How the New Medicare Part D Benefit Affects the Prescription Drug Coverage for IHS, Tribal Health Programs and Urban Indian Health Programs

By: Source: AARP.org Date Posted: 2005-11-09 00:00:00-05:00

From AARP and The National Indian Council on Aging, Inc.

While the federal government has legal trust responsibility to all federally recognized Tribes, the Indian health care system has broad discretion in how it fulfills that responsibility. Unlike Medicare and Medicaid, the services provided by the Indian Health Service (IHS) are not considered entitlements by the federal government, although Tribes do believe they are. The IHS operates as part of the Public Health Service and does not offer insurance or have an established benefits package. Instead, it relies on yearly Congressional appropriations and third party reimbursements from Medicare, Medicaid, and private insurance for direct, contracted, or compacted services to American Indians and Alaska Natives (AI/ANs). Unfortunately, that amount has not kept pace with rising health care costs and inflation. It covers little more than half of the estimated health care required by eligible Indians. Indian Health facilities are continually at risk of exhausting funding before the end of the fiscal year. They are forced to reduce or eliminate critical services until the next funding cycle begins. The entire Indian health system, known collectively as the Indian Health Service, Tribes, and Urban Indian Health Programs (I/T/U), provide health care directly to American Indian and Alaska Native Elders who are members of federally recognized Tribes and live in the service areas.

The majority of American Indian Elders are "certain that the provision of comprehensive health care for Indian people is a federal trust and treaty obligation and are greatly concerned about the increased reliance on Medicaid and Medicare reimbursements."1 This concern is well founded. The funding for the IHS has not increased in recent years and services are severely rationed. IHS, Tribal Health Centers, and Alaska Native Village Clinics provide health care at no cost to their AI/AN beneficiaries. Most Urban Indian Health Centers bill a modest fee, usually on a sliding scale, to their patient population. The Indian health system will submit claims for prescription drugs to Medicare, Medicaid, or private insurance companies, if the patient is covered. It is often difficult or impossible to collect from private insurance if the Indian health or village clinic is not in the plan network as a provider. These important revenues are used to provide services such as Benefits Coordinators to assist AI/ANs with accessing benefits, such as Medicare Part D.

Medicare Prescription Drug Plan For Those Who Use Retail Pharmacies

Starting January 1, 2006, Medicare prescription drug coverage becomes available to everyone eligible for Medicare. These plans will be offered by private insurance companies and other private companies. Plans will cover both generic and brand-name prescription drugs. Medicare prescription drug coverage is insurance provided by private companies. For low income people, there is no cost for this insurance. AI/AN Elders could also use the insurance to get prescription drugs at non-Indian pharmacies, but they may have to pay a small amount there. There will be no cost to them if they continue to get their medicines at their Indian Health or Alaska Native Village Clinics.

How will the new Medicare Part D affect Rx drug coverage for I/T/U systems?

Medicare Part D will affect prescription drug coverage for I/T/U pharmacies in a number of ways:

1. They will incur additional administration burden and cost for outreach and enrollment of eligible patients because almost no AI/AN Elders understand the Part D program. Prescription drug plans do not cover these activities. The Indian health system will have to provide this service in order for their patients to access the benefits and be reimbursed for prescriptions. There are also no funds to provide membership retention activities.

2. The Indian and Alaska Native Village pharmacies will lose reimbursement resources for those patients who do not elect to participate in the Part D program. They will have to reduce other services to pay for prescription drug cost for these beneficiaries.

3. Benefits Coordinators have to be trained about the Part D program and Extra Help application process offered by the Social Security Administration. They will have to develop tracking systems for their patients who get the Extra Help for the annual re-certifications. They will have to do extensive community education about the program.

4. The Benefits Coordinators will have to develop new network contact relationships with prescription drug plans and in the Social Security Administration offices in order to assist their patients when they encounter problems. These contacts have to be in place to protect patient privacy.

5. Indian and Alaska Native Village billing offices will have to update their billing programs with their prescription drug plan contracts and know how each prescription drug plan contract wants their claims to be completed before payments are sent. For each contract they need to know how to submit a "clean claim" -electronically or paper. The billing office will also have to establish point of contacts with each prescription drug plan provider to resolve any billing issues. Resolving issues with prescription drug plans will be difficult to do because the Indian health system does not represent a large membership base.

6. The Indian and Alaska Native Village health billing office will need information on their patients' prescription drug plan to submit claims to the correct prescription drug plan and be more proactive with patients in selecting a prescription drug plan.

7. For patients who utilize more than one Indian health system facility for their health care, difficulties in filling their prescription with different prescription drug plan contracts will create a financial burden for the facility that does not have a contract with the patient's prescription drug plan. This will occur if a patient is referred to a higher level of care.

8. For those patients not eligible for Extra Help, Indian and Alaska Native health system will either have to pay for the premiums or fill the prescription without any reimbursement because these patients will not want to enroll in the Part D program because the patients do not receive any benefit for the premiums that they have to pay to participate.*

*Editor's note:
The coverage provided by the Indian Health System is considered "creditable" and therefore at least as good as or better than the new Medicare Prescription drug plans-and is provided at little or no cost to the individual Indian and Alaska Native elder. Therefore, it would not be financially advantageous for the individual to enroll in a Medicare prescription drug plan unless he or she qualifies for Extra Help, which covers monthly premiums, deductibles, and co-pays. However, it is very important to pharmacies in the Indian Health System to receive the savings that individual might receive by joining a plan. It's possible that some Indian Health System pharmacies may consider paying premiums, deductibles, and co-pays for some participants with high drug costs in order to recoup a portion of the cost from a PDP.

How will the new Medicare Part D affect Rx drug coverage for AI/AN Elders who do not receive services from the Indian health care system?

