Training and Advocacy Support Center

June 2005  Q and A[1]

 

Manjusha P. Kulkarni, Staff Attorney, National Health Law Program

 

 

Question:       My client is a child who is enrolled in Medicaid and Medicare.  She regularly receives kidney dialysis, which is covered by Medicare.  What impact will Medicare Part D benefits have on prescription drugs she currently takes, which are covered by Medicaid and EPSDT?

 

Answer:         Beginning January 1, 2006, your client will no longer obtain prescription

drugs through her Medicaid coverage.  Instead, she will receive her medications from Medicare Part D.  Her Medicare Part D plan should cover all medically necessary prescription drugs, other than those explicitly excluded from the Part D benefit.  However, the plan=s formulary may not cover your client=s drugs, as the plan is required to cover only two drugs in each therapeutic class.  For that reason, advocate assistance will be critical in enabling your client to obtain the medications she needs.

 

 

Background

 

Medicare Coverage of Kidney Dialysis

 

Medicare is a federal program that provides health care coverage to senior citizens and individuals with disabilities.  Additionally, Medicare covers individuals with End Stage Renal Disease (ESRD), which is permanent kidney failure requiring dialysis or kidney transplantation.[2]  For those with ESRD, Medicare provides coverage of inpatient dialysis treatments as well as  coverage of outpatient dialysis treatments, home dialysis treatments, doctors= services, self-dialysis training and certain home supportive services.  Inpatient services are generally covered through Part A, Medicare=s hospital insurance, and outpatient services are provided through Part B, its medical insurance.[3]  While many individuals with ESRD do not have to pay a premium for Part A, they do have to pay a Part B premium.[4]  Medicare beneficiaries who also have private insurance or Medicaid coverage can have either coverage pay their Part B premiums.[5]  Beneficiaries with ESRD who enroll in Medicare Parts A and B are entitled to the current full Medicare benefits.[6]

 

Medicaid and EPSDT

 

The Medicaid program is a cooperative state‑federal program that covers health care for categories of low-income individuals.  All Medicaid beneficiaries under the age of 21 are entitled to receive Early and Periodic, Screening, Diagnostic and Treatment (EPSDT).[7]  In addition to providing comprehensive screening services, EPSDT provides coverage of diagnostic and treatment services for any diseases or conditions children may have.[8]  Its treatment mandate is broad. The Medicaid Act explicitly requires that states provide through EPSDT  Anecessary health care, diagnostic services, treatment, and other measures . . . to correct or ameliorate defects and physical and mental illnesses and conditions discovered by the screening services, whether or not such services are covered under the State plan.@[9]  This means that children with ESRD needing prescription drugs and other optional services can obtain them through Medicaid even if their state does not cover the benefits for adult beneficiaries.

 

Coverage of Prescription Drugs Through Medicare Part D

 

Beginning January 1, 2006, Medicare will provide payment for outpatient prescription drugs through private plans.  Authorization for this change came from the Medicare Prescription Drug Improvement and Modernization Act of 2003.[10]  As a result of the enactment of the Medicare Modernization Act (MMA), six million seniors and individuals with disabilities who are dually eligible for Medicare and Medicaid benefits will now obtain prescription drug coverage through Medicare.  While initiating a prescription drug benefit under Medicare, the law will also terminate federal funding of Medicaid prescription drug coverage for drugs available to all dual eligibles under Medicare.[11] 

 

Medicare Part D, as the prescription drug benefit is called, will provide coverage of medications through prescription drug plans.  Plans will determine what drugs to cover and will have broad flexibility, beyond certain federal requirements and guidance, to choose which drugs to include in their formularies.[12]  Furthermore, plans can limit the number of drugs available in a therapeutic class to two and may even define what constitutes a therapeutic class for purposes of developing their formularies.[13]

 

While Medicare Part D will provide Medicare coverage of prescription drugs for the first time in the history of the program, most beneficiaries will have significant new cost-sharing obligations.  Dual eligibles and other low-income Medicare beneficiaries may obtain subsidies to pay much of the costs.  Dual eligibles should be deemed eligible for the low-income subsidy without having to independently apply.

 

Analysis

 

Since enactment of MMA, Medicaid advocates have expressed concern about Medicare Part D because it terminates Medicaid coverage of prescription drugs for dual eligibles.  Currently, they have full access to prescription drugs under Medicaid and encounter minimal cost-sharing, in the form of Anominal@ copayments.[14]  Because dual eligibles will be restricted to Medicare Part D drug benefits, they will face plan limitations in coverage of certain drugs as well as the possibility of significant new cost-sharing obligations.  While all Medicare beneficiaries will be impacted by these elements of Part D, dual eligibles are likely to experience a more severe impact due to the fact that they often have more significant health care needs than other Medicare beneficiaries and generally possess lower incomes and fewer assets.

