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  1. 1. URBAN THE ABC DIGEST OF CARDIOLOGY A Publication of the Association of Black Cardiologists, Inc. Dedicated to Equity in Cardiovascular Diagnosis and Treatment Examining the Lack of Diversity in Federally- Funded Cardiology Training Programs (p. 10) A Primer on Medicare and the New Medicare Prescription Drug Benefit (p. 14) Volume 31, Number 4 July/August 2005
  2. 2. THE ABC DIGEST OF EDITORIAL BOARD URBAN Editor in Chief: Elizabeth Ofili, M.D., M.P.H. Morehouse School of Medicine CARDIOLOGY Atlanta, GA Anekwe Onwuanyi, M.D., Assistant Editor A Publication of the Association Morehouse School of Medicine of Black Cardiologists, Inc. Atlanta, GA Michelle Albert, M.D., M.P.H. Karol Watson, M.D., Ph.D. 6849 B-2 Peachtree Dunwoody Road Brigham & Women’s Hospital University of California—Los Angeles Atlanta, GA 30328 Harvard Medical School David Geffen School of Medicine Urban Cardiology is a bimonthly publica- Boston, MA Los Angels, CA tion of the Association of Black Cardiologists, Inc., a non-profit organization of medical John Fontaine, M.D. Deborah Williams, M.D. professionals dedicated to the reduction of Drexel University College of Medicine Howard University Hospital cardiovascular and related diseases in minor- Philadelphia, PA Washington, D.C. ity and underserved populations. The ideas and opinions expressed in this publication do Kenneth Jamerson, M.D. Jackson Wright, Jr., M.D., Ph.D. not necessarily reflect those of the University of Michigan Health System Case Western Reserve University Association, editors, or publisher. Ann Arbor, MI School of Medicine Cleveland, OH Correspondence should be addressed to: Stephanie Kong, M.D. URBAN CARDIOLOGY MetroHealth Group of America Clyde Yancy, M.D. Association of Black Cardiologists, Inc. 6849-B2 Peachtree Dunwoody Rd., N.E. Atlanta, GA University of Texas Atlanta, GA, 30328 Southwestern Medical Center Laurence Watkins, M.D., M.P.H. Dallas, TX For advertising information, contact Healthy Heart Center Imquest, Inc. Port St. Lucie, FL 590 S. Lenola Road, Suite 3121 Maple Shade, NJ 08052 856–489–7550 OUR EDITORIAL MISSION The ABC Digest of Urban Cardiology, published bimonthly, is an official publication of the Roslyn Daniels Association of Black Cardiologists, Inc. (ABC). The ABC is a non-profit organization of health The Daniels Network professionals dedicated to the reduction of cardiovascular and related diseases, especially in 11 Fieldstone Court minority populations, wherein lies a burden of excessive morbidity and mortality. This publica- Oakland, NJ 07436 tion is provided as an educational service to all health professionals who share this dedication. 201–337–3593 The mission of this publication is to assist such clinicians to deliver the best of care to patients with cardiovascular and related diseases and to do so in a culturally competent and Publisher demographically appropriate manner. We do so by providing—in a compact, easily compre- Hilton M. Hudson, II, M.D., F.A.C.P. hensive journalistic style—up-to-date information of immediate applicability to the unique Editor in Chief clinical setting of urban medicine. This information consists of: Elizabeth Ofili, M.D., M.P.H., F.A.C.C. • Original, evidence-based, clinical and research main articles (including CME self-assessment). • “Tidbits”—a regular column of useful clinical knowledge gleaned from recent clinical Editorial Staff research trials and other information drawn from the medical literature. Meredith Carter, Association of Black • “Developments”—a regular column covering newsworthy recent events such as new drug Cardiologists and device market introductions, new controversies in medicine, new trends in health Debra Teague, Morehouse School of care, new scientific insights, and new demographic, economic, and governmental activity Medicine affecting the practice of medicine. • Commentary from the president of ABC, the publication’s editor in chief, and the publisher. © Copyright The Association of Black Cardiologists, Inc. 2005. All rights We strive continually to improve upon the execution of our editorial mission and therefore reserved. No part of this publication in any encourage and welcome your suggestions on how we can serve you, our reader, better. form may be reproduced or transmitted without the expressed written permission In this issue you will observe product advertisements from AstraZeneca, Bristol-Myers Squibb of the publisher. Library of Congress Medical Imaging, Fujisawa Healthcare, McNeil-PPC and Schwarz Pharma. These pharmaceutical ISSN# 1096-3863 firms are providing educational grant support to the Association of Black Cardiologists, Inc. to enable us, among other things, to provide you with this publication without a subscription charge Hilton Publishing, Inc. to you. P.O. Box 737 We encourage you—as you deem appropriate—to acknowledge and show appreciation for Roscoe, IL 61073 this support, as well as for these supporters’ recognition of the special health challenges faced by minority and underserved populations and by the clinicians who treat them. 4 ABC DIGEST OF URBAN CARDIOLOGY July/August 2005
  3. 3. From the Publisher THE ABC DIGEST OF URBAN PICNICS IN THE PARK WITH CARDIOLOGY A Publication of the Association HAMBURGERS, FRIED of Black Cardiologists, Inc. CHICKEN, POTATO SALAD, Vol. 31, No. 4 July/August 2005 AND ICE CREAM CONTENTS Summertime conjures up so many All-American images. Pick Message from the President 8 up baseball and basketball games, hot dogs, and beer. The Fourth Letter from the Editor 9 of July and fireworks, celebrated with spare ribs slathered in barbe- cue sauce and cole slaw made with mayonnaise. Picnics in the park Examining the Lack of Diversity with hamburgers, fried chicken, potato salad, ice cream. Swimming in Federally-Funded Cardiology in the pool or at the shore and amusement parks teeming with Training Programs 10 snacks of pizza, fried dough, fried clams, and cool soda pop. A Primer on Medicare and the Summertime, as the song goes, “And the livin’ is easy.” New Medicare Prescription Drug And it truly is. Summertime indeed is a wonderful time. We Benefit 14 feel great over all for the weather is good, days are pretty, vaca- tions are taken and family get-togethers are meaningful. But with regard to our health, as well as the health of our loved ones and patients, let’s not let our guards down completely. We need to Cover: Inset Illustration by Joel Gresham remember not to overindulge in unhealthy lifestyle behaviors. The paintings used on the cover of the Digest of This false sense of security is dangerous. Urban Cardiology depict teachable moments When wishing your patients a well-deserved rest and good between children and their grandparents. The dialogue here is: vacation, don’t forget to tell them to take basic precautions: Al: Keep on going baby. It looks like its going in • Eat healthy, nutritious, fresh foods at this time of peak harvest Gramps: Yeah, that’s it, right in the hole. Gramps: Great shot! You made that putt look and cut back on the fried foods easy. • Don’t over-exercise and be sure to check with you or another Al: I’m getting pretty good like grandpa. physician to be sure the exercise is safe and properly designed Gramps: You surely are Al. If you keep playing like this, we may have the next Tiger Woods! for their lifestyle Al: I’m not that good yet. I’m just learning. • Wear a hat and sunglasses Gramps: If you keep coming out to the links with your old Grand Pa, who knows the poten- • Drink plenty of water and other hydrating fluids tial you may reach. Al: Do you really believe I have what it takes? With common sense and some basic precautions, we can all Gramps: Well Al, everything has a starting, mid- enjoy this wonderful time of year safely and healthfully. And at the dle, and an end point. If you follow through same time, enjoy this issue of Urban Cardiology with its important from the beginning to the end, you are des- tined for success. information on Medicare and the lack of diversity in federally- Al: I’m glad that you have so much confidence funded cardiology training programs. So go ahead and live that easy in me. It’s good to know I’ll always have you in my corner. life. We all need rest and relaxation. It really is good for us! Gramps: Come on “Tiger.” Lets go to the next hole. Hilton M. Hudson II, M.D., F.A.C.S., F.C.C.P. To “Talk Back” write to: Director of Outreach B. Waine Kong, Ph.D., J.D. Dept of Cardiothoracic Surgery Chief Executive Officer Association of Black Cardiologists, Inc. University of Chicago 6849-B2 Peachtree Dunwoody Rd., N.E. President and C.E.O., Hilton Publishing Company, Inc. Atlanta, GA 34328 President, Health Literacy Foundation, Richmond, IN 678–302–4222
