On December 8, 2003, President Bush signed into law the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the "Act"). The Act makes numerous changes to the Medicare and Medicaid programs, including the addition of programs to expand Medicare coverage of outpatient prescription drugs. Our overall summary of this sweeping legislation is contained in our memorandum to health care clients dated December 10, 20031. This memorandum focuses on the Act’s potential impact upon institutional pharmacies and the nursing facilities whose residents they serve.
The Act provides for Medicare-endorsed prescription drug discount cards ("Medicare Drug Discount Cards") to be made available as an interim step beginning within six months of the Act’s enactment, with a new Medicare Part D prescription drug benefit ("Part D") to be offered through private entities commencing effective January 1, 2006.
The most significant aspect of the Act for institutional pharmacies and nursing homes is likely to be the mandatory conversion to Part D coverage of "dual eligible" residents of nursing facilities (i.e., Medicaid residents who also are covered by, or eligible for, Medicare Part A or Part B), whose outpatient prescription drug costs are currently borne by state Medicaid programs. As a consequence, institutional pharmacies that currently bill state Medicaid programs directly for drugs provided to such residents will instead bill the plans offering Part D coverage under participation agreements to be negotiated between the plan sponsors and the pharmacies. The net effects of such changes on institutional pharmacy reimbursement are presently unclear; for example, reduced pharmacy reimbursement for residents who are currently "private pay," but in the future enroll for Part D coverage by a plan, might be more than made up by increased reimbursement under such coverage for Medicaid residents.
Where such negotiations over a participation agreement prove contentious, plan sponsors may seek to have drugs provided to their enrollees by a different institutional pharmacy than that currently serving a given facility. The new payment structure also raises the possibility that nursing facilities will be forced to utilize multiple institutional pharmacies for the prescription drug needs of their residents, presenting various potential operational difficulties for the facility and its pharmacies.
On a more imminent basis, the introduction of Medicare Drug Discount Cards may increase the number of nursing facility residents who expect the facility’s institutional pharmacy to honor such cards, especially in light of the "Medicare" imprimatur. However, any impact on nursing facilities will be limited by the fact that a relatively small proportion of nursing facility residents are private pay.
There are a number of other ways in which the Act may impact institutional pharmacies and nursing facilities, several of which we discuss below.
At present, prescription drugs provided to residents of nursing homes are paid for from several different sources. Residents of a skilled nursing facility ("SNF") whose stay at the facility is covered under Part A of the Medicare program ("Medicare PPS Residents") generally are entitled to coverage for their outpatient prescription drugs under the Medicare prospective payment system ("PPS") for SNFs, with the SNF responsible for the cost of the drugs and Medicare reimbursement for such cost provided to the SNF as part of the PPS per diem payment to the SNF for the resident’s care. For nursing facility residents whose stay at the facility is covered under a state Medicaid program ("Medicaid Residents"), the state Medicaid program covers outpatient prescription drugs as part of the Medicaid benefit, with the pharmacy directly billing the relevant state Medicaid program.
For nursing home residents whose stay is covered by a managed care plan or other private health insurance, if prescription drug coverage is part of the resident’s insurance benefit, the agreement between the private insurer and the SNF often will make the SNF responsible for paying for the residents’ outpatient prescription drugs out of the total payment by the insurer to the SNF, similar to the arrangement for Medicare PPS Residents under the PPS. Alternatively, the insurer may pay the pharmacy directly on a fee-for-service basis. For residents whose stay at the nursing facility is paid for out of the resident’s own funds or by the resident’s family, and for residents whose stay at the facility is covered by private health insurance that does not include prescription drug coverage (collectively, "Private Pay Residents"), the resident or his or her family is responsible for paying the pharmacy for the cost of the resident’s prescription drugs.
