Pharm Econ Exam 2- Medicare Part D Part 1

Front 1

Medicare in 1965- drug coverage

Back 1

When Medicare was enacted in 1965, there was no reason to include drug coverage.

Front 2

why did medicare not cover drugs back in the day (2)

Back 2

Drug costs were low.
Drug coverage was not included in most health insurance plans.

Front 3

Medicare Catastrophic Coverage Act 1988- what did it do to medicare (2)

Back 3

added outpatient prescription drug coverage to Medicare Part B and capped out of pocket spending

Front 4

Medicare Catastrophic Coverage Act drug coverage- describe what it was like

reactions?

Back 4

There was no government subsidy for the drug coverage. To pay for it, everybody enrolled in Part B had to pay an extra premium and high income seniors had an additional surcharge.

Senior citizens reacted very unfavorably and the law was repealed before major provisions were implemented.

Front 5

Significant pressure for a Medicare drug benefit subsided until

Back 5

rising drug expenditures in the late 1990s.

Front 6

The Medicare drug benefit passed in 2003 was the result of .. (3)

Back 6

public pressure to add a drug benefit plus significant compromise and “horse-trading” by legislators.

Front 7

what seniors wanted from medicare (3)

Back 7

Voluntary benefit with eligibility not tied to income.
Comprehensive benefit package.
Medicare Advantage plans not the only source of drug coverage.

Front 8

pharmaceutical manufacturers- wanted what from medicare (2)

Back 8

Run by private companies and not CMS.

Did not want the government negotiating prices- if just one power negotiating for all the old people, might result in price controls

Front 9

what did insurance companies oppose/not want to happen in medicare

Back 9

Very concerned about adverse selection and as a result opposed a voluntary stand alone benefit (thought that only sick people would sign up for voluntary program) where they would bear the risk.

Front 10

pharmacists- what did they want out of medicare (3)

Back 10

Wanted payment for medication therapy management.
No incentives to use mail order.
Patients free to use any pharmacy.

Front 11

in general republicans wanted what from medicare? (3)

Back 11

Run by private companies.
Tied to privatization of Medicare.
Less comprehensive benefit to control costs

Front 12

in general, what did dems want to see in medicare? (2) (these key views are all what people wanted to see in medicare before all the changes)

Back 12

Wanted CMS to run the benefit.
Willing to pay for more comprehensive benefit.

Front 13

Medicare Prescription Drug, Improvement, and Modernization Act of 2003 - law- what did it put into law? (2)

Back 13

Added an interim drug discount program from May 2004 until the drug benefit began.
Added a voluntary prescription drug benefit to Medicare beginning in January of 2006 (Medicare Part D).

Front 14

who is responsible for implementing medicare part D

Back 14

The Center for Medicare and Medicaid Services (CMS) has the responsibility of implementing and overseeing the law

Front 15

The end result of all the compromise in medicare part D was what?

Back 15

a voluntary benefit with choice of stand alone private prescription drug plans (PDPs) in the original Medicare system or drug coverage through Medicare Advantage (not stand alone).

Front 16

Issue with medicare part D when it was first implemented (what did not exist at the time)

Back 16

private stand alone PDPs (that would manage risk, etc) did not exist in the market when the drug benefit was passed, so the government needed to create a new private insurance market.

Front 17

who is eligible for part D?

Back 17

All Medicare beneficiaries with Part A or Part B are eligible

Front 18

enrollment in part D- voluntary or no?
exceptions?

Back 18

Enrollment is voluntary, except for people who are dually eligible for Medicare and Medicaid.

Front 19

Drug coverage for dual eligibles switched from Medicaid to Medicare in

Back 19

Jan 2006

Front 20

medicare part D- choice?

funding is through what?

Back 20

Beneficiaries have a choice of plans.
Funding is through premiums and general tax revenue (same as Part B).

Front 21

enrollment period for part D (2)

Back 21

Every year there is an open enrollment period in Oct-Dec where people can join a plan or switch plans

People joining Medicare have an initial 7 month enrollment period when they become eligible

Front 22

special enrollment period (SEP).

Back 22

dual eligibles and low income beneficiaries able to change part D plans at any time

Front 23

dual eligible part D enrollment

Back 23

Dual eligibles are automatically enrolled (random assignment) unless they choose a plan

Front 24

2 options for drug coverage in medicare

Back 24

stay in original medicare and get drugs through Medicare prescription drug plan (PDP)

or they can get their drug coverage through a Medicare Advantage plan (MA-PD)

Front 25

Prescription drug coverage is through whom?

exception?

