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Medicare Compliance & Reimbursement

PART D:

States Chime In With Dual Eligible Transition Concerns

Published on Fri Jan 06, 2006

Focus group fears increased cost obligations and inadequate support.

The Centers for Medicare & Medicaid Services is taking its fair share of lumps for the way it's handling dual eligibles' transition from Medicaid to Medicare drug coverage.

In a recent focus group, 12 Medicaid officials from 11 states spoke "off the record" regarding their personal experience and knowledge about the transition. Health Management Associates facilitated the focus group for the Kaiser Commission on Medicaid and the Uninsured. These are some of their findings:

Transition from Medicaid to Medicare. Focus group participants share concerns that some enrollees will inevitably fall through the cracks--in spite of CMS contingency plans, such as its point-of-sale and first-fill policies. With more than 6 million people making the transition, even the smallest auto-enrollment error margin--0.5 percent is one current estimate--could leave tens of thousands of dual eligibles without coverage.

Coverage loss resulting from data discrepancies, opt-out confusion and insufficient state-level contingency plans threaten to create an unmanageable burden on states. Many state officials fear that enrollees will direct their inquiries to state Medicaid agencies rather than Medicare and the federal government. To compound the problem, states simply may not be able to provide answers because CMS doesn't require Part D plans to share beneficiary information with states.

Part D plan options. Focus group participants concur that benes who choose their own prescription drug plan rather than auto-enroll find the large number of PDP choices confusing. Benes' confusion only stands to make outreach efforts more difficult at both federal and state levels. Even CMS' Web-based services offer states little relief, as many suspect that few dual eligibles are likely to use the Internet, much less sophisticated Web services like CMS' Formulary Finder and Prescription Drug Plan Finder, participants add.

Focus group participants also share concerns about formularies--CMS hasn't provided the electronic Part D formularies states need to help benes with their coverage inquiries. And confusing cost-sharing tiers and utilization controls tend to undermine otherwise robust plan formularies.

States' roles in low-income subsidy program. Among the 11 states represented in the focus group, most play little or no role in determining eligibility for the Part D low-income subsidy, referring benes instead to the Social Security Administration.

Fiscal implications. Focus group participants wholeheartedly object to clawback obligations, which require states to continue to partially finance federal drug coverage. Many believe that the clawback formula will actually cost them more than it did to offer drug coverage through Medicaid. In addition, many are frustrated that per-capita clawback amounts vary widely, noting that the Medicare Modernization Act bases clawback obligations on comprehensive coverage instead of the actual value of dual eligibles' subsidized Part D benefit.

States are also concerned that as Part D gains momentum, they'll increasingly discover low-income benes who are eligible for Medicare Savings Plans and require Medicaid services. The transition could also hurt state-level supplemental rebate programs for non-dual eligibles, participants fear, threatening their ability to negotiate for the same rebate standards they've secured in the past.

Long-term policy implications. Once the initial transition from Medicaid to Medicare takes hold, states will begin to focus on long-term coverage issues. Some focus group participants worry that the market ultimately can't sustain the number of PDPs that are available, causing many to drop out. There's also the chance that PDPs will pare down their formularies or increase premiums. In either situation, dual-eligibles will find themselves back to square one to find a new PDP and maintain their current coverage levels and drug options.

States also worry that they'll find themselves under pressure to subsidize Part D copayments for low-income enrollees without the federal Medicaid funding they'll need to offset these additional costs.

Medicare Special Needs Plans sparked interest among many of the focus group's participants. But only one state had specific plans to leverage SNPs to improve its ability to coordinate its Medicaid services with Medicare.

Lastly, some focus group participants feel that Part D's financial model might encourage CMS to prematurely invoke further Medicaid reform. CMS doesn't have a plan in place to evaluate Part D implementation, and state officials fear that it may jump the gun to roll out further changes that will affect state Medicaid services negatively.

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