In some cases, Private Pay Residents do have some type of prescription drug coverage through a prescription drug "discount card." These cards are issued as part of programs, such as that offered by AARP, under which the card sponsor negotiates with participating pharmacies and/or manufacturers for discounts off of list prices for prescription drugs. The card sponsor pays the pharmacy the discounted price at the time the drugs are dispensed. The Private Pay Resident (or a family member) is responsible for paying the discounted price to the discount card sponsor, as well as a membership fee to participate in the program. The discount card sponsor typically bills the discounted charges for drugs purchased using the card to the credit card number of the resident or family member provided at the time of enrollment. Additionally, several leading pharmaceutical manufacturers have made available a drug discount card to low-income Medicare beneficiaries, without a membership fee, under the brand name "Together Rx."
III. RELEVANT PRESCRIPTION DRUG PROVISIONS OF THE ACT 2
A. Drug Discount Card Coverage The Act provides that the Secretary of the Department of Health and Human Services (the "Secretary") shall establish a program to endorse prescription drug discount card programs that meet the applicable requirements of the Act. In order to be eligible for a Medicare Drug Discount Card, an individual must be entitled to benefits, or enrolled, under Part A or Part B of the Medicare program, and not enrolled under a state Medicaid program or a Medicaid managed care plan under a Section 1115 waiver that provides any coverage for outpatient prescription drugs.3 Enrollment in a Medicare Drug Discount Card program is voluntary. The annual enrollment fee for receiving a Medicare Drug Discount Card may not exceed $30, and will be collected directly by the card sponsor.4
As part of the program, the Secretary is to provide for "transitional assistance" for individuals otherwise eligible for the discount card whose family income is not more than 135% of the poverty line applicable to the family size involved.5 Transitional assistance consists of payment of any annual enrollment fee for enrollment under the program, plus payment of 90% (or, for individuals whose income is not more than 100% of the poverty line, 95%) of the costs of covered prescription drugs obtained through the program, subject to an annual limit of $600 for each of 2004 and 2005. 6
Medicare Drug Discount Card sponsors are required to make available to enrollees "negotiated prices" for covered drugs.7 The Act provides that "negotiated prices shall take into account negotiated price concessions, such as discounts, direct or indirect subsidies, rebates, and direct or indirect remunerations, for covered discount card drugs, and include any dispensing fees for such drugs."8 Sponsors also are required to ensure that enrollees are not charged more than the lower of the negotiated price and the usual and customary price, and to provide that each pharmacy that dispenses a covered drug shall inform enrollees of any differential between the price of the drug to the enrollee and the price of the lowest priced generic equivalent available at such pharmacy. 9
Medicare Drug Discount Cards may be sponsored by pharmaceutical benefit management companies, a wholesale or retail pharmacy delivery system, an insurer (including insurers offering Medigap policies), an organization offering a Medicare+Choice plan, or any combination of such entities. Medicare Drug Discount Card programs are to be operated directly, or through arrangements with an affiliated organization or organizations, that have demonstrated experience and expertise in operating such a program or a similar program and that meet such business stability and integrity requirements as the Secretary may specify.10 Except for Medicare+Choice plans and reasonable cost-reimbursed Medicare HMOs, each Medicare Drug Discount Card sponsor must make its card available statewide in each state where it offers enrollment to any individual. The Secretary shall ensure that there are at least two Medicare Drug Discount Cards available in each state, and may limit the number of Medicare Drug Discount Cards available in any state (but not to a number less than two).11
Each card sponsor is required to secure the participation in its network of a sufficient number of pharmacies that dispense (other than solely by mail order) drugs directly to enrollees to ensure convenient access, consistent with rules to be established by the Secretary. The Secretary is required to establish access rules no less favorable to enrollees than those applicable under the Department of Defense’s TRICARE program, which require that 90% of plan enrollees in urban areas have access to a retail pharmacy within 2 miles, that 90% of suburban enrollees have access to a retail pharmacy with 5 miles, and that 70% of rural plan enrollees have access to a retail pharmacy within 15 miles.12 However, with respect to institutional pharmacies, the Act further provides that the Secretary "shall establish procedures and may waive requirements ... as necessary to negotiate arrangements with sponsors to provide arrangements with pharmacies that support long-term care facilities in order to ensure access to transitional assistance for transitional assistance eligible individuals who reside in long-term care facilities."13 Further, with respect to Medicare Drug Discount Cards offered by Medicare+Choice plans and Medicare cost-reimbursed HMOs, the pharmacy network access requirements may be satisfied by offering a pharmacy network approved by the Secretary. 14
According to an HHS overview on the Medicare Drug Discount Card program dated December 8, 2003, sponsors of Medicare Drug Discount Cards will have the opportunity to apply for "special endorsement" to provide transitional assistance to, among others, residents of nursing facilities, through long term care pharmacies. The overview states that such special endorsement "for providing access to ... long term care pharmacies ... will be competitively awarded to the card sponsors with the best plans."15
The Act provides that prices negotiated from drug manufacturers for covered drugs purchased under a Medicare Drug Discount Card shall not be taken into account for purposes of determining the "best price" for the drug under the Medicaid drug rebate statute.16 Accordingly, the Act contemplates that manufacturers will be able to grant discounts for drugs purchased under Medicare Drug Discount Cards that result in the drugs being sold for a price lower than the "best price" they otherwise are making available, without any impact on the rebates they are required to pay under the Medicaid drug rebate provisions.
B. Medicare Part D Coverage
The Act provides for a new voluntary Medicare prescription drug benefit under Part D that is to become available to Medicare beneficiaries effective January 1, 2006. In order to be eligible for Part D coverage, an individual must be entitled to benefits, or enrolled, under Part A or Part B of the Medicare program.17
The Act contemplates three ways in which Part D coverage could be provided: (i) through prescription drug coverage provided as part of a Medicare+Choice (renamed "Medicare Advantage" in the Act) plan (an "MA-PD Plan"); (ii) prescription drug coverage as a "stand-alone" insurance benefit, provided by an entity licensed to offer health insurance under state law (a "PD Plan");18 or (iii) in any area where there are not at least two plans offering Part D coverage, at least one of which is a PD Plan, a "fallback prescription drug plan" (a "Fallback Plan"), to be provided by a pharmaceutical benefit manager or similar entity, with the federal government bearing the cost of paying claims made under such plan. 19
The Act specifies certain baseline parameters for Part D coverage. For 2006, the "standard" benefit is to have an annual deductible of $250, and pay 75% of the costs (determined based upon "negotiated prices" for covered drugs) above that deductible up to an initial coverage limit of $2,250. 20 The 75% level does not preclude actuarially-equivalent coverage with tiered co-pays that result in an average expected payment of 75% of utilization above the standard $250 deductible and up to the standard $2,250 initial coverage limit.21 Part D coverage must also pay for the cost of drugs in excess of an out-of-pocket maximum of $3,600, subject to a beneficiary co-payment of 5% or $5, whichever is greater (or, with respect to generic drugs or multiple source drugs that are preferred drugs, $2).22
PD Plans and MA-PD Plans also may offer "supplemental prescription drug coverage" with reduced deductibles, higher initial coverage limits (e.g., elimination of the "donut hole"), reduced beneficiary co-pays or certain other coverage enhancements, so long as such coverage has a higher actuarial value to the beneficiary than standard coverage and the sponsor also offers standard coverage in each area where supplemental coverage is offered.23
PD Plans and MA-PD Plans are required to bid to offer their coverage in coverage areas to be established by the Secretary and generally made consistent with the coverage areas for Medicare Advantage plans. Beneficiaries will be required to pay a monthly premium for coverage by a PD Plan or MA-PD Plan, based upon the amount of the applicable plan’s bid. The federal government will subsidize coverage by paying approximately 74.5% of the cost of standard coverage (with such cost determined based upon the weighted average of amounts bid nationwide by PD Plans and MA-PD Plans to provide such coverage), through a combination of direct premium subsidies and reinsurance payments. The reinsurance provisions involve complicated formulas under which the federal government bears a portion of any amount by which a plan’s drug costs exceed certain levels, and shares in any savings associated with a plan’s drug costs falling below certain levels.24
For Fallback Plans, the monthly beneficiary premium will be equal to 25.5% of an amount equal to the Secretary’s estimate of the average monthly per capita actuarial cost, including administrative expenses, under the Fallback Plan of providing coverage in the relevant region. 25