1. The Elders will be responsible for making sure they enroll in a prescription drug plan that their local pharmacy uses.

2. The burden of paperwork for enrolling, taking affirmative steps to change prescription drug plans, accessing low income subsidy help, and appealing denials falls solely to the Elder.

3. The Elder will have to pay deductibles, co-pays, and premiums unless the Elder is a dual eligible covered by the Centers for Medicare and Medicaid Services or receives the low income subsidy from Social Security Administration.

Auto Enrollment for Dual Eligibles

People who have both Medicare and Medicaid are known as "dual eligibles." Medicare is their primary payer and Medicaid covers those expenses that are not covered by Medicare (co-pays, deductibles, durable medical equipment that are considered to be items of convenience like handheld shower heads, raised toilet seats, or safety grab bars). Before Medicare Part D, these people had comprehensive medical coverage under Medicaid that included prescription drugs, and they did not have to pay a monthly premium, deductible, or co-pay. Dual eligible people have a low income that is at or below the Medicaid federal poverty level and have very limited resources.

Dual eligible people automatically qualify for the Social Security Extra Help program. They must join a plan by December 31, 2005, to choose the plan used by their pharmacy. If they do not join a plan, they will be assigned to a Medicare prescription drug plan. They can change their prescription drug plan at any time. Changes begin on a monthly basis.

It is very important for them to choose a prescription drug plan that is coordinated with their Indian or Alaska Native village pharmacy to prevent any lapse in coverage.

Medicare Savings Program Qualified Medicare Beneficiary (QMB):
Pays for Medicare's premiums, deductibles and coinsurance
Specified Low-income Medicare Beneficiary (SLMB):
Pays for Medicare's Part B Premium
Qualifying Individual (QI-1) Program:
Pays for Medicare's Part B Premium

People who are on State Medicare Savings Programs (MSP) have their Medicare Part B premiums paid by the state. They have either coverage through Qualified Medicare Beneficiary (QMB), Specified Low-income Medicare Beneficiary (SLMB), or Qualified Individual (QI). They are eligible for Extra Help and are auto enrolled just like the dual eligibles. Staying on MSPs require annual recertification. If they do not reapply, they are terminated from the program. Termination eliminates Extra Help and people will have to reapply for it.

It is very important to recertify these people annually for the MSP so that they can get Extra Help coverage for their prescriptions. Those who have QMB, SLMB, or QI coverage will not be auto enrolled in Medicare Part D until the spring of 2006, so it is important that they enroll this fall with the prescription drug plan that works best for them.

Low income subsidy

Extra Help is provided by the Social Security Administration through a low income subsidy. It is highly recommended that all AI/AN Medicare recipients, excluding the dual eligibles, apply for the extra help. The Centers for Medicaid and Medicare Services (CMS) estimates that 30% of AI/AN Elders are eligible for the subsidy. The low income subsidy is separate from the plan application. The subsidy pays for the monthly premiums, co-payments, and the annual deductible. It will pay up to 100% of the cost based on a person's annual income and resources.

Applications can be obtained from the Social Security Administration office at www.ssa.gov or at the Benefits Coordinators' offices within the Indian health care system. Resource limits applied to the low income subsidy include:

Single people - savings, investments, and real estate (other than home and other assets) must not exceed $11,500.
Married and living with spouse - must not exceed $23,000.
" People with more than those amounts may still be eligible for this extra help. They should check with their Indian Health System benefits coordinators to apply for Extra Help.

Social Security requires information about income and resources to determine eligibility. The information is used on the application but is not submitted unless requested by Social Security. Documents include:

ID, Social Security card, and Medicare card
bank account statements, including checking, savings, and certificates of deposit
" Individual Retirement Accounts, stocks, bonds, savings bonds, mutual funds, and other investment statements
tax returns
payroll slips
most recent Social Security benefits award letters, statements for Railroad Retirement income, Veterans benefits, pensions and annuities
Cash value and face value of any life insurance policies. Insurance agents can supply the exact amount of cash value on life insurance policies.

Medicare Only

People who have Medicare as their only health insurance may also be eligible for the extra help. They need to check with their Indian health pharmacy to determine the best coverage for their prescription drugs. If they do not access health care through some aspect of the Indian health system, they are responsible for working with their local pharmacy to determine the best coverage for their prescription needs.

All Elders who have Medicare, are dual eligible, or have Medicare Savings Programs must visit their Benefits Coordinator or Pharmacy staff before December 31, 2005. They will receive assistance in completing the application for a prescription drug plan that works with their Indian Health pharmacy.

Credible Coverage

Important: If AI/AN Elders already have prescription coverage through their private retirement plan, signing up for Medicare Part D will cause them to lose that coverage. They should carefully evaluate whether to give up this coverage. Indian Health Service has determined that Indian health system patients are considered to have credible coverage and AI/AN beneficiaries do not have to enroll in the Medicare Part D. If they decide to join a Medicare drug plan after the May 2006 deadline, they do not have to pay a higher monthly premium penalty. For most people, joining now means paying a lower monthly premium. The prescription drugs that they get from IHS/Tribal/Alaska Native village/Urban Indian Health Centers will still be available to them without additional costs.

Remind AI/AN Elders to review all documents they received from the Social Security Administration and the Centers for Medicare and Medicaid Services and request assistance in interpreting and understanding what is being asked of them. They will also be getting a lot of information about Medicare drug plans throughout the coming months.

Mark these dates!

October 2005
Elders will receive the Medicare & You 2006 handbook in the mail.

November 15, 2005
First day that Elders can join a prescription drug plan.

January 1, 2006
Coverage starts if the Elder joined a prescription drug plan by December 31, 2005.

May 15, 2006
Remember to join by this date or the Elder may have to wait until November 15, 2006, to join a prescription drug plan.

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