  4. 4. Message from the President ILLUMINATING CRISIS: MANPOWER IN CARDIOLOGY Manpower in Cardiology and Part D of the issue. So, we have Medicare Modernization Act are two topics the been lobbying for Digest will focus on in this issue. the government to For the past four years, we have taken an increase the fund- aggressive stance concerning the need to ing that was increase the number of cardiologists in the frozen at the 1995 United States and in particular, the number of level with the African American cardiologists. A dozen years caveat that these ago, the American College of Cardiology (ACC) new slots can only conferred on the “Future Personnel Needs for be filled by under- Cardiovascular Care” (1993) and wrote that the represented minorities. We have also lobbied output of cardiologists exceeded the nation with training programs to increase the enroll- present and future needs and mandated the ment of African Americans. After making Wake number of trainees be decreased. As a result, Forest University aware that in fifty years of about twenty cardiology training programs were training cardiologists they have never trained an closed (including one that was near and dear to African American. Dr. William Little, Chief of us—Harlem Hospital) and most programs were Cardiology, has now accepted two African required to reduce the number of cardiologists Americans who will start next month. An African in training they could accommodate. proverb says, you only build a bridge if you know Then in 2003, another ACC Taskforce on there is a river. Congratulations to Dr. Little and Workforce chaired by Dr. Bruce Fye came to to the Wake Forest/Bowman Grey family. the conclusion that our Nation is confronting a Finally, physicians can expect to be bom- growing shortage of cardiologists that will hin- barded with questions relating to the prescrip- der access to care and undermine our vital tion drug benefit (Part D) from the Medicare research effort. This was no surprise to the Modernization Act that will go into effect in many practices that are trying to recruit part- January. This is extremely confusing for both ners and not finding anyone. As a result, physicians and patients. BUT, we have a con- salaries for cardiologists have risen and patients densed answer. This article is a must read for often must wait for the care they need. all physicians. If you want to understand the Unfortunately, even with the reduction in program, we are providing the best explanation training slots and the closure of several training for you. This explanation was commissioned by programs, 77 percent of training program direc- Novartis and we persuaded them to make it tors report that they cannot fill the slots that are available for you. Just as you have with “Pay- allocated because of lack of funds. Last year, more for-Performance”, you must avail yourself of than 300 training positions were left unfilled that this important information. could have been filled with underrepresented Paul Underwood, M.D. minorities. It turns out that we could train 327 President more cardiologists per year if cost was not an Association of Black Cardiologists, Inc. 8 ABC DIGEST OF URBAN CARDIOLOGY July/August 2005
  5. 5. Letter from the Editor DR. EUGENE STEED FIRST TO DIVERSIFY CARDIOLOGY PROGRAM It is timely that we dedicate some of this trained 30 African issue to Manpower in Cardiology and to ensur- American cardiol- ing that sufficient numbers of African ogists and has American cardiologists are available to meet more African the growing and expanding needs of our com- Americans on munity. The man who engineered racial inclu- staff than any siveness in the training of physicians and cardi- other majority ologists died on June 12, 2005, he was medical institu- 96-years-old. tion in the United States. Where are the Dr. Eugene Stead served as Chief of change agents like Dr. Eugene Stead who can Medicine at Duke University from 1947-1969 engineer these achievements? and is known to the world as the man who cre- Academically, Dr. Stead was known for his ated the country’s first program for physicians’ pioneering work with cardiac catherization and assistants. We celebrate his life because he heart failure and was instrumental in the estab- accepted the first African American (Dr. lishment of the Duke Clinical Research Charles Curry) to be trained and to become Institute which now maintains diagnostic and board certified as a Cardiologist in this country. treatment data on more than 250,000 patients. Dr. Curry went on to serve as Chief of Thank you Dr. Stead, we owe you a great debt Cardiology at Howard University Hospital for of gratitude. 30 years and in turn participated in the training A memorial service will be held for Dr. of more than 100 African American Stead on Sunday, October 30, 2005 from Cardiologists. Dr. Stead did not stop with this 9:00–11:00 am at the Washington Duke Inn on remarkable decision, given the racial climate of the Duke University Campus. the 1960’s in the South, but went on to encour- age Duke to adopt a bold diversity policy that With my Best Personal Regards, would eventually result in 25 percent of Duke’s Elizabeth Ofili, M.D., M.P.H., F.A.C.C. employees, faculty, students, residents, and fel- Editor lows are African American. Duke has now ABC DIGEST OF URBAN CARDIOLOGY July/August 2005 9
  6. 6. Special Feature EXAMINING THE LACK OF DIVERSITY IN FEDERALLY-FUNDED CARDIOLOGY TRAINING PROGRAMS B. Waine Kong, Ph.D., J.D. Chief Executive Officer, The Association of Black Cardiologists, Inc. The cost of training cardiologists in the United States is subsidized by federal tax dol- Contrary to common belief, there is no lars through the Medicare program. In over shortage of African American and fifty years of training cardiologists in the United States, these funds have been used pri- other under-represented minorities marily to train white men and foreign medical who are ready, willing and able to be graduates. This has resulted in a cardiology pool consisting of only two percent African accepted into cardiology training pro- American, five percent Hispanic and six per- grams. In fact, the program sponsored cent women. Several programs have exclusively by Vanderbilt University, Meharry trained only white men. The consequences of this lack of diversity have operated to the detri- Medical College and the Association of ment of a significant portion of cardiology Black Cardiologists received 32 appli- patients that these cardiologists were trained to cations for the one position available. serve. A reexamination of the allocation of these public funds is in order. The Extent of the Problem: Lack of Diversity Results in Less Than Optimal Patient Care SULLIVAN COMMISSION 2004 It is well documented that minorities suffer • Access to health professions remain separate and unequal . . . The ghosts of pre civil rights continue disproportionately from cardiovascular disease, to haunt the health professions and experience greater difficulty in accessing quality health care services. A similar disparity • The problem of racial and health disparities, and exists in the limited number of programs to the lack of minorities in the health professions are inescapably linked. train specialists to treat these patients—minor- ity medical graduates are admitted to a dispro- • Without more diversity in the health workforce, our portionately smaller number of cardiovascular nation’s minority population will continue to suffer training programs each year. • The cullture of the health professions must change Training programs vary greatly in the demographics of their residents. For example, 10 ABC DIGEST OF URBAN CARDIOLOGY July/August 2005
