Supplementing PACE through Medicare Part D Thomas Snedden

Supplementing PACE through Medicare Part D Thomas Snedden Director Pennsylvania PACE Program State Coverage Initiatives Invitational Summit Conference October 7, 2004 Philadelphia, PA

Pennsylvania Pharmaceutical Assistance Contract for the Elderly (PACE) -- Implemented 1984 -- Funded by state lottery -- Currently serving 290, 000 older Pennsylvanians -- Eligibility increase implemented January 1, 2004 -- Gross annualized expenditure of $480 Million -- Projected 2005 enrollment 335, 000

Program Eligibility Criteria -- Sixty-five years of age or older --Pennsylvania resident --Limited income PACE =< $14, 500 (Single) =< $17, 700 (Married) PACENET =< $23, 500 (Single) =< $31, 500 (Married) -- Not enrolled in Medicaid Rx -- No asset test -- Criteria makes eligible two-thirds of Pennsylvania’s 65+ population (1. 25 million out of 1. 9 million)

Program Benefit Structure PACE -- First dollar coverage -- Low copays ($6 generics / $9 brands) -- 2003 state share for average participant was $2, 189 PACENET -- $40 monthly deductible -- $8 generic copay and $15 brand copay -- 2003 state share for average participant was $1, 249 BOTH PROGRAMS -- Open formulary -- Open network -- Open enrollment -- No quarterly or annual dollar limits on enrollees -- Concurrent drug utilization review (with mandatory edits) and step therapy requirements

Program Provider Environment -- Open Pharmacy Network (3, 021 Providers: 1, 701 chains; 1, 131 independents; 189 others) -- No formulary or Preferred Drug List (PDL) -- Average Wholesale Price (AWP) – 10% + $4. 00 -- On-line, real time claims adjudication (No administrative transaction fees) -- No mail-order incentives or mandates -- Seventeen day turnaround on claim remittance deposit

The “PACE Cardholder” -- 79 years old -- widow -- four or five maintenance medications (anti-inflammatory, anti-platelet, osteoporosis treatment, lipid-lowering agent, and gastrointestinal agent) -- less than 10 th grade education -- lives alone in a private residence -- and overweight

Medicare Prescription Drug Discount Card -- $600 annual Transitional Assistance(TA