans are available
to dual eligibles and other low-income beneficiaries. Click
here to view this chart.
Drug Plan Choices for Dual Eligibles
A key population for NAMI in the drug benefit remains the 6.2 million extremely
low-income Medicare beneficiaries simultaneously eligible for Medicaid in their
state. In most states, as many of 40% of these dual eligibles have a serious
These dual eligible individuals will continue to participate in the Medicare
drug benefit on a mandatory basis. So long as they stay with a plan that is
“at or below benchmark,” they will get coverage with no monthly
premium, no annual deductible and no gap in coverage (the so-called “doughnut
hole” gap), with their only costs being $1 for a generic and $3 for a
brand name prescription.
Because of the lower than projected premiums, in many states the cost of the
average “benchmark” plan has gone down for 2007. As a result, some
dual eligibles are in drug plans for 2006 that will not be “at or below
the benchmark” for 2007, i.e. they cannot enroll for a $0 premium for
2007. For these dual eligibles, CMS is planning to automatically re-assign them
to a new drug plan with the same sponsoring organization or with an identical
formulary list in an attempt to avoid disruption.
“Re-Deeming” of Certain Dual Eligibles
There are some low-income Medicare beneficiaries who had dual eligible status
in 2006, who will not in 2007. These are individuals that prior to 2006 qualified
for Medicaid in their state as a result high medical expenses and “spend-down”
eligibility. Most of these dual eligibles were automatically enrolled in a Part
D plan for 2006.
For 2007 however, many will not have dual eligible status because they never
reached the Medicaid “spend-down” level in 2006. These individuals
will need to send in a new application for the Medicare Part D “Low Income
Subsidy” (LIS) in order to access affordable drug coverage for 2007 (in
most cases, coverage with no monthly premium, no deductible, no gap in coverage
and as little as $3 for a generic, and $5 for a brand name prescription).
Notices from CMS to these “deemed” individuals were sent by mail
late last month, with an LIS application and postage paid envelope. For more
Reaching Low-Income Individuals Eligible for “Extra Help”
Of extreme concern to NAMI since 2005 has been the large number of low-income
Medicare beneficiaries who are ineligible for Medicaid, but yet are still very
low-income and cannot afford drug coverage without a very deep subsidy to make
coverage affordable, minimize cost sharing and avoid any gap in coverage (deductibles
and the “doughnut hole”).
The Low-Income Subsidy (LIS) or “Extra Help” allows many of these
beneficiaries with limited incomes (about $20,000 for couples and about $15,000
for individuals) to get drug coverage with little or no premium, no gap in benefits
and minimal cost sharing.
Of the projected 7.5 million Medicare beneficiaries eligible for LIS, only
about 2 million have applied and been approved. In order to improve on this,
CMS and a range of non-profit partners have undertaken a major outreach and
enrollment effort. NAMI is supporting these efforts – including an effort
by the Access to Benefit Coalition (ABC).
NAMI affiliates are strongly encouraged to share these announcements and enrollment
materials with their members and partner organizations to help reach low-income
beneficiaries and get them all the assistance they are entitled to.
Lots of Web-Based Tools Available
In addition to the resources listed above, more web-based information about
the Medicare prescription drug benefit is available through the following links: