STATE PERSPECTIVES ON STATE PERSPECTIVES ON IMPLEMENTATION OF MEDICARE PART D: IMPLEMENTATION OF MEDICARE PART D: COORDINATING MEDICARE AND MEDICAID COORDINATING MEDICARE AND MEDICAID

COVERAGE THROUGH SPECIAL NEEDS COVERAGE THROUGH SPECIAL NEEDS PLANSPLANS

James M. VerdierJames M. VerdierMathematica Policy Research, Inc.Mathematica Policy Research, Inc.

AcademyHealth Annual Research MeetingAcademyHealth Annual Research MeetingSeattle, WASeattle, WA

June 27, 2006June 27, 2006

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Introduction and Overview

Medicare Modernization Act of 2003 (MMA) set up three Medicare Modernization Act of 2003 (MMA) set up three major options for Part D Rx drug coveragemajor options for Part D Rx drug coverage– Stand-alone prescription drug plans (PDPs)Stand-alone prescription drug plans (PDPs)

Fee for service (“traditional Medicare”)Fee for service (“traditional Medicare”)– Medicare Advantage prescription drug plans (MA-PDs)Medicare Advantage prescription drug plans (MA-PDs)

Managed care Managed care – Special Needs Plans (SNPs)Special Needs Plans (SNPs)

A a new type of MA-PDA a new type of MA-PD

SNPs represent a major opportunity to better integrate SNPs represent a major opportunity to better integrate Medicare and Medicaid acute and long-term care for dual Medicare and Medicaid acute and long-term care for dual eligibles, including Rx drugseligibles, including Rx drugs– Important key to SNP success will be partnerships with Important key to SNP success will be partnerships with

statesstates

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Introduction and Overview (Cont.)

SNPs face major challenges in enrolling dual SNPs face major challenges in enrolling dual eligibleseligibles– Over 90 percent are now in stand-alone PDPsOver 90 percent are now in stand-alone PDPs– States can help with SNP enrollmentStates can help with SNP enrollment

State interest in contracting with SNPs to cover State interest in contracting with SNPs to cover Medicaid benefits for duals will likely depend on the Medicaid benefits for duals will likely depend on the state’s interest in providing Medicaid long-term care state’s interest in providing Medicaid long-term care (LTC) benefits in managed care settings(LTC) benefits in managed care settings– Medicaid acute care benefits for duals are now Medicaid acute care benefits for duals are now

very limitedvery limited

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Special Needs Plans

SNPs can specialize in serving nursing facility residents, SNPs can specialize in serving nursing facility residents, dual eligibles, and others with severe or disabling chronic dual eligibles, and others with severe or disabling chronic conditions (SSA, Sec. 1859(b)(6))conditions (SSA, Sec. 1859(b)(6))– SNPs are SNPs are Medicare Medicare plans and cover only Medicare plans and cover only Medicare

servicesservices– Can contract with Medicaid to cover Medicaid services Can contract with Medicaid to cover Medicaid services

for dualsfor duals

276 SNPs approved by CMS for 2006276 SNPs approved by CMS for 2006– 226 for dual eligibles226 for dual eligibles– 37 for those in institutions37 for those in institutions– 13 for those with chronic conditions13 for those with chronic conditions

42 states, DC, and PR have approved SNPs42 states, DC, and PR have approved SNPs– Most have little enrollment unless duals were “passively Most have little enrollment unless duals were “passively

enrolled” from existing Medicaid managed care plansenrolled” from existing Medicaid managed care plans

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SNP Enrollment Challenges

As of June 11, 2006, 6.1 million of 6.5 million full dual As of June 11, 2006, 6.1 million of 6.5 million full dual eligibles were enrolled in PDPseligibles were enrolled in PDPs– Receive Rx drugs and other Medicare benefits on Receive Rx drugs and other Medicare benefits on

a fee-for-service (FFS) basisa fee-for-service (FFS) basis– About 500,000 are in Medicare managed care About 500,000 are in Medicare managed care

plans, including SNPsplans, including SNPs

How can SNPs identify duals in PDPs, market to How can SNPs identify duals in PDPs, market to them, and enroll them?them, and enroll them?– States can help, but SNPs need to offer benefits States can help, but SNPs need to offer benefits

and services for duals beyond what they can get and services for duals beyond what they can get in Medicare FFSin Medicare FFS

