Post on 26-Dec-2015
©2005 SilverScript, Inc. All rights reserved. This presentation contains confidential and proprietary information of SilverScript, Inc. and may not be
reproduced, distributed or printed without written permission from SilverScript, Inc.
Medicare Prescription Drug Coverage: An Overview of Opportunities and Challenges for
PBMs and Industry Partners
Todd R. RookerPresident, SilverScript Insurance Co.
Wisconsin Association of Health UnderwritersFall Sales Conference
Sept. 14, 2005
Confidential and proprietary information. Not for distribution.
What is SilverScript?
SilverScript Insurance Company Indirectly wholly owned subsidiary of Caremark Will participate as a PDP in 34 regions
– Pending insurance licensure in all states– Granted waiver by CMS to operate PDP until licensure
secured
Two products offered for 2006– A fully-insured offering, featuring two basic alternative
benefit plan designs
Confidential and proprietary information. Not for distribution.
Agenda
Evolution of Part D Providing employer support Providing health plan support The role of agents and brokers in Medicare Part
D The future of the program for duals and low-
income subsidy individuals Conclusions
Confidential and proprietary information. Not for distribution.
Medicare Modernization ActThe Evolution of Part D
Encourages growth of managed care in Medicare Adds a drug-only benefit to the existing Medicare fee-for-
service (FFS) program Relies on private plans (which must bear insurance risk) to
deliver drug benefits Included interim drug discount card, which “sunsets” at end
of 2005 Other significant components
Health savings accounts (HSAs) Reimportation Revise Part B drug reimbursements (AWP reform) E-prescribing Hatch-Waxman changes Demonstration projects
Confidential and proprietary information. Not for distribution.
Key Dates
Employer subsidy applications due to CMS MAPD/PDPs begin marketing Medicare.gov plan comparison site goes
live Dual eligibles auto-assigned Open enrollment begins. Final day to send
notices of creditable coverage Part D benefit begins End of initial enrollment period Facilitated enrollment of low-income
subsidy eligibles
— Sept. 30, 2005
— Oct. 1, 2005
— Oct. 15, 2005
— Oct. 20, 2005
— Nov. 15, 2005
— Jan. 1, 2006
— May 15, 2006
— May 16, 2006
Confidential and proprietary information. Not for distribution.
Employer Options Subsidy
Employer provides prescription coverage to retirees under regular prescription benefit plan
Direct waiver PDP Employer becomes a PDP for its own retirees
Indirect waiver PDP Employer contracts with a PDP to offer a closed Part D plan to
their retirees Wrap
A nonMedicare plan that coordinates with Part D. Employer encourages its retirees to join a Part D plan, but provides additional benefits
Premium subsidy Employer subsidizes premiums for retirees who enroll in a PDP
or MA-PD plan Drop coverage
Employer drops retiree coverage. Retirees may enroll in a PDP or MA-PD plan of their choice
Confidential and proprietary information. Not for distribution.
What are Employers Doing for 2005?
83%
0%
11%
6%
28% Subsidy
Waiver PDP
Drop Coverage
Wrap/PremiumSubsidy
Source: Caremark survey of employer clients, June 2005
Confidential and proprietary information. Not for distribution.
Employer SubsidyHow to Ensure Your Groups Qualify
Five-step process for 2006:1. Submit application by Sept. 30
– Extension recently granted to Oct. 312. Include actuary’s attestation that plan meets actuarial
equivalence standard, which is a CMS requirement3. Certify that the plan will notify enrollees of the creditable
coverage status of the plan4. Submit and periodically update enrollment information5. Submit aggregate data about incurred drug costs and
reconcile costs at the end of the year
Confidential and proprietary information. Not for distribution.
