Medicare Part D: early experiences.

Medicare Part D: An LTC Update

The worry, the hand-wringing, the scramble to figure it out is over. Medicare Part D roared into the healthcare world on January 1, 2006, and changed forever the way prescription drugs would be paid for on behalf of Medicare and Medicaid beneficiaries. "This is the biggest change in the provision of healthcare since Medicare started," says Jeannine Powell, PhD, CPG, director of pharmacy services for Golden Gate National Senior Care (formerly Beverly Enterprises).

[ILLUSTRATION OMITTED]

There are still a few kinks, but Part D is now on its shakedown cruise. So how is it working, particularly for nursing homes and their residents? "I liken the arrival of Medicare Part D to the Y2K scare," says Darren Trisel, administrator of Asian Community Nursing Home in Sacramento, California. "We heard all this hubbub of how terrible it was going to be, but on the nursing home end, I think we've escaped the turmoil more than anyone else."

Before implementation and after, CMS has worked closely with pharmacies, facilities, and healthcare associations, such as the American Association of Homes and Services for the Aging (AAHSA) and the American Health Care Association (AHCA). "We established an open dialogue with CMS to identify any areas of concern and work with them to correct any problems," says Susan Feeney, senior director of public affairs for AHCA. "CMS developed a number of tools to help facilities if they had questions. A lot has been ironed out and it seems to be going well."

That's not to say it's been easy, particularly for long-term care pharmacies, which have shouldered the largest burden of interaction with the various drug plans. Anything new requires work--education, planning, and detailed execution. And make no mistake, the work required to implement Part D was prodigious. But Part D hasn't turned out to be quite as harrowing for nursing homes as all the affected players anticipated.

The good news is that all parties involved--CMS, the healthcare associations, the long-term care pharmacies, and nursing homes--have worked to ensure that no resident would go without medication while the reimbursement details were being worked out.

Program Particulars (at the Moment)

Part D is still very much a work in progress, and both the legislature and CMS will undoubtedly continue to tinker with the mechanics. At press time, the Part D program looked like this:

* As of January 1, 2006, all Medicare beneficiaries had to be enrolled in a private prescription drug plan in order for their pharmaceutical needs to be reimbursed by Medicare.

* Beneficiaries in nursing homes who qualify for both Medicare and Medicaid (called dual eligibles) have their drug coverage switched from Medicaid to Medicare.

* CMS took bids from the private drug plans and benchmarked an average price for plans for various regions of the country. Any plans with bids at or below that benchmarked price are able to accept dual eligibles into their program.

* If dual eligibles did not choose a drug plan as of January 1, 2006, CMS randomly assigned them one of the benchmarked plans in their region. Because dual eligibles constitute the largest population in nursing homes, this limits the number of plans most nursing homes have to deal with.

* Individual PDPs can set their own formularies for the drugs they cover. They can also control utilization, such as imposing "step therapy" mandates (i.e., requiring the patient to try a cheaper drug and have it fail before authorizing a more expensive drug), prior physician authorization for certain drugs, and the substitution of generic drugs for brand names.

* Certain drugs important to long-term care residents are not covered by Part D, such as benzodiazepines, barbiturates, some medications used to treat seizures and mental health disorders, vitamins, and others. Legislative action may or may not change this in the future.

* Dual eligibles can switch plans at the beginning of any given month. (Others are required to wait until the annual open reenrollment period from November 15 to December 31.) CMS will recertify its benchmark for plans for dual eligibles during the next open enrollment period, which means that such plans may be added or dropped.

* Copays for dual eligibles are waived; however, a waiting period of up to one full calendar month is required. While there may have been some issues with this one-month waiting period extending to two months earlier in the year, CMS clarified the issue through guidance on April 19, 2006: "In the first partial month of admission (i.e. when an individual is admitted on any day other than the first of the month, from a community setting to a medical institution for the remainder of the month) the individual is not considered institutionalized for part D purposes. Effective the first day of the following month, if the individual is expected to remain throughout the month, assume the co-pay should be at the institutional level of $0."

Thus, while Medicare Part D remains a gigantic work in progress, with unanswered questions and possible pitfalls for the unwary, the program is off to a start and being implemented to the extent possible by resourceful long-term care facilities. Read on to see how these facilities are coping, and what big unanswered questions remained, at least as of midyear 2006.

How Do Long-Term Care Pharmacies Cope?

