The Transition of Dual Eligibles

The Risk of Losing Access to Needed Medications, in Transition to Medicare Drug Coverage in 2006

(Information dated June 2005)

Dual eligibles are people who receive both Medicare and Medicaid. There are 6.4 million people who fall into this category.  Nearly half a million of them are people with developmental disabilities.  Most are receiving both SSI and Social Security benefits.  The Medicare Prescription and Modernization Act of 2003 (MMA) will give Medicare beneficiaries (senior citizens and people with disabilities under the age of 65) the opportunity to voluntarily enroll in a private prescription drug plan beginning in January, 2006.

For dual eligibles, prescription drug coverage they currently have through Medicaid will end on January 1, 2006. 

Because dual eligibles already have comprehensive drug coverage through Medicaid, the transition to Medicare drug coverage, and the anticipated differences in the Medicare drug benefit, raises a unique set of challenges.  Some dual eligibles could find that drug coverage under the Medicare program is less comprehensive, more costly, or less secure than the coverage they have had under Medicaid.

Many people with cognitive, intellectual and developmental disabilities have complex needs.  Switching medications can be risky – new drugs may not be as effective as the medications that they are now taking, or may cause additional side effects.  Therefore, it will be important to closely monitor the transition to Medicare prescription drug coverage to ensure that people with cognitive, intellectual, developmental disabilities and other conditions are protected.

How do dual eligibles receive prescription medications now?

Currently, full benefit dual eligibles, who receive Medicare and full Medicaid coverage, receive their prescription coverage through Medicaid.  Additionally, some low income Medicare beneficiaries (often a person with an income near or slightly lower than the poverty level of $776/month for a single individual in 2004) do not qualify for full Medicaid benefits but receive Medicaid assistance to pay for Medicare premiums and cost-sharing.  These are called partial benefit dual eligibles and, generally, do not get prescription drug coverage under Medicaid.

How will dual eligibles receive prescription drug coverage under the MMA?

On January 1, 2006, federal support for prescription drug coverage for dual eligibles through Medicaid will end; and, dual eligibles will be required to enroll in a Medicare prescription drug plan in order to continue to receive prescription drug coverage.  Those who desire prescription drug coverage and do not enroll in a Medicare prescription drug plan on their own will be “auto enrolled.”  The Center for Medicare and Medicaid Services (CMS) will begin automatic enrollment of dual eligibles in the fall.  Dual eligibles will be enrolled in the plan with lowest premium cost in their area.  If the individual finds that the plan does not meet their needs (i.e., their medications are not on the plan formulary or list of approved drugs), CMS will allow them to switch plans.  However, the federal assistance with cost-sharing that will be provided to the dual eligibles will only cover the premium for the lowest cost plan.  The regulations also require prescription drug plans to have transition processes to help dual eligibles and other enrollees to transfer from existing coverage.  CMS will be offering guidance on this requirement in the near future.  Individuals will be allowed to request exceptions to the formulary and appeal plan decisions.

Will dual eligibles continue to receive other services through Medicaid?

Yes, after January 1, 2006, dual eligibles will still have Medicaid benefits for other health care expenses, such as coverage for long care services and supports and assistance in paying Medicare premiums and cost sharing.

How will the new Medicare prescription drug benefit differ from the current Medicaid prescription drug benefit?

The Medicare prescription drug law creates a new program called the Part D Program.  Currently, the Part A Program provides hospital coverage, Part B provides coverage for physician and primary care services, and Part C (called Medicare Advantage formerly Medicare + Choice) allows individuals to voluntarily enroll in a managed care plan.  Under the MMA, Medicare beneficiaries will be given the opportunity to enroll in a private prescription drug plan (called PDP).  They will be guaranteed a choice of at least two plans.  If there are not two plans available in each region or community, the federal government will step in and set up a “fallback plan” to ensure that Medicare beneficiaries are able to purchase prescription drug coverage.

In deciding what drugs to cover, PDPs will be permitted to have a formulary.  Unlike Medicaid, however, Medicare permits formularies to be more restrictive.  Under Medicaid, a person can get virtually all FDA approved drugs when they are medically necessary.  For some drugs, often high cost drugs or drugs subject to misuse, Medicaid can require preauthorization to insure that the drug is medically necessary.  However, beneficiaries have a legal right to access all medically necessary drugs.  By contrast, under Medicare, a plan could limit access to those drugs that are on the formulary, and a beneficiary could be denied drugs that are not on the formulary without regard to medical needs.

Will dual eligibles be required to pay more than they do now for prescription drugs?

Under the MMA, persons residing in institutions will continue to be exempt from paying cost-sharing.  Dual eligibles living in the community, however, will be required to pay a co-payment for every prescription medication that is provided on the plan’s formulary.  For dual eligibles with incomes below the federal poverty level, the co-payment will be $1 for each preferred drug and $3 for each non-preferred drug.  For dual eligibles with incomes above the poverty level, the co-payment for preferred drugs will be $2, and non-preferred drugs, $5.  The amounts will increase every year as medical costs increase.  Additionally, beneficiary costs could increase greatly if they have to purchase drugs on their own because the drugs that they need are not on the formulary of the Medicare PDP.  People may also have to pay the differences in the premium costs if they chose a more expensive plan that offers better coverage for their medication(s).

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