Employer SubsidyHow Your PBM Can Help
Subsidy Requirement PBM SupportApplication filing with CMS by September 30
Can provide executive summary template for application
Include actuary’s attestation that plan meets actuarial equivalence standard
Can provide access to tools and data to assist with actuary’s attestation
Segregate subsidy population Can assist in setting plan and beneficiary hierarchy
Certify that plan will notify enrollees of the creditable coverage status of the plan
Can provide letters of creditable coverage
Submit and periodically update eligibility information
Can assist clients in meeting CMS eligibility format requirements and ongoing enrollment files
Submit aggregate data about incurred drug costs and reconcile costs at year-end
Can provide client with claims files and backend-reporting requirements for CMS
Confidential and proprietary information. Not for distribution.
Employer SubsidyAdvantages
CMS highlights the administrative advantages of the retiree drug subsidy option including: Employer control over plan design Ability to use vendors of choice Reduced administrative requirements No service area restriction Later deadlines Retiree communication requirements streamlined Easier to manage requirements for noncalendar year plans
Confidential and proprietary information. Not for distribution.
Health Plan Options
Medicare Advantage Prescription Drug Plan (MAPD) Prescription Drug Plan (PDP) options:
Open PDP Waiver PDP (indirect or direct)
Support employer-based coverage 28% subsidy Wrap plans
Fallback plans None anticipated for 2006
Confidential and proprietary information. Not for distribution.
MAPD/PDP SupportHow Your PBM Can Help
Client application support
Customer care enrollment and eligibility support
Benefit set up and coordination of benefits
Network contracting and development including long-term care, home infusion, Indian/tribal/ urban pharmacies
Claims processing Mail service/specialty Formulary development,
P&T review Reporting Rebate processing and
billing Electronic prescribing Compliance/audit
Confidential and proprietary information. Not for distribution.
MAPD/PDP Outsource ChallengesAreas to be Cautious Assigning to a PBM
Customer care Customer calls can only support prescription inquiry which
may impact beneficiary satisfaction Information and outreach
Duplicate production of information to accommodate Medical and prescription coverage
Limited control of branding Enrollment
Owning the beneficiary experience Missed cross-selling opportunities
Confidential and proprietary information. Not for distribution.
Role of Agents and Brokers
Generally, a licensed agent must review and approve a Medicare beneficiary’s Part D application
Significant growth opportunities Current policyholders Medicare beneficiaries without prescription coverage Group business and employers dropping coverage
Impact on Medicare supplement business H, I, & J plans: not “creditable” coverage
Confidential and proprietary information. Not for distribution.
Looking ForwardEmployers
Employers looking to subsidy for 2006 Re-evaluate for 2007 Dropping coverage, wraps, waiver PDPs
Part D plans will partner with employers who elect to drop prescription coverage Direct marketing and education to beneficiaries
through a trusted source (employers) Perceived continuity Ties-in with normal open enrollment season
Additional services may be offered by Part D plans to ease transition to insured benefit Premium subsidy Implement secondary or wrap coverage
Confidential and proprietary information. Not for distribution.
Looking ForwardDual Eligibles and Low-Income Subsidy
Note: 100% of poverty is equal to $9,310/single: $12,490/couple in 2004. Source Congressional Budget Office, November 2003.
62% eligible for full
subsidy
20% eligible for reduced subsidy
19% not eligible because of assets
Nondual eligibles <150% of poverty: 9.4 million beneficiaries
All Medicare beneficiaries: 39.4 million
Nondual eligibles >150% of poverty (23.6 million beneficiaries)
60%
Dual eligibles (6.3 million beneficiaries)
16% Nondual eligibles <150% of poverty (9.4 million beneficiaries)
24%
Confidential and proprietary information. Not for distribution.
Looking ForwardPart D Market
Beneficiary experience Plan design, adoption, adverse selection Premiums versus drug pricing Shift from employer coverage to insured market
CMS Reinsurance corridors, risk adjusters COB process
Budgetary factors Deficit, Iraq, Katrina, political environment
2007 PDP and MAPD bids Year-to-year uncertainty on premiums Re-enrollment process PDPs versus MAPDs
Confidential and proprietary information. Not for distribution.
Questions?