For Professionals: Advocacy & Policy

California Low-Income Health Advocate Alert On Medicare Part D

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April 30, 2007

PLEASE DISTRIBUTE
More information on Medicare Part D, including past Alerts, can be found at www.cahealthadvocates.org/cmc/ and http://www.nsclc.org/areas/medicare-part-d.

State Update

California Bill Would Pay for Dual Eligibles’ Part D Copays

As referenced in prior Alerts, many individuals who are dually eligible for Medicare and Medi-Cal have been struggling to afford co-payments under the Medicare Part D prescription drug benefit. Those that cannot afford these co-pays often go without needed medications. When the state Emergency Drug Benefit expired at the end of January, it appeared that the state government would not act to provide additional assistance to California’s dual eligibles – until now. Senate Bill 623, introduced by Senator Wiggins, would require that the state pay co-payments for dual eligible beneficiaries in the Medicare Part D prescription drug program. The proposed bill “would provide that, beginning January 1, 2008, the [Department of Health Services] shall pay all copayments required by drug plans under the Medicare Program for generic or brand name medications for full-benefit dual eligible beneficiaries under specified conditions.” SB 623 has cleared its first legislative hurdle after being heard in, and passed by, the Senate Health Committee on April 11, 2007. During the hearing Senators Kuehl and Alquist asked to be added as co-authors. SB 623 is not currently scheduled for another hearing.

Here is a link to a copy of the bill: http://info.sen.ca.gov/….html. Advocates with dual eligible clients who have been hurt by burdensome co-payments since the advent of Part D may send their stories to Kate McGarvey of the Health Consumer Alliance, mcgarvey@healthlaw.org, who will collect and forward the stories to Sacramento advocates and legislators.

Federal Update

Update on Advocacy Efforts to Address Medicare Advantage Marketing Abuses

In recent Issue Alerts, we reported that advocates are continuing to encounter inappropriate marketing activities surrounding the sale of Part D and Medicare Advantage (MA) plans, particularly MA Private Fee-for-Service (PFFS) plans. Further, we noted that dual eligibles are being targeted to enroll in PFFS plans, which often results in them having to change doctors or try to disenroll from the plan in order to continue seeing their providers.

A group of advocacy organizations, including California Health Advocates and NSCLC, has continued efforts to bring attention to these ongoing marketing problems, including through submitted comments on CMS’ Draft Call Letter to Medicare Advantage and Part D plans, and correspondence with both CMS headquarters and members of Congress.

In late March, CMS issued a Draft of its 2008 Call Letter to Medicare Advantage and Part D plans, which provides information for plan sponsors to prepare for the following calendar year, including a summary of CMS rules and guidance. In early April, NSCLC compiled and submitted comments to CMS on behalf of a group of advocacy organizations, including California Health Advocates. These comments included a range of issues addressed in the Draft Call Letter, including: marketing rules, beneficiary mailings, plan comparison information, Medicare Advantage plan rules and formulary issues. These comments are available on NSCLC’s website at http://www.nsclc.org/….

On April 20th, CMS released the Final 2008 Call Letter to Medicare Advantage and Part D Plans. While CMS is starting to take affirmative steps to address marketing issues, many advocates believe that the agency has not gone far enough. CMS’ Final 2008 Call Letter does acknowledge that plan sponsors – particularly those offering PFFS plans – must take more responsibility for overseeing marketing activities: “Medicare Advantage organizations must provide strong oversight and training for all marketing activities” including ensuring that agents and brokers who sell PFFS plans “explain to prospective enrollees that while they can see any provider who agrees to accept the plans terms and conditions, providers may decline to accept the PFFS terms and conditions.” (p. 25).

Otherwise, the final Call Letter fails to provide strong guidance to protect beneficiaries. CMS says that it is “considering” several PFFS oversight features including: required disclaimer language in all marketing and enrollment as well as sales presentations; requiring plans to provide documented training of marketing agents and brokers; using a contractor to conduct “secret shopper” tests on sales and outreach activities; and requiring plans to perform “outbound verification calls” to all new applicants to verify that they understand the plan features and do in fact want to enroll. (pp.51-52) The statement that CMS is only “considering” implementing these proposals does not send a strong message to plans now. CMS’ Final Call Letter also does not incorporate several suggestions made by advocates, including requiring plans to verify that a prospective enrollee’s doctor(s) will accept the plan prior to processing enrollment. The Final Call Letter is available at: http://www.cms.hhs.gov/….pdf

In addition, California Health Advocates recently wrote a letter to certain members of California’s Congressional delegation – signed onto by NSCLC and several other advocacy groups – requesting that Congress analyze: 1) the marketing of PFFS plans to dual eligibles (including a review of the suitability of these products for dual eligibles, and a call for a ban on marketing such plans to duals until plans and CMS can demonstrate such suitability); and 2) the commission structures that plans pay agents for selling Medicare products. A copy of the letter can be found on California Health Advocates' website at: http://www.cahealthadvocates.org/advocacy/index.html

If you encounter instances of potential marketing misconduct, we suggest that you report the case to CMS; for further information, and to share stories of potential marketing misconduct, please contact David Lipschutz at California Health Advocates at dlipschutz@cahealthadvocates.org.

