For Professionals: Advocacy & Policy
California Low-Income Health Advocate Alert On Medicare Part D
February 15, 2007
PLEASE DISTRIBUTE
More information on Medicare Part D, including past Alerts, can be found at cahealthadvocates.org/CMC/ website, and nsclc.org/areas/medicare-part-d
By California Health Advocates and the National Senior Citizens Law Center
State Update
E.D.B. – R.I.P. – California’s Emergency Drug Benefit Expired on January 31, 2007
Despite efforts by advocates to work with representatives from the state legislature, the Governor’s office, and the Department of Health Services, the state Emergency Drug Benefit (EDB) program, California’s backup system for dual eligibles having trouble accessing medically necessary medications under Medicare Part D, ended on January 31, 2007. Even though several other states continue to provide some form of emergency drug coverage for dual eligibles, there does not appear to be the political will to continue to do so in our state. As stated in the last Issue Alert, without this important safety net in place, dual eligibles who continue to have problems at the pharmacy counter may be sent home empty handed.
Federal Update
Early 2007 – Problems Reported Around the Country
Although 2007 appears so far to be much smoother than 2006 for low income Medicare beneficiaries using Part D, significant problems continue to be reported by advocates across the country. Some of the problems include: mysterious disenrollments from plans, the Low Income Subsidy (LIS) not showing up at the pharmacy, people’s plans not showing up on the computer (whether they changed plans in 2007 or not), erroneous or retroactive billing of premiums and co-pays and fraudulent marketing, particularly of Medicare Advantage Private Fee-for-Service (PFFS) plans.
Legislative Update
New Congress
The newly elected Congress appears ready to take on some Medicare Part D issues. Although a complete overhaul seems unlikely, some reform may be on the horizon. The House passed a bill allowing the government to negotiate drug prices in Part D. The president has already indicated, however, that he will veto the bill. Other changes to the MMA are being contemplated. In the Senate, four bills are being contemplated which would address the coverage gap (the donut hole), zero co-payments for certain people in the community, and Low Income Subsidy issues, such as eliminating or reducing the asset test, changing the application and/or the way certain assets are counted. In the House, Congressman Lloyd Doggett plans to introduce two bills reforming the MMA. One focuses on low income beneficiaries; the other is a global bill.
Several legislative leaders including key members of the California delegation (Waxman and Stark) have expressed an interest in increasing the accountability of CMS and SSA regarding the Part D benefit. Hearings are expected soon. Advocates can help by continuing to share problems, stories and information, as well as identifying potential witnesses who might be able to testify. Additionally, a number of legislative staff have requested that we identify issues and problems that can be addressed administratively and do not need legislative action. NSCLC is preparing a list of possible administrative actions and welcome suggestions from all of you.
Executive Update
New Executive Order on Regulations and Guidance
President Bush issued a new Executive Order on January 18, 2007, 72 Fed. Reg. 2763, increasing executive review and control over all federal administrative agencies. According to the new directive, each agency will be subject to oversight by a policy office headed by a political appointee. Agency regulations will be issued only when the agency can identify “the specific market failure” or problem justifying governmental regulation. Previously, regulations were issued based on an identified public health or environmental need. Moreover, all significant guidance must be reviewed and approved by the White House before being issued.
It is unclear exactly what impact the new Order will have on Medicare Part D, but given the extensive level of sub-regulatory guidance issued by CMS for the program, it is possible that it will make the issuance of additional regulations and increased enforcement activities more difficult.
2007 Federal Poverty Level (FPL) Figures Released
Federal poverty level (FPL) guidelines for 2007 were released in the Federal Register on January 24, 2007 (72 Fed. Reg. 3147). These figures include income limits for the Medicare Savings Programs (QMB, SLMB, QI, QDWI) and the Low Income Subsidy (see separate discussion below regarding the new LIS figures). For a description of how these new FPLs impact various federal programs, see the Center for Medicare Advocacy’s online article “2007 Federal Poverty Levels will Affect Eligibility for Many Federal Health Programs” at:
http://www.medicareadvocacy.org/… ; also see a companion chart prepared by CMA at: http://www.medicareadvocacy.org/….pdf.
