Medicare Prescription Drug,
Improvement, and Modernization Act of 2003

Background on Prescription Drug Coverage for Older Adults
& People with Disabilities in Illinois

1.6 million Illinoisans served by Medicare (38 million nationally)

1/3 of the 38 million do not have prescription drug coverage

370,000 Illinoisans age 65 or older use Senior Care (Drug Waiver program)

60,000 Illinoisans age 65 or older or with disabilities receive Pharmaceutical Assistance

Prescription Drug Coverage

The Act creates a new Part D for prescription drug coverage.
The coverage starts effective January 1, 2006.

Who is Covered:

Persons who are entitled to benefits under Medicare Part A or enrolled in Medicare Part B are eligible for prescription drug coverage under Part D.

This includes both persons who are age 65 or older and persons who are disabled who receive Social Security benefits and it includes persons who have purchased Medicare Part B coverage or had Medicare Part B coverage purchased for them by a state Medicaid program.

What Do People Get Under the Prescription Drug Benefit

Starting June 1, 2004, people can apply for a discount drug card.

Starting January 1, 2006, people can enroll in prescription drug coverage under Part C or Part D.


Discount Card Program

Voluntary program (6/2004 – 12/2005)

Excludes individuals enrolled in Medicaid and SeniorCare, but not persons enrolled in Pharmaceutical Assistance

Vendors or "Sponsors" may charge an enrollment fee of no more than $30/year

Low-income beneficiaries receive $600 credit for use

Discount Card sponsors can limit drug formulary and change it at any time

Discount Card sponsor is required to provide at least one drug in each of the 209 therapeutic categories

Estimated savings of 10-25% on many drugs

Discount Card vs. SeniorCare and Pharmaceutical Assistance

Medicare Discount Card for Medicare beneficiaries (both 65 and older and persons with disabilities) with income at or less than 135%of FPL except dual eligibles (full Medicaid and Medicare) No fee for persons less than 135% of FPL; no more than $30 per year for persons above 135% of FPL $600 credit for persons at or less than 135% of FPL; drug costs reduced by discount as negotiated by discount card sponsor Set by discount card sponsor—must include at least one drug in each of the 209 therapeutic categories set by Centers for Medicare and Medicaid Services

SeniorCare for Persons 65 years and older with income at or less than 200% of FPL.  No enrollment fee.  For persons at or less than 100% of FPL, no copays on 1st $1750 of medications and 20% of costs thereafter.  For persons from 100% to 200% of FPL, copays of $1 (generic) and $4 (name brand) on 1st $1750 of medications and $1/$4 copay and 20% of costs thereafter. Current Medicaid drug formulary


Pharmaceutical Assistance Persons 65 years and older with incomes from 200-250% of FPL and persons with disabilities up to 250% of FPL who are not eligible for Medicaid or SeniorCare For persons up to 100% of FPL, $5 yearly.  For persons from 100-250% of FPL, $25 yearly. For persons up to 100% of FPL, no copay for 1st $2000 of medications in year and 20%of costs thereafter.  For persons from 100-250% of FPL, $3 copay for 1st $2000 of medications in year and 20% plus $3 copay thereafter Formulary set by Illinois Department of Revenue


Part D Prescription Drug Coverage (starting January 1, 2006)

Voluntary drug benefits administered through drug-only plans (Prescription Drug Plan ) or integrated plans that provide a full set of Medicare benefits (Medicare Advantage)

Premium and cost-sharing subsidies for low-income beneficiaries

Medicare beneficiaries with full Medicaid (dual eligibles) must get benefits through Medicare, not Medicaid, starting January 1, 2006

New law estimated at $395 billion over 10 years when bill was passed by Congress in December 2003; now has been revealed that CMS believed costs will be $500-$600 billion over ten years.

What Prescription Drugs are Covered

Prescription Drug Plans (PDPs) have broad flexibility to determine the drug formulary.

Authorized to limit, to two, the number of drugs that they cover in any given therapeutic class.

PDPs decide what constitutes a therapeutic class for purposes of complying with this requirement.

Who Provides the Benefits

The Act requires that each beneficiary has a choice of at least two qualifying plans in the area where that person lives. At least one of the plans must be a prescription drug plan (PDP).

Monthly Premiums

Premiums will average $35 per month.

Cost-Sharing Provisions

See attached table on next page

Example of How Part D Works

Assume Mr. Potter has income of $1,200 a month and $300 monthly drug costs
for a total of $3600 per year.

Mr. Potter pays first $250 and $500 (one-quarter of next $2000) and all of next $1350 for a total of $2,100

Part D pays $1500.

How Part D Impacts Low-Income Medicare
 Beneficiaries in Illinois

Dual eligibles are Medicare beneficiaries who are also enrolled in Medicaid

As of January 1, 2006, dual eligibles can enroll in Medicare Part D plans

Drug coverage through Medicaid ends

Unclear whether this applies to SeniorCare

Low-Income Subsidy

Individuals < 135% of poverty with assets <$6,000 per individual or $9,000 per couple

                –No premium if selected average or lower cost plan
                –No deductible
                –Indexed cost-sharing: $2 per generic / $5 per brand-name

Individuals from 135% to 150% of poverty with assets below $10,000 per individual / $20,000 per couple (or below 135% with higher assets)

                –Sliding scale premium assistance
                –$50 deductible
                –15% co-insurance to catastrophic limit
                –$2 per generic / $5 per brand-name above catastrophic limit $5,100

Apply at SSA or State Medicaid offices; the state will screen and enroll applicants for Medicaid, if eligible

Issues for Illinois Low-Income Medicare Beneficiaries

Medicare Part D benefits are not as comprehensive as those provided by SeniorCare

Medicare Part D is voluntary. To get the benefits, the person must choose a plan and enroll.

Many dual eligibles may find it hard to enroll and make a choice about which plan to choose.

State cannot offer wraparound medication coverage to cover costs of drugs from $2250 to $5100.


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