SUMMARY: ACTIVITIES AND RECOMMENDATIONS OF THE
STATE PHARMACEUTICAL ASSISTANCE TRANSITION COMMISSION

By Linda Schofield[1]


The State Pharmaceutical Assistance Transition Commission (SPATC) has completed its deliberations and report.  This is a brief summary of the Commission and highlights of the report.

The SPATC was created by Section 106 of the Medicare Modernization Act of 2003 and included administrators of State Pharmaceutical Assistance Programs (SPAPs) and other state officials, as well as representatives of the pharmacists, pharmaceutical manufacturers, Medicare Advantage plans, commercial payers, and consumers. The Commission was charged with submitting a final report to the President and Congress by Jan 1, 2005 and with advising the Secretary on ways to address the SPAP transitional issues given the impending Medicare Part D program. The Commissions’ tasks were to be completed in a manner consistent with three principles set out in the law:

·         “Protection of the interests of program participants in a manner that is the least disruptive to such participants and that includes a single point of contact for enrollment and processing of benefits.

·         Protection of the financial and flexibility interests of States, so that States are not financially worse off as a result of this title.

·         Principles of Medicare modernization under this Act.”

The SPATC formed three working groups and held a series of meetings and conference calls from July to December, 2004.  Each of the three groups developed papers and recommendations which are all included in the final report.  The work groups addressed the following topics:

·         Beneficiary eligibility and enrollment;

·         Program design & benefits administration ;

·         Claims & data infrastructure.

Through the process of deliberation, the SPATC established its’ own set of over-arching principles, compatible with but extending beyond the principles set out in the law:

·         SPAP members should have uninterrupted access to medications in the transition to Medicare.

·         There should be a framework that makes it easy for SPAPs to coordinate with PDP sponsors to:

·         Maximize benefits for enrollees

·         Encourage state flexibility and choice

·         Minimize cost shifting to SPAPs.

·         There should be seamless coordination of benefits, which requires real-time information exchange.

·         Paperwork should be minimized and technology maximized.

·         Lessons learned from implementation of the Medicare drug discount card should be applied, especially as relates to the best mechanisms for maximizing prompt enrollment.

·         The enormous challenge of public education should not be under-estimated, and SPAPs should play a role in outreach to assure program success.

The SPACT report is 114 pages long, plus appendices, and includes 6 pages of bulleted recommendations, many of which are rather technical.  Thus, it cannot easily be briefly summarized.  However, these are the key recommendations prioritized by the Commission, as well as some additional recommendations most likely to be of interest.

Key Recommendations:

·         SPAPs should be allowed to endorse one or more preferred PDPs for their enrollees and to auto-enroll their beneficiaries into the preferred plan(s), with an opt-out to a Part D plan of the beneficiary’s choice.  This would simplify choices for SPAP beneficiaries and assure that all are enrolled in a Part D plan, even if they fail to act on their own.  Based on experience with the discount cards, the SPAPs found that few beneficiaries signed up unless auto-enrolled, even if though they stood to gain from doing so.  This approach also would allow states to choose PDPs offering the best value (such as better formularies) and to minimize the complexity of coordinating benefits with multiple plans.

·         SPAPs should be allowed to determine eligibility for subsidy assistance for individuals applying though their programs.  Though not all SPAPs may choose to do so, it would conform to the Act’s principle of a single point of contact for enrollment, and will certainly simplify the administrative process for applicants to both programs.

·         SPAPs should be enabled to pay Part D premiums for their enrollees using a Part B buy-in type of process.  SPAPs want to pay upfront on behalf of their beneficiaries, not to reimburse the beneficiaries after they’ve paid.

·         SPAPs should have authority to appeal on behalf of their beneficiaries.  The proposed regulations do not provide this authority, but the SPAPs, as secondary payers, are at risk for claim denials by the PDP, so they should have an appeal right.

·         The exceptions and appeals process in proposed regulations should be revised to assure that consumers are given notices of their rights at the time of a denial and to make the timelines much quicker.  Proposed timelines far exceed both commercial and Medicaid standards, and jeopardize the health of low income beneficiaries by leaving them without coverage for 14-30 days while their requests for exception are processed.

·         CMS should establish a centralized data system to facilitate real-time coordination of benefits.

·         Marketing and educational materials should explain to beneficiaries how the SPAPs and PDPs will coordinate prescription benefits, so they are not confused by the dual coverage and different rules.

·         CMS should form an ongoing advisory committee of SPAP representatives, as numerous technical and policy questions will emerge once the program is actually implemented.

Additional Recommendations by Each Working Group

Beneficiary Eligibility & Enrollment

·         The asset test should be eliminated for determining eligibility for low-income subsidies. At a minimum, states should be permitted the same flexibility to determine assets as they do with the Medicare Savings Program.  Most states that have liberalized “asset disregards” have found no budget impact from doing so.

·         The SPATC was very concerned about the proposed regulations’ involuntary disenrollment process for disruptive behavior.  This would leave disenrolled low income and Medicaid beneficiaries with no access to medications.  This provision should be removed from the proposed regulations.