  7. 7. served population as a point in that candidate’s ASSOCIATION OF PROFESSORS OF MEDICINE favor for a training position. The very fact of (2/2004) being a member of an underserved population Chairs of departments of internal medicine and other likely correlates most highly with practicing in leaders in academic medicine must take specific an underserved community and dedication to steps to increase diversity among students, residents, minority populations that it could become fellows, and faculty, not only because it is the right proxy for the measures themselves. thing to do but the smart thing to do . . . The APM To be sure, optimal health status can not be strongly supports the use of all legally permissible maximized by doctors who are merely excellent strategies to achieve this goal. at their craft. A significant part of the solution lies in the diversity of cardiologists. Our health is best ensured by doctors who have a nuanced Duke University consistently recruits and trains understanding of what we need and who can a class consisting of 25% African Americans, empathize with us. Doctors who live in our while Wake Forest University, an equally pres- communities with us, see what we see and tigious institution that is 75 miles away, has speak our language put us at ease and establish trained no African Americans. Contrary to common belief, there is no shortage of African American and other under-represented minori- HISPANICS/AFRICAN AMERICANS IN CALIFORNIA ties who are ready, willing and able to be accepted into cardiology training programs. In fact, the program sponsored by Vanderbilt University, Meharry Medical College and the Association of Black Cardiologists received 32 applications for the one position available. Is it outright discrimination that is occur- ring at these institutions? Hopefully not, as fed- eral law prohibits such discrimination for pro- grams that receive federal funding. But, perhaps the objective criteria on which resi- dents are selected at some institutions reflects a bias that disfavors minorities and undervalues the criteria needed to actually fulfill the needs EDUCATION PIPELINE FOR AFRICAN AMERICANS of the community suffering from cardiovascular illness. Admittedly, it is difficult to measure certain factors such as the likelihood of later practicing in an underserved community or better understanding the peculiar needs and stresses of minority patients, but in a publicly funded program dedicated to better health for all Americans, these should be important con- siderations. Perhaps, in addition to the standard objec- tive criteria, it would be rational to count a can- didate’s membership in a minority or under- continued on the next page ABC DIGEST OF URBAN CARDIOLOGY July/August 2005 11
  8. 8. HEALTH PROFESSIONS PARTNERSHIP INITIATIVE (AAMC) 2004 There is no doubt that the current • Deficiencies in educational opportunities for URM training system produces very fine persist doctors and cardiologists—by many • Comprehensive educational remediation should standards the world’s finest. But the begin earlier than high school people did not allocate funds to pro- • Among college bound high school students, there are few differences in intended majors across eth- duce the world’s finest cardiologists; nic groups. Students show little or no difference by race or ethnicity in their math, science, and engi- these funds were allocated to reduce neering interest. mortality and morbidity from cardio- vascular disease in the population. trust. Where there is diversity, there is inter- change, new ideas and new priorities. It can be expected that increased and more effective There is no doubt that the current training interaction with minority cardiologists will system produces very fine doctors and cardiolo- result in increased treatment efficacy for gists—by many standards the world’s finest. But minority patients. the people did not allocate funds to produce the world’s finest cardiologists; these funds were allocated to reduce mortality and morbid- Public Dollars for Public Benefit ity from cardiovascular disease in the popula- The Medicare program is financed with tion. These goals are similar but not the same. taxpayer dollars to benefit Medicare beneficiar- Training is not subsidized out of lofty scientific ies. Consistent with this goal, graduate medical motives or even for bragging rights. It is also education is subsidized with these funds to important to recognize that this subsidy is not a make competent medical professionals avail- prize or reward for past achievement or to able for patients in the United States. Because ensure brilliant careers to promising people. taxpayer funds intended to increase the health Nor is this program meant for the redress of status of all Americans are being used, every- past discrimination. Rewarding achievement thing done with these funds should be viewed and redressing discrimination are worthy goals, through this framework. During the allocation but not the goals of this program. Medicare process, decisions must be rationed and priori- subsidizes cardiologist training so cardiologists tized. The standard is that the expenditure will be available to provide for the needs of must serve the public interest in some tangible American citizens. and efficient way. So, where the people, the taxpayers, pledge money to serve their health care needs, as they do when subsidizing post graduate education for cardiologists, they must do so by the most SULLIVAN COMMISSION 2004 effective means. The present system produces We recommend that accrediting bodies evaluate cardiologists who, in the aggregate, are not diversity to ensure that not only the health staff but addressing the nation’s needs. The system fails the administrators are culturally diverse. in large part because the pool is too homoge- nous. The pool is too homogenous because 12 ABC DIGEST OF URBAN CARDIOLOGY July/August 2005
  9. 9. CURRENT DISTRIBUTION OF CARDIOLOGISTS (21,726) WHAT A DIFFERENCE A DECADE MAKES ACC Conference on “Future Personnel Needs for Cardiovascular Care” (1993): The output of cardiolo- gists exceeds the nation’s needs. The number of trainees should be decreased. ACC Taskforce on Workforce (2003): The Nation is confronting a growing shortage of CVD specialists that will hinder access to care and undermine our vital research effort. doctors are selected into these programs on the CURRENT SITUATION—CARDIOLOGISTS IN TRAINING basis of criteria that do not represent the actual (2002). TOTAL 2223 virtues ethnic communities require in cardiolo- gists. Remedies Should Encourage Diversity in Cardiology Training Programs Medicare subsidization of cardiology train- ing programs should be reexamined to imple- ment policies and requirements to ensure the enrollment of more minorities. The Department of Health and Human Services and the Centers for Medicare and Medicaid Services should investigate programs that do These measures, together with a realization not enroll minority candidates for any possible that an increased number of minority cardiolo- discriminatory behavior. Programs that have gists will benefit overall cardiovascular health denied under-represented minorities and care in the United States, will begin to reverse women access to cardiology training should be a trend that has led to a significant disparity in required to repay the federal funds used to minority cardiologists. train representatives from only one group, and should be ineligible for further subsidies from Medicare. Also, the Medicare regulations for Boosting the number of African Americans, Hispanics graduate medical education subsidies should and Native American in health care is critical to meet- include, as a condition of receiving federal ing the needs of America’s increasingly diverse soci- funds, a requirement that institutions certify to ety as well as raising the cultural competence of all having in place a program to encourage the practitioners. recruitment and placement of minority cardio- vascular training residents. ABC DIGEST OF URBAN CARDIOLOGY July/August 2005 13
  10. 10. Special Feature A PRIMER ON MEDICARE AND THE NEW MEDICARE PRESCRIPTION DRUG BENEFIT Valerie Barton, M.A., Tanisha Carino, Ph.D., Lovisa Gustafsson, Heidi Reester, M.P.H., Elizabeth Hinshaw, Chiquita Wuite, M.P.P., Danyel Henry, M.P.A., Lindy Hinman, M.H.S.A., John Richardson, M.P.P. Contents Prescription Drug, Improvement, and Modernization Act of 2003 (MMA). This law I. History and Overview of Medicare makes a number of significant changes to the II. Medicare Financing, Covered Services, Medicare program, including adding a new and Program Administration outpatient prescription drug benefit for seniors III. Medicare Part D—The New Medicare and younger persons with disabilities who are Outpatient Prescription Drug Benefit: covered by Medicare. On August 3, 2004, the Benefit Structure and Key Program Centers for Medicare and Medicaid Services Elements (CMS) published a proposed regulation to clar- IV. Changes to Medicare Managed Care ify some aspects of the law and to solicit public Program (Medicare Advantage) comment on the huge number of policy and V. Quality Improvement Initiatives in implementation issues involved in the Medicare Medicare drug benefit. Numerous entities sub- VI. Appendix mitted detailed comments and recommenda- VII. Key Acronyms tions responding to the proposed regulation. VIII. Glossary of Key Terms CMS reportedly received 7,600 comment let- ters from concerned stakeholders. Foreword On January 21, 2005, CMS released its final regulations, which addressed some stake- When Medicare was created in 1965, it did holders’ concerns. However, there are still not cover outpatient prescription drugs because many uncertainties that will be addressed these therapies were not a significant compo- through sub-regulatory guidance that CMS will nent of healthcare services provided to release throughout the year. Other unknowns, America’s senior population. Over the past 40 such as which plans and beneficiaries will par- years, prescription drugs have fundamentally ticipate in the benefit, will become clearer as changed healthcare in the United States, play- the program is implemented and evolves over ing an increasingly important role in the pre- time. Certainly, the new Medicare drug benefit vention and treatment of disease. will transform the way in which prescription In November 2003, Congress enacted, and drugs are delivered to and paid for by (or on the President later signed, the Medicare behalf of) Medicare beneficiaries. 14 ABC DIGEST OF URBAN CARDIOLOGY July/August 2005