2007 Federal Poverty Levels can be found online at:
http://www.cms.hhs.gov/….pdf
For programs in California that use FPLs to determine income eligibility, see the California Department of Health Services’ All-County Welfare Directors Letter No. 07-04 (February 6, 2007) at:
http://www.dhs.ca.gov/….pdf (Note that most of these levels are effective April 1, 2007, but see discussion about Medicare Savings Program applicants and recipients not receiving Title II income). Also see ACWDL No. 06-39 (December 29, 2006) for income limits relating to the Medi-Cal Aged & Disabled FPL program from January through March 2007 at: http://www.dhs.ca.gov/….pdf
Low Income Subsidy Issues
New LIS Income/Resource Limits
CMS has released the new income and resource limits for the Low Income Subsidy. Individuals applying for the subsidy must have monthly incomes below $1,276.25 ($1,711.25 for a married couple living together) and resources less than $11,710 ($23,410 for a married couple living together. Remember that full benefit dual eligibles or beneficiaries who are enrolled in a Medicare Savings Program (QMB, SLMB, QI) do not need to apply for the Low Income Subsidy because they qualify automatically.
Applications filed in late 2006 that were slightly over the 2006 income limits were held by SSA and will now be reprocessed using the 2007 income limits. These determinations will likely take place during March. The effective date for any of these applicants who are found eligible under the 2007 limits will be February 1, 2007 (the first day of the month in which the new limits became effective).
For more information on the Low Income Subsidy see NSCLC’s recently updated “LIS: An Overview of the Low Income Subsidy” available at: http://www.nsclc.org/…
Update on SSA LIS Redeterminations
As mentioned in the December 5, 2006 Alert, the Social Security Administration conducted a review process to redetermine LIS eligibility in 2007 of individuals who applied and were found eligible for the LIS in 2006. [See December 5, 2006 Alert for a general overview of the redetermination process.] CMS recently announced that the Social Security Administration has finished its initial rounds of redeterminations. Individuals whose LIS eligibility will change or terminate as a result of a redetermination have been notified by SSA that the change or termination will take effect on February 1, 2007. Individuals who were sent, but failed to return the Form 1026B, will receive a notice indicating that their benefits will terminate effective March 1, 2007.
CMS claims, and federal regulations require, that SSA send all notices before the effective date of the termination in order to provide beneficiaries with sufficient time to file an appeal. Individuals who disagree with SSA’s decision can file an appeal. If individuals file their appeals within 10 days after receiving the notice they can continue to receive the benefits of the LIS pending the outcome of the appeal (20 CFR § 418.3615).
SSA will continue to process redeterminations as beneficiaries return 1026B forms and SSA verifies information received from beneficiaries. All decisions made by SSA regarding eligibility will be prospective. Beneficiaries will receive notices of any reduction or termination of benefits. Redeterminations are conducted throughout the year for beneficiaries who report a change in marital status. Any change in LIS eligibility which is a result of a change in marital status will be effective the month following the month in which the change is reported.
For a copy of the CMS memorandum on “Redetermination of Low-Income Subsidy (LIS) Eligibility for 2007” see, http://www.nsclc.org/….
Adjustment of SEP for those losing LIS
As mentioned in the January 18, 2007 Alert, individuals who no longer qualify for the Low Income Subsidy have been granted a Special Enrollment Period (SEP) during which they can make one election (switch plans, disenroll from Part D, etc.). CMS has modified the timing of this SEP. In its new form, the SEP lasts from January 1 to March 31 of each calendar year, OR starting the month the beneficiary is notified of the loss of LIS eligibility and 2 months after, whichever occurs later in the calendar year. For example, beneficiaries who receive notices in February 2007 indicating that their LIS eligibility will end effective March 1, 2007 will have the opportunity to make one election from February 1, 2007 to April 30, 2007.
Beware: New Medicare Advantage Enrollment Period for MA-Only Plans Could Lead to Loss of Part D Coverage for Non-Dual Eligibles
As discussed in the last Issue Alert, the outgoing Congress in late 2006 created a new Medicare Advantage (MA) related enrollment period for Medicare beneficiaries. This new enrollment period allows individuals in the original, fee-for-service Medicare program one opportunity during the year in 2007 and 2008 to enroll in a Medicare Advantage-only plan (meaning an MA plan without Part D coverage). On February 7, 2007, CMS issued a memo to all Medicare Advantage Organizations describing this new enrollment period, which has been named the “Limited Open Enrollment Period” or “L-OEP.”
Because the rules surrounding whether an MA enrollee can also enroll in outside Part D coverage depend upon the type of MA plan s/he is enrolled in, this enrollment period favors Medicare Advantage Private Fee-for-Service (PFFS) plans and insurance companies offering such products. In short, an original Medicare enrollee with or without separate Part D coverage through a PDP will be able to enroll in a PFFS plan (without Part D coverage) at any time of year, and PFFS plan sponsors will likely be aggressively marketing such products year round.
