Medicare Compliance & Reimbursement

GAO report questions protections for benes--much to CMS' displeasure.

A safety net is in place to ensure comprehensive, uninterrupted drug coverage for dual eligibles during their transition to Medicare Part D--but it contains some significant holes, a new report charges.

The contingency plans that are in place to protect full-benefit dual eligibles from losing Medicaid coverage when they transfer to Medicare Part D may not be enough to guarantee that all enrollees will be able to obtain the drugs they need starting Jan. 1, 2006, the Government Accountability Office cautions in a recent report. Three main problem areas, plus flaws in its four key contingency plans, suggest that the Centers for Medicare & Medicaid Services may be overconfident, or GAO may be overcritical.

Congress Shows Growing Concern

After citing potential coverage problems for dual eligibles to CMS earlier this year, Max Baucus (D-MT), Senate Finance Committee ranking member, redirected his concerns to the GAO. Despite CMS' contingency plans, some of the 6 million enrollees who qualify for benefits under both Medicare and Medicaid may still find themselves without drug coverage after Jan. 1, Baucus notes. Specifically, the single-day transition from one type of drug coverage to another could create difficulties in ensuring that pharmacies will fill prescriptions for this vulnerable population.

To evaluate the transition process and the protections in place to fulfill dual eligibles' drug needs, Baucus asked GAO to specifically review 1) potential problems that may arise during dual eligibles' transition from Medicaid to Medicare; and 2) CMS', prescription drug plans' and states' contingency plans to respond to these potential problems should they arise.

The GAO upheld Baucus' concerns upon its review. "Although each of these contingency plans is useful in mitigating risks for dual-eligible beneficiaries, their effectiveness is uncertain," notes Kathleen M. King, the GAO's health care director. "While we credit [CMS] for taking the steps to mitigate potential risk for dual-eligible beneficiaries, we believe that the agency's complete confidence in contingency plans that have yet to be fully tested, publicized or implemented may be premature," she adds.

3 Problem Areas Leave Room For Coverage Gaps

In the first part of its report, GAO identifies these three problems with the current set of CMS, PDP and state contingencies for dual eligibles' drug coverage:

• Potential inaccuracies in state or federal data may prevent CMS from identifying some individuals for automatic enrollment in a PDP.

• CMS may not identify and auto-enroll all benes in time if they become dually eligible in late 2005 and beyond.

• Benes' prescription drugs may not be on their PDP formulary, or their customary pharmacy may not be in their PDP pharmacy network.

Automatic Enrollment Contingency Leaves Pharmacies With Scant POS Preparations

In the second part of the report, the GAO shifts its focus to review each of CMS' contingency plans, beginning by criticizing its automatic enrollment system.

CMS has developed a point-of-sale enrollment contingency to detect dual eligible and newly eligible benes the first time they attempt to fill drug prescriptions. The POS system automatically enrolls benes without coverage in a predetermined Part D plan the first time they present at a pharmacy, allowing them to receive their prescription drugs immediately.

CMS contracted with WellPoint on Nov. 22 to provide and execute POS coverage, leaving less than six weeks to implement it, GAO points out. This may not be enough time to educate pharmacies and provide them with the information they need to understand and implement coverage from their end, the report says.

Pharmacies Unprepared To Invoke Eligibility Transaction

CMS has also put a contingency plan in place for dual eligibles who do have coverage but don't have information about their PDP. Pharmacies can identify a dual eligible's PDP and provide contact information to benes using a new information technology solution called the Eligibility Transaction.

The GAO is equally concerned that CMS has not adequately publicized the Eligibility Transaction. Many independent drug stores are simply not aware of the IT tool, and consequently, they will probably not use it.

First-Fill Contingency Doesn't Preclude Out-Of-Pocket Expenses

Auto-enrolled dual eligibles who use maintenance drugs not found in their PDP's formulary may be in for a surprise the first time they attempt to fill their prescriptions after Jan. 1. To ensure benes have immediate access to the drugs they need, CMS will allow in-network pharmacies to fill non-formulary prescriptions on a one-time basis. CMS then expects benes to work with their physicians to switch to a formulary drug, file an appeal for a formulary exception with their PDP or switch to a new PDP.

The problem with the first-fill contingency is twofold. First, PDP formularies typically include only 80 percent of the most commonly used drugs, notes CMS. Second, benes who present at out-of-network pharmacies must pay the retail price out-of-pocket and then submit a reimbursement claim to their PDP after the fact. CMS acknowledges that most dual eligibles--many of whom already live at or below the poverty line--will not be able to front their prescription costs in these situations.

Financial Disincentives Cause Many States To Pass On Medicaid Refill Option

To minimize disruptions in treatment and provide dual eligibles with the time they need to resolve any coverage problems they may encounter, CMS gave state Medicaid agencies the option to offer early or extended drug refills prior to Jan. 1, 2006. Many state officials have indicated that they do not plan to provide the refills, however, due to what GAO calls "financial disincentives associated with the transition."

CMS Offers Prickly Defense

CMS responded to the GAO report with a firm retort, arguing that its findings are misleading, and CMS' contingency plans have fully addressed the two specific problems Baucus asked the GAO to investigate. These contingencies will produce prescription drug coverage that is "at least as accessible and comprehensive" as the coverage full-benefit dual eligibles had previously, CMS claims.

"We object to any implication that we have not taken all steps to keep potential problems to a minimum, including establishing a point-of-sale safety net for any dual eligible individual[s] that somehow are not identified and assigned to a plan in advance of January 1, 2006," asserts CMS Administrator Mark McClellan. CMS further defends itself by arguing that "a standard of absolute perfection for this transition ... is clearly untenable," duly noting that the GAO doesn't expect state Medicaid programs to meet the same impossible standard.

Concerned that the GAO report undermines its contingency plans' effectiveness, CMS asked GAO to revise its findings to focus more on the solutions than on the problems. "CMS believes the first formal finding of the report should reflect the fact that CMS has established effective contingency plans to ensure that dual-eligible beneficiaries will be able to obtain comprehensive coverage and obtain necessary drugs beginning January 1, 2006," notes McClellan.

In addition, CMS requests that the GAO revise the report's second finding to focus on the solutions CMS has put in place to avert the potential problems Baucus cited in his request. CMS objects to the report's assertions that some benes may face one- to two-month coverage gaps or encounter difficulties in obtaining necessary drugs immediately.