The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) established the Medicare Prescription Drug Program, also known as Medicare Part D. Medicare Part D makes prescription drug coverage available to all Medicare beneficiaries who are entitled to Part A or enrolled in Part B. Persons wanting to receive the benefit must enroll in a prescription drug plan. Premiums, copayments and deductibles will be applicable in most situations. Medicare Part D coverage begins January 1, 2006.

The MMA also establishes special assistance, for Medicare Part D cost sharing, for persons with low incomes and resources. This assistance, called the Medicare Part D Subsidy or Low Income Subsidy, will help with the costs of Part D premiums, copayments and deductibles. There are several different levels of subsidy assistance, as determined by the person’s income, resources and living arrangement.

All dual eligible beneficiaries (those who receive Medicare and Medicaid) will be deemed eligible for the new subsidy by the Centers for Medicare and Medicaid Services (CMS), as per KEESM 2675. No further application will be necessary. Medicaid coverage may be under any program, including SI, HCBS, LTC, Working Healthy, MA CM, MP, QMB, LMB and Expanded LMB. However, those with coverage under Medically Needy with an unmet spenddown are not included in the deemed population. A mass notice will be sent to all dual eligible beneficiaries in May, 2005 with information on Medicare Part D Subsidy. In addition, CMS will also be providing notification of eligibility.

In addition to those persons already on Medicaid, the new Part D Subsidy is also available to persons who have:

1. incomes below 151% of the federal poverty level and
   
   
2. resources below $10,000 for a single or $20,000 for a couple.

Keep in mind that all dual eligibles will be eligible for the Part D Subsidy, even those with incomes or resources exceeding these limits.

The MMA requires both the state Medicaid offices (DCF) and the Social Security Administration(SSA) to determine eligibility for Medicare Part D Subsidy. Although Medicare Part D coverage is not available until January 1, 2006, the application process for subsidy will begin July 1, 2005. This memo provides instructions on this process.

1. Medicare Part D Subsidy Application Requirements - An application form and process for determination of the Medicare Part D subsidy is currently in development. The new process will include an alternate application form and KAECSES support as well as policy material for determining eligibility. The new process is scheduled to be available by January 1, 2006.

   To meet the July 1 deadline required by the MMA, DCF will utilize the application process developed by the SSA. The SSA-1020, Application for Help with Medicare Prescription Drug Plans Costs, is available to DCF staff. Special instructions have been developed by SSA specifically for guiding DCF staff through the application process. DCF staff are responsible for assisting in the application process when requested. These instructions, as well as an initial supply of applications will be delivered to the region during the May 2005 MMA training event. Additional applications are available through the Social Security Administration or through EES Central Office.

   Because persons determined eligible for Medicaid or a Medicare Savings Program (MSP) also receive the subsidy benefit, all potential applicants must be screened and given the opportunity to apply for an MSP. This will not only be beneficial to the applicant, but to the eligibility worker as well. The MSP approval will continue to provide the normal Medicare cost sharing benefit (e.g. Medicare Part B buy-in) but will now provide Medicare Part D Subsidy as well. A special set of questions has been developed as a guide for meeting the screening requirement. The guide, Prescreening Questions For Part D Subsidy, will be included with the May, 2005 MMA training material.

   For all Medicare beneficiaries requesting help with Medicare cost sharing, whether for Parts A and B or the new Part D, the following general process shall be followed:

   Step 1: Determine if the individual is already a medical assistance recipient. If so, the beneficiary is already deemed eligible and should be informed that additional information will be sent from CMS regarding the subsidy. Exception: Medically Needy person who haven’t yet met spenddown.

   Step 2: For persons who are not current recipients, determine if their countable resources and income fall within the MSP guidelines. If so, instruct the individual to complete an ES-3100.4 application and to return the form to an DCF service center. The staff person should offer assistance in completing the application. Persons should be reminded that Estate Recovery does not apply to persons approved only for a Medicare Savings Plan.

   Step 3: If the income and resources do not fall within the MSP guidelines, instruct the individual to complete an SSA-1020. Again, assistance must be offered in completing the application. The SSA-1020 will then be sent to the Social Security processing center in Wilkes-Barre, PA for processing.

   In the event the Medicare beneficiary refuses to utilize the SSA-1020 application for the subsidy and requests that DCF process his or her application, the worker must notify Central Office, Medical Assistance Manager, for further instructions. Because the MMA requires DCF to process an application if necessary, the agency will honor these requests when necessary.

   In all cases the individual must be reminded of the importance of selecting and enrolling in a prescription drug plan.

