TS: Medicare Part D is an outpatient prescription drug benefit which requires a premium payment, a deductible, a co-insurance, and will also have a coverage gap at some point during the course of the enrollment year. The plans will cover about 50 percent of an individual’s average annual drug spending and people are going to pay about $1,100 a year, on average. The average annual expenditure for older people is currently about $2,200 a year. What isn’t included is whatever the plan decides not to put on their formulary. There will be 29 separate entities offering drug benefits in Pennsylvania under Medicare – including insurers and pharmacy benefit managers. Everybody is going to have to provide a standard benefit, which comes out to be about 50 percent of an individual’s average annual drug costs. The benefits start in January. Enrollment starts November 15^th and the enrollment window closes on May 15^th of 2006. Enrollment is voluntary, but those who do not sign up within the enrollment window will pay a penalty that is equivalent to at least one percent per month of the average annual premium.

TS: Some plans will have lower premiums than others and there will likely be some difference in the deductibles. The annual deductible standard benefit is $250 but some plans could offer it at $200. The standard benefit calls for a 25 percent co-insurance, but some plans may have slightly lower co-insurances. There will be this "donut hole," or coverage gap, and some plans may cover certain medications during the coverage gap. The coverage gap is a function of how much benefit is being paid. Plans are going to be expected to cover $2,000 in drug expenses in ’06. Once that $2,000 has been covered, then you’re paying everything out of pocket until $3,600, at which point the catastrophic coverage kicks in and the plan will pay 95 percent of the costs. Plans may also differ on formularies and possibly on networks. Not all pharmacies will be participating in all plans.

TS: Generally speaking, no. The vast majority of people, once they sign up for a plan, are going to be locked in until the end of the year. There will an open enrollment window during which time they can switch. This year the enrollment window runs from November 15, 2005 to May 15, 2006 and then it shuts. They can switch within that window but, at the end of the year you run into the new window, which is November 15^th to December 31^st and that’s the way it will be in ’07 and ’08 and beyond: there will be a six week window each year within which they can switch, unless they move or become institutionalized, or their plan pulls out of the market.

TS: The details that need to be worked out are between CMS and the prospective plans. My understanding is that those details pertain largely to formularies, to networks and to cost-sharing as it relates to the beneficiary. They expect to finalize those details by October 1^st.

TS: PACE and PACENET cover any medication that requires a prescription. It’s an open formulary and virtually every retail-licensed pharmacy in Pennsylvania is enrolled as a provider in PACE or PACENET. There are no enrollment fees. There are no premiums. In PACE there isn’t even a deductible. In PACENET there is a $40 monthly deductible. People who are eligible for this benefit have to be a state resident, 65 years of age or older, and meet certain income requirements. The income ceiling for PACENET is about 250 percent of the federal poverty level, which is $23,500 for singles and $31,500 for marrieds. For PACE the income limits are $14,500 and $17,700 – single or married. Copayments under PACE are $6 for generics and $9 for brand-name drugs, and in PACENET it’s $8 and $15. There are currently 300,000 Pa. seniors enrolled: 200,000 in PACE and 100,000 in PACENET.

TS: Not immediately. We’re looking to automatically enroll about 80,000 PACE people who meet the criteria for the subsidized federal benefit. The federal government will pay your premiums and deductible. There will be no coverage gap. The income ceiling for eligibility is about $14,300 for singles and $19,300 for marrieds. We’re working with the federal government to have us apply on behalf of our enrollment and to get them enrolled in the subsidy benefit. Once we get them into the subsidy, then we need to get them into a Part D plan.

TS: The first thing we have to do is determine which plans can meet our standards for coordinating benefits with PACE. We will do that through an RFP.

TS: It depends on how many plans meet our standards for coordinating benefits. I would presume that it is going to be more than one. If we’re going to wind up with more than one plan, we’re going to have to work out a method to randomly assign enrollees.

TS: By the end of December.

TS: About $100 million a year.

TS: That’s something that we’re going to have to work out down the road. We’re not anticipating doing that much before the second half of 2006. The obstacle is coming to a political consensus of how this gets done. For example, if we’re going to automatically enroll people in our program into the Part D benefit and they’re going to have a premium requirement, the question is, who pays the premium? Is it us or is it the enrollee? I think the developing consensus is that the state should pay the premium. So the question is, how do we do that in such a way that we are able in the future to have some impact on what the premium is going to be? The position of the Rendell Administration is that the federal benefit must have no adverse impact on the PACE benefit. If we’re going to enroll people in a benefit that’s going to require them to pay a premium that they don’t now pay, that’s adverse. That can’t happen.

TS: All of them. Everybody in PACE has Medicare eligibility if they’re 65 or older.

TS: Until we know exactly who the plans are and what we’re going to have to pay for – that they don’t pay for, we’re not sure. But I would conservatively estimate about $200 million a year.

TS: A political consensus has to develop around that. One of the options is to use the money elsewhere – for nursing home care, for hospitals. But the more likely option is to use it to provide a drug benefit to people in Pa. who don’t have one. You can do that one of two ways. You can lower the age in PACE from 65 to, say, 60. That’s been proposed. Or you can raise the income eligibility.

TS: I don’t have a precise estimate, but I would say easily another 100,000 people.

TS: Yes. It would make sense because the federal benefit will not cover everything that the PACE benefit covers. From the perspective of the senior, it would make more sense just to be enrolled in PACE, because they don’t have to go through the hassle of being enrolled in another benefit, being confused about what this other benefit is. I think that most Medicare beneficiaries are going to be challenged by the paperwork requirements of getting into the benefit. The Congressional Budget Office is presuming that about 70 percent of Medicare Part D eligibles will actually enroll, but that seems optimistic to me.

TS: If their patient has PACE, my advice would be to tell them not to worry about it – don’t enroll in Part D, and you will not see any change in your PACE benefit.

TS: No, not the individual. There is a benefit to the program. That’s how we sell it to our enrollment.

TS: Yes, and to the provider and the pharmacist. Seniors will go to the pharmacy as they normally do, they’ll present their PACE card and their prescriptions as they normally do. The system will take care of insuring that charges that should be paid for by the federal government go to the plan and charges that would be paid for by PACE come to the state. We’ve been doing this with other plans since 1992. In fact, Pennsylvania was the first state in the country to have a statewide program with online, real-time, point-of-sale claims adjudication. Some 34,000 our current enrollees also have drug coverage with Independence Blue Cross and Highmark, who handle large Medicare HMO enrollments. Of the 29 entities that will be doing Medicare Part D in Pennsylvania, six of them will be Medicare Advantage (HMO) plans and will be offering a drug benefit. Some of our people may be enrolled in their plans and, to the extent that they are, their plan is the primary coverage and we’re secondary. We will take care of the claims routing at the point of sale.

TS: The key details that have to be worked out are what products are we covering that are not on a Part D plan’s formulary, and who in our network is not in their network. The federal plan would be the primary coverage – that’s by federal law and state law.