PLEASE CIRCULATE

February 16, 2006

California Low-Income Health Advocate Alert

On Medicare Part D

Medicare Part D, the new prescription drug benefit is a complex, confusing, health crisis for dual eligibles (those on Medicare and Medi-Cal). Dual eligibles lost Medi-Cal coverage of virtually all prescription drugs starting January 1, 2006. This Alert informs California advocates of the latest developments.

State Update

California Extends Emergency Coverage for Dual Eligibles

The state funded emergency drug coverage for dual eligibles having difficulty obtaining their drugs through Part D was extended with passage of SB1233, signed by Governor Schwarzenegger on February 9, 2006. The Governor has used his discretion under the bill to extend this emergency coverage through March 17, 2006. The bill authorizes the Governor to further extend the emergency coverage in increments up to 30 days, but not beyond May 16, 2006.

Emergency drug benefits are only available when:

n a claim submitted to a Part D plan by the pharmacy has been denied payment for reasons other than processing errors or omissions made by the pharmacy, lack of medical necessity or health and safety reasons;

n the pharmacy is unable to submit a claim solely due to unavailable or incomplete Part D enrollment information (including through the E1 eligibility transaction and information from CMS, CMS contractors, and Part D plans); or

n The Part D plan provides information that the dual eligible's deductible or co-payment amount is higher than the $1 to $5 range under the Low-Income Subsidy (LIS).

For the latest Medi-Cal provider bulletin with detailed instructions (dated February 10, 2006), see the Medi-Cal website at www.medi-cal.ca.gov

Please distribute this information to advocates, clients, health care providers and pharmacists.

Relief is Temporary

As reported in the last Issue Alert, this relief for dual eligibles is only temporary, and further assistance will be needed in order to address ongoing, long-term problems for dual eligibles forced to enroll in Part D plans. According to the Department of Health Services (DHS), an estimated 10,000 people in California will be become dually eligible every month; problems will persist for both new and current dual eligibles.

Feds Lower State Clawback Payment

On February 9, 2006, the federal Department of Health and Human Services announced that California will send $113.2 million less to the federal government in 2006 in clawback payments (aka "state phase-down contributions") "because lower drug costs and strong competition have reduced the price tag for Medicare's new drug coverage" (See HHS press releases at http://www.hhs.gov.news ). In a press release issued the same day, Governor Schwarzenegger stated: "Instead of penalizing California at a cost of more than $77 million to implement the Medicare prescription drug program for our low-income seniors and persons with disabilities, California will now save $43 million more than if Medi-Cal continued to provide medication for these vulnerable Californians." (See press release at: http://www.governor.ca.gov/state/govsite/gov_htmldisplay.jsp?BV_SessionID=@@@@0274195009.1139939314@@@@&BV_EngineID=cccgaddgmilgfiecfngcfkmdffidfng.0&sCatTitle=Press+Release&sFilePath=/govsite/press_release/2006_02/20060209_GAAS09106_Medicare_Drugs.html&sTitle=Statement+by+Governor+Schwarzenegger+on+Federal+Recalculation+of+California's+Costs+for+Medicare+Prescription+Drug+Program&iOID=73953 ) It is unclear whether the state will continue with a planned lawsuit against the federal government concerning clawback payments.

Department of Insurance Issues Notice to Life Insurers and Life Agents re: Unlawful Sales Practices Pertaining to Medicare Part D and Annuities for Seniors

In a Notice dated November 18, 2005, California Insurance Commissioner John Garamendi described the application of state laws to marketing and sales practices involving Part D benefits by "insurers and agents." See: http://www.insurance.ca.gov/0200-industry/0200-prod-licensing/0400-other-info/0200-prod-notice-archive/upload/notice-on-annuity-and-part-d-sales2.pdf

Federal Update

CMS Response to Problems

The Centers for Medicare and Medicaid Services (CMS) continues to issue belated recommendations to Part D plans in an attempt to try to resolve ongoing access issues faced by Part D enrollees - particularly dual eligibles.

Transition Plans and "First Fills"

As reported in the last Issue Alert, many Part D enrollees are having problems accessing "first fills" of drugs not covered by their Part D plans, as part of each plan's transition process.