Back 25

The prescription drug coverage is through private companies with one exception. CMS may establish a “fallback” government Part D plan in areas with insufficient private plans.
No fallback plans have been needed to date.

Front 26

what is a medicare PDP?

Back 26

Medicare PDPs are private companies who are a mix of PBM and health insurance company.

Front 27

medicare PDPs only responsible for what?

Back 27

Only responsible for prescription drug costs, not other health care costs

Front 28

PDP- how does it ascertain it's plan/premiums?

risk sharing with whom (and what this means)

Back 28

Submit bids each year that include their plan characteristics and monthly premiums.

Share “risk” for catastrophic prescription drug costs with CMS (government)- beneficiaries that exceed certain level of drug costs will be paid for by gov't

Front 29

how do PDPs make money (when would they make money?)

how to deter cherry picking

Back 29

Make money if prescription drug costs in a year are less than their monthly premiums.

Some risk adjustment by CMS ( if you attract more high risk beneficiaries- fed govt will take money from healthier plans and give to sicker plans)

Front 30

what is an MA-PD

Back 30

Medicare Advantage plans (private companies) that participate in Part D. Medicare Advantage plans existed prior to Part D and a few offered some drug coverage

Front 31

MA-PD existed before- how did part D change it?

Back 31

Part D added more prescription drug coverage and changed some rules for how they operate

Front 32

MA-PDs are at risk for what? (2)

Back 32

both prescription drug costs and other health care costs (as opposed to PDPs which are just dealing with drugs)

Front 33

MA-PDs- how do they make money?

focus on what goals? (2)

risk adjustment?

Back 33

make money if total health care costs less than premium bid they submitted

-still very focused on short term costs, even though they also care about total health care costs (like keeping people out of ER- PDP's don't give a shit about ER visits so they don't care about making sure enough drug therapy is given out)

but for cholesterol lowering, shit that has long term outcomes, MA-PDs don't care

some risk adjustment by CMS

Front 34

CMS role- (2)

one condition on how they carry out their role

Back 34

CMS oversees the entire Medicare program.

They are responsible for setting rules to guide the Medicare PDPs and MA-PDs.

Rule may not contradict the original law, but they may clarify and expand upon it

Front 35

CMS goals vs. PDPs and MA-PDs

Back 35

CMS has a long term total health care cost focus.

Front 36

CMS needs to balance what?

Back 36

needs to balance beneficiary protections with providing incentives for private companies to participate in the Medicare drug benefit

Front 37

some issues CMS has to deal with to maintain fair coverage (protections) (2)

Back 37

Ensure beneficiaries have reasonable access to medications and sicker beneficiaries aren’t being discriminated against.

Handle adverse selection and allow plans to use same tools they use in managing non-Medicare plans

Front 38

net result of balancing act done by CMS, on medicare

Back 38

drug benefit provided by private companies, but heavily regulated and subsidized by the federal government (via CMS).

Front 39

medicare drug coverage- rank from most to least % of coverage (5)

Back 39

1) most is PDP
2) MA-PD
3) employer
4)other
5) none

Front 40

Drug Plan Regions- est. by whom?

what are drug plan regions?

Back 40

CMS

regulations for plan participation: plans may participate in one or more regions, but may not participate in only part of a region.

Front 41

regions- consists of what?

regions in PDP vs MA-PD- same or different?

Back 41

Regions vary from 1 state to 7 states, with Iowa being in the 7 state region.

Regions are different for PDPs and MA-PD plans.

Front 42

plan market and regions

Back 42

Beneficiaries have a choice of many PDPs and MA-PDs, but the number of plans varies by region

Front 43

increase in plans from 2006-2007- why?

then decreased...why?

how have the # of plans been the last few years?

Back 43

Increase from plans from 2006-2007 as regional plans went national

then several years of decreases as plans consolidated.

Number of plans steady over past 3 years, but the plans are not the same.

Front 44

2010- decrease in # of plans due to CMS- what did they do? (2)

Back 44

took steps to reduce # of plans in market by putting limitations on # of plans a sponsor could offer

discouraged plans with low enrollment to get out- need minimal number of enrollees

Front 45

plan variability across the years

Back 45

even though #s are stable, plans change up every year (new plans coming in, old plans go out)

Front 46

market concentration?

Back 46

more concentrated- top 10 plans that dominate the market

Front 47

2011 Purchase of Universal American by CVS Caremark- what happened? (4 things happened in sequence)

Back 47

In 2006, NCPA collaborated with an organization to offer a “community pharmacy friendly” PDP.
The Community Care Rx (CCRx) Part D plans had no mail order and paid community pharmacists to do MTM.
Organization subsequently was sold to Universal American, another PDP sponsor.
In 2011, Universal American’s PDP business was sold to CVS Caremark.