  11. 11. I. History and Overview of Medicare Medicare was created by the federal gov- Medicare originally covered hospital ernment in 1965 as a medical insurance pro- stays and related physician services; gram for individuals age 65 and older. Medicare shields elderly Americans from the now it covers many more kinds of catastrophic costs of long hospital stays and services provided in a range of health- expensive medical procedures. Since its estab- care settings, and it offers other health lishment, Medicare has expanded the scope of its benefits, the populations it covers, and, con- insurance plan options, such as Health sequently, its cost. Maintenance Organizations (HMOs) Medicare originally covered hospital stays and Preferred Provider Organizations and related physician services; now it covers many more kinds of services provided in a (PPOs). The most recent benefit addi- range of healthcare settings, and it offers other tion is a significantly expanded outpa- health insurance plan options, such as Health tient prescription drug benefit, which Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). The will begin in 2006. most recent benefit addition is a significantly expanded outpatient prescription drug benefit, which will begin in 2006. As further described Medicare. The federal government created this below, Medicare previously covered some pre- Medicare eligibility category in 1972 in recog- scription drugs in limited circumstances nition of the very high costs associated with through physician services and through kidney transplants and dialysis treatments. Medicare managed care plans. Approximately 6 million Medicare beneficiaries The size of the Medicare program has fall into the disabled or ESRD eligibility groups grown dramatically since it was created. (about 5.6 million are persons with disabilities Medicare covered 20.1 million Americans in and about 400,000 are persons with ESRD).6,7 1970; today, there are approximately 41.7 mil- lion Medicare beneficiaries, including over 6 Medicare Enrollment and Spending million persons under age 65 with disabilities.1,2 Due to demographic trends, Medicare Federal spending on Medicare services has enrollment will continue to grow at an increas- grown from $7.5 billion in 1970 to $308.9 bil- ing rate over the next 30 years. After the “Baby lion (including administrative costs) in 2004.3 Boom” generation starts reaching age 65 in There are three ways that an individual can 2010, the federal government expects become eligible for Medicare. First, most ben- Medicare’s enrollment to increase rapidly. By eficiaries (approximately 35 million) qualify for 2030, it is estimated that there will be 78.3 mil- Medicare based on their age and their (or their lion Medicare beneficiaries—up from 41.7 mil- spouse’s) work history.4 Second, people under lion in 2004.8 age 65 who have one or more permanent dis- Over the past twenty years, there has been abilities may become eligible for Medicare a growing concern that the revenues coming after receiving disability insurance payments into the federal government to fund Medicare from Social Security for at least two years.5 will be insufficient to cover the growing costs of Third, people of any age who develop End the program. The coming Medicare eligibility Stage Renal Disease (ESRD), or irreversible kidney failure, may also become eligible for continued on the next page ABC DIGEST OF URBAN CARDIOLOGY July/August 2005 15
  12. 12. PROJECTED MEDICARE ENROLLMENT, 2005-2030 Source: 2005 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, Table III.A3., p. 30. © The Health Strategies Consultancy of the Baby Boom generation brings additional tain items and services will be covered, deter- urgency to these concerns. mining payment rates and policies, administer- In 2004, Medicare spent an estimated ing claims, educating beneficiaries and health- $302.5 billion on healthcare services, making it care providers, and conducting research on the second largest public health insurance pro- alternative healthcare delivery systems. gram in the country (second only to spending The Medicare program is organized, for the Medicaid program).9 The majority of administered, and funded in four distinct parts: Medicare spending is for hospital services. • Part A—Acute inpatient hospital and post- Physicians, managed care plans, and nursing acute care (skilled nursing facility and home home care also make up a significant portion of health) services, including prescription drugs spending. Because coverage of prescription used in inpatient settings; drugs has been limited in the Medicare pro- • Part B—Physician services, hospital outpa- gram, spending on this category comprises a tient services and other kinds of ambulatory small fraction of total spending. This will care, ancillary services such as clinical labo- change significantly when the Medicare pre- ratory tests and durable medical equipment, scription drug benefit is implemented in 2006. and limited coverage of outpatient prescrip- tion drugs including physician-administered II. Medicare Financing, Covered (i.e., injectable) drugs, immunosuppressives, Services, and Program Administration oral anti-cancer drugs and oral anti-emetics, blood clotting factors, and the drug erythro- Medicare is a federal program administered poietin (EPO) administered to dialysis by the Centers for Medicare and Medicaid patients; Services (CMS). CMS is responsible for all • Part C—Managed care plans that offer Part aspects of Medicare’s program administration, A and Part B services together; and including making decisions about whether cer- 16 ABC DIGEST OF URBAN CARDIOLOGY July/August 2005
  13. 13. • Part D—Outpatient prescription drug cover- Inpatient hospital services account for the age, scheduled to take effect in January 1, vast majority of all spending in Medicare. 2006. There are approximately 12 million Medicare discharges from hospitals each year.11 Medicare PART A—HOSPITAL INSURANCE coverage for non-acute long-term care services The Medicare Hospital Insurance program, is limited, but under certain limited conditions, also referred to as Part A, is funded through Medicare will pay for short-term nursing home payroll taxes and beneficiary cost-sharing. Part care for beneficiaries who require skilled nurs- A covers benefits provided in: ing or rehabilitation services. As in inpatient hospitals, pharmaceuticals that are provided to • Acute inpatient hospitals, inpatients of SNFs are paid for under Medicare • Skilled nursing facilities (SNFs), Part A. • A Medicare beneficiary’s residence (home health and some hospice services), and PART B—SUPPLEMENTARY MEDICAL • A hospice.10 INSURANCE Beneficiaries pay no monthly premium for Unlike Part A, Part B is not funded by a Part A; it is offered to most U.S. citizens who specific payroll tax, but rather from general tax have been employed for a sufficient number of revenues from the U.S. Treasury and from years (currently 10 years) to qualify for full Social monthly premiums paid directly to Medicare by Security benefits. However, beneficiaries who beneficiaries. In paying providers, beneficiaries use Part A covered services, such as inpatient also make per-service coinsurance payments. hospital and SNF services, must pay significant For most Part B services, Medicare will pay 80 cost-sharing amounts for those services (e.g., an annual deductible and certain copayments). continued on the next page MEDICARE SPENDING BY TYPE OF PROVIDER, 2004 Source: Calculation by Health Strategies Consultancy based on the 2005 Annual Report of the Board of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, Table II.B1., p. 4. © The Health Strategies Consultancy ABC DIGEST OF URBAN CARDIOLOGY July/August 2005 17