The federal government will provide additional premium subsidies for enrollees whose income is not more than 150% of the poverty line and who have certain resources of less than $10,000 per individual or $20,000 per couple in 2006, based upon a sliding scale.26 Eligible individuals with incomes below 135% of the poverty line and resources not in excess of $6,000 per individual or $9,000 per couple would be eligible for a premium subsidy equal to 100% of the weighted average beneficiary premium for the PD Plans and MA-PD Plans in the region. 27 Similarly, plan deductibles and beneficiary co-payments also are to be reduced on a sliding-scale basis based upon income, with persons at or below 135% of the poverty line having no deductible and a co-payment of $2 for generic or preferred multiple-source drugs and $5 for brand or non-preferred drugs.28
Significantly, Medicaid coverage of outpatient prescription drug costs has been eliminated for individuals eligible for Part D coverage who also are eligible for full Medicaid benefits under the applicable state Medicaid program ("Dual-Eligible Individuals").29 For any Dual-Eligible Individual who does not enroll in a plan offering Part D coverage, the Act provides for a default enrollment process whereby the Secretary will enroll such individuals in a PD Plan or Fallback Plan that has a premium equal to or below the premium subsidy amount available to persons with incomes of 135% or less of the poverty line.30 While the Act provides that nothing prevents such persons from declining or changing such enrollment,31 the elimination of Medicaid coverage for outpatient prescription drugs makes it unlikely that any Dual-Eligible Individuals would decline Part D coverage.
Institutionalized Dual-Eligible Individuals will not be required to pay any amounts for deductibles or co-payments, and will not be subject to any coverage limits.32 Accordingly, for Dual-Eligible Individuals who are residents of nursing facilities, there will be no "donut hole" in Part D coverage, and so far as the beneficiary is concerned all of such beneficiary’s covered outpatient prescription drug costs will be covered by the plan in which such individual is enrolled.33 For purposes of the Act, "institutionalized" Dual-Eligible Individuals means Medicaid recipients who are inpatients of a medical institution or nursing facility for which payments are made under Medicaid.34
As with Medicare Drug Discount Cards, the sponsors of plans providing Part D coverage generally are required to make available to enrollees "negotiated prices" for covered drugs.35 The Act provides that "negotiated prices shall take into account negotiated price concessions, such as discounts, direct or indirect subsidies, rebates, and direct or indirect remunerations, for covered part D drugs, and include any dispensing fees for such drugs."36
Similarly, sponsors of plans providing Part D coverage generally are subject to the same obligations to secure the participation in their networks of a sufficient number of pharmacies that dispense (other than solely by mail order) drugs directly to enrollees to ensure convenient access, consistent with rules to be established by the Secretary that are no less favorable to enrollees than the TRICARE standards noted above with respect to Medicare Drug Discount Cards.37 The Act specifically provides that "such rules may include standards with respect to access for enrollees who are residing in long-term care facilities...."38 Sponsors generally are required to permit the participation of any pharmacy that meets the terms and conditions of the sponsor’s plan. 39 Sponsors may not condition participation by a pharmacy upon the pharmacy accepting insurance risk.40 However, sponsors are allowed to reduce enrollee co-pays for enrollees who use in-network pharmacies.41
The Act also requires that PD Plans or MA-PD Plans using a formulary meet certain requirements. A pharmaceutical and therapeutic committee, with a majority of its members being practicing physicians or practicing pharmacists, must develop and review the formulary. 42 At least one practicing physician and one practicing pharmacist on such committee must be independent and free of conflict with respect to the sponsor and the plan, and have expertise in the care of elderly or disabled persons.43 In reviewing and developing the formulary, the committee must base clinical decisions on the strength of scientific evidence and standards of practice and whether including a drug in the formulary would have advantages in terms of efficacy and safety. 44 The formulary must include drugs within each therapeutic class and category of drugs to which Part D coverage applies, although not necessarily all drugs within such categories and classes.45
Additionally, each plan sponsor is required to have a cost-effective drug utilization program, quality assurance measures, a medication therapy management program and a program to control waste, fraud and abuse as well as a meaningful procedure for resolving grievances between the sponsor and enrollees.46 The medication therapy management program must be developed in cooperation with licensed and practicing pharmacists and physicians, and plan sponsors must take into account, in establishing fees for pharmacists and others providing services under the plan, the resources used, and time required, to implement such medication therapy management program.
