In the news ... 2007

Medicare Part D Update

March 2007

January 1, 2007 marked the second year of the Medicare Part D benefit. Thankfully, it began with much less disruption and fewer problems than had originally been projected. However, significant problems continue to be encountered, particularly affecting some of the lowest income beneficiaries. Some of the problems include: apparent computer glitches causing unexplained disenrollment from Medicare Part D plans, Low Income Subsidy (LIS) or extra help not appearing on an individual’s benefit at the pharmacy and mistakes in the billing of premiums and co-pays. There were also reports of fraudulent marketing, particularly with the Medicare Advantage plans.

In California, over 80,000 individuals—including approximately 3500 people living with HIV/AIDS—lost their LIS on January 1, 2007. Due to a completely inadequate education effort by the Centers for Medicaid and Medicare (CMS), most were unaware of the change in their benefit. More about this problem will be discussed below in the Understanding LIS section of the update.

Will a New Congress Mean Improvements to Part D?
2007 also brought a newly elected Congress with changed leadership. Congress is now showing willingness to take on at least some issues regarding the Medicare benefit.

While it is unlikely that Congress will make massive systemic changes, there may be opportunities for creating a better benefit with more protections for people living with HIV/AIDS. The House has already passed a bill which would allow the government to negotiate drug prices in the Medicare benefit. While this is important, it is unclear how the individual would benefit in the absence of at least one national Medicare Part D plan run by the government that could take advantage of lowered drug prices and give the government leverage in negotiating with the pharmaceutical companies. The President has indicated that he will veto the bill should it pass the Senate.

In the Senate, four bills are being contemplated which would address the “donut hole” or coverage gap. In the House, there are plans to introduce some Medicare Part D reform bills addressing global issues and specific to low income beneficiaries. Other bills have been introduced that would allow the AIDS Drug Assistance Program, and other entities currently excluded from counting toward TrOOP (the out of pocket spending that move the beneficiary through the coverage gap and into more comprehensive coverage), to count toward that threshold.

Hearings are expected in the House on the accountability of CMS and the Social Security Administration (SSA) in their respective roles in Medicare Part D. If you have issues that should be brought to hearings, contact Anne Donnelly.

Centers for Medicaid and Medicare Services (CMS) Advocacy
Project Inform and other members of the HIV Medicaid Medicare Work Group continue to meet with high level CMS Administrators on a monthly basis. There are issues with Medicare Part D, such as holding plans accountable to ensuring all anti-HIV drugs are including in the formulary with no need for prior authorization or that plan exceptions get handled in the appropriate time frame. These issues do not need to go through Congress to be resolved. If you are seeing issues with Medicare Part D that need to be brought to the attention of CMS, contact Anne Donnelly.

2007 Federal Poverty Level (FPL) Guidelines
FPL guidelines for 2007 were released in late January. These guidelines are used to determine income eligibility for many federal and state health care programs. You can also read an explanation of how the changes affect eligibility for many of the federal programs.

Special Enrollment Periods
If a beneficiary lost LIS on January 1, 2007, he or she can make one plan change between January 1–March 31, 2007. The most common reason for loss of LIS was an inability to meet Medicaid (Medi-Cal in California) share of cost or spend down in 2006. If a beneficiary who lost LIS is currently enrolled in a plan doesn’t work for them, they can change once before March 31st. Many of the plans that offer more comprehensive coverage also have higher monthly premiums. A client without a LIS will be responsible for premiums. Check to see if the state Office of AIDS, ADAP, or Department of Health Services has a program to assist people with HIV/AIDS with Medicare Part D premiums.

In addition, if someone loses LIS mid-year they may change plans starting in the month they are notified through the two months after notification. For example, beneficiaries who receive notice in February that their LIS will end in March have from February through the end of April to make a plan change.

Beneficiaries are supposed to receive letters from Social Security informing them that their LIS may no longer be effective. We have been told by over a hundred beneficiaries that they don’t believe they received the notice. We spoke to only two beneficiaries who say they got the notice, and in reviewing one person’s notice it was clear that at least for some Californians the notice is misleading. If a beneficiary suspects they may lose their LIS whether or not they receive notice, they should follow up with SSA and Medicare and get advocacy help if necessary.

Understanding Low Income Subsidy (LIS)
LIS is a Medicare benefit that is intended to provide additional help to people who are considered to have low income. Every Medicare beneficiary is eligible for the Medicare Part D standard benefit but only those who meet the criteria are eligible for a full or partial low income subsidy. The standard Medicare benefit has many costs associated with it that generally have to be paid for by the individual beneficiary. People with HIV/AIDS often get help with some of these costs from their AIDS Drug Assistance Program but each state ADAP can differ in how it helps people and what costs it covers. Help from ADAP should not be confused with LIS, which is paid by Medicare and available not only to people with HIV/AIDS, but all Medicare beneficiaries who meet the criteria.

The Medicare Part D standard benefit requires people to pay a plan premium each month, a deductible of $265 annually, and 25% of the cost of their drugs during the “first level of coverage” (from $265–$2400 in total drug spending). Once the plan has spent $2,400 on a person’s drugs, they reach the coverage gap or “donut hole”. The beneficiary can’t get through the coverage gap until they pay $3,850, generally from their own funds (ADAP payments don’t count). If they pay, they will move to what is called the catastrophic level of coverage. At that point, Medicare will pick up 95% of the cost of their drugs and they will be responsible for 5%. Without the low income subsidy or extra help, Medicare Part D is too costly for most people with HIV/AIDS.