Front 48

Walmart and Humana cobranded PDP- benefits for using this (2)

Back 48

Premium was about ½ of next lowest PDPs’ premiums.
Reduced patient cost-sharing for using their preferred pharmacies (Walmart pharmacies).

Front 49

Humana-Walmart PDP qualified as what type of plan? what happened as a result?

Back 49

qualified as a LIS (low income subsidy- so dual eligibles and shit) plan in all regions so many LIS beneficiaries were auto-assigned to it (dual eligibles)

Front 50

reasons to decrease # of plans on market for part D
reasons not to

Back 50

decrease confusion for old people

if you take out all the shit, this lowers the number of options

Front 51

medicare part D plans must offer...(2)

can also offer what?

Back 51

Plans must offer the standard benefit package or an approved actuarially equivalent package.

Plans may offer an “enhanced” benefit package

Front 52

enhanced benefits package for part D- limits?

how is this paid for

Back 52

Limits on number of plans per organization.
Beneficiaries pay full cost of extra coverage.

Front 53

standard benefit structure for part D (don't have to know specific dollar amounts- just understand basics) (4 basic parts)

Back 53

deductible --> initial coverage limit (where say, plan pays 75%)

THEN they enter the coverage gap (“donut hole”) is an unusual and problematic feature that is being eliminated over time due to the ACA of 2010. Closing of coverage gap began in 2011.

THEN they get into catastrophic coverage threshold where gov't is paying like 80% of the cost

Front 54

% of PDPs that offered the defined standard benefit

Back 54

Only about 10% of PDPs each year have offered the defined standard benefit

Front 55

common deviations from standard plan (2)

Back 55

are eliminating the deductible and having tiered copayments instead of coinsurance.

Front 56

actuarially equivalent means what for the plans?

Back 56

don't have to use same structure but value of what they offer must be same as standard benefit definition

Front 57

most tiered copayment plans are how many tiers?

specialty tiers tend to use what form of cost share?

Back 57

Most tiered copayment plans are three tier, but use of 4 or even 5 tiers is growing.

Plans often use coinsurance in specialty tiers

Front 58

trends in avg PDP copays (3)

Back 58

preferred brand names
and non preferred brand names prices going up and higher than employer plans (though generics are cheaper)

Front 59

why did part D plans not really offer gap coverage even though they were allowed to? (2)

more gap coverage available in PDP or MA-PD?

Back 59

Likely due to adverse selection (people who chose plans with gap coverage were the sickest)
Plans with gap coverage were expensive.
More gap coverage has been available in MA-PDs than PDPs

Front 60

coverage gap- phased out by when (2)

Back 60

ACA 2010 started phasing it out in 2011

Coverage gap will be fully phased out by 2020

Front 61

Overall costs for Medicare Part D have been…higher same or lower than projected?

Back 61

lower than projected

Front 62

part D premiums

Back 62

Beneficiaries pay a monthly premium that varies across plans

Front 63

part D premiums - how much does gov't pay
risk adjustments

Back 63

Government pays 74.5% of standard premium and beneficiary pays the remainder.

Government adjusts what plans are paid (not premiums) for health status of enrollees and bears some of the risk for high cost enrollees- so plans that have a lot of healthy people get less money from gov't WTF- not reflected in premiums though and ONLY for basic benefits not enhanced benefits

Front 64

medicare part D- rating type and why

Back 64

pure community rating
Premiums do not vary by health status or age.

Front 65

if people don't enroll during initial enrollment period- what is the penalty

exceptions (2)

Back 65

People who don’t enroll during their initial enrollment period pay more when they enroll via Penalty which is 1% higher premiums for each month of delay (adverse selection) and for the rest of your life

Exceptions: low income beneficiaries and people with other creditable (compareable) coverage.

Front 66

low income beneficiary premiums

Back 66

Low income beneficiaries pay lower premiums or no premiums.

Front 67

Trends in part D premiums- from 2006-2012?

2011-2012?

2012-2013? (projected)

Back 67

The average premium has increased by 46% from 2006 to 2012.
A 1% decrease from 2011 to 2012.
A projected increase of 7% from 2012-2013.

Front 68

reason for large premiums increases for some of the more popular plans

Back 68

plan stickiness- people just stay with the plan they were on

Front 69

part D low income assistance- what is it

Back 69

Many low income Medicare beneficiaries are eligible for extra assistance with premiums and drug costs.