2. Applications for Medicaid, Medically Needy (spenddown met) and Medicare Savings Program (QMB, LMB, ELMB)

   In addition to current recipients, all Medicare beneficiaries newly approved for these programs will receive Medicare Part D subsidy. However, such individuals will not receive the special mailing sent in early May. Therefore, all new approvals processed on or after June 1, 2005 must be sent a separate notice telling them of their eligibility for the subsidy as well as other changes.

   A new KAECSES notice, the V-800, Medicare Part D Information, has been created for this purpose. This notice must be sent on each new approval with a participating Medicare beneficiary. The notice requires the EES Specialist to select, from two options, the specific information about the subsidy. The choice is dependent upon the type of Medicaid approval: 9.

   1. For full Medicaid approvals (including Medically Needy with met spenddown), where drug coverage will actually be ending, select item 1.
      
      
   2. For MSP approvals (including Medically Needy with unmet spenddown), select item 2.
      
      
   3. For Medically Needy approvals where spenddown has not been met and the individual is not MSP eligible do not send the notice. Instead, follow the process for application denial listed in item C. below for denied applications.

      CMS will also provide additional information to these newly approved beneficiaries.

3. Medicaid Denials

   Some Medicare beneficiaries who initially apply for Medicaid and are denied coverage may be eligible for the Medicare Part D Subsidy. DCF will provide an SSA-1020 to each denied family group where there is potential subsidy eligibility. The application shall be mailed to the Primary Individual on the case, along with a new form, the ES-3108, Important Part D Information. DCF staff are to assist in completing the application when requested.

4. Medicaid Closures

   No additional action regarding the subsidy is necessary for case closures involving a Medicare beneficiary. Because the deeming rule will include any individual who was approved for any benefit month beginning on or after April 1, 2005, a case closure will not impact the individual’s status as a deemed beneficiary.

5. Importance of Selecting a Medicare Part D Plan
   
   Regardless of where a subsidy application is made, it is critical for the beneficiary to understand that selection of a drug plan and application for the subsidy are separate processes.

   For individuals who apply for the subsidy, that are not deemed eligible, selection of the drug plan is especially crucial. If the individual does not select a drug plan, the individual will not have drug coverage. However, this population will receive help with selecting a plan by May, 2006 if they do not enroll on their own.

6. Part D Coverage and Medicaid

   Because the Medicare program will assume responsibility for outpatient prescription drugs beginning January 1, 2006, prescription drug coverage for Medicare beneficiaries will end on December 21, 2005. MMA specifically prohibits coverage of drugs by the Medicaid program for any Medicare beneficiary eligible to enroll in Medicare Part D, even for those who have not enrolled in a plan. Medicaid will not cover drugs for Medicare beneficiaries beginning January 1, 2006.

   For this reason, it is critical that all current dual eligibles enroll in a Medicare drug plan. CMS will assist in the process by automatically enrolling all dual eligibles who have Medicaid drug coverage in a participating Medicare drug program in October, 2005. However, the plan may not offer an appropriate formulary or network choice. The beneficiary will have an opportunity to change plans following the automatic enrollment. DCF staff must encourage all dual eligibles to review formularies to make an informed choice. Senior Health Insurance Counseling for Kansas (SHICK) offers trained volunteers to help the individual make an appropriate choice. SHICK can be reached at 1-800-860-5260. Questions regarding enrollment in a Medicare drug plan may be directed to SHICK.

   Dual eligibles who do not have drug coverage through Medicaid, including those on QMB/LMB/ELMB only or those with a combination Medically Needy plan who have never met spenddown, will not be automatically enrolled in a plan. However, CMS will assist the beneficiary in selecting a plan by May, 2006.

   It is important to note that the MMA has specifically delineated a small list of prescription medication that WILL continue to be covered under the Medicaid program. This list includes the barbiturates and the benzodiazepines, such as Lorazepam and Diazepam (for more information on coverage of the benzodiazepines, see Changes to the Coverage of Benzodiazepines included in KMAP Pharmacy Bulletin 445. Additional information on this topic will be provided at a later date.

7. Future Guidance

   This guidance is not intended to be an all inclusive response to the MMA. Many issues continue in the development phase. As noted above, the Medicare Part D application process is one of these issues. In addition, guidance regarding other Medicaid eligibility rules (such as allowable expenses for spenddown and patient liability) as well as the impact of the MMA on the food stamp program, also continue to be developed. Policy material on these, and other Medicaid rules, will be released at a future date.

BM:DZP:JS:jmm

Attachments: Important Medicare Part D Information

                        V800 Medicare Part D Information

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