This new enrollment period can be dangerous. Medicare enrollees with a stand-alone PDP will lose their Part D coverage altogether if they enroll in an MA-only HMO, PPO or Regional PPO. According to the CMS memo, if a beneficiary in original Medicare with a PDP chooses to enroll in an MA-only HMO, PPO or Regional PPO, “his or her enrollment in the PDP will be automatically cancelled as of the effective date of enrollment in the MA-only plan.” While CMS has established certain procedures that MA plans must follow if an applicant is identified as being in danger of losing his/her PDP coverage, including contacting the individual to “ensure that s/he understands” that such an enrollment could jeopardize their prescription drug coverage, CMS notes that such contact “may be made by telephone, written notice, or both.” Given that plans can meet this obligation through a phone call only, and given advocates’ experiences with some MA and Part D plans’ failure to communicate effectively with their enrollees, advocates fear that these safeguards will not be enough to protect beneficiaries from and inform them about such potential loss of drug coverage.
Advocates are concerned that CMS may be misinterpreting Medicare law, and will investigate this issue further. In California in 2007, this would only appear to impact individuals trying to join local HMOs without Part D coverage that are available in various counties, since, according to CMS materials, the two Regional PPOs (available statewide) both offer Part D coverage, as do the handful of local PPOs available in certain counties. Note that as discussed in the last Issue Alert, full dual eligibles have an ongoing Special Enrollment Period which enables them to change plans on a monthly basis.
LIS: Best Available Data Policy
As reported in the last Issue Alert, throughout 2006, many Low Income Subsidy (LIS) recipients faced problems obtaining drugs at the correct subsidy level. When pharmacists’ computer queries to plans failed to show accurate LIS status, these beneficiaries were forced to choose between paying high out-of-pocket costs or leaving without needed medication. According to CMS’ tentative guidance, plans are supposed to continue to apply a “best available data” policy in 2007, allowing recipients who can document their LIS status to receive the subsidy immediately. Beneficiaries who are entitled to LIS in 2007 therefore should take all possible evidence of their eligibility (e.g., state Medicaid card, a letter from the state Medicaid agency or SSA showing LIS status) with them to the pharmacy in 2007.
Despite CMS’ revised guidance, advocates report that these problems are continuing in 2007. Advocates and beneficiaries have been able to obtain accurate cost-sharing only after persistent advocacy with both the plan and CMS. Some of the problems with LIS status undoubtedly reflect delays inherent in CMS’s data transfer system. Advocates who encounter plans that refuse to apply the best available data policy are encouraged to file a complaint against that plan with Region IX.
FDA Action Against Quinine Drugs
Part D beneficiaries who regularly take prescription medication containing quinine (an anti-malarial drug now used primarily to treat muscle cramps) may encounter difficulties the next time they try to fill a prescription: the Food and Drug Administration (FDA) has ordered a halt to manufacturing and shipping of most drugs containing quinine.
The FDA took this action because it decided that most quinine products were not adequately labeled to reflect potential adverse side effects and risks. Because Part D generally covers only drugs that are approved by the FDA, this action means that all Part D plans have taken or will take most quinine drugs off their formularies. By June 2007, all non-FDA approved quinine products should be off the market entirely. The only FDA approved drug remaining is Qualaquin (quinine sulfate), which has been approved only for the treatment of uncomplicated malaria. Clients who have been taking drugs containing quinine for cramping should consult their physicians to find an alternative treatment.
The FDA has published a list of questions and answers about the enforcement action, available online at http://www.fda.gov/….pdf.
Other Less-Than-Effective DESI Drugs and Oral Anti-Cancer Drugs
As of February 1, 2007, CMS has a new policy that excludes less than effective (LTE) drug efficacy study implementation (DESI) drugs from coverage by Medicare Part D. LTE DESI drugs are those that have not been proven both safe and effective, but which the FDA permits to remain on the market because they were introduced prior to 1962 amendments to the federal Food, Drug and Cosmetic Act which tightened regulation of drugs sold in the United States. Plans were supposed to provide beneficiaries who have been taking LTE DESI drugs with a transition supply in January, 2007, to allow beneficiaries time to switch with covered Part D drugs.
In the same memo, CMS clarified that oral anti-cancer drugs with no purpose other than cancer treatment (e.g., capecitabine) are not eligible for reimbursement under Part D. These oral anti-cancer drugs may only be covered under Medicare Part B.
