20 THINGS YOU MAY NOT KNOW ABOUT THE MEDICARE ACT OF 2003 - BUT SHOULD
The Medicare Act of 2003:
1. Does not add a prescription drug benefit to the Medicare program itself. Instead, the Act requires people who want drug coverage to select and enroll in a private plan in order to obtain prescription drug coverage.
2. Imposes a late penalty on people who don=t enroll in a Part D drug plan when they are first eligible, unless they have Acreditable coverage.@ Creditable coverage includes coverage that is comparable to the new Medicare Part D prescription drug benefit, such as coverage provided under Medicaid or an employer-sponsored health plan. The Act says that drug coverage obtained under a Medigap policy is not considered Acomparable coverage@. Drug coverage obtained under a Medigap H, I, or J policy will not be considered comparable coverage. Thus individuals with Medigap policies that cover drugs may have to pay the late penalty if they delay enrollment in a Medicare drug plan.
3. Does not establish a standard Part D premium amount. The monthly $35 premium amount used in discussions about the new plan is just an estimate of what the Aaverage@ premium may be. Further, the actual premium can vary by plan and by geographic area.
4. Allows drug plans to vary from the standard drug benefit (for example, from the $250 deductible, 25% co-payment up to $2250) as long as the benefit package offered is the Aactuarial equivalent@ (meaning it is estimated to be the same value) as the basic benefit.
5. Requires beneficiaries to pay the full cost of prescriptions in what is known as Athe doughnut hole,” a second large deductible, until a $3600 out-of-pocket spending cap is reached. The Adoughnut hole@ is a complete gap in coverage between $2,250 and $5,100 on covered drugs.
6. Does not include the price of non-formulary prescriptions when calculating the annual $3600 out-of-pocket (OOP) spending cap. Payments made towards the initial $250 deductible and co-payments count toward the OOP, but only when paid for drugs on the plan=s formulary. Premium payments do not count toward the out-of-pocket requirement. Also, co-payments, deductibles, and other costs paid for by a retiree health plan are not counted toward the out-of-pocket requirement. This means that most people will spend more than $3600 out-of-pocket before reaching the “catastrophic coverage” benefit available after the $3600 OOP requirement is met.
7. Allows each Part D drug plan to have its own formulary of covered drugs.
8. Requires people to remain in the drug plan they choose for a year, but allows drug plans to change the drugs they cover during the year with just 60 days notice to beneficiaries.
9. Requires prescription drug plans to make available information about changes in the formulary but does not require the plan to actually provide the information directly to enrollees.
10. Prohibits, as of January 1, 2006, the sale of Medigap policies H, I, and J, which provide prescription drug benefits, except to people who already have those policies as of 1/1/2006.
11. Does not allow Medigap policies to pay for the Part D deductible or co-payments or for drug coverage in the "doughnut hole."
12. Prohibits the Secretary of the Department of Health and Human Services (HHS) from negotiating prescription drug prices on behalf of all the more than 41 million Medicare beneficiaries as the Veterans Administration does.
13. Requires people with both Medicare and Medicaid coverage (dually eligible individuals) to obtain drug coverage through Medicare by precluding state Medicaid programs from paying for prescriptions for people who are also eligible for the Medicare Part D drug benefit. Medicaid may not pay for drugs that are covered under Medicare Part D but that are not on an individual’s Part D plan=s formulary.
14. Increased the Part B deductible on January 1, 2005, for the first time since 1991, from $100 to $110. The Part B premium will increase annually hereafter.
15. Further increases the Part B premium in 2007 for individual’s with annual incomes above $80,000 and couples above $160,000 – adding an income differential for the first time in Medicare’s history.
16. Provides coverage for one physical exam (but not related lab work.) in the first 6 months after enrollment in Part B, but only for people who first enroll in Part B after January 1, 2005. Medicare beneficiaries already enrolled in Part B before 1/1/2005, and those who enroll in Part A after that date, but not in Part B, do not receive this benefit.
17. Increases, rather than decreases, the time for processing a Medicare appeal by giving Medicare contractors twice as much time to review appeals at the contractor level.
18. Makes it harder to obtain a hearing for Medicare denials by allowing for an annual increase in the dollar amounts which must be at issue in order to obtain an Administrative Law Judge hearing and to appeal a Medicare denial to federal court.
19. Changes the name of Medicare Part C, which governs Medicare managed care plans, from Medicare+Choice (M+C) to Medicare Advantage (MA).
20. Changes the name of the entities that process claims from Fiscal Intermediaries (for Part A claims) and Carriers (for Part B claims) to “Medicare Administrative Contractors” (MACs).
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