The Act amends the Medicaid drug rebate provisions to provide that prices negotiated by drug manufacturers with PD Plans, MA-PD Plans and qualified retiree prescription drug plans (which are to receive subsidies under the Act) with respect to drugs provided to Medicare beneficiaries will not be taken into account in determining the manufacturer’s "best price" for Medicaid rebate purposes.47
Both Medicare Drug Discount Cards and the new Part D benefit have the potential to impact institutional pharmacies and their long-term care facility customers.
With respect to Medicare Drug Discount Cards, institutional pharmacies may see an increase in the number of Private Pay Residents who have drug discount cards and expect such cards to apply to prescription drugs provided in nursing facilities, particular in light of the "Medicare" imprimatur. Card sponsors will try to negotiate such discounts with institutional pharmacies. Institutional pharmacies that do not reach pricing agreements with card sponsors may find Private Pay Residents attempting to switch to competing pharmacies which do honor the discount cards. Inasmuch as nursing facilities typically seek to deal only with a single institutional pharmacy, such attempted switches may impact the facility as well as the pharmacy. However, the impact of Medicare Drug Discount Cards on institutional pharmacies’ provision of services to nursing home residents will be limited by the fact that a relatively small percentage of most nursing homes’ census consists of Private Pay Residents. Assisted living facilities, on the other hand, typically have all private pay residents; as such, institutional pharmacies that service such facilities may see a greater impact from such residents’ enrollment in Medicare Drug Discount Card programs.
Introduction of Part D coverage on January 1, 2006 will result in certain changes to institutional pharmacies’ provision of services to nursing home residents, particularly due to the mandatory conversion of Dual-Eligible Individuals to coverage under the new PD Plans and Fallback Plans. Most Medicaid Residents of nursing facilities will constitute Dual-Eligible Individuals since, in addition to Medicaid, they also generally are eligible for, or covered by, Medicare Part A or Part B. As a consequence, their prescription drug costs will no longer be covered under Medicaid, but rather under the new Part D plans. In addition to Medicaid Residents, a number of Private Pay Residents will presumably decide to enroll in plans offering the Part D benefit, in light of the various federal subsidies to be provided.
PD Plans and MA-PD Plans will need to negotiate participation agreements with institutional pharmacies to dispense drugs for their enrollees. While the plans are likely to seek discounts, the net effect of such negotiations on institutional pharmacy reimbursement is not clear—for example, discounts that may be granted on rates currently charged to Private Pay Residents could be more than offset by increases in reimbursement for Medicaid Residents. Where the existing institutional pharmacy for a nursing facility and a plan covering a portion of the facility’s residents do not reach an agreement with respect to price or other matters, PD Plans and MA-Plans may seek to have the drugs provided to such residents by a different institutional pharmacy that will agree to the discounts requested. In such cases, nursing facilities may face pressure to have their residents serviced by two or more institutional pharmacies.