LIS is the money Medicare pays for those who qualify, to cover all or a portion of the cost of their benefit. If someone qualifies for the full LIS they are responsible only for co-pays of between $1 and $5.10 for each drug. Once they reach approximately $3,850 in spending (calculated by how much Medicare and the beneficiary have spent on drugs), they will have no co-pays for the rest of the plan year. With a partial LIS, the beneficiary is responsible for 15% of their drug costs until they reach $3,850 in spending, after which they are responsible only for co-pays of between $2.15 and $5.35 for each drug. Due to the complex way that Medicare determines the amount spent “out of pocket” when someone receives a partial LIS, the person will eventually pay only co-pays even if they rely on ADAP payments.

How does a beneficiary qualify for LIS?
There are several ways a person can qualify for LIS. One is by income. To find out if you qualify, you must fill out a LIS application with the Social Security Administration (SSA), on line at www.ssa.gov or in person at the SSA or Medicaid office.

The new income and asset limits for LIS are: for an individual a monthly income at or below $1,276.25 ($1,711.25 for a married couple living together) and resources at or below $11,710 ($23,410 for a married couple living together). A beneficiary who meets these criteria will receive either a partial or full LIS. In California, all Medicare beneficiaries who will continue to use ADAP must apply for the LIS and, if denied, should keep a copy of their denial letter to show to their ADAP eligibility worker.

These new limits became effective February 1, 2007. If a beneficiary filed for LIS last year and was over the last year’s income and asset levels but close to the new levels, SSA held the application and will re-evaluating them using the new limits. If applicants are found eligible, the effective date will be February 1, 2007.

The other way that people qualify for LIS is through a linkage to Medicaid or Medicare Savings Programs (MSP). If someone is full Medicaid eligible or participates in a MSP, a program in which the state pays some of the individual’s Medicare costs such as the Qualified Medicare Beneficiaries (QMB), Specified Low-Income Medicare Beneficiaries (SLMB), Qualified Individual (Q1) or Qualified Disabled and Working Individual (QDWI), they will be deemed eligible for the full LIS. They do not have to apply.

Medicaid Medically Needy Program participants—LIS confusion
This issue that has generated multiple problems and untold confusion is how CMS is dealing with people who participate in Medicaid Medically Needy programs. 36 states run medically needy programs. These beneficiaries have incomes that are higher than the Medicaid income eligibility level, but otherwise would qualify for Medicaid. They must prove that their medical expenses are causing significant financial hardship and this often means they have very high drug costs each month. They have to spend a portion of their income (meet a “spend down” or a “share of cost”) each month before they become officially Medicaid eligible.

CMS decided that if these individuals were over the income level for LIS, they could qualify by getting billed or meeting spend down or share of cost (SOC) in any one month during a series of months considered by CMS to be qualifying months. For example, for plan year 2006 if the beneficiary got billed or met their Medicaid SOC in any one month from March 2005 through December 2005, they would automatically get the full LIS for all of plan year 2006. For plan year 2007, they would have to get billed or meet their SOC in one month from July 2006 through December 2006 in order to qualify. CMS made no apparent outreach or education effort directed at these beneficiaries despite the lack of clarity around their LIS, so many had no idea what LIS was much less how they would qualify.

For people with HIV/AIDS in some states the confusion was compounded by the fact that prior to the Medicare Part D benefit, ADAP paid Medicaid SOC. Because clients were not officially eligible for Medicaid until they met their SOC, ADAP could use state dollars to pay a portion of their drug costs, clearing their SOC; Medicaid covered the rest and provided medical services not covered by Medicare. To many the process was relatively seamless and some were unaware of their significant SOC. In plan year 2006, almost all people with HIV who also had a Medicaid SOC, received the full LIS in Medicare.

However, once most drug moved from Medicaid to Medicare in 2006, most people with HIV/AIDS never had the occasion to get billed from their Medicaid programs. Most of their cost in Medicaid had been for drugs, Medicare covered most of their primary care costs. Unless someone was hospitalized or in those states where dental costs are covered by Medicaid, had significant dental costs, Medicaid had no reason to bill the individual. So most people with HIV/AIDS, certainly in the state of California and likely in other states with medically needy programs, lost their LIS on January 1, 2007.

Although people were supposed to receive letters from Social Security informing them that they might not be eligible for LIS in 2007, the vast majority never saw such a letter or, if they saw it, was confused as to what it meant. Plans were also supposed to contact beneficiaries who were losing LIS but in talking to several hundred people over the course of several months, we didn’t speak to anyone who had been contacted by a plan. Conversely, many were told that by their plans that everything would remain the same.

If people have lost their LIS, they should be aware of the special enrollment period described above in this update. They should also contact their local AIDS Service Organization and see if there is any assistance in their state for the additional costs. They can also contact their State Office of AIDS or Department of Health Services. For contact information, visit this website. In California, there are some programs that may be of help with costs. Contact a benefits counselor, your local AIDS Service Organization or call 916-449-5992 for assistance.

If a beneficiary meets their SOC or spend down in one month during the plan year 2007, they will qualify for LIS retroactive to the date they meet spend down. It takes time for the LIS to show at the pharmacy, but the eligibility is retroactive and the beneficiary should get reimbursement for expenditures made during the period of retroactive eligibility. Advocates are discussing strategies to ensure that data lags don’t affect beneficiaries. Project Inform will post strategies on our website as they emerge.

New Resources and Information
The National Senior Citizens Law Project follows the Medicare Part D benefit closely and has published strategies for advocates and a report exposing the lack of linguistic capability among Medicare Part D plans. Check their website at www.nsclc.org for updates and new information.

California Health Advocates and the Medicare Rights Center recently released an issue brief examining the marketing of Medicare Advantage and Part D plans.

The Kaiser Family Foundation issues ongoing updates and reports on Medicare Part D. Check their website at www.kff.org for more information.