  14. 14. percent of allowed charges and the beneficiary legislation (e.g., coverage of oral anti-emetics is responsible for the remaining 20 percent. and immunosuppressives). Also, drugs adminis- Persons who become eligible for Part A are tered with durable medical equipment (DME), eligible for Part B at the same time, but they such as infusion pumps and nebulizers, are cov- must voluntarily enroll in Part B at that time, ered by Medicare. In 2002, Medicare paid an or a “late enrollment” penalty will be assessed estimated $8.4 billion for the 450 drugs cov- for as long as they are enrolled. To enroll in ered by Medicare Part B. Over 77 percent of Part B, a beneficiary agrees to pay a monthly Medicare spending for drugs was for cancer premium, which is the same for all beneficiar- drugs. ies in the United States regardless of where Until 2004, payment for drugs was based they live, but which increases each year. The on 95 percent of the drug’s average wholesale Part B premium in 2004 was $66.60 per month price (AWP), as published in major commercial and is $78.20 per month in 2005. Although drug pricing compendia (e.g., Red Book, First enrollment in Part B is voluntary, nearly all DataBank). However, the MMA authorized beneficiaries choose to enroll.12 In 2002, CMS to make dramatic changes to reimburse- approximately 93 percent of the total Medicare ment for drugs covered by Part B: population was covered by both Part A and • In 2004, subject to certain exceptions, Part B.13 Medicare’s payment rate for most drugs was • Part B covers a variety of services, including: approximately 85 percent of the drug’s aver- • Physician services and non-physician practi- age wholesale price (AWP).14 tioner (e.g, physician assistant and nurse • In 2005, Medicare implemented lower pay- practitioner) services ment rates based on each drug’s average sales • Hospital outpatient and ambulatory surgical price (ASP), which is calculated by CMS center services using sales data submitted by manufacturers • Durable medical equipment (DME) (so the policy imposes new price/discount • Prosthetics and orthotics (P&O) • Clinical laboratory services Average Wholesale Price (AWP)—As used in this • Pharmaceuticals used in conjunction with a Medicare primer, the term "AWP" or "Average Wholesale physician service and certain oral products, Price" constitutes a reference for each product, set as a including immunosuppressive agents and percentage above the price at which each product is some oral anti-cancer drugs offered generally to wholesalers. Notwithstanding the • Vaccines inclusion of the term "price" in "Average Wholesale • Limited preventive screenings Price," AWP is not intended to be a "price" charged by a • Ambulance services manufacturer for any product to any customer. PART B COVERAGE OF PRESCRIPTION DRUGS Medicare currently covers a limited num- Average Sales Price (ASP) –ASP is defined in law as the ber of prescription drugs that are provided price that is net of all discounts and rebates and “incident to” a physician service (i.e., the drugs includes volume discounts, prompt pay discounts, cash discounts, chargebacks, short-dated product discounts, are administered via injection or infusion in a free goods, rebates, and all other price concessions pro- physician office or hospital outpatient setting). vided by any relevant purchaser. Direct sales to hospitals There are certain other types of orally-adminis- are excluded from ASP. tered drugs that are covered through specific 18 ABC DIGEST OF URBAN CARDIOLOGY July/August 2005
  15. 15. the hospital outpatient setting is limited to only Wholesaler Acquisition Cost (WAC)—The list price paid drugs used in conjunction with physician serv- by a wholesaler for drugs purchased from the whole- ices or DME. Previously, Medicare paid for saler's supplier, typically the manufacturer of the drug. prescription drugs provided in the hospital out- Publicly disclosed or listed WAC amounts are not net of patient setting on a “reasonable cost” basis, but discounts which may be available to the wholesaler or over the past five years, CMS has moved to customers. paying for hospital outpatient services, includ- ing prescription drugs, through the hospital reporting requirements on pharmaceutical outpatient prospective payment system manufacturers): (HOPPS). Some pharmaceuticals may receive – For a multiple-source drug, the reimburse- separate, and higher, payment. ment rate generally will be 106 percent of the drug’s ASP, with ASP calculated using PART C—MEDICARE ADVANTAGE (FOR- sales data for all of the drug products, both MERLY MEDICARE+CHOICE) brand and generic, available in the market Medicare+Choice (also referred to as Part for that drug. Thus, the ASP for brand C) was established by Congress in the Balanced products that have generic competition Budget Act of 1997 to provide Medicare bene- will be very low. ficiaries with access to managed care plan – For single-source drugs, the reimbursement options, in addition to the traditional fee-for- rate will be the lower of 106 percent of ASP service program (FFS). The Medicare+Choice or wholesale acquisition cost (WAC). program was designed to control costs, offer • In 2006, Medicare payment for Part B-cov- additional benefits to enrollees, encourage ered drugs will be based on either the “106 health plans to expand to markets where percent of ASP” policy described above, or on Medicare beneficiaries had little or no access to a completely new “competitive acquisition managed care plans, and offer a wider variety program” (CAP). Each physician will have to of managed care plans, including health main- choose whether to purchase drugs themselves tenance organizations (HMOs), point of service and obtain payment from Medicare based on (POS) plans, preferred provider organizations 106 percent of ASP, or purchase drugs from (PPOs), and private fee-for-service (PFFS) third-party vendors that will contract with plans. Similar to commercial health plans, Medicare on a competitive basis to provide Medicare managed care plans are paid a “per drugs to physicians. CAP could fundamen- member per month” payment for each tally change the drug distribution chain for Medicare beneficiary that they enroll, and in physicians who choose this method to pur- return must provide at least the full range of chase Part D covered drugs. Physician behav- Part A and Part B healthcare services covered ior could change based on financial incentives by regular Medicare. under the CAP. On February 25, 2005, CMS From 2000 to 2004, enrollment in Part C released its proposed rules for the CAP, pre- steadily declined due to a limited choice of senting multiple policy options and soliciting plans in many areas, instability in provider par- public comments on various aspects of the ticipation compared with fee-for-service program. The final CAP regulations are Medicare, and increased out-of-pocket costs for expected to be released prior to October 2005. beneficiaries who choose to enroll. In 2004, 79 percent of Medicare beneficiaries had access to As with drugs provided in the physician office setting, coverage for drugs provided in continued on the next page ABC DIGEST OF URBAN CARDIOLOGY July/August 2005 19
