Draft CY 2007 Formulary Guidance on Medicare Part D prescription drug policies is available for public comment. CMS will be accepting comment through March 6, 2006. Part D plan formulary submissions must be made between 3/27/2006 and 4/17/2006. [CMS Formulary Guidance Webpage]
Several of the items worth noting in the draft 2007 formulary guidance, as compared with the 2006 guidance -
- Certain Classes of Clinical Concern – The 2006 guidance required Part D plan formularies to include “all or substantially all” drugs in six particular classes: immunosuppressant, antidepressant, antipsychotic, anticonvulsant, antiretroviral, and antineoplastic. Under the draft 2007 guidance, formularies would be required to include substantially all drugs in those classes available on 4/17/2006, with subsequent new drugs to be subject to the normal P&T committee review process. The draft guidance lists four explicit exceptions not subject to the “substantially all” requirement. Restrictions on prior authorization or step therapy requirements for drugs within the six classes are prescribed. CMS further solicits industry feedback on current managed care strategies that might be implemented within the context of CMS policy.
- Multiple Formularies – Multiple formularies that have been submitted by a plan should have meaningful differences, so that confusion among beneficiaries is reduced. CMS may request withdrawal of a formulary if no meaningful difference from the plan’s other formulary or formularies can be demonstrated.
- Formulary Key Drug Types – If a USP Formulary Key Drug Type only includes drugs primarily covered under Part B, over-the-counter, statutorily excluded drugs, or drugs determined by the FDA to be less than effective, then the formulary need not include those drug types.
- Specialty Tiers – CMS will approve formularies and plan designs that include a specialty tier only if certain conditions are met -
- Single Specialty Tier – Only one tier may be designated a specialty tier exempt from cost-sharing exceptions.
- 25% Cost-Sharing Ceiling – Cost-sharing for the initial range (or actuarially equivalent, for plans with decreased or no deductible basic alternative benefit design) associated with the specialty tier is limited to 25%.
- $500 Monthly Price Floor – Only Part D drugs with plan negotiated prices that exceed $500 per month may be included in the specialty tier.
The Governmental Accounting Standards Board has published a proposed staff Technical Bulletin aimed at clarifying financial reporting of subsidy payments received by a governmental employer or plan from the federal government under Medicare Part D. [Proposed GASB Technical Bulletin No. 2006-a, ©2006 GASB; News Release] As previously touched on here at BeneBlog, GASB does not view Medicare Part D subsidy payments for prescription drug coverage as connoting transfer to the federal government of any portion of a governmental employer’s obligation for postretirement health care coverage. Proposed guidance under the technical bulletin -
- Employer Accounting for Subsidy Payment – A payment from the federal government is a voluntary nonexchange transaction that should be recognized as an asset and revenue under the requirements of GASB 33.
- Accounting for Subsidy Payment to Plan – A Medicare Part D subsidy payment to a governmental OPEB plan is treated as an on-behalf payment for fringe benefits under GASB 24. The employer should disclose and recognize revenue and expense or expenditures for the payment. No reduction should be made for the subsidies in determination of OPEB expense or expenditures.
- Effect on OPEB Accounting – A governmental employer should determine actuarial accrued liabilities, the annual required contribution, and OPEB cost without reduction for the subsidy payments.
The technical bulletin would be effective for financial statements issued after June 30, 2006, except that guidance pertaining to GASB 43 and 45 would apply concurrent with implementation of those standards. Comments on the proposed technical bulletin should be submitted to GASB by April 17, 2006.
If an employer-sponsored union group health plan provides presciption drug coverage to individuals who are eligible for Medicare Part D, then the plan sponsor must provide notice to the Centers for Medicare & Medicaid Services (CMS) whether the plan’s coverage is “creditable prescription drug coverage.” CMS has published guidance relating to the form, manner, and timing for meeting that notification requirement. [Disclosure to CMS Guidance]
All entities described in the regulation at 42 CFR 423.56(b) must disclose to CMS whether the prescription drug coverage offered to Part D eligible individuals is creditable or non-creditable. Entities that contract with Medicare directly as a Part D plan or that contract with a Part D plan to provide qualified prescription drug coverage are exempt from the disclosure requirement.
Entities are to make the disclosure to CMS by completion of an on-line form on the CMS Creditable Coverage Disclosure Web Page. See Disclosure to CMS Form.
The Disclosure Notice must be made to CMS on an annual basis and upon any plan change that affects whether the drug coverage is creditable. The initial Disclosure Notice must be provided to CMS by 3/31/06.
The Centers for Medicare & Medicaid Services (CMS) has published a Tip Sheet & Issue Paper About Retirees Automatically Enrolled In Medicare Part D (zipped file containing two Word documents). Included among the provisions of the Medicare Part D prescription drug coverage introduced by the Medicare Modernization Act (MMA), all dually eligible Medicare and Medicaid beneficiaries were to be automatically enrolled in a Medicare prescription drug plan by 12/31/05 to ensure continuation of prescription drug coverage when Medicaid coverage expired on 12/31/05. Under some retiree drug plans sponsored by employers or unions, a retiree loses coverage under the plan if the individual enrolls in a Medicare drug plan, in large part because a Part D subsidy is not paid with respect to any individual who is enrolled in a Medicare drug plan. Notwithstanding the subsidy implications, the CMS tip sheet and issue paper seek to encourage employers to adopt “best practices” aimed at reducing the potential adverse consequences for individuals facing the complicated decisions arising from automatic enrollment.
Although not explicitly required to do so under the law or regulations, CMS suggests that employers and unions that would eliminate coverage under their plans for individuals who enroll in a Part D plan should consider taking the following steps -
- Flexible Transition and Correction Period. Some retirees who wish to opt out of part D coverage in order to retain employer/union coverage may have been unable to do so in a timely manner. CMS suggests that employer/union plans consider -
- Deferring permanent changes in retiree’s plan eligibility, enrollment, or covered benefits for a transition period.
- Providing a special enrollment period for plan re-enrollment.
- Coordinating benefits with Medicare drug plans for a transition period.
- Split Retiree/Family Enrollment. For a plan where a retiree’s Part D enrollment would put the employer/union plan’s coverage of spouses and dependents at risk, CMS suggests the employer/union plan be modified to permit continued coverage of spouses and dependents despite the retiree’s Part D enrollment.
- Supplemental Coverage Option. CMS suggests addition of supplemental coverage under an employer/union plan to minimize adverse consequences to retirees who have been automatically enrolled under Part D.
- Assisting Retirees in Choice to Opt Out of Part D. CMS suggests that employers and unions provide educational materials and other assistance that can help individuals understand their choices and explain how to disenroll from a Medicare drug plan.