CMS’ memo on LTE DESI drugs and oral anti-cancer drugs is available online at http://www.cms.hhs.gov/….pdf.
Advocacy Tips
Ongoing Problems Caused by Premium Withholding Errors
Advocates across the country report ongoing problems associated with Medicare premium withholding. CMS and SSA system errors caused incorrect withholding in 2006 for some people who signed up for automatic withholding of Medicare Part D and Medicare Advantage premiums from their Social Security payments. At the end of January, CMS announced that it had compared records with the Social Security Administration and found 200,000 Medicare beneficiaries with automatic withholding problems. Some beneficiaries are being charged now by plans because too little was withheld, or premiums were never withheld. Other beneficiaries had too much withheld and are now due a refund. In at least a few instances, beneficiaries have received 1099 tax forms reporting that they received a refund, but have yet to see a check.
CMS sent letters to 5,190 California residents explaining that their requests for premium withholding were incorrectly processed. The letters either inform recipients that an amount owed will be withheld from their February 2007 Social Security payment, or inform them that they are entitled to a refund. Unfortunately, the letters seem designed to cause further confusion and anxiety. They fail to inform recipients about exact amounts allegedly owed, options for setting up payment plans, or how to dispute the accuracy of CMS’ records. Copies of the letters and additional information are available on CMS’ website at http://www.cms.hhs.gov/….
Additional beneficiaries (about 80,000 nationwide) will be placed into a “reconciliation process” conducted by CMS. CMS says that it expects this process to occur in the spring of 2007, and it will decide then how to recoup amounts owed or issue refunds for the remaining affected beneficiaries. Beneficiaries subject to the spring reconciliation have not yet received any notice.
CMS officials have confirmed that the government requires plans to bill enrollees for unpaid premiums; plans are not allowed simply to forgive premiums owed. (It remains to be seen how aggressively plans will attempt to collect past due premiums.) A beneficiary who believes that a Part D plan is erroneously attempting to recoup premium fees, or that premiums were wrongfully deducted from a February Social Security payment, should verify the amount charged or deducted and compare it to his or her records and any 1099 form. If a discrepancy exists, the beneficiary or an advocate should file a complaint with CMS. In situations where a dual eligible individual was erroneously enrolled in an enhanced plan, and is now being charged for an under-withheld portion of the premium attributable to the “enhanced” benefit, some advocates have successfully obtained retroactive enrollment into a basic plan offered by the same Part D plan sponsor. CMS must approve any request for retroactive enrollment. Advocates should contact the Region IX office to request retroactive enrollment.
Beneficiaries may also have the right to request a waiver of attempts by CMS, SSA or their Part D plan to recoup amounts owed due to alleged under-withholding. This issue is presently pending before the Court of Appeals for the District of Columbia Circuit in Action Alliance v. Leavitt, a case brought by the Center for Medicare Advocacy. Beneficiaries, their family members and their advocates who receive a letter from CMS about their Part D premium, or who have Part D premium problems but who have not received a letter, may contact Vicki Gottlich in CMA’s Washington, DC office, at (202) 216-0028 or vgottlich@medicareadvocacy.org.
Litigation Update
The Court certified a nation-wide class in Situ v. Leavitt, the case NSCLC and the Center for Medicare Advocacy filed on behalf of dual eligibles having enrollment or subsidy problems. __ F.R.D. __, 2007 WL 127993 (N.D. Ca. Jan. 12, 2007). This is the second major procedural victory in the case. The plaintiffs survived the federal government’s motion to dismiss in a December 18, 2006 order. 2006 WL 3734373 (N.D. Ca. Dec. 18, 2006). In the January order the Court held that the plaintiffs met each of the requirements set forth in Fed Rule Civ. P. 23. The Court modified the proposed class definition somewhat to refer to specific conduct of the defendant. The class is now defined as:
All full benefit dually eligible Medicare beneficiaries who have not received the full benefits of Medicare Part D prescription drug coverage or The Low Income Subsidy because of one or more of the following: (1) the Secretary did not follow all auto- enrollment requirements after the beneficiary fail to enroll in a plan of his or her choice; and (2) at the time benefits were sought, the beneficiary’s Part D plan had not been informed by the Secretary of the beneficiary's enrollment in the plan or his or her entitlement to the Low Income Subsidy; or (3) the beneficiary was listed by the Secretary as a member of more than one Part D plan or as a member of the incorrect Part D plan after the beneficiary elected to change plans.