 

CMS= Position on Prescription Drug Coverage for Dually Eligible Children

 

Like other dual eligibles, children enrolled in Medicare and Medicaid may experience some negative consequences as a result of the implementation of Medicare Part D.  However, unlike adults enrolled in Medicare and Medicaid whose Medicaid benefits are sometimes limited, children on Medicaid are entitled to comprehensive treatment services through EPSDT.  This includes prescription drugs, which states may limit or deny coverage of for adults.  Medicare Part D benefits provide no such protection for children with disabilities or ESRD against plan-imposed drug limits or exclusions.

 

Because of the limitations of Medicare Part D, advocates have been inquiring about the possibility of continued Medicaid and EPSDT coverage of prescription drugs for Medicaid-enrolled children.  Recently, Centers for Medicare and Medicaid Services (CMS) addressed the issue of Medicare Part D coverage for dually eligible children.  According to CMS,

 

Medicaid, including its EPSDT benefit, will not pay for drugs which

could be covered under Medicare Part D, for full-benefit dual eligible

children.  This will be the case regardless of whether these drugs are

covered under the plan=s Part D formulary.[15]    

 

The explicit prohibition in the MMA applies to not only the drugs included in a Part D plan=s formulary, but also any drug that could be covered under Part D.[16]  This means that Medicaid-enrolled children cannot obtain their prescription drugs in Medicaid if their Medicare Part D plan could cover it, but chooses not to do so.

 

As discussed above, Part D plans have broad flexibility in establishing their formularies and can  limit the prescription drugs they cover.  They are also allowed to exclude coverage of certain classes of drugs by Part D.[17]  Plans are, however, required to cover at least two drugs in each therapeutic class and can be made to cover non-formulary drugs that are medically necessary for their Medicare members through the appeals process.[18]  Whatever drugs they cover, all plans must set up a transition plan for new enrollees, including dual eligibles, who are currently taking Medicaid covered drugs.  For dual eligibles, states can continue coverage of excluded drugs with federal matching funds.[19]

 

Advocacy Tips

 

As the start date for Medicare prescription drug coverage quickly approaches, advocates must work diligently to inform their dual eligible clients of upcoming changes.  Beneficiary outreach is crucial for enabling clients to obtain their prescription drugs through Part D.  Children who previously obtained comprehensive prescription drug coverage through Medicaid and EPSDT may now be enrolled in plans that do not include their needed medications in the formulary. Advocates and their client=s family must determine if plan-covered drugs in the same therapeutic class as the ones needed by the client are sufficient to meet her needs.  If not, advocates can help these children seek plan coverage of specific, non-formulary drugs by arguing that they are medically necessary.  Otherwise, advocates can assist children in switching to another plan that does provide coverage of the specific drugs they need. 

 

If the drug is among a class of medications that may be excluded by Part D plans, advocates can encourage their states to provide continuing coverage.  Wraparound coverage may be critical for ensuring children=s health, in particular, because a number of drugs children need, such as prescription vitamins, drugs to treat anorexia, weight loss or weight gain, and barbiturates and  benzodiazepines for anxiety, tension, sleep and epilepsy disorders, can be excluded by Part D plans.  For excluded classes of drugs, states can and should establish wraparound programs with federal matching funds; states should also create wraparound programs that cover individual drugs not listed in plan formularies, though they will be limited to state-only dollars. 

 

Advocates should not, however, encourage dual eligible clients to disenroll from Medicare in an effort to continue obtaining Medicaid coverage of prescription drugs.  The MMA prevents Medicaid from covering prescription drugs that can be covered by Medicare Part D.  This applies to those who are eligible for Part D as well as those who actually enroll in it.[20]  Individuals are deemed eligible for Part D if they are entitled to Medicare benefits under Part A or enrolled in Medicare Part B.[21]   Children with ESRD and many of those with disabilities may be considered Aentitled to Part A benefits@ whether they enroll in Medicare or not. So, while a child may disenroll from Medicare or Medicare Part D,[22] doing so would essentially leave her without prescription drug coverage.

 

Whatever assistance advocates provide, they must begin planning now for the January 1, 2006 launch of Medicare prescription drug coverage.  Below is a list of advocacy resources for those who plan to participate in this important undertaking.