CMS Prohibits Plans from Disenrolling Part D Beneficiaries Who Have Requested That Premiums be Withheld from Their Social Security Checks; Clarifies “All or Nothing” Rule for Premium Withholding

As has been reported in previous Alerts, premium withhold errors have been a consistent element of Medicare Part D. Under Medicare Part D, beneficiaries who are liable for premiums can elect either to pay their premiums to the plan directly (“direct bill”) or to have premiums withheld from their Social Security checks (“premium withhold”). When the premium is withheld from the Social Security check, the Social Security Administration (SSA) and the Centers for Medicare and Medicaid Services (CMS) are responsible for ensuring that the amount withheld is transferred to the plan.

Unfortunately, there have been thousands of instances in which the premium withhold system has not functioned properly. In some cases, too much money has been withheld from checks; in others, too little. And, in many cases, Part D plans have not received premiums owed. As a result, some plans have attempted to disenroll beneficiaries involuntarily for failure to pay premiums.

In a recent memorandum to plans, CMS clarified that plans may not involuntarily disenroll for failure to pay premiums beneficiaries who are considered, by CMS, to be in premium withhold status. CMS considers a beneficiary who has requested automatic withholding to be in premium withhold status until either: 1) the request for premium withhold is rejected, fails or is otherwise unsuccessful for a reason not related to a CMS/SSA or CMS/plan system transfer issue; or 2) the beneficiary affirmatively requests “direct bill.” Only after one of these two situations occurs will a beneficiary be considered “direct bill.” Once the beneficiary is considered “direct bill,” the plan must notify the beneficiary of the premium amount owed and provide a grace period for repayment. The plan must always allow the beneficiary an opportunity to pay the amount owed prior to initiating an involuntary disenrollment.

Plans cannot involuntarily disenroll beneficiaries for failure to pay premiums which the beneficiaries can demonstrate were deducted from their checks, even if the plan never received the payments. Instead, plans must work with CMS to obtain payment. Plans are also prohibited from seeking payment of these premiums from beneficiaries.

The memo also reminds plans that involuntary disenrollments are prohibited when the plan has been notified that a State Pharmaceutical Assistance Program (SPAP) or other third party payer intends to pay the beneficiary’s entire Part D premium.

CMS issued another memo on March 8, 2007, clarifying its “all or nothing” rule with respect to Social Security premium withholding: if a beneficiary is getting partial help paying premiums from a pharmaceutical assistance program or other supplemental payer, the beneficiary cannot elect to have a partial premium withheld from his or her Social Security payments. CMS recommends that beneficiaries with premium reductions from other payers select “direct bill” for the remainder of their plan premium; otherwise the amount automatically withheld will exceed the amount owed.

Copies of the memos are available at: http://www.nsclc.org/….

CMS Announces 2008 Benefit Premium Calculations

In an effort to limit disruptions in Medicare prescription drug coverage for low-income beneficiaries at the beginning of the 2008 plan year, the Centers for Medicare and Medicaid Services (CMS) announced plans to continue using its demonstration authority to modify the statutory formulas used to determine “benchmark” drug plans and to apply a de minimis policy for plans with premiums above benchmark.

Under the Medicare Modernization Act (MMA), full premium subsidies are available to qualified low income beneficiaries only if they enroll in basic plans with premiums at or below a benchmark set annually. Premium benchmarks are set using a weighted average of bids by plans for the upcoming plan year. The weighting is based on plan enrollments for the prior year.

In 2007, CMS, under its demonstration authority, abandoned the statutory formulas and substituted formulas that significantly reduced weighting. Because most beneficiaries had enrolled in the most inexpensive plans, use of the statutory formulas would have caused many plans to lose benchmark status and could have resulted in massive disruption for low-income beneficiaries. When plans lose benchmark status, low income enrollees either must change plans or pay the additional premium. In the case of auto-enrolled dual eligible beneficiaries, CMS moves them out of non-benchmark plans into new benchmark plans without regard to whether the new plan’s formulary meets the prescription drug needs of the beneficiary. These moves can be accompanied by computer errors, the most common of which has been loss of an LIS identifier in a person’s file.

CMS is planning to use the modified formulas again in 2008. Even with those formulas, at least 1.17 million beneficiaries faced reassignment in 2007.

In 2007, CMS also determined that low income beneficiaries in plans with premiums that were no more than $2 above the benchmark could continue in those plans without penalty. CMS announced that it will continue the demonstration for the 2008 plan year but that the de minimis amount for 2008 will be $1.