If nursing facilities are required to use multiple institutional pharmacy providers for each facility, this may create operational difficulties for both the pharmacy and the facility. For example, packaging and dispensing systems used by different institutional pharmacies often differ, and existing medication carts (which are often now owned and provided by the single pharmacy servicing the facility) may not work well with medications provided by another pharmacy using a different packaging system. Facility staff would need to keep track of which pharmacy is servicing which residents. Differences in pharmacy policies and procedures (and associated inservice training provided to facility staff by the pharmacy and quality assurance reviews) also may create confusion. Various other potential operational issues can be imagined.
Aside from the potential for a change in pharmacy provider for a portion of their residents effective January 1, 2006, nursing facilities may face the need to change the pharmacy for Medicare PPS Residents every time such a resident exhausts his or her SNF benefit under Medicare Part A. At that point, the pharmacy with which the SNF contracts while the SNF is responsible for such resident’s drug costs under PPS may need to be replaced by the pharmacy with which the resident’s applicable PD Plan has a contract. At a minimum, this would be likely to create an administrative burden.
One factor that may become important in determining the level of impact upon current institutional pharmacy arrangements is the extent to which entities in fact do apply to provide Part D coverage through PD Plans in the various regions to be established around the country. As noted above, in any region where there is not at least two plans offering Part D coverage (at least one of which is a PD Plan), the Secretary is required to contract to make available a Fallback Plan in such area. Fallback Plans ultimately place the risk of prescription drug costs upon the federal government, not the PD Plan or MA-PD Plan, and consequently Fallback Plans may not be as aggressive in negotiating discounts with pharmacies. However, it should be noted that the management fees to be paid to entities managing Fallback Plans are required to be tied to performance measures that "contain costs ... through mechanisms such as generic substitution and price discounts."48
Further, the addition of Part D coverage to existing Medicare HMOs may increase the proportion of Medicare beneficiaries electing to receive their Medicare benefits through such HMOs. Inasmuch as many Medicare HMOs contract with SNFs to provide both nursing facility services and outpatient prescription drugs in exchange for a single per diem payment (or a per diem with a fixed add-on for prescription drug costs), this aspect of SNFs’ business may significantly increase (with a corresponding decrease in Medicare PPS Residents). Given the possibility that such Medicare HMOs offering Part D coverage will seek to have SNFs compete against one another for this business on the basis of price, SNFs may, in turn, seek to reduce their prescription drug costs or, failing to do so, face a squeeze on their profit margins based upon lower per diems.
The regulations to be promulgated by the Secretary with respect to "convenient access to in-network pharmacies" and "access for enrollees who are residing in long-term care facilities" may have an important impact on the effect of the legislation. For example, if such regulations were to require that plans offering Part D coverage must contract with the institutional pharmacy with which a nursing facility has entered into an "under arrangements" contract, the multiple-pharmacy scenario described above would be much less likely. The Act does not appear to put any particular constraints upon the Secretary in promulgating such regulations.
Removal of Medicaid drug coverage for Dual-Eligible Individuals also may impact the analysis of the Office of Inspector General ("OIG") of the Department of Health and Human Services regarding discounts granted by institutional pharmacies to SNFs for the cost of drugs provided to Medicare PPS Residents. Previous OIG analysis has suggested that if a pharmacy were to grant a SNF prices below the rates payable by the applicable state Medicaid program for Medicaid Residents, the arrangement might be challenged as an inducement for referral of the Medicaid Residents to the pharmacy. 49 If, however, the Act’s switch of Dual-Eligible Individuals from coverage under Medicaid to Part D coverage has the effect of eliminating the ability of the nursing facility to refer the Dual-Eligible Individuals to a particular institutional pharmacy, and also has the effect of eliminating the single price benchmark that Medicaid had made available as a measure against which pricing to the SNF could be compared, the OIG’s prior analysis may no longer apply.
The removal of manufacturer discounts granted for utilization under Medicare Drug Discount Cards and Part D coverage from "best price" calculations under the Medicaid rebate statute may have an important effect upon price negotiations between plan sponsors and drug manufacturers. A number of analysts have criticized the "best price" provisions as creating a de facto floor on discounting by manufacturers.
