STATE PERSPECTIVES ON
IMPLEMENTATION OF MEDICARE PART D:
COORDINATING MEDICARE AND MEDICAID
COVERAGE THROUGH SPECIAL NEEDS
PLANS
James M. Verdier
Mathematica Policy Research, Inc.
AcademyHealth Annual Research Meeting
Seattle, WA
June 27, 2006
Introduction and Overview
1

Medicare Modernization Act of 2003 (MMA) set up
three major options for Part D Rx drug coverage
– Stand-alone prescription drug plans (PDPs)
 Fee for service (“traditional Medicare”)
– Medicare Advantage prescription drug plans (MAPDs)
 Managed care
– Special Needs Plans (SNPs)
 A a new type of MA-PD

SNPs represent a major opportunity to better
integrate Medicare and Medicaid acute and long-term
care for dual eligibles, including Rx drugs
– Important key to SNP success will be partnerships
with states
Introduction and Overview (Cont.)
2

SNPs face major challenges in enrolling dual
eligibles
– Over 90 percent are now in stand-alone PDPs
– States can help with SNP enrollment

State interest in contracting with SNPs to cover
Medicaid benefits for duals will likely depend on the
state’s interest in providing Medicaid long-term care
(LTC) benefits in managed care settings
– Medicaid acute care benefits for duals are now
very limited
Special Needs Plans
3

SNPs can specialize in serving nursing facility
residents, dual eligibles, and others with severe or
disabling chronic conditions (SSA, Sec. 1859(b)(6))
– SNPs are Medicare plans and cover only Medicare
services
– Can contract with Medicaid to cover Medicaid
services for duals

276 SNPs approved by CMS for 2006
– 226 for dual eligibles
– 37 for those in institutions
– 13 for those with chronic conditions

42 states, DC, and PR have approved SNPs
– Most have little enrollment unless duals were
“passively enrolled” from existing Medicaid
managed care plans
SNP Enrollment Challenges
4

As of June 11, 2006, 6.1 million of 6.5 million full dual
eligibles were enrolled in PDPs
– Receive Rx drugs and other Medicare benefits on
a fee-for-service (FFS) basis
– About 500,000 are in Medicare managed care
plans, including SNPs

How can SNPs identify duals in PDPs, market to
them, and enroll them?
– States can help, but SNPs need to offer benefits
and services for duals beyond what they can get
in Medicare FFS
Options for Building SNP Enrollment

Some SNPs have benefitted from passive enrollment
from Medicaid managed care plans
– Based on press accounts, about 200,000 duals in
about a dozen states were passively enrolled in
SNPs in 2005-2006


5
About 100,000 in PA, with most of the rest in AZ, CA, MA, MN,
NY, TX, WI
One-time event

Companies that own both SNPs and PDPs in the
same geographic area have contact info for duals in
their PDPs (e.g., United, Humana, WellCare)

SNPs can work through physicians, clinics,
community organizations, nursing facilities

States can send mailings to duals in PDPs informing
them of SNPs and other options
SNPs and States

SNPs that offer only Medicare benefits may have
difficulty demonstrating that they are adding value
beyond what a standard Medicare managed care
plan can offer
– Disease management and coordination of
Medicare benefits is common in Medicare
managed care plans

Partnering with states to cover Medicaid benefits is
an opportunity for SNPS to add value for dual
eligible beneficiaries and states
– Including only Medicaid acute care benefits
(dental, vision, transportation) adds limited value
– Real opportunity is in adding Medicaid long-term
care (LTC) benefits

6
Home- and community-based services (HCBS) and nursing
facility (NF) services
Medicaid Managed LTC

States offering or planning to offer managed LTC in
Medicaid are best prospects for partnership with
SNPs

AZ, FL, MA, MN, NY, TX, WI currently have managed
LTC programs
– For details, see 11/05 AARP Issue Brief:
http://assets.aarp.org/rgcenter/il/ib79_mmltc.pdf

Center for Health Care Strategies (CHCS) has made
grants to five states to help them develop integrated
care programs (FL, MN, NM, NY, and WA) and is
working with five others (AR, MD, MI, RI, and VA)
– For details, see http://www.chcs.org/info-url_nocat3961/infourl_nocat_show.htm?doc_id=291739
7
Challenges for States and SNPs
8

Working with conflicting Medicare and Medicaid
managed care rules
– Rate setting and financing
– Marketing and enrollment
– Complaints, grievances, and appeals
– Monitoring and reporting

Setting capitated rates for NF and HCBS services
– Little experience in states or in Medicare
– Important to give incentives for more use of HCBS

Serving beneficiaries in NFs and HCBS settings
– Most managed care plans have little experience
– Evercare has extensive experience with NFs, but
less with HCBS
Conclusion
9

SNPs present a major opportunity to improve care
for dual eligibles and other Medicare beneficiaries

Cooperation among states, SNPs, and CMS is
needed to achieve the full promise of SNPs

CHCS and others are working to help facilitate this
cooperation

Mathematica is preparing congressionally mandated
evaluation of SNPs for CMS
– Due to Congress by December 31, 2007

Mathematica report for MedPAC on site visits to
SNPs in Boston, Phoenix, and Miami is on MedPAC
web site (http://www.medpac.gov/)
STATE PERSPECTIVES ON
IMPLEMENTATION OF MEDICARE
PART D:
COMMENTS
James M. Verdier
Mathematica Policy Research, Inc.
AcademyHealth Annual Research Meeting
Seattle, WA
June 27, 2006
Issues Facing States
11

Medicaid agencies
– How to manage Medicaid Rx benefit for nonduals?
 50% of Medicaid Rx spending was for duals
 Rebates from drug companies will be smaller
 Beneficiary cost sharing can be higher (2005
Deficit Reduction Act)
– How to manage long-term care for duals in
absence of data on Rx drug use?

SPAPs
– Continue with SPAP?
 How much value does SPAP add after Part D?
– Continue to use SPAP to wrap around Part D?
 How to minimize administrative burden of
coordinating with Part D plans?
Issues Facing Part D Plans and States
12

What can states learn from Part D plans about
managing Rx benefits?

How will Part D plans deal with dual eligibles?

Part D plans need to structure premiums, cost
sharing, formularies, and overall benefit package to
maximize enrollment, revenue, and profit
– Beneficiaries prefer low/no premiums, no
deductibles, co-pays rather than co-insurance,
broad formularies, few up-front limits on
utilization
 Part D plans that structure benefit this way are
getting high enrollment, but how are they going
to make money?
 What happens if they don’t?
Issues Facing Part D Plans and States
(Cont.)

13
How to coordinate Rx coverage with other enrollee
health care?
– Significant issue for stand-alone PDPs
 Share Rx data with physicians, hospitals,
nursing facilities, states?
 Part D Medication Therapy Management
requirements
– MA-PDs can coordinate all Medicare services, but
not Medicaid services for duals unless they
become SNPs and contract with states