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Options for Building SNP Enrollment

Some SNPs have benefitted from passive enrollment from Some SNPs have benefitted from passive enrollment from Medicaid managed care plansMedicaid managed care plans– Based on press accounts, about 200,000 duals in about a Based on press accounts, about 200,000 duals in about a

dozen states were passively enrolled in SNPs in 2005-dozen states were passively enrolled in SNPs in 2005-20062006

About 100,000 in PA, with most of the rest in AZ, CA, MA, MN, NY, TX, WIAbout 100,000 in PA, with most of the rest in AZ, CA, MA, MN, NY, TX, WI One-time eventOne-time event

Companies that own both SNPs and PDPs in the same Companies that own both SNPs and PDPs in the same geographic area have contact info for duals in their PDPs geographic area have contact info for duals in their PDPs (e.g., United, Humana, WellCare)(e.g., United, Humana, WellCare)

SNPs can work through physicians, clinics, community SNPs can work through physicians, clinics, community organizations, nursing facilitiesorganizations, nursing facilities

States can send mailings to duals in PDPs informing them States can send mailings to duals in PDPs informing them of SNPs and other optionsof SNPs and other options

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SNPs and States

SNPs that offer only Medicare benefits may have difficulty SNPs that offer only Medicare benefits may have difficulty demonstrating that they are adding value beyond what a demonstrating that they are adding value beyond what a standard Medicare managed care plan can offerstandard Medicare managed care plan can offer– Disease management and coordination of Medicare Disease management and coordination of Medicare

benefits is common in Medicare managed care plansbenefits is common in Medicare managed care plans

Partnering with states to cover Medicaid benefits is an Partnering with states to cover Medicaid benefits is an opportunity for SNPS to add value for dual eligible opportunity for SNPS to add value for dual eligible beneficiaries and statesbeneficiaries and states– Including only Medicaid acute care benefits (dental, Including only Medicaid acute care benefits (dental,

vision, transportation) adds limited valuevision, transportation) adds limited value– Real opportunity is in adding Medicaid long-term care Real opportunity is in adding Medicaid long-term care

(LTC) benefits(LTC) benefits Home- and community-based services (HCBS) and nursing facility Home- and community-based services (HCBS) and nursing facility

(NF) services(NF) services

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Medicaid Managed LTC

States offering or planning to offer managed LTC in States offering or planning to offer managed LTC in Medicaid are best prospects for partnership with SNPsMedicaid are best prospects for partnership with SNPs

AZ, FL, MA, MN, NY, TX, WI currently have managed AZ, FL, MA, MN, NY, TX, WI currently have managed LTC programsLTC programs– For details, see 11/05 AARP Issue Brief: For details, see 11/05 AARP Issue Brief:

http://assets.aarp.org/rgcenter/il/ib79_mmltc.pdfhttp://assets.aarp.org/rgcenter/il/ib79_mmltc.pdf

Center for Health Care Strategies (CHCS) has made Center for Health Care Strategies (CHCS) has made grants to five states to help them develop integrated grants to five states to help them develop integrated care programs (FL, MN, NM, NY, and WA) and is care programs (FL, MN, NM, NY, and WA) and is working with five others (AR, MD, MI, RI, and VA)working with five others (AR, MD, MI, RI, and VA)– For details, see For details, see http://www.chcs.org/info-url_nocat3961/info-http://www.chcs.org/info-url_nocat3961/info-

url_nocat_show.htm?doc_id=291739url_nocat_show.htm?doc_id=291739

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Challenges for States and SNPs

Working with conflicting Medicare and Medicaid Working with conflicting Medicare and Medicaid managed care rulesmanaged care rules– Rate setting and financingRate setting and financing– Marketing and enrollmentMarketing and enrollment– Complaints, grievances, and appealsComplaints, grievances, and appeals– Monitoring and reportingMonitoring and reporting

Setting capitated rates for NF and HCBS servicesSetting capitated rates for NF and HCBS services– Little experience in states or in MedicareLittle experience in states or in Medicare– Important to give incentives for more use of HCBSImportant to give incentives for more use of HCBS