An interview with Tom Clark, director of policy and advocacy for the American Society of Consultant Pharmacists 

Much of the work of implementing Medicare Part D in nursing homes has fallen on long-term care (LTC) pharmacies. Pharmacists must verify the resident's coverage in a plan, compare prescribed drugs with those in the plan's formulary, suggest alternatives for drugs not in the formulary, obtain physician permission if required for certain drugs, and notify the nursing home of any problems. All of that is causing headaches for nursing home pharmacists, according to Tom Clark, director of policy and advocacy for the American Society of Consultant Pharmacists (ASCP). Although ASCP has been highly proactive in working with CMS to implement Medicare Part D, Clark notes, some basic questions remain unanswered. In an interview in April, Clark talked about the challenges facing LTC pharmacies and the nursing homes that rely on them.

How are LTC pharmacies dealing with the various plans and formularies?

Clark: Pharmacies have been working with nursing homes to identify residents who are on plans that do not meet their needs and then work with residents and family members to move people into plans that are more appropriate for the medications they use.

The initial round of CMS's formulary review for 2006, in our view, was not as thorough on the long-term care side. I think this was largely because of inexperience on the part of the managed care plans and CMS. We're hopeful and expecting that the 2007 formulary review will be more thorough in terms of looking at specific long-term care needs.

Has the relationship between the long-term care facility and its pharmacy changed?

Clark: The facility/LTC pharmacy relationship hasn't really changed, except that facilities are facing potentially more financial liability for these noncovered medications. Some facilities have been billed by their LTC pharmacies for drugs that the plans have refused to pay for. The facilities have a couple of options: They can try to collect from a family member of the resident or they can use the incurred medical expense deduction available in some states, which allows facilities to submit to Medicaid on behalf of dual-eligible beneficiaries claims for noncovered expenses. In these cases, facilities may be able to get reimbursement indirectly from Medicaid through the incurred medical expense deduction.

CMS allowed for a transition period for pharmacies and plans to make adjustments and work with Part D formularies. That transition period has ended. Has there been an increase in denials of drug coverage by plans since then?

Clark: Yes. Prescription plans are beginning to impose their formulary restrictions and prior authorization requirements, so more of these medication claims are not going through. One of our fairly large member pharmacies says [at press time] that it has seen a 10% increase in rejections of medication claims since the transition, which represents about 11% of its dollar volume.

What are the financial risks to facilities that could materialize under Part D?

Clark: During the transition period, most LTC pharmacies absorbed the cost of medications that were not covered by the resident's plan. As a result, LTC pharmacies have millions of dollars tied up in accounts receivable that they are working on trying to get covered. If they are unable to capture that reimbursement, they could very well forward the costs on to the nursing facility. Obviously pharmacies can't survive if they have to give away medication. Of course, by the same token, facilities can't survive if they have to pay substantial medication bills.

The fundamental flaw in all this is that nursing homes are legally required to give medication as ordered by a physician. But Part D plans are legally permitted to deny claims to cover the medication. So if the physician prescribes drug X and the Part D plan won't pay for it, and the resident doesn't have any money, who is supposed to pay for it? That is the big unanswered question. CMS has said it expects Part D plans to cover all "medically necessary" medications, but the Part D plan gets to decide what's medically necessary. So, if a surveyor goes into the nursing home and sees that a physician has ordered drug X for a patient and the facility hasn't provided it--for whatever reason--the facility is at risk for a survey deficiency. This is an example of the fundamental disconnect between Part D and long-term care reality.

What can facilities do to cope?

Clark: Be aware of Part D issues like these and advocate politically where possible. We are seeking legislative changes to make sure there is a mechanism to pay for these medications, and the need for political pressure to bring this about is intense.

Parker Jewish Institute Shows How

We have embraced Medicare Part D," says Michael N. Rosenblut, president and CEO of Parker Jewish Institute for Health Care and Rehabilitation, a 527-bed not-for-profit facility in New Hyde Park, New York. "Part D has been successfully implemented at Parker because we formed a multidisciplinary work group, composed of representatives from the finance, pharmacy, social work, and administration departments, who began preparing one full year in advance." The team met weekly to create spreadsheets of every resident and to plan its strategy.

The Part D team at Parker was a force to be reckoned with. "From day one of January 1, 2006, not only did all of our residents get the proper medications that they needed, but we were also able to successfully bill the prescription drug plans for those medications," says Rosenblut.

