The new drug benefit established by Part D of the MedicareModernization Act (MMA) assures that all older and disabledpersons have access to affordable prescription drug coverageand will subsidize many low-income persons who previouslyhad no access to drug benefits through Medicaid or statepharmaceutical assistance programs. It also will result insignificant changes in state programs that currently providedrug benefits to other populations. While the major decisionsabout the federal program’s design are now finalized andcodified, there are many important decisions that states willmake in the next few months regarding how state programswill adapt to the new MMA benefit.States will see both significant savings opportunities (especiallyin their state pharmaceutical assistance plans [SPAPs] andretiree benefits; possibly in Medicaid) as well as significant newcosts (especially in Medicaid) as a result of the Part Dprogram. The decisions states make can affect both. Therefore, state legislators and administrators will need infor-mation and analyses about all the options and decisionsbefore them.However, the decisions made by state policy makers must notonly reflect budget considerations, but also recognize the leadrole that states have and always will have in providing a safetynet to the poorest, frailest, and most vulnerable of our citizens.Related state policy decisions have the potential to influencethe perceived success of the Part D program implementation.If states act to supplement and coordinate effectively with thePart D program, they may prevent future demands upon safetynet services. Thus, the states have an essential role, comple-menting the federal role, to address the access andinformation needs of older and disabled persons who havePart D benefits, but who also rely, and may continue to rely, onvarious other state services.
The MMA makes its most sweeping impact on the Medicaidprogram, carving out the coverage of drugs for dual eligiblesand transferring this responsibility to the Medicare program.Federal matching funds will no longer be available for Medicaiddrug benefits provided to dual eligibles, except for drugs thatare not included in the list of Part D drugs. However, thetransfer of program responsibility is not a complete hand-off. The states are still largely financially responsible for the cost of drugs for dual eligibles, in the form of the “clawback.”“Clawback” is the popular term for the mandatory paymenteach state must make to the federal government toward thecost of Medicare drug coverage for the dual eligibles. Thestates must also establish new processes and enhance theirinfrastructure to accept and process applications for Part Dlow-income subsidies. In the course of processing these appli-cations, they must screen for eligibility for Medicare savingsprograms available under Medicaid (QMB, SLMB, QDWI andQI), thereby potentially discovering and enrolling significant newnumbers of dual Medicaid/Medicare beneficiaries at newexpense to the state. Additionally, states are assessing theimpact of MMA on Medicaid cost containment initiatives andother programs such as disease management, drug utilizationreview, Medicare subsidies, and managed care benefitstructures. While these requirements are finalized and will notlikely be changed, states do have a number of opportunities toinfluence the effectiveness of the new Part D program and re-evaluate future Medicaid policy and program design decisions.
As safety net providers, states want to assure that dualeligibles enjoy appropriate access to necessary medicationsafter their transfer to a prescription drug plan (PDP). BecausePDPs will have different formularies and prior authorizationrequirements than the Medicaid programs, as well as highercopays in some cases, some beneficiaries will face new barriersin obtaining needed medications. Although Medicaid programscannot claim federal matching funds for coverage of copays orfor Part D drugs not available under a PDP’s formulary, thestates do have the option to use state funds to subsidize thisaccess. Indeed, some Medicaid programs are consideringenrolling their duals into their state pharmaceutical assistanceprogram (SPAP) as a vehicle for providing them such coverage.In addition, states may continue coverage of non-part D drugs(benzodiazepines, barbiturates, vitamins, over-the-counterdrugs, etc.) under Medicaid and may receive federal matchingfunds for those costs. The Centers for Medicare and Medicaid Services (CMS) hasalso indicated that pharmacies may waive copayments for dualeligibles at their own expense. Under federal Medicaid rules, instates that have Medicaid drug copayments, the pharmacistsmay not refuse to supply a prescription to a beneficiary whocannot afford the copayment. States may want to work withtheir state pharmacies to incentivize them to extend this sameprotection to dual eligibles enrolled in Part D plans. Alternatively, states may want to determine if they can extendtheir current mandates for pharmacists to serve those dualeligibles who cannot pay, even though the duals are coveredby Part D plans.