  16. 16. PART D—OUTPATIENT PRESCRIPTION From 2000 to 2004, enrollment in DRUG BENEFIT Medicare will begin to pay for outpatient Part C steadily declined due to a prescription drugs through private plans begin- limited choice of plans in many areas, ning in January 2006. This new program is instability in provider participation financed through what is called Medicare Part D. compared with fee-for-service Medicare, and increased out-of-pocket III. Medicare Part D—The New Medicare Outpatient Prescription Drug Benefit: costs for beneficiaries who choose Benefit Structure and Key Program to enroll. Elements Drug Discount Card and Transitional Assistance: 2004-2005 the 155 existing Part C plans, but only about The MMA mandates the implementation of 4.6 million Medicare beneficiaries, or about 11 a Medicare-endorsed prescription drug dis- percent, were enrolled in managed care.15 The count card program in 2004 and 2005.18 MMA includes provisions designed to reverse Participation in the discount card program is the trends of declining plan participation and voluntary, and the program was implemented Part C enrollment. through private “card sponsors,” primarily The MMA replaces the Medicare+Choice PBMs and health plans. The discount card is program with “Medicare Advantage” (MA). intended to serve as an interim measure to Under both Medicare+Choice and Medicare offer substantial discounts off of cash prices for Advantage, private health plans contract with prescription drugs (with estimated savings of 15 Medicare to provide basic Medicare benefits to 25 percent from cash prices) for the several plus extra healthcare services, often including million beneficiaries who currently have no prescription drugs. However, the MMA prescription drug insurance coverage. The dis- increases the government’s payments to count card program is scheduled to end upon Medicare Advantage plans in 2004 and 2005, in implementation of the prescription drug bene- an effort to reverse the exodus of private health fit in January 2006. plans from Medicare over the past four years. All beneficiaries are eligible for the drug Also, in 2006, Medicare Advantage will be discount card so long as they do not have expanded to include regional “preferred Medicaid prescription drug coverage. Eligible provider organization” (PPO) plans.16 The beneficiaries began enrolling in the drug dis- MMA and the final rule include special incen- count card program in May 2004 and began tives to attract and retain regional PPOs in receiving discounted drug prices on June 1, rural areas. Policymakers hope that the addi- 2004. CMS announced in September 2004 that tion of regional PPOs will provide beneficiaries, it would automatically enroll 1.8 million low- particularly those in rural areas, with more income beneficiaries currently enrolled in options when selecting a health plan. CMS Medicare Savings Programs. These additions projects that in 2005, over 90 percent of were estimated to bring the March 2005 dis- Medicare beneficiaries will have access to count card enrollment to 6.2 million beneficiar- Medicare Advantage plans.17 ies19, many of whom were automatically enrolled continued on page 22 20 ABC DIGEST OF URBAN CARDIOLOGY July/August 2005
  17. 17. A Primer on Medicare and the New Medicare which make up 95 percent of all drugs used by Prescription Drug Benefit the Medicare population. continued from page 20 Card sponsors must negotiate rebates, dis- counts, or other price concessions from manu- through Medicare Advantage plans and State facturers and retail pharmacies on covered Pharmaceutical Assistance Programs (SPAPs). drugs and must pass a “share of such conces- Beneficiaries may enroll in only one sions” to discount card enrollees. The price dis- Medicare-endorsed drug discount card pro- counts given to the Medicare prescription drug gram at a time and may be charged up to a $30 plans are excluded from Medicaid best price enrollment fee, but they may also use any non- calculations. endorsed drug discount card, as well, if they Card sponsors are required to report drug- choose to do so. Beneficiaries enrolled in a specific pricing information to CMS, as well as Medicare managed care plan were able to aggregate data on savings passed on to discount enroll only in that plan’s discount card program, card enrollees. CMS established a drug price if it offers one. Beneficiaries were permitted to comparison Web site for beneficiaries (located switch from one Medicare-endorsed discount at www.medicare.gov), which includes the max- card plan to another during the coordinated imum “negotiated prices” (including dispensing election period from November 15 through fee) for all of the individual drugs offered by December 31, 2004. There are exceptions to the card sponsor. Beneficiaries may also call this “lock-in” policy under certain circum- Medicare’s national number (1-800- stances, e.g., if a beneficiary moves outside his MEDICARE) to obtain drug price comparison or her original card sponsor’s service area or if a information for different discount cards. card sponsor terminates its program. Certain low-income beneficiaries (i.e., ben- New Outpatient Prescription Drug eficiaries with incomes below 135 percent of Benefit: 2006 the federal poverty level (FPL), or $17,320.50 Beginning in 2006, the Medicare prescrip- for a family of two in 2004) also may be eligible tion drug benefit will transform the way that for a “transitional assistance” credit of $600 per Medicare beneficiaries pay for and receive year to help them purchase prescription drugs. their prescription drugs. When applying the transitional assistance, ben- eficiaries must still pay coinsurance of between STANDARD DRUG BENEFIT DESIGN 5 and 10 percent per prescription, but do not The MMA specifies certain minimum stan- have to pay the card’s annual enrollment fee, if dards for Part D coverage—the “standard Part one applies. State pharmaceutical assistance D benefit,” which is structured as follows: programs can also “wrap around” the drug ben- • To enroll, a beneficiary must pay a monthly efit by covering the drug coinsurance amounts premium that is projected to be approxi- for low-income discount card enrollees. mately $37 per month (or $448 annually) in There are over 40 Medicare-approved drug 2006 (late enrollment penalties will be discount cards currently offered to beneficiar- ies. The discount card regulations require that, at a minimum, all card sponsors must provide Transitional Assistance (TA)—The $600 federal subsidy access to at least one discounted drug in each for prescription drug spending,provided in 2004 and of 209 specified therapeutic categories. 2005 to Medicare drug discount card enrollees with Sponsors must offer a generic drug alternative incomes below 135% FPL. in more than half of the therapeutic categories, 22 ABC DIGEST OF URBAN CARDIOLOGY July/August 2005
  18. 18. assessed for individuals who enroll in Part D TrOOP, but employer wraparound benefits will after the initial enrollment period) not count toward incurred out-of-pocket costs for • The beneficiary must pay an annual the purposes of reaching the catastrophic cap. deductible of $250 before Medicare coverage Plans may alter certain aspects of the bene- begins fit design (e.g., lowering the annual deductible • For drug expenses between $251 and $2,250, or reducing cost-sharing above the catastrophic Medicare and the plan will share 75 percent threshold) as long as the design provides bene- of costs and the beneficiary must pay the fits at least “actuarially equivalent” to, or richer remaining 25 percent than, the standard Part D benefit. • For drug expenses between $2,251 and The premium, deductible, initial coverage $5,100, the beneficiary must pay all costs— limit, and catastrophic threshold will all be this is commonly referred to as the gap in increased after 2006 by the rate of growth in Part D coverage (“doughnut hole”) Medicare prescription drug spending. • For drug expenses beyond $5,100, Medicare Depending on how fast total Medicare spend- will pay 80 percent, the plan is at risk for 15 ing on prescription drugs grows each year, percent, and the beneficiary will pay the these amounts could grow substantially from remaining 5 percent one year to the next. Medicare beneficiaries will be acutely aware of these year-to-year In 2006, beneficiaries must spend out-of- changes in out-of-pocket expenses and cover- pocket $3,600 on Part D drugs (including the age limits for the Medicare drug benefit. The $250 deductible, 25% coinsurance in the initial 2005 Medicare Trust Fund Trustees’ report coverage stage, and the coverage gap) to reach estimates that the benefit gap will increase the catastrophic threshold. The Part D premium from $2,850 in 2006 to $4,605 in 2013. is not included in these true out-of-pocket (TrOOP) costs. Drugs that are not on a plan’s for- ADMINISTRATION OF DRUG BENEFIT mulary do not count toward TrOOP. Assistance As noted above, private-sector entities will from SPAPs, bona fide charities, and family administer the Medicare Part D benefit. These members will be included in the calculation of entities, which could include established man- aged care organizations or prescription drug Negotiated Prices—Prices for covered Part D drugs that only plans, may use many of the standard cost- take into account discounts, subsidies, rebates, and containment tools. These tools include drug other price concessions and include any dispensing fees. formularies, tiered copayment structures, PDP sponsors and MA organizations are required to pro- generic drug substitution, therapeutic substitu- vide their enrollees with access to negotiated prices for tion, and restricted pharmacy networks. covered Part D drugs included in the plans’ formularies. TYPES OF PLANS There are three types of plans that may administer the Part D benefits: Coverage Gap—The portion of the Part D benefit structure in which beneficiaries pay 100% of their Part D drug 1. A “Medicare Advantage” managed care expenditures. In 2006, there will be a $2,850 coverage prescription drug plan (MA-PD plan), gap in the standard benefit between the initial coverage 2. A stand-alone “prescription drug plan” limit ($2,250) and the catastrophic threshold ($5,100). This (PDP), and gap corresponds to $3,600 in out-of-pocket spending for the beneficiary. (Also referred to as the “doughnut hole”) continued on the next page ABC DIGEST OF URBAN CARDIOLOGY July/August 2005 23
