October 21, 2004 Contacts:       Alfred Chiplin, Esq.

202) 293-5760

NOTE: This is the second of a three-part Alert series that the Center for Medicare Advocacy, Inc. is publishing regarding the implications of the Medicare Modernization Act (MMA) of 2003 for AIDS Drug Assistance Programs (ADAPs).  The first Alert reviewed ADAP structures and funding.  This second CMA Weekly Alert explores how ADAPs will interact with MMA to provide complete and continuous coverage for this vulnerable population.

Shifting prescription drug coverage for beneficiaries with HIV/AIDS from ADAPs to Medicare raises several issues.  First, it remains a question whether Part D coverage will be an improvement over ADAP coverage.  As discussed in the previous Alert, ADAP coverage varies greatly from state to state.  Some programs offer as little as 18 drugs while others have open formularies.  Some states do not include all FDA-approved retroviral medications in their formularies, and, as of April 2004, nine states had waiting lists (National ADAP Monitoring Project Annual Report, May 2004).  Whether Part D will be an improvement depends upon the ADAP and upon the drug plans available in the state.  It also remains to be seen how complete the coverage offered to HIV/AIDS beneficiaries by drug plans will be.  For HIV/AIDS patients who typically follow a strict multiple class drug regimen, the flexibility drug plans have in choosing which drugs to cover in their formulary could be devastating to the successful maintenance of the illness. The Center for Medicare Advocacy and other consumer advocacy groups recommend that plans provide open formularies for HIV/AIDS patients, and that they immediately add new FDA-approved HIV/AIDS drugs to their formularies when they become available.

One of the chief concerns voiced by HIV/AIDS advocates is that using ADAP subsidies could prevent a patient from ever reaching the out-of-pocket expenditure threshold to qualify for catastrophic coverage (Medicare beneficiaries will qualify for catastrophic coverage when they have spent $3,600 of their own money).  The proposed regulations state that if ADAPs subsidize premiums, deductibles or cost-sharing, the payments would not count toward out-of-pocket costs.  ADAPs payments do not count as out-of-pocket costs because they are not designated as State Pharmaceutical Assistance Programs (SPAPs).  The proposed regulations for Section 1860D-23(b) of the law interpret SPAPs to be State programs that provide drug assistance only with State funds.  This interpretation precludes ADAPs from being designated as SPAPs since almost all of their funding comes from federal sources; they therefore cannot provide wrap around coverage that would count toward out-of-pocket costs for HIV/AIDS patients.

The implications of the MMA on the financial future of ADAPs are another issue of concern for advocates.  Though ADAPs may expect some financial relief when many of their clients are shifted to Part D, the proposed regulations note that many of the dual eligibles who will no longer receive Medicaid prescription drug coverage may turn to ADAPs to help supplement their costs.  If plans are required under the MMA to have open formularies, then people may not have to look to ADAPs for medically necessary drugs that are not provided by their plan.

Many of the concerns underscored here, such as the need for open formularies, apply to all HIV/AIDS beneficiaries, not just those who receive coverage through ADAPs.  It is difficult to predict exactly how Part D will interact with ADAPs.  These issues may become more focused as the MMA is implemented.  Advocates should pay attention to how ADAP developments play out in their states.

Copyright Center for Medicare Advocacy, Inc. 09/10/2013