On March 10, 2014, the Centers for Medicare & Medicaid Services (CMS) issued a memorandum to Part D Plan Sponsors and Medicare Hospice Providers entitled, "Part D Payment for Drugs for Beneficiaries Enrolled in Hospice – Final 2014 Guidance" (Guidance). The Guidance identifies a billing problem related to medications after Medicare beneficiaries elect hospice, and designs a solution effective May 1, 2014. The Guidance also describes the solution's "implications for beneficiaries." ThisAlert will discuss the problem and solution. A second Alert will discuss the identified implications for beneficiaries.
Medications that should be covered by the Medicare Hospice Benefit are sometimes paid for by the insurance companies that administer Medicare Part D plans. To prevent this from happening, effective May 1, 2014, all prescribed medications for hospice patients billed to Medicare Part D will initially be denied coverage. To get their medications, hospice patients will have to initiate and ultimately succeed at a Medicare appeal. In other words, to protect insurance companies, dying patients will have to jump through hoops to get medically necessary, potentially life-sustaining medications.
Hospice is care for the dying. It is palliative care, which means it is patient and family-centered, and optimizes quality of life by anticipating, preventing, and treating suffering. Good hospice care addresses physical, intellectual, emotional, social and spiritual needs, and facilitates autonomy.
Since 1983 Medicare has paid for hospice care when beneficiaries are certified as having a life expectancy of 6 months or less. Medicare providers are paid a per diem that is designed to cover all services necessary for the palliation and management of the terminal illness and related conditions. Hospice coverage includes the cost of medications related to the terminal illness. When Medicare beneficiaries elect the hospice benefit, they forego Medicare coverage for curative treatment related to their terminal illness, but are still eligible for Medicare coverage for all other covered care. For instance, if a Medicare beneficiary with liver cancer elects the hospice benefit, Medicare will no longer pay for treatment to cure the cancer, but it will continue to pay for care related to other illnesses like diabetes and hypertension.
Medicare Part D
In 2006, Medicare began paying for prescription medications. Rather than simply doing this through traditional Medicare, Congress added a new "part" to Medicare – Medicare Part D. In an unnecessarily complex system, the prescription drug benefit is offered by an array of insurance companies, each offering one or multiple plans with a dizzying amount of formularies for beneficiaries to choose from. Each year, Medicare beneficiaries are expected to review their medication needs and to choose the plan that offers the best formulary and the best price.
The CMS Guidance indicates that Part D Plans might inappropriately pay for Hospice medications. This is a real possibility, but CMS's solution to the problem inappropriately burdens the dying and their families.
When the Prescription drug benefit was added to Medicare, very little thought was given to how it would interface with the hospice benefit. Guidance issued at the time appropriately indicated that hospice providers should pay for palliative medications related to the terminal illness and that the insurance companies that offered the Part D plans should pay for all other medications. However, no process was created to inform the insurance companies when Medicare beneficiaries elected hospice.
The CMS Guidance raises the possibility that, after Medicare beneficiaries elect hospice, the insurance companies may continue to pay for medications that should properly be covered by the hospice benefit. For instance, prior to electing hospice, a beneficiary may need and receive medications for pain and nausea related to cancer. These medications would be covered by her Part D plan. If the beneficiary elects the Hospice Benefit because of the cancer, the hospice provider becomes responsible for covering the pain and nausea medications. However, if a family member brings the prescription to a local pharmacy, the pharmacy will bill the insurance company administering the beneficiary's Part D plan. Because the insurance company does not know the beneficiary elected hospice, it will probably pay for the prescription medications.
To solve this problem, CMS designed a process whereby Part D plans can find out via the Medicare Beneficiary Database when a beneficiary elects hospice. CMS then advises them that, "drugs covered under Part D for hospice beneficiaries will be unusual and exceptional circumstances." The Guidance then directs the insurance companies to "place beneficiary-level prior authorization (PA) requirements on all drugs for beneficiaries who have elected hospice to determine whether the drugs are coverable under Part D." (emphasis in original)
The new Guidance means that whenever the hospice patient or her family tries to fill a prescription at the pharmacy, the pharmacy will get a message stating, "Hospice Provider-Request Prior Authorization for Part D Drug Unrelated to the Terminal Illness or Related Conditions." Then it will be the duty of the pharmacy to contact the beneficiary or prescriber to determine whether the medication is related to the terminal illness. If the medication is related to the terminal illness, the pharmacy will bill the hospice for the cost of the medication. If the medication is not related to the terminal illness, the pharmacy cannot fill the prescription. Instead, the pharmacy will provide the standardized pharmacy notice with appeal rights (i.e., Prescription Drug Coverage and Your Rights – Form CMS- 10147).
So, even when it is determined that the medication is not related to the terminal illness, to get her medications the beneficiary or "appointed representative" will have to contact the insurance company and request an appeal. If this is done, the insurance company will contact the prescriber and ask him or her to complete the prior authorization form and submit it by fax or mail. CMS imagines that if the prescriber is unwilling to complete the prior authorization paperwork, the insurance company will call the hospice and ask it to explain whether the medication is related to the terminal illness.
If the insurance company is satisfied that the medication is not related to the terminal illness, CMS expects the Part D plan to contact the pharmacy and instruct the pharmacist regarding how to override the denial. CMS indicates that the decision should be made within 72 hours, but that the adjudication timeframe may be extended "pending receipt of the necessary information" or "based on the facts and circumstances of the case."
This process may prevent insurance companies from bearing the cost of hospice medications, but it does this by burdening the hospice patient and his family. For instance:
Mr. B. was 83 years old. He was quite healthy and independent, living an active life with the help of a few medications, including one to control his blood pressure. After experiencing some uncomfortable indigestion, he went to his physician. Sadly, he was diagnosed with metastatic pancreatic cancer and given a limited life expectancy. He elected the hospice benefit. Under this new protocol, when his wife goes to the pharmacy to re-fill his life sustaining blood pressure medication to prevent a stroke, the request for payment will be automatically denied. This is despite the fact that Mr. B. will be at high risk for a stroke without the medication. Mrs. B. will have to contact the insurance company to appeal the denial. The insurance company may not speak to Mrs. B. because she is not an "appointed representative." Mr. B. may not feel well enough to call or to complete the required paperwork. If Mr. B is up to negotiating the appeal process, the insurance company should then call Mr. B.'s doctor who may or may not agree to fill out the pre-authorization form. If Mr. B's doctor does not fill out the form, the insurance company may or may not contact the hospice provider. In the meantime, due to a protocol designed to save the insurance company money, Mr. B. may have a stroke.
This burden-shifting to the dying patient is illogical and immoral.
CMS has erred in assuming that most hospice patients will not continue to have Part D covered medications. Most older Americans are on medications for chronic conditions, and some of these medications, like Mr. B's hypertension medication, are very important as they prevent premature death or devastating injury. Further, CMS has erred in designing a system further burdening the dying and their families. The insurance companies that administer Medicare Part D plans can easily design a system to retroactively review medications covered for hospice patients. If appropriate, the Part D plans can seek reimbursement from hospice providers. Such a process is already imagined in the Guidance for situations when insurance companies pay for hospice medications before determining the beneficiary has elected hospice.
Insurance companies, though not legally responsible, should continue to bear the risk of initially paying for medications for hospice patients. In weighing the financial concerns of insurance companies against the legal rights of dying Medicare beneficiaries, clearly the rights of hospice patients and their families should prevail.