·         The SPATC felt that PDPs would be likely to seek to avoid low income populations, not trusting CMS to create a truly neutralizing risk adjustment that reflects all of the higher utilization and administrative costs that accompany this population.  Therefore, the risk adjuster for low income persons should not be neutral but should create an incentive for PDP sponsors to enroll low-income persons.

Program Design & Benefits Administration

·         There should be no differential co-payments for in-network and out-of-network pharmacies – i.e no preferred versus non-preferred pharmacies.  At a minimum, CMS should count only preferred pharmacies as part of a plan’s network for the purpose of determining whether a plan meets CMS’ access standards.  Otherwise, a network could discriminate against low income beneficiaries by having only non-preferred pharmacies in inner cities and other low income areas.

·         CMS should establish transition rules to ensure continuity of care and avoid formulary denials and the consequent potential for medical emergencies. 

·         The Commission agrees with CMS that the needs of certain populations for continuity of care trump formulary design – e.g. persons with mental illness, AIDs, and in LTC facilities. 

·         Midyear formulary changes should be discouraged, but if allowed, current consumers should be grand-fathered in.  At a minimum, 90-day notice should be required and continuous coverage should be provided for the duration of an exception request or appeal to assure continuity of care.

·         CMS should reserve for themselves the authority to review mid-year formulary changes to assure continued compliance, since the regulations only propose to have CMS conduct formulary review and approval as part of the bid process.

·         Current consumers should be grand-fathered in to retain lower co-pays, if mid-year co-payment increases are made.

·         For purposes of co-payment relief, “institutionalized duals” (people who are eligible for both Medicare and Medicaid),should be broadly defined, and a system for identifying these individuals to PDPs must be established.

·         Pharmacists and physicians should both be able to pursue exceptions and appeals for patients. 

·         Written denial notices, specifying the reasons for denial and the beneficiary’s appeal rights, should be required.

·         The proposed bifurcated appeals process, which provides for a slower response time if the patient pays out-of-pocket than if the patient walks away with without the medication, should be eliminated.  One faster timeline should apply to all cases.

·         Time frames for initial exception (or for prior authorization) should be 24 hours as in Medicaid or 2 days as in commercial PBMs, not 14-30 days as proposed.

·         Dual eligible beneficiaries, at least, should get continued protections now available to them under Medicaid:  3 day emergency supplies, coverage during appeals, 24 hour prior authorization turn-around.

·         Initial denials should be considered coverage determinations and exceptions should be considered re-determinations, thereby eliminating an extra step in the appeals process and assuring that all denials result in a notice.

·         The threshold for appealing to the Administrative Law Judge should reflect the likely duration of use of a drug, and therefore the true cost of a denial to the beneficiary.

·         Criteria for co-pay exceptions should include effectiveness and safety, side effects, and patient clinical profile, as in formulary exceptions.

·         Non-formulary drugs approved on appeal should carry the co-pay of the plan’s preferred drug.  Otherwise, all non-formulary drugs approved upon appeal could be subject to the highest co-pay tier, which can be as high as 100%.  The beneficiary would then have to appeal again to get the co-pay level reduced.

·         A beneficiary education campaign should be started as soon as possible and involve as many entities as possible.  Outreach and education campaigns always fall short of expectations for motivating people to act quickly even in their own best interest, especially when facing a set of complex choices and concepts. 

·         CMS should conduct periodic evaluations of Part D, which should include evaluation of the impact on SPAPs and their beneficiaries in relation to:

·         Access to medications

·         Utilization and costs of non-drug benefits

·         Satisfaction measures

·         Number of failed transactions/month

·         Formulary changes

·         Number of non-formulary drugs covered

·         The metrics should be broken down by PDP for comparison of quality and service.

·         CMS should make data available to independent evaluators as well.

Claims and Data Infrastructure

·         A technical advisory committee should be established to provide recommendations and develop requirements for a reliable, efficient, recipient-friendly electronic system of COB.  It should include all stakeholders and NCPDP.

·         PDP sponsors should be required to coordinate benefits with SPAPs.

·         All PDPS should be required to use NCPDP standard ID card formats.

·         PDPs should be required to inform pharmacists of availability of secondary coverage.

One additional topic was briefly discussed: That SPAPs should have the option to act as a PDP for SPAP members and to collect the federal premium subsidies. While there were no objections, the Commission did not have time to fully develop this possible recommendation.


[1] Linda Schofield, President, Schofield Consulting (860-651-8739).  Ms. Schofield was a member of the State Pharmaceutical Assistance Transition Commission (SPATC) mandated by the Medicare Modernization Act of 2003 and chaired the Commission’s workgroup on Program Design & Benefits Administration.  The Center for Medicare Advocacy thanks Ms. Schofield for her excellent work and for permission to publish this Summary of the Commission’s activities and recommendations.

The full report of the Commission will be available on the Centers for Medicare & Medicaid website, www.cms.gov, after it is submitted to Congress, most likely in January, 2005.


© Center for Medicare Advocacy, Inc.