Information for Advocates
Announcements from CHA
California Health Advocates is pleased to announce the following schedule of events:
Schedule of California Medicare Coalition Meetings:
April 4 – Meeting – Southern California (location to be announced)
April 11 – Meeting – Northern California (location to be announced)
Schedule of California Medicare Coalition Regional Forums –10:00 am - Noon
Topic: “Marketing of Rx Drug Plans in California”
- March 6 – Bakersfield – Red Lion Hotel – 2400 Camino Del Rio Court
- March 20 – Monterey – San Carlos Cathedral – 510 Church Street
- April 24 – Riverside
- May 8 – San Francisco
- June 13 – Redding
For more information on these upcoming events or to join the California Medicare Coalition please visit California Health Advocates' website: cahealthadvocates.org/CMC/.
Subscriptions/Workshops: To subscribe to California Health Advocates' bi-monthly electronic newsletter “California Medicare News” or to request information about our workshops for statewide organizations please email .
California Health Advocates and the Medicare Rights Center Release Issue Brief on the Marketing of Medicare Advantage and Part D Plans
California Health Advocates and the Medicare Rights Center (MRC) recently released an issue brief entitled “After the Gold Rush: The Marketing of Medicare Advantage and Part D Plans.” The brief examines the marketing of Medicare Advantage and Part D plans by insurance companies and their contracted agents selling these plans in the field, and argues that the use of a tiered commission system for agents has created financial incentives to enroll people with Medicare into plans, particularly Medicare Advantage plans, without adequate regard to the suitability for the individual. The brief provides an overview of the current Medicare landscape, reviews current marketing rules, and highlights the experiences advocates have had with the marketing of a particular type of Medicare Advantage product, the Private Fee-for-Service (PFFS) plan. As discussed in the last California Health Advocates/NSCLC Issue Alert, advocates in California, New York, and elsewhere have found that agents are aggressively marketing PFFS plans to individuals who are dually eligible for Medicare and Medi-Cal, even though such plans appear to offer little, if any, benefit to duals and are not accepted by many providers. After highlighting unscrupulous marketing activities that advocates have seen, some of which are permissible under current marketing rules, the authors provide recommendations to Congress, CMS and state regulatory agencies to stop abusive marketing activities and protect Medicare beneficiaries. A copy of the brief can be found online at:
http://www.cahealthadvocates.org/….pdf
For more information about this issue brief and to share stories of potential marketing misconduct, please contact David Lipschutz at California Health Advocates.
New/Updated Materials from NSCLC
Flaws and Fixes. New materials from NSCLC outline some of the flaws in the Part D program that impact dual eligibles and propose actions that CMS, Congress and the Administration can take to fix the flaws. The Flaws and Fixes are available at, http://www.nsclc.org/….
Updated Overview of the Low Income Subsidy. NSCLC has updated its overview of the Low Income Subsidy. This tool outlines LIS eligibility and benefits and is available at, http://www.nsclc.org/….
Report Your Medicare Prescription Drug Stories!
In order to help to get changes at the state and federal levels, we need to hear about the problems your low income clients are facing. We know that your time as advocates is already stretched thin, but any time you can take to report client stories would be extremely helpful.
You can use NSCLC’s updated “Client Story Form” to report problems your clients have faced. You can access the new form at http://www.nsclc.org/areas/medicare-part-d.
More information about Medicare Part D is posted on the NSCLC website www.nsclc.org/areas/medicare-part-d. We will continually post new training materia
ls as this program develops. Other helpful websites:
- Center for Medicare Advocacy at www.medicareadvocacy.org
- Health Consumer Alliance at www.healthconsumer.org
- Families USA at www.familiesusa.org
- Medicare Rights Center at www.medicarerights.org
- California Health Advocates at www.cahealthadvocates.org
- California HealthCare Foundation at www.chcf.org/topics/healthinsurance/drugbenefit
- Health Assistance Partnership at www.healthassistancepartnership.org
- Kaiser Family Foundation at www.kff.org/medicare
For more information, e-mail California Health Advocates or NSCLC:
California Health Advocates
David Lipschutz
National Senior Citizens Law Center
Jeanne Finberg
Katharine Hsiao
Georgia Burke
Kevin Prindiville
Anna Rich
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This Alert is provided by California Health Advocates in partnership with National Senior Citizens Law Center with support from The California Endowment.
California Health Advocates: cahealthadvocates.org
National Senior Citizens Law Center: nsclc.org