 

Advocacy Resources on Interaction of Medicare Part D and Medicaid

 

$                   National Health Law Program

www.healthlaw.org

 

$                   Center for Medicare Advocacy, Inc.

www.medicareadvocacy.org

 

$                   National Senior Citizens Law Center

www.nsclc.org

 

$                   Kaiser Family Foundation

www.kff.org/medicare/

 

$                   Families USA

www.familiesusa.org

 

$                   Centers for Medicare and Medicaid Services

www.cms.hhs.gov/medicarereform/

 

 

 

 


[1]  Produced by the National Health Law Program with a grant from the Training Advocacy Support Center (TASC) at the National Association of Protection and Advocacy Systems, Inc. Support for the development of this document comes from a federal interagency contract with the Administration on Developmental Disability (ADD), the Center for Mental Health Services (CMHS), and the Rehabilitation Services Administration (RSA).  Assistance was provided by Randy Boyle and Sarah Cox of the National Health Law Program and Patricia  Nemore and Vicki Gottlich of the  Center for Medicare Advocacy.

[2]  42 C.F.R. ' 406.13.  See  Health Care Financing Administration, U.S. Department of Health and Human Services, Medicare Coverage of Kidney Dialysis and Kidney Transplant Services, No. HCFA- 10128, 6 (June 2001)(available at www.medicare.gov/publications/pubs/pdf/esrdcoverage.pdf.  The federal regulations define Aend stage renal disease@ as Athat stage of kidney impairment that appears irreversible and permanent and requires a regular course of dialysis or kidney transplantation to maintain life.@  See 42 C.F.R. ' 405.2102.

[3]  42 C.F.R. '' 406.13, 410.3.

[4]  42. C.F.R. '' 406.12, 406.13.  Individuals with ESRD do not have to pay a premium for Part A if they are getting or are eligible for Social Security or Railroad Retirement benefits, they have worked the required amount of time under Social Security, the Railroad Retirement Board or as a government employee, or their spouse or parent either worked the required amount of time to be eligible for Medicare or is receiving Social Security or Railroad Retirement benefits.  See also  Health Care Financing Administration, U.S. Department of Health and Human Services, Medicare Coverage of Kidney Dialysis and Kidney Transplant Services, No. HCFA- 10128 at 9.

[5]  42. C.F.R. '' 407.40, 408.80.

[6]  Center for Medicare Advocacy, Medicare Coverage for People with End Stage Renal Disease, Healthcare Rights Review, Vol. V, No. 2, 1 (August 2004).

[7]  See 42 U.S.C. '' 1396a(a)(43), d(a)(4)(B); 42 C.F.R. ' 440.40(b). 

[8]  For more information about EPSDT, see Jane Perkins and Sarah Somers, Toward A Healthy Future:  Medicaid Early and Periodic Screening, Diagnostic and Treatment Services For Poor Children and Youth, National Health Law Program (April 2003).

[9]  See 42 U.S.C. ' 1396d(r)(5);  42 C.F.R. ' 440.40(b)(2).

[10]  See 42 U.S.C. ' 1395w-101 et seq.

[11]  42 C.F.R. ' 423.906.

[12]  42 U.S.C. ' 1395w-102; 42 C.F.R. ' 423.104.

[13]  Id.

[14]  See 42 C.F.R. ' 447.53.

[15]  Email response from MMA_STATES@LIST.NIH.GOV on behalf of CMS MMA_States to Patricia Nemore, Center for Medicare Advocacy.  In the response, CMS stated that the Q&A will also posted on the MMA Q&A database soon (see http://www.cms.hhs.gov/medicarereform/medicarereformfaqs.asp).

[16]  See 42 U.S.C. ' 1395w-102(e).  See also 42 C.F.R. ' 423.100.

[17]  42 U.S.C. '1396r-8(d)(2).  The following drugs or classes of drugs, or their medical uses, may be excluded from coverage or otherwise restricted:

(A) Agents used for anorexia, weight loss or weight gain.

(B) Agents used to promote fertility.

(C) Agents when used for cosmetic purposes or hair growth.

(D) Agents when used for the symptomatic relief of cough and colds.

(E) Agents when used to promote smoking cessation.

(F) Prescription vitamins and mineral products, except prenatal vitamins and fluoride preparations.

(G) Nonprescription drugs.

(H) Covered outpatient drugs which the manufacturer seeks to require as a condition of sale that associated tests or monitoring services be purchased exclusively from the manufacturer or its designee.

(I) Barbiturates.

(J) Benzodiazepines.

[18]  See 42 C.F.R. ' 423.600(c).

[19]  42 U.S.C. ' 1396u-3(d)(2).

[20]  See 42 C.F.R. ' 423.906(b).  A Afull-benefit dual eligible@ is defined as an individual who qualifies for Medicaid and is eligible for Part D.  42 C.F.R. ' 423.34.

[21]  42 C.F.R. ' 423.30.

[22]  See 42 C.F.R. ' 423.34(e).  See also Duke Univ. Med. Ctr. v. Bruton, 516 S.E.2d 633 (N.C.Ct.App. 1999)(holding that Medicaid cannot require Medicare enrollment as a condition of eligibility).