Serving beneficiaries in NFs and HCBS settingsServing beneficiaries in NFs and HCBS settings– Most managed care plans have little experienceMost managed care plans have little experience– Evercare has extensive experience with NFs, but less Evercare has extensive experience with NFs, but less

with HCBSwith HCBS

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Conclusion

SNPs present a major opportunity to improve care for dual SNPs present a major opportunity to improve care for dual eligibles and other Medicare beneficiarieseligibles and other Medicare beneficiaries

Cooperation among states, SNPs, and CMS is needed to Cooperation among states, SNPs, and CMS is needed to achieve the full promise of SNPsachieve the full promise of SNPs

CHCS and others are working to help facilitate this CHCS and others are working to help facilitate this cooperationcooperation

Mathematica is preparing congressionally mandated Mathematica is preparing congressionally mandated evaluation of SNPs for CMSevaluation of SNPs for CMS– Due to Congress by December 31, 2007Due to Congress by December 31, 2007

Mathematica report for MedPAC on site visits to SNPs in Mathematica report for MedPAC on site visits to SNPs in Boston, Phoenix, and Miami is on MedPAC web site Boston, Phoenix, and Miami is on MedPAC web site (http://www.medpac.gov/)(http://www.medpac.gov/)

STATE PERSPECTIVES ON STATE PERSPECTIVES ON IMPLEMENTATION OF MEDICARE IMPLEMENTATION OF MEDICARE

PART D:PART D:COMMENTS COMMENTS

James M. VerdierJames M. VerdierMathematica Policy Research, Inc.Mathematica Policy Research, Inc.

AcademyHealth Annual Research MeetingAcademyHealth Annual Research MeetingSeattle, WASeattle, WA

June 27, 2006June 27, 2006

12

Issues Facing States

Medicaid agenciesMedicaid agencies– How to manage Medicaid Rx benefit for non-duals?How to manage Medicaid Rx benefit for non-duals?

50% of Medicaid Rx spending was for duals50% of Medicaid Rx spending was for duals Rebates from drug companies will be smallerRebates from drug companies will be smaller Beneficiary cost sharing can be higher (2005 Deficit Beneficiary cost sharing can be higher (2005 Deficit

Reduction Act)Reduction Act)– How to manage long-term care for duals in absence of How to manage long-term care for duals in absence of

data on Rx drug use?data on Rx drug use?

SPAPsSPAPs– Continue with SPAP?Continue with SPAP?

How much value does SPAP add after Part D?How much value does SPAP add after Part D?– Continue to use SPAP to wrap around Part D?Continue to use SPAP to wrap around Part D?

How to minimize administrative burden of coordinating How to minimize administrative burden of coordinating with Part D plans?with Part D plans?

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Issues Facing Part D Plans and States

What can states learn from Part D plans about What can states learn from Part D plans about managing Rx benefits?managing Rx benefits?

How will Part D plans deal with dual eligibles?How will Part D plans deal with dual eligibles?

Part D plans need to structure premiums, cost Part D plans need to structure premiums, cost sharing, formularies, and overall benefit package to sharing, formularies, and overall benefit package to maximize enrollment, revenue, and profitmaximize enrollment, revenue, and profit– Beneficiaries prefer low/no premiums, no Beneficiaries prefer low/no premiums, no

deductibles, co-pays rather than co-insurance, deductibles, co-pays rather than co-insurance, broad formularies, few up-front limits on broad formularies, few up-front limits on utilizationutilization

Part D plans that structure benefit this way are Part D plans that structure benefit this way are getting high enrollment, but how are they going getting high enrollment, but how are they going to make money?to make money?

What happens if they don’t?What happens if they don’t?

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Issues Facing Part D Plans and States (Cont.)

How to coordinate Rx coverage with other enrollee How to coordinate Rx coverage with other enrollee health care?health care?– Significant issue for stand-alone PDPsSignificant issue for stand-alone PDPs

Share Rx data with physicians, hospitals, Share Rx data with physicians, hospitals, nursing facilities, states?nursing facilities, states?

Part D Medication Therapy Management Part D Medication Therapy Management requirementsrequirements

– MA-PDs can coordinate all Medicare services, but MA-PDs can coordinate all Medicare services, but not Medicaid services for duals unless they not Medicaid services for duals unless they become SNPs and contract with statesbecome SNPs and contract with states