While the efforts of CMS to blunt the impact on low income beneficiaries are helpful, the action highlights fundamental structural flaws in the Part D program and its failure to provide stable and dependable prescription drug coverage to low income enrollees. For further information, contact NSCLC’s Oakland office.

Upcoming Congressional Hearings on Medicare

  • Senate Finance Committee – “The Medicare Prescription Drug Benefit: Monitoring Early Experiences” -- May 2nd 10:0am (ET) see: http://finance.senate.gov/….htm
  • House Ways & Means Committee – “Hearing on Medicare Programs for Low-Income Beneficiaries” -- Thursday, May 3rd 10:00am (ET) see: http://waysandmeans.house.gov/…

Various CMS Materials/Updates

Comments on Draft Revisions to MA and PDP Enrollment Guidance Due May 7th
CMS has issued draft revisions of the Medicare Advantage (MA) and Prescription Drug Plan (PDP) Enrollment and Disenrollment Guidance for a three-week comment period. Comments on the draft revisions must be received by CMS no later than 5 p.m. (EDT), Monday, May 7, 2007. The draft update to the Medicare Advantage enrollment guidance, summary of changes, and comment chart are available on the Medicare Health Plan Enrollment and Disenrollment Page of the CMS website at: http://www.cms.hhs.gov/…

The draft update to the PDP enrollment guidance, summary of changes, and comment chart are available on the Part D Enrollment Guidance page of the CMS website at: http://www.cms.hhs.gov/…

If you have comments or questions about CMS’ draft enrollment and disenrollment guidance, please contact Georgia Burke, gburke@nsclc.org, or David Lipschutz, dlipschutz@cahealthadvocates.org. Comments received before May 7 will be collected and submitted to CMS.

Special Transition Period for Auto-Enrollees; Revised Auto-Enrollment Letters for Dual Eligibles

CMS has posted an instruction memo to plans re: reimbursing dual eligibles for coverage during a retroactive enrollment period at: http://www.cms.hhs.gov/….pdf. This process is particularly important for Medicare beneficiaries who later become eligible for Medi-Cal (Medicaid), and who currently experience a gap or delay in getting auto-enrolled in a prescription drug plan at the full Low Income Subsidy amount. Even though auto-enrollment and LIS eligibility are retroactive to the start of full benefit eligibility, beneficiaries may be forced to pay out-of-pocket until CMS’ systems get caught up. (Beneficiaries who know their Medicaid eligibility has been approved and are waiting for CMS’ systems to catch up should try to utilize the Point of Service option and/or the Best Available Data policy to secure medications at the appropriate subsidy level.)

CMS’ recent memo reminds Part D plans that they are responsible for reimbursing prescription drug costs that newly auto-enrolled members may have incurred during the period of retroactive eligibility. For 2007, CMS is requiring plans to provide a “special transition period” of up to seven months for which the plans must reimburse claims incurred while a beneficiary was retroactively dual eligible. When the special transition period applies, plans must reimburse “all allowable charges paid by other third party payers for all Part D drugs, including non-formulary drugs provided outside the transition period and formulary drugs with prior authorization requirements.” CMS will be responsible for payment of any extra costs caused by out-of-network or other pricing differences. Note that there may be other situations (outside of auto-enrollment lags) in which LIS recipients may seek retroactive reimbursement from their plans.

CMS has also revised its auto-enrollment notice to inform dual eligibles about the change in their drug coverage from Medicaid to Medicare. The notice explains that these individuals will be enrolled in a Medicare Prescription Drug Plan if they haven’t joined a plan on their own, what plan Medicare will enroll them in, and their costs in the plan. It also informs beneficiaries that they may request reimbursement for certain prescription drug costs incurred on or after the date of auto-enrollment, per CMS’ new “special transition period” described above. It will also notify them that their Medicaid isn’t creditable prescription drug coverage. A copy of the letter is available at: http://www.cms.hhs.gov/….pdf

CMS Posts Data re: Medicare Advantage and Part D Plans on Website

CMS has added a new section on the CMS public website to house contract and enrollment data about MA and Part D plans. This site provides: a) a plan directory; and b) an MA claims processing contact directory. According to CMS, these directories contain basic information about the contract as well as contact information for the plan itself. The site can be found at: http://www.cms.hhs.gov/MCRAdvPartDEnrolData/

Litigation Update

The National Senior Citizens Law Center and the Center for Medicare Advocacy participated in an informal settlement conference last month with CMS officials and their attorneys for Situ v. Leavitt, the national class action lawsuit on behalf of dual eligibles. We were able to outline for CMS the key enrollment and subsidy problems facing dual eligibles as a result of information many of you have provided. It was clear to us that some high level officials at CMS are still not aware, in many respects, of the type and severity of problems our clients face in accessing Part D plans. For example, they were surprised to hear that there continue to be serious problems with using the 1-800-MEDICARE number (please update NSCLC with your 1-800-MEDICARE experiences—see “Report Your Stories” in Section IV below). A formal settlement conference with a magistrate judge is currently scheduled for July 3. Meanwhile, the lawsuit has begun the discovery stage, including both document production and depositions of CMS officials.