  19. 19. TIMELINE FOR IMPLEMENTATION OFMEDICARE DRUG BENEFIT Notes: MMA=Medicare Modernization Act; NPRM=Notice of Proposed Rule-Making. * CMS notice of 2006 rate methodology and assumptions. © The Health Strategies Consultancy STANDARD MEDICARE PART D DRUG BENEFIT STRUCTURE * Equivalent to $3,600 in “true out-of-pocket” (TrOOP) spending (= $250 + $500 [25% coinsurance on next $2,000] + $2,850 [100% coinsurance during coverage gap]). Sources: Kaiser Family Foundation, March 2005.2005 Medicare Trustees Report. © The Health Strategies Consultancy 24 ABC DIGEST OF URBAN CARDIOLOGY July/August 2005
  20. 20. 3. A “fallback” prescription drug plan, which will be offered only in regions where there True Out of Pocket Costs (TrOOP)—The portion of cost- are not at least two private plans willing to sharing incurred by the individuals in a health plan. Under Medicare Part D, TrOOP will be counted to deter- offer Part D coverage. mine when a beneficiary reaches the coverage gap and These plans will derive payments from a when a beneficiary qualifies for catastrophic coverage. number of sources, including: • Monthly premium subsidies from the federal MA-PD plans and PDPs will contract with government, which will be risk-adjusted to Medicare to deliver Part D benefits and will reflect variation in drug costs among benefi- bear the financial risk for the costs within cer- ciaries, tain risk corridors. Potential plan sponsors may • Monthly premiums and per script copay- approach other entities with proposals to ments paid by beneficiaries, spread risk to other players (e.g., manufactur- • Reinsurance payments for high-cost benefici- ers). Fallback plans will be offered only if two aries, and risk-bearing plans (including at least one stand- • Risk-sharing payments from the federal gov- alone PDP) are not willing to offer Part D cov- ernment if a plan’s total drug costs are unex- erage in the region. Fallback plans will contract pectedly high in a given year (conversely, a with Medicare to provide administrative serv- plan must share with the federal government ices (e.g., claims payment) only. Fallback plans some of the savings realized if its drug costs will bear only performance risk while the fed- are significantly lower than expected in a eral government will bear the financial risk of given year). providing the drug benefit. continued on the next page SIZE OF THE “DOUGHNUT HOLE” INCREASES DRAMATICALLY OVER TIME * Assumes that growth in drug costs significantly exceeds CPI. Source: 2005 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, Table V.C2., p. 156. © The Health Strategies Consultancy ABC DIGEST OF URBAN CARDIOLOGY July/August 2005 25
  21. 21. ies living in these regions. Plans may bid to Medicare Advantage Prescription Drug Plan (MA-PD)— serve only one region or every region in the Medicare Advantage plans that choose to offer the Part country. PDPs and regional MA-PD plans must D prescription drug benefit. offer coverage to all eligible individuals who reside in the region(s) they serve. The regions design is critical in determining the degree of success of the Medicare drug ben- Prescription Drug Plan (PDP)—Prescription drug cover- efit. The regional structure will also influence the age that is offered to beneficiaries enrolled in FFS amount of rebates (and other price concessions) Medicare by a plan sponsor under a contract with CMS. plans seek from manufacturers. Plans serving PDP sponsors may offer more than one plan. larger regions with larger populations may be more aggressive in seeking volume-related price concessions. By designating more and smaller Fallback Prescription Drug Plan—A Part D prescription regions, CMS has attempted to induce plan par- drug plan that will not bear insurance risk. If beneficiar- ticipation and competition by minimizing the ies do not have a choice of at least two plans under Part potential risks associated with managing expendi- D in a region, CMS may assume insurance risk and tures for very large populations. administer the drug benefit through plans bearing per- The following graphics depict the PDP and formance risk only. MA regions announced by CMS on December 6, 2004: MA-PD plans and PDPs will negotiate with PLAN BIDDING AND CONTRACTING manufacturers to secure discounts. Plans will PROCESS be required to report the “aggregate” price Beneficiary premiums for the new drug concessions negotiated between plans and benefit will be determined through a competi- manufacturers that are passed through to bene- tive bidding process. All prescription drug ficiaries in the form of lower subsidies, lower plans and Medicare Advantage plan sponsors monthly beneficiary prescription drug premi- will submit bids to CMS for the cost of provid- ums, and lower prices through pharmacies and ing the drug benefit in the service area to a typ- other dispensers. This information will be ical beneficiary. Plans must submit bids by June exempt from Medicaid best price reporting 6, 2005 for each of the Part D plans they pro- obligation. pose to offer in 2006. CMS will review the bids, and the portion of all the approved bids PLAN REGIONS for basic benefits will be compiled into a The MMA required CMS to establish national weighted average, which will serve as a between 10 and 50 service regions in which benchmark for purposes of setting premiums. MA-PD plans and PDPs must compete. On There will be considerable uncertainty dur- December 6, 2004, CMS announced the estab- ing the first years of the prescription drug pro- lishment of 34 PDP regions and 26 MA regions. gram so CMS is implementing a system of In CMS’ configuration, each state is assigned to aggregate risk corridors and individual reinsur- only one region (i.e., no state is split between ance to encourage plans to enter the new mar- regions), and each of the PDP service areas ket. The risk corridors will protect plans and “nest” within the MA service areas (i.e., no MA limit the total amounts of their potential losses region is split between two PDP regions. MA- PD plans and PDPs will bid to serve beneficiar- continued on the next page 26 ABC DIGEST OF URBAN CARDIOLOGY July/August 2005
  22. 22. PDP REGIONS NOTE: Each territory is its own PDP. SOURCE: CMS, http://www.cms.hhs.gov/medicarereform/mmaregions/, December 6, 2004. © The Health Strategies Consultancy MA REGIONS SOURCE: CMS, http://www.cms.hhs.gov/medicarereform/mmaregions/, December 6, 2004. © The Health Strategies Consultancy ABC DIGEST OF URBAN CARDIOLOGY July/August 2005 27
  23. 23. PLAN BIDDING AND CONTRACTING PROCESS * Plans also begin establishing systems connectivity with CMS at this time. © The Health Strategies Consultancy if drug expenses for their enrollees greatly peutic categories and classes that may be used exceed their expectations. In 2008 and beyond, by MA-PD plans or PDPs as part of their drug the risk corridors will be widened and plans benefit formularies. USP’s mission in develop- will be put at more risk. ing the Model Guidelines was to create a list of The federal government will also protect categories and classes that protect Medicare Part D plans from “catastrophic” drug costs beneficiaries’ access to the drugs they need and associated with extremely high-cost individual supports the United States Government’s beneficiaries. Through a reinsurance subsidy cal- efforts to implement the Medicare prescription culated on an individual beneficiary basis, the drug benefit. government will cover 80 percent of the cost of The Model Guidelines will play a role in a beneficiary’s Part D drugs once he has reached the implementation of the Part D benefit, the out-of-pocket threshold. These payments because plans adopting the Model Guidelines will be estimated in CMS’ up-front monthly pay- are given a “safe harbor.” That is, those plans ments to plans and reconciled at the end of the choosing to adopt the Model Guidelines are year to reflect actual reinsurance costs. Thus, given protection from scrutiny of their thera- plans bear risk for only 15 percent of a benefi- peutic classification system (TCS) by CMS. The ciary’s catastrophic spending. The following dia- classification systems of plans choosing to gram graphically depicts this reinsurance policy: depart from the Model Guidelines will be sub- ject to CMS review.21 It is important to note FORMULARIES AND OTHER COST that a classification system is just one compo- CONTAINMENT TOOLS nent of a formulary and that CMS will review The MMA required the United States Pharmacopeia (USP)20 to develop model thera- continued on page 30 28 ABC DIGEST OF URBAN CARDIOLOGY July/August 2005