Last year, after assessing the viability of maintaining Parker's in-house pharmacy, CFO Mary Jane Gigatti began pursuing contracts with all the prescription drug plans (PDPs) that the Centers for Medicare & Medicaid Services (CMS) had benchmarked for dual-eligible beneficiaries, which make up 97% of Parker's long-term care residents. "We didn't want to be in the position of having to get residents reassigned to different PDPs to ensure they got their pharmaceuticals," she says. "We decided from the beginning to enter into contracts with all the PDPs."

The next task was to update computer software. "We needed point-of-service billing so we could bill like a retail pharmacy--submit a bill and get paid," says Chris Ferreri, associate vice-president of administration. Before Part D, Medicaid had included reimbursement for pharmaceuticals in its daily rate, but now the state had pulled that money out of it payments. "We had to tie our order process for dispensing medication, which had been a retrospective system, to a prospective system," says Ferreri. "That way we could bill as we were dispensing and get verification that we were getting paid."

The Parker team relied heavily on CMS for assistance in November and December. "The American Association of Homes and Services for the Aging (AAHSA) put us in touch with people at CMS, and we forwarded a roster of all our residents eligible for both Medicare and Medicaid," says Maribeth Lavin, PharmD, director of pharmacy. CMS then notified Parker as to which plan each resident was enrolled in. "On January 2, all we had to do was call the plan and secure the resident's identification numbers," says Lavin.

Although 15% of the residents had been missed by CMS, the Parker team was on top of that as well. "We had running spreadsheets on every resident, so we didn't have to guess who was missing a plan," says Lavin. "The team decided that if the resident wasn't enrolled for some reason, we would not withhold their medication." For those who didn't have a plan, the team worked with Parker's social workers to provide educational sessions on the 15 benchmarked plans at the residents' council, family council, and volunteer auxiliary meetings. "By the middle of January, all our residents were secured in a Part D plan," says Lavin.

A medical profile was run on patients as soon as confirmation of their enrollment in a plan was received. "Plan formularies were available online in November, so long before January 2, I checked each patient's medication list against the plan formulary, and the pharmacy was able to make medication changes when there was an accessible alternative, or we contacted the PDP requesting the prior authorization form so we could get it to the physician to complete," says Lavin. Because all pharmacists were educated to know which drugs would be "high alert" drugs, the team was able to get prior authorizations where needed. "Filling out the forms and getting the physician involved did take time," she adds. "But it was necessary. And with leadership from our medical director, it's been a very positive and workable situation."

The denials for payment that Parker has received have been minimal. "They are mostly on technicalities," says Rosenblut. "The pharmacy had a learning curve in terms of behaving more like a retail store than a long-term care pharmacy, so denials were more from a lack of practice and expertise. They were usually reversed."

All is going smoothly at Parker but, of course, new admissions keep arriving and when the reenrollment period arrives in November, there likely will be changes. Rosenblut says he's not worried. "Our operational team will stay in place until we retire, and until then we'll just keep doing what we do," he says. "The process of implementation was so successful that word of mouth about our expert team spread rapidly. We've even gotten a lot of requests from community members who are not residents for information, and we've held some town hall meetings for the community."

Who knew Medicare Part D could be such a good outreach tool?

Nursing Homes' Experience with Part D

"The worst is over!"

That's what most nursing homes might be thinking about the implementation of Medicare's new Part D prescription drug benefit. Preparation last November and December for the January 1 implementation was a marathon for many, as nursing homes worked to educate residents and their families, resolve formulary issues from the various prescription drug plans (PDPs), discern which plan the Centers for Medicare & Medicaid Services (CMS) had assigned to their dual eligibles, and figure out how best to communicate a plethora of information to the long-term care pharmacies they work with.

Many nursing homes launched a massive educational initiative for both residents' families and staff. "We worked very closely with our pharmacy partners to develop training material to help educate our facility staff members and families on the basics behind Part D," says Dan Kight, assistant vice-president of pharmacy for HCR Manor Care. "We know that the most important tool for evaluating and selecting plans is the Medicare.gov Web site."

Although nursing homes are prohibited from guiding residents into a particular plan, as long as the facility is acting in the best interests of the resident, CMS has extended some flexibility on this. Many nursing homes are suggesting residents choose one of the CMS benchmarked plans, even if the resident is only on Medicare, because many people will soon exhaust their assets and have to apply for Medicaid. "In terms of minimizing disruption of their medication therapy, it makes sense to get them on a benchmarked plan early on," advises Jeannine Powell, PhD, CPG, director of pharmacy services for Golden Gate National Senior Care (formerly Beverly Enterprises).

Of course, in November, when open enrollment comes around, some plans may have changed, some may not, and CMS will benchmark a whole new set of PDPs. "Then we'll do the whole process over again," says Powell. "And we'll get better each time around."

Long-term care residents do have one advantage over the Medicare beneficiary at home: Most residents are on a fairly stable regime of drugs, and once the plans and formularies are worked out and prior authorizations obtained, their pharmaceutical needs are generally set for the year. "We don't have crises in getting an authorization for a drug," says Darren Trisel, administrator of Asian Community Nursing Home in Sacramento, California. "But, up front, it was a lot of work for the pharmacies--they were pulling their hair out."

Gearing up administratively

Most nursing homes have made do with the staff on hand, but the extra work load for Part D was sometimes a strain. "There was so much manpower involved, and we spent an inordinate amount of time and money," says Robert Kopansky, administrator of Pennypack Center in Philadelphia. "It's settled down and things are going more smoothly, but we have 60% resident turnover here, so for every admission we have to readdress the issue of plan enrollments and make sure the family has not ignored this process. If they have, we're back to square one to educate the resident and family about the pros and cons of the various plans."

Part D was and will continue to be a team effort. "We brought our whole facility leadership team together in new collaborative ways to make sure we have successfully ensured our patients' access to their medications during this transition process," says Powell. "We haven't created any new positions, but we suggest that each facility should designate a Medicare D liaison person. In some instances that has been the social services director, whom the family talks to on a regular basis, or it could be the director of nursing or a unit manager. That one person is a touch point for Part D questions and information."

A facility liaison to the pharmacy is particularly important. To resolve any problems that arise with a particular prescription, the pharmacy must be able to contact the facility quickly. "In an institutional pharmacy, you don't have the luxury of having the patient standing in front of you," says Kight. "The facility faxes orders to the institutional pharmacy and the pharmacy contacts the insurance plan. If the drug is not covered, the pharmacy has to fax back to the facility or call. Sometimes the appropriate nurse can't be reached quickly because she may be with a patient. We then have to work with the pharmacy so that the drugs make it on the van for delivery to the facility that night, so timing is critical. If the pharmacy can't get a timely answer, it has to dispense a temporary supply until the drug can be switched to a covered drug."

And Who Will Pay?

The issue of payment for drugs that are not covered by the resident's plan is probably going to be around for a while as Part D gets refined. Initially, some state Medicaid programs picked up the slack for any drugs not covered and CMS agreed to reimburse them. But in April, CMS notified the states that it will no longer cover those expenses. The states aren't too happy about that as a permanent arrangement, but that's the status quo as of press time.

Some facilities are treating the "who will pay" question as a contractual issue with the pharmacy. "It will be different for every nursing home or chain," says Kight. "The prescription will still be filled, so the pharmacy must either eat the charge or bill the facility. Facilities need to be aware of this as they contract with pharmacies; for example, some pharmacies will assume payment risk for a ten-day supply, which allows a window to get the drug switched to a covered agent. Dual eligibles may also switch plans monthly, so that if they have significant noncovered issues, they can evaluate other options to determine if another plan provides better coverage." Of course, this puts the onus on facilities and/or pharmacies to keep track of these situations.

What Still Needs to Be Fixed?

"One of the real gaps in the system--and CMS is working on this--is that there is no real basis for communication between the plan and the nursing facility," says Powell. "All communication is between the plan and the pharmacy or the plan and the beneficiary. Beneficiaries who reside in nursing homes have a different layer of protections than those at home, in that facilities are required by law to provide medications to residents who have prescriptions, but we haven't built the infrastructure to accommodate the necessary communication."

The issue of copays also looms large. The copays for dual eligibles are waived, but many impoverished residents cannot meet the monthlong waiting period.

"We also need reforms that are beyond the scope of the current regulatory authority of CMS," says Powell. "For example, the law requires the exclusion of the benzodiazepines, which are antianxiety drugs. Most states have said they will pick that up, but there are a number of other drugs on that excluded drug list that are not covered."

Simply having a universal code for identifying beneficiaries as nursing home residents would clear up possible confusion about Medicare Part B versus Part D coverage for drugs. For example, some medications, such as nebulized respiratory medications, oral cancer drugs, and many injectables, are provided under Part B for beneficiaries living in the community, but residents of skilled nursing facilities don't have access to the Part B benefit, and their medications must be provided under Part D. Asks Powell, "If the plan can't recognize that a person is in a skilled nursing facility, how can it know whether to provide coverage under Part D or not?" CMS is working toward solving some of these issues.

As noted, Powell also would like to see a standard patient-locator code become part of claims processing, as advocated by the National Council on Prescription Drug Plans. "The code would tell the PDP's processor that the person is in a skilled nursing facility, and then turn on all the special protections that are built into the law for residents of long-term care. A number of plans have tweaked their systems to accept this standard locator code. We'd like to see a mandate that they all do."

Limited formularies, varying from plan to plan, are also problematic for long-term care residents. "Residents are often on a combination of drugs," says HCR Manor Care's Kight. "Formularies, by definition, limit the number of available drugs to choose from, which limits the ability to optimize this appropriate combination of drugs. We would like to see a broader, perhaps LTC-specific formulary, which allows for greater freedom when determining which drugs to use. Physicians and pharmacists could choose the best combination of drugs without having to worry about whether they are covered by the PDP plan."

As Part D settles into the fabric of healthcare--and political negotiation--many of these issues will be addressed. After all, patients need medications and a reliable mechanism to pay for them. For now, one thing is certain: All long-term care facilities are committed to providing their residents with the medications they need. "Family members who are looking at the current situation really need to be comforted and know that their relatives in nursing facilities are going to be taken care of, no matter what" says Powell. That's the real long-term care bottom line.

Supported by Eli Lilly and Company MG39619

Government Resources

1-800-MEDICARE -- A real person answers questions

www.medicare.gov -- CMS's official Medicare Web site

www.cms.hhs.gov/partnerships/downloads/whatifl.pdf -- Possible scenarios under Part D

www.healthassistancepartnership.org -- Click on "Medicare," then click on "State Health Insurance Assistance Programs (SHIPs)"

www.aoa.gov/eldfam/How_to_Find/Agencies/Agencies.asp -- Locator for state and area agencies on aging

www.medicare.gov/medicarereform/map.asp -- Locator to determine what PDP region your facility is in

Industry Resources

www.ascp.com/MedicareRx -- American Society of Consultant Pharmacists (ASCP)

www.ahca.org -- Resource for members of the American Health Care Association (AHCA)

www.aahsa.org -- Resource for members of the American Association of Homes and Services for the Aging (AAHSA)

RELATED ARTICLE: Part D Information for Residents and Families

Important facts for residents and families about Medicare Part D drug coverage:

* If you are already on a Part D plan, your entry into a nursing home will not automatically change that status. However, if you eventually spend enough of your assets to qualify for Medicaid coverage (called "spending down"), you may be reassigned to a plan that is qualified to provide combined Medicare and Medicaid coverage.

* If you are reassigned to such a plan (called a "dual-eligible plan"), check to make sure that all or most of the drugs you use are covered by this plan. If the plan is unsatisfactory, you may change to another qualified plan once each month. Residents who are eligible only for Medicare--and not Medicaid--must wait until the next open enrollment period (November 15-December 31) to change plans.

* Make sure that the nursing home has obtained all necessary preauthorizations (permissions) to provide the drugs you use. These will depend on the individual plan. Plan decisions that deny coverage are subject to exceptions and appeals processes. Ask your nursing home to explain Part D's exceptions and appeals processes.

* After residing in a nursing home on a dual-eligible plan for up to a month, depending on which day of the month you are admitted, you will no longer be required to pay copayments for your medications. Copayments may resume when you are discharged.

* Certain drugs are not covered by Part D. These include benzodiazepines (drugs for anxiety), barbiturates (as in sleep medications), drugs for seizure disorders, vitamins, and more. Individual states have made exceptions and will cover some of these drugs for those who qualify for Medicaid. Check with your state department of health, visit helpful Web sites (see below), or phone 1-800-MEDICARE to learn which of these drugs are covered in your state.

* Pay close attention to your Part D coverage at all times, and take whatever steps you can to maximize your coverage.

* Important Web sites to search for valuable information about Part D include www.medicare.gov; www.healthassistancepartnership.org (click on "Medicare," then click on "State Health Insurance Assistance Programs"); and www.aoa.gov/eldfam/How_to_Find/Agencies/Agencies.asp (a locater for the state or area Agency on Aging).

Please feel free to photocopy and distribute this page.

Sources: American Health Care Association, American Society of Consultant Pharmacists, National Council on the Aging, National Council on Prescription Drug Plans