For questions about the Situ litigation, contact Jeanne Finberg, Anna Rich, arich@nsclc.org, or Kevin Prindiville, kprindiville@nsclc.org. We particularly appreciate the support of some fabulous California advocates—thank you!!

Information for Advocates

Announcements from California Health Advocates

The following public events are scheduled:

California Medicare Coalition Regional Forums –9:30 am – Noon

(Registration begins at 9:00 a.m.)
Topic: “Buyer Beware: Marketing of Medicare and Part D Plans”

  • May 8 – San Francisco - Mission Creek Senior Community – Swift Conference Room – 225 Berry Street, San Francisco, CA 94158
  • June 13 – Redding -- Holiday Inn & Convention Center – Buckskin Room – 1900 Hilltop Drive, Redding, CA 96002

Call (916) 231-5110 or email to RSVP.

Live Webcast: “Special Needs Plans: A National and California Perspective"

Wednesday, June 6; 10:00 a.m. – Noon PST
Patricia Nemore, Senior Policy Attorney, Center for Medicare Advocacy, Inc.
David Lipschutz, Staff Attorney, California Health Advocates
Anna Rich, Liman Fellow/Project Attorney, National Senior Citizens Law Center

Register today! E-mail: news@cahealthadvocates.org or call (916) 231-5110. You must register to receive web access information.

Participating Organizations: California Health Advocates; Center for Medicare Advocacy, Inc.; National Senior Citizen's Law Center. This webcast is supported by The California Endowment.

For more information on these upcoming events or to join the California Medicare Coalition please visit: http://www.cahealthadvocates.org/cmc/events.html or email news@cahealthadvocates.org.

Newsletter Subscriptions/Workshops: To subscribe to the bi-monthly electronic newsletter “CalMedicare Advocate”- please email news@cahealthadvocates.org.

To learn more about educational opportunities available through California Health Advocates, visit http://www.cahealthadvocates.org/education/ for a description of educational training opportunities, or to submit a request for a session.

Announcements from NSCLC

The Center for Medicare Advocacy and the National Senior Citizens Law Center have announced a new affiliation called the “Justice Partnership.” The groups are planning a major conference in Washington, DC to focus advocates and policymakers on the challenges facing lower income older people and people with disabilities. The conference will take place this October.

For two decades the Center for Medicare Advocacy and the National Senior Citizens Law Center (NSCLC) have worked together. The two organizations have shared histories, interrelated missions, and have successfully collaborated in significant litigation, projects, and grants to advance the rights of older people and people with disabilities.

The Justice Partnership grows out of a mutual concern that the safety net for older Americans, created over the last several decades, is unraveling. By collaborating more closely, both organizations will strengthen their ability to advance the legal rights of lower-income older people and people with disabilities and to ensure fair access to quality health care. The partnership comes as Michael Kelly takes the helm as NSCLC's new executive director.

In celebration of the National Senior Citizens Law Center's 35th anniversary and the Center for Medicare Advocacy's 21st anniversary, the first major venture of the Justice Partnership will be a national conference about challenges facing lower-income older people. The conference will be held at the Kaiser Family Foundation in Washington, DC on October 19th. It will assemble advocates, policy-makers, and academicians to examine creative solutions to meet the needs of an aging society.

Report Your Medicare Prescription Drug Stories!

In order to help to get changes at the state and federal levels, we need to hear about the problems your low income clients are facing. We know that your time as advocates is already stretched thin, but any time you can take to report client stories would be extremely helpful.

You can use NSCLC’s updated “Client Story Form” to report problems your clients have faced. You can access the new form at www.nsclc.org/areas/medicare-part-d. This month, NSCLC is particularly interested in reports of problems with 1-800-MEDICARE; email arich@nsclc.org. Thanks for sharing your stories and information.

Get more information about Medicare Part D on this site and at www.nsclc.org/areas/medicare-part-d. We will continually post new training materials as this program develops. Other helpful websites:

For more information, e-mail California Health Advocates or NSCLC:

California Health Advocates

David Lipschutz

(213) 381-3670

National Senior Citizens Law Center

Jeanne Finberg

Katharine Hsiao

Georgia Burke

Kevin Prindiville

Anna Rich

# # #

This Alert is provided by California Health Advocates in partnership with National Senior Citizens Law Center with support from The California Endowment.

California Health Advocates: cahealthadvocates.org

National Senior Citizens Law Center: nsclc.org

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