  24. 24. A Primer on Medicare and the New Medicare USP also suggested a list of “Formulary Prescription Drug Benefit Key Drug Types” that CMS could use as part of continued from page 28 its evaluation of formularies submitted by drug plans and released a comprehensive listing of all plans’ formularies to ensure that they do not individual drugs that would fit into the Model “discriminate” against certain types of patients Guidelines. This listing may be used by plans (e.g., impose unreasonable prior authorization intending to use the Model Guidelines as a safe or cost-sharing requirements for only certain harbor, but—like the listing of key drug kinds of medications). For this reason, the types—is not required. importance of the Model Guidelines has been The MMA allows plans to develop and use diminished. formularies in administering the Part D drug The Final Model Guidelines released on benefit. A plan’s formulary must include at least January 3, 2005 consist of: two drugs in each therapeutic category or class unless there is only one drug in a given class. • 41 broad therapeutic categories, based on CMS may require more than two drugs per similar groups of diagnosis codes; class in cases where additional drugs present • 137 pharmacologic classes, generally based unique and important therapeutic advantages on similar mechanisms of action or chemical in terms of efficacy and safety. CMS will review structure; and all classification systems to ensure that the for- • A total of 146 unique therapeutic categories mulary offers sufficient breadth of necessary and pharmacologic classes. (32 categories are drugs and is non-discriminatory. subdivided into 137 unique classes; 9 cate- Plans are also permitted to use tiered cost gories have no associated classes.) sharing structures and other mechanisms to PLANS SHARE AGGREGATE RISK WITH THE GOVERNMENT THROUGH RISK CORRIDORS * Plans also begin establishing systems connectivity with CMS at this time. © The Health Strategies Consultancy 30 ABC DIGEST OF URBAN CARDIOLOGY July/August 2005
  25. 25. DESCRIPTION OF “INDIVIDUAL REINSURANCE” FOR HIGH COST ENROLLEES * True out-of-pocket spending (TrOOP) © The Health Strategies Consultancy control costs, such as prior authorization, step tices in its P&T committee meetings, formula- therapy, and therapeutic interchange. CMS will ries, and use of benefit management tools. look to best practices in existing drug benefits CMS will use four principles to guide its and expects that the types of formularies in evaluations: widespread use today would receive approval. • Review existing “widely recognized” best The MMA contains several measures, such as practices of plans that currently provide pre- drug utilization management programs, which scription drug benefits for seniors and people encourage plans to include incentives to reduce with disabilities, costs where medically appropriate and to pre- • Provide access to medically necessary drugs, vent over- and under-utilization of prescribed • Provide flexibility for plans to design bene- medications.. fits that “promote real beneficiary choice On January 21, 2005, CMS released guide- while protecting beneficiaries from discrimi- lines that it will use to evaluate PDPs’ and MA- nation,” and PD plans’ formularies and drug cost contain- • Use an administratively efficient process for ment procedures. CMS views the guidelines formulary reviews at CMS. (along with requirements in the final Part D • More detailed information on P&T commit- regulations for formularies, appeals, and excep- tee, formulary, and benefit management tions) as a method to “assure that beneficiaries reviews can be found in the Appendix. receive clinically appropriate medications at the lowest possible cost” by providing access to GRIEVANCES AND APPEALS medically necessary treatments, ensuring Part D plans not only have to have well- nondiscrimination, and encouraging the use of designed formularies, but they are also required drug benefit management tools currently in to have in place meaningful grievance proce- widespread use. The final guidelines specify dures and appeals processes that conform to that CMS will evaluate Part D plans’ proposed formularies for potentially discriminatory prac- continued on the next page ABC DIGEST OF URBAN CARDIOLOGY July/August 2005 31
  26. 26. Medicare managed care standards. CMS’ rules tative must be allowed to request coverage for for grievances and appeals are very complicated, a non-formulary drug if the drug they need is and this primer provides only a high-level not on the formulary, has been removed from overview of the policies and procedures that the formulary, or requires step therapy or dos- Part D plans must have in place for handling: ing restrictions. Beneficiaries can request an expedited review to receive a decision from the • Appeals (for beneficiaries who dispute deci- plan within 24 hours. If the initial exceptions sions regarding their entitlement to services), request is denied, it becomes a “redetermina- • Coverage determination requests (which tion,” and if the redetermination request is also allow enrollees to ask for coverage), denied, the process can leave the plan, and the • Requests for exceptions (for beneficiaries who decision can be passed on to an Independent are requesting access to a non-formulary Review Entity (IRE) and other external com- drug, continued coverage of a drug removed mittees. from the formulary, or an exception to step therapy or other utilization management ELIGIBILITY AND ENROLLMENT techniques), and In order to be eligible for Part D coverage, • Grievances (which cover situations that do an individual must be enrolled in Medicare not involve coverage determinations or dis- Part A or Part B. Beneficiaries will be able to putes involving enrollment or eligibility for choose from at least two private Part D plans Part D). per geographic region, except in areas where The MMA defines a complex formulary there is only a fallback plan. Beneficiaries will exceptions process, including external review, be permitted to change plans annually during for decisions related to the application of cost- an open enrollment period, similar to the sharing and coverage of non-formulary drugs. process used in the current Medicare managed Part D enrollees or their authorized represen- care program. The first open enrollment period More Information on the Automatic Enrollment of Full-Benefit Dual Eligible Individuals CMS’ regulations address the potential gap in coverage for dual eligible beneficiaries. By January 1, 2006, CMS will automatically enroll full benefit dual eligibles who fail to enroll in a PDP or MA-PD plan into a PDP offering basic prescription drug coverage. If there is more than one qualifying plan in a region, CMS will enroll individuals in plans on a random basis. CMS will begin enrolling dual eligibles in qualified plans as soon after November 15, 2005 as participating plans are known. After 2006, any Medicare individual who is a qualifying full dual eligible will beauto-enrolled into a qualifying PDP as soon as possible. CMS provides for a “special enrollment period” in which full dual eligible individuals may elect to switch into another PDP or MA-PD plan at any time. Though CMS has the legal authority to automatically enroll full benefit duals into PDPs, it has concluded that it does not have the legal authority to automatically enroll them into MA-PD plans—even if the beneficiary is enrolled in an MA plan during 2005. CMS will, instead, “facilitate enrollment” by assigning these individuals to an MA-PD plan with the lowest premium offered by the same MA organization. CMS will inform the beneficiary in advance of the assignment. If the dual eligible individual does not affirmatively elect a different plan or decline enrollment, he or she will be enrolled in the MA-PD plan. 32 ABC DIGEST OF URBAN CARDIOLOGY July/August 2005

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