On February 2, 2006, CMS issued a memo to Part D plans entitled "Extension of Transition Period to March 31" in which CMS Administrator McClellan calls "for a one-time across the board extension of the transition period to March 31 for those individuals who were enrolled in the first few months of the program." For individuals who enrolled in plans on January 1, 2006, this CMS request might lead to a 90 day transition period. For individuals "who enroll on March 1 or thereafter, the 30-day transition policy remains in place." Part D plans were required to respond to CMS by 2/6/06 concerning their "intention to implement this transition policy." See the memo on the Health Assistance Partnership website at: http://www.healthassistancepartnership.org/assets/pdfs/Transition-Extension2-_2.pdf

CMS Requests Part D Plans to Extend Billing Limit Time Periods

In a memo to Part D sponsors dated February 7, 2006, CMS notes that pharmacists attempting to bill or resubmit claims to Part D plans are "encountering a 30 day billing limit placed by the Part D plan." In response, CMS requests that "plans not implement 30-day billing limits placed on pharmacists and beneficiaries. Instead, these edits should be relaxed to allow pharmacists to bill Part D plans for claims that are as old as 90 days. In addition, beneficiaries should have 90 days in which to provide documentation to the plan for any incorrect payments they may have made." See the memo on the Health Assistance Partnership website at:

http://www.healthassistancepartnership.org/assets/pdfs/02-07-06_30DayBillingLimit.pdf

CMS Releases "Model Form" for Requesting Coverage Determinations

CMS has released a model form entitled "Request for a Medicare Prescription Drug Coverage Determination" that is "intended to provide basic information to enrollees on how to ask for a coverage determination from a Medicare drug plan." CMS stresses that the use of this model form is optional and both the format and content of the model form can be changed. Part D plans are not required to accept this form; if they do choose to use this form, they "may require additional information or documentation to support the enrollee's request."

See following link at CMS website, under "Downloads"

http://www.cms.hhs.gov/PrescriptionDrugCovGenIn/04_Formulary.asp#TopOfPage

While advocates feel that this is a step in the right direction, beneficiaries and those that assist them (advocates and providers) would be better served by a truly standardized, uniform exception and appeals form that can be used by all beneficiaries for all plans. (As reported in the New York Times on February 14, 2006, one plan has 39 different forms for doctors to use when prescribing certain drugs.)

Sec. Leavitt issues a One Month Progress Report on Part D

On February 1, 2006, DHHS Secretary Leavitt issued a progress report on Medicare Part D, outlining "progress" as well as "unexpected problems" and Action Steps to address these problems. For a copy of the Report, go to the Health Assistance Partnership website at: http://www.healthassistancepartnership.org/assets/pdfs/Extended-Transition.pdf

Office of Inspector General (OIG) Issues Report on Dual Eligibles and Part D Formularies

In January 2006, OIG issued a report evaluating whether Part D plans into which dual eligibles were automatically enrolled covered the 200 prescription drugs that were most frequently used by the dual eligible population in the first two quarters of 2005. See OIG report, Dual Eligibles' Transition: Part D Formularies' Inclusion of Commonly Used Drugs OEI-05-06-00090 (Jan. 2006) http://www.oig.hhs.gov/oei/reports/oei-05-06-00090.pdf

For a summary of the OIG report findings, see the Center for Medicare Advocacy's February 9, 2006 Weekly Alert entitled Part D Formularies Fail to Cover Many Prescription Drugs Taken by Dual-Eligible Beneficiaries at:

http://www.medicareadvocacy.org/PartD_PartDFormularies.htm

Keep Those Stories Coming

The adverse publicity regarding the problems that the dual eligibles are facing is helping to get the changes we need at the state and federal levels. California's bail out will last, at most, until May 17, 2006. We need to keep our client stories in the press to get more permanent relief. Please help us by identifying clients or their family members who are willing and able to talk to the press. Send stories and contacts to jfinberg@nsclc.org or oakland@nsclc.org.

More information about Medicare Part D is posted on www.calmedicare.org, and on main page and California page of the NSCLC website, which you can view at www.nsclc.org. We will continually post new training materials as this program develops. Other helpful websites: Center for Medicare Advocacy at www.medicareadvocacy.org; Health Consumer Alliance at www.healthconsumer.org; Families USA at www.familiesusa.org; Medicare Rights Center at www.medicarerights.org; California Health Advocates at www.cahealthadvocates.org; California HealthCare Foundation at www.chcf.org/topics/healthinsurance/drugbenefit; Health Assistance Partnership at www.healthassistancepartnership.org; and Kaiser Family Foundation at www.kff.org/medicare.

More information on Medicare Part D, including past Alerts, can be found at the www.nsclc.org website, and at www.cahealthadvocates.org/cmc/index.html.

For more information call or email NSCLC or CHA:

National Senior Citizens Law Center

Jeanne Finberg

jfinberg@nsclc.org

Katharine Hsiao

khsiao@nsclc.org

California Health Advocates

David Lipschutz

dlipschutz@cahealthadvocates.org