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