Following numerous public hearings and the receipt of more than 7,500 comments from organizations and individuals, the Centers for Medicare and Medicaid Services (CMS) in January released the final rule it will use to implement and operate the vast new Medicare Part D prescription drug benefit.

The new prescription drug benefit and other provisions in the more than 1,100 pages of regulations are the key elements of the Medicare Modernization Act (MMA) passed by Congress and signed into law by President Bush in December 2003. Enrollment in the new prescription drug plans that will administer the new benefit will begin this fall, and the program will debut officially on January 1, 2006.

The regulations create the first prescription drug benefit for those enrolled in fee-for-service Medicare. The Medicare Advantage program will continue to offer prescription coverage as well. Low-income Medicare beneficiaries served under Medicaid (so called "dual eligibles") will be shifted to Medicare Part D.

The draft rules implementing the MMA were released last August. During the public comment period, APA's Department of Government Relations (DGR) and Office of Healthcare Systems and Financing (OHSF) prepared extensive comments that APA filed with CMS. The comments addressed both the proposed regulations and the proposed drug-classification system that was developed by United States Pharmacopeia (USP) for use by participating plans as they create drug formularies for the new benefit (Psychiatric News, October 1, 2004; November 5, 2004).

While APA staff continue to analyze the massive final rule document, APA Medical Director James H. Scully Jr., M.D., noted that "implementation will require constant vigilance to ensure that the balance will play out in favor of patients."

In the interim, Scully added, "APA continues to be concerned that the MMA final rule does not adequately ensure that patients with mental illness will have timely access to all the medically appropriate medications they need."

The MMA provides that all Medicare beneficiaries will have access to at least two prescription drug plans (PDPs) that will administer the standard Part D benefit. According to CMS, the standard benefit in 2006 will pay an average of 75 percent of drug costs after a $250 deductible, up to an initial coverage limit of $2,250. The plan will pay about 95 percent of drug costs once a beneficiary spends $3,600 out of pocket.

CMS estimates that the average premium paid by beneficiaries will be less than $37 per month. Medicare will pay an estimated $113 per month, per beneficiary, to the PDP with which the individual enrolls. For low-income individuals who meet defined poverty-level criteria, there is no premium.

The final rule requires PDPs to have a "cost-management program that lowers prescription drug costs for beneficiaries, including the use of medication therapy management programs and a coordination of benefits system." However, PDPs are also required to have an" up-to-date" formulary.

In response to public comments, CMS modified the proposed Pharmacy and Therapeutics Committee membership requirements and procedures to ensure that beneficiaries will be able to get drugs that might not be among the plan's preferred drugs in a timely manner and that the formulary will not exclude access to drugs that discriminate against beneficiaries with certain illnesses.

Specifically, CMS shortened the time-frame for plans to make coverage determinations and appeal decisions so that enrollees will be able to receive medications as soon as possible. The final rule requires that decisions be received by enrollees within 72 hours of their request for a routine exception and no longer than 24 hours for an expedited exception.

Responding to the numerous concerns expressed during the public-comment period, CMS also changed the procedures by which dual-eligible patients will be transitioned from Medicaid into Medicare. The final rule now ensures that those beneficiaries will be placed into a Medicare PDP before the end of 2005 to prevent interruption in coverage. CMS will work with states to identify all current dual-eligible patients by the middle of 2005 and notify each of the impending transition. All identified dual-eligible patients will be automatically enrolled in a PDP operating in their geographic region unless they opt out of the automatic PDP and choose a PDP themselves.

The final rule appears to ensure that beneficiaries will be covered for medically necessary drugs. For example, the final rule establishes drug formulary standards and oversight. PDPs will be required to include at least two drugs in every therapeutic category within their formulary (see article on page 10 at right).

Each PDP will be responsible for the design of its own formulary, including the mechanisms the plan uses to control drug costs and the actual list of preferred drugs. CMS also released a draft guidance regarding its formulary review processes that will guide each PDP through the approval process. While CMS will support the USP Model Guidelines for formulary drug categories and classes, the guidance said, "CMS will review specific drugs in each category and class to ensure that the formulary offers a sufficient breadth of drugs necessary to treat all disease states in a nondiscriminatory way."

More information on the Medicare Part D benefit is posted online at<www.cms.hhs.gov/medicarereform/pdbma/>.▪