Finally, the additional federal money that will be provided to help pay for seniors’ prescription drug costs under the Act could have the net overall effect of reducing pressures on institutional pharmacies’ margins. For example, the federal subsidies that will be provided to employer-sponsored retiree drug plans should make it less likely that such coverage for Private Pay Residents will be withdrawn or curtailed, unless the employers drop the plans on the basis that enrollment in Part D plans is now available. Similarly, the switch of Dual-Eligible Individuals from coverage under state Medicaid programs to Part D coverage will significantly reduce, if not eliminate entirely, institutional pharmacies’ exposure to various states’ efforts to contain their Medicaid prescription drug costs.
The Act makes changes in the way in which prescription drugs used by many residents of nursing facilities will be paid for, and various potential consequences could result for institutional pharmacies and their nursing facility customers. Much of the effect of the legislation will depend upon regulations still to be promulgated and the way in which private entities and Medicare beneficiaries respond to the Part D coverage that the Act envisions. Overall, the Act contains a mix of provisions that are likely to present both opportunities and challenges for institutional pharmacies and their nursing facility customers.
1. This memorandum is available on the internet at:http://www.reedsmith.com/library/publicationView.cfm?itemid=61104
2 This Section describes the principal prescription drug features of the Act relevant to institutional pharmacies and nursing facilities. Please note that this is not intended as an exhaustive description of the provisions relating to either Medicare Drug Discount Cards or the new Part D benefit. Moreover, the Act contains other provisions, apart from Medicare Drug Discount Cards and the new Part D benefit, that may affect institutional pharmacies and nursing facilities. Additional detail on the Act is contained in our memorandum dated December 10, 2003.
3 Section 1860D-31(b) of the Social Security Act (the "SSA"), as added by Section 101 of the Act. Certain limited categories of Medicare beneficiaries eligible for Medicaid benefits are to be made eligible for Medicare Drug Discount Cards under rules to be promulgated by the Secretary
4 SSA Section 1860D-31(c)(2), as added by Section 101 of the Act.
5 SSA Section 1860D-31(b)(2), as added by Section 101 of the Act. To be eligible for transitional assistance, individuals also must not have any prescription drug coverage under private health insurance (other than Medicare+Choice plans), the Department of Defense’s TRICARE program or the Federal Employees Health Benefit Program. Transitional assistance eligible individuals must also be residents of one of the fifty states or of the District of Columbia.
6 SSA Section 1860D-31(g), as added by Section 101 of the Act. Any balance of the $600 available and unused in 2004 is carried over and added to the $600 available for 2005, subject to certain adjustments.
7 SSA Section 1860D-31(e)(1)(A), as added by Section 101 of the Act.
9 SSA Sections 1860D-31(h)(8) and 1860D-31(d)(3)(A), as added by Section 101 of the Act.
10 SSA Section 1860D-31(h)(1), as added by Section 101 of the Act.
11 SSA Section 1860D-31(h)(2), as added by Section 101 of the Act. Medicare+Choice plans and reasonable cost-reimbursed Medicare HMOs may elect to offer their cards only to enrollees in their Medicare HMO plans.
12 SSA Section 1860D-31(e)(1)(B), as added by Section 101 of the Act; Medicare Prescription Drug, Improvement and Modernization Act of 2003 Conference Agreement ("Conference Agreement") at p. 25. The TRICARE standards relate only to retail pharmacy networks, not institutional pharmacies.
13 SSA Section 1860D-31(g)(5)(A), as added by Section 101 of the Act.
14 SSA Section 1860D-31(h)(9)(B)(ii), as added by Section 101 of the Act.
15 "Overview – Medicare Prescription Drug Discount Card and Transitional Assistance Program," dated December 8, 2003, available at http://www.cms.hhs.gov/discountdrugs/overview.asp, at pp. 7-8.
16 SSA Section 1860D-31(e)(1)(D), as added by Section 101 of the Act.
17 SSA Section 1860D-1(a)(3)(A), as added by Section 101 of the Act.
18 SSA Section 1860D-12(a)(1), as added by Section 101 of the Act. The requirement that an entity be licensed to offer health insurance under applicable state law may be waived by the Secretary based upon substantially the same criteria as apply to the waiver of such requirement for an entity seeking to offer a Medicare Advantage plan. SSA Section 1860D-12(c), as added by Section 101 of the Act. 19 SSA Sections 1860D-1(a)(1) and 1860D-11(g), as added by Section 101 of the Act. 20 SSA Section 1860D-2(b), as added by Section 101 of the Act.
19 SSA Sections 1860D-1(a)(1) and 1860D-11(g), as added by Section 101 of the Act.
20 SSA Section 1860D-2(b), as added by Section 101 of the Act.
21 Id.; SSA Section 1860D-2(c), as added by Section 101 of the Act.
22 SSA Section 1860D-2(d), as added by Section 101 of the Act.
23 SSA Section 1860D-2(a)(2), as added by Section 101 of the Act.
24 SSA Sections 1860D-13 and 1860D-15, as added by Section 101 of the Act.
25 SSA Section 1860D-13(g)(6), as added by Section 101 of the Act.
26 SSA Section 1860D-14, as added by Section 101 of the Act. These resource standards are to be increased in future years based on the percentage increase in the consumer price index.
27 SSA Section 1860D-14(a)(1)(A)(i), as added by Section 101 of the Act.
28 SSA Section 1860D-14(a)(1)(D)(ii), as added by Section 101 of the Act.
29 SSA Section 1935(d)(1), as added by Section 103(c) of the Act. We note that, as drafted, the literal terms of this provision would appear to eliminate Medicaid coverage of outpatient prescription drug costs for Medicare beneficiaries effective as of the date of enactment of the Act, not as of January 1, 2006. This was almost certainly not the intent of Congress in including this provision, as evidenced by various section headings and other evidence, and consequently this Section appears to contain a drafting error.
30 SSA Section 1860D-1(b)(1)(C), added by Section 101 of the Act. In areas where there are more than one such plan available, the Secretary shall enroll Dual-Eligible Individuals in such plans on a random basis.
32 SSA Section 1860D-14(a)(1)(D)(i), as added by Section 101 of the Act.
33 However, the cost of drugs not included on the plan’s formulary are not covered, at least with respect to the portion of annual costs exceeding $2,250. SSA Section 1860D-2(b)(4)(C)(i), as added by Section 101 of the Act.
34 Id.; SSA Section 1902(q)(1)(B).
35 SSA Section 1860D-2(d)(1)(A), added by Section 101 of the Act.
36 SSA Section 1860D-2(d)(1)(B), added by Section 101 of the Act.
37 SSA Sections 1860D-4(b)(1)(C) and 1860D-21(c), added by Section 101 of the Act. Note that the Act provides for certain exceptions to these network access requirements for MA-PD Plans in SSA Sections 1860D-21(c)(3) and 1860D-21(d).
39 SSA Section 1860D-4(b)(1)(A), added by Section 101 of the Act.
40 SSA Section 1860D-4(b)(1)(E), added by Section 101 of the Act.
41 SSA Section 1860D-4(b)(1)(B), added by Section 101 of the Act.
42 SSA Section 1860D-4(b)(3)(A), added by Section 101 of the Act.
44 SSA Section 1860D-4(b)(3)(B), added by Section 101 of the Act.
45 SSA Section 1860D-4(b)(3)(C), added by Section 101 of the Act.
46 SSA Section 1860D-4(c), added by Section 101 of the Act.
47 SSA Section 1860D-2(d)(C), added by Section 101 of the Act; Section 103(e) of the Act.
48 SSA Section 1860D-11(g)(5)(B), as added by Section 101 of the Act.
49 E.g., see OIG Advisory Opinion 99-2, issued February 26, 1999.
This article is presented for informational purposes only and is not intended to constitute legal advice.