Medicare Compliance & Reimbursement

CMS nixes notion in March memo.

State pharmacy assistance programs may not steer their low-income clients into particular Medicare Part D prescription drug plans, the Centers for Medicare and Medicaid Services said in a March 29 memorandum to state officials and potential PDP sponsors.

In the memo, CMS Deputy Administrator Leslie Norwalk noted that "some states have already begun the process of drafting and enacting legislation that would allow them to act as the authorized representative of their state program enrollees and auto-enroll them into a specific PDP."

Norwalk said it was fine for SPAPs to help their beneficiaries choose a PDP, and even encouraged them to do so. But she drew the line at state programs that go beyond decision support and "eliminate choice for the low-income subsidy population," she said.

Norwalk outlined a menu of penalties that the government could impose on states and plans that participate in such steering arrangements.
  
For example, participating SPAPs would not meet the definition of an SPAP under the Medicare Modernization Act, and thus payments they make on behalf of Medicare beneficiaries would not count against the out-of-pocket cost threshold beneficiaries must meet before qualifying for catastrophic benefits under the MMA.
 
Preferred drug plans that transfer rebates back to states might have their bids to participate in Part D rejected by CMS as not accurately reflecting the cost of providing drug benefits. And states and their preferred PDPs might be prosecuted under federal anti-kickback laws.

CMS's stance runs counter to the position taken by the State Pharmaceutical Assistance Transition Commission, which the MMA created to advise Congress and the administration regarding the SPAP transitional issues surrounding the new Medicare drug benefit.

How? In its December report, the commission recommended that SPAPs be allowed to act as the authorized reps of their beneficiaries and enroll them in one or more preferred PDPs. The commission said this would facilitate  coordination of SPAP and Part D benefits and help simplify a confusing Part D enrollment process for low-income SPAP beneficiaries, making them more likely to choose to participate in the voluntary Medicare drug benefit. 
 
In support of CMS's position, Norwalk pointed to MMA language that defines an SPAP as a program that, in providing assistance to Part D enrollees, "does not discriminate based upon the Part D plan in which the individual is enrolled." The commission said this language would be satisfied as long as beneficiaries were allowed to opt out of a preferred PDP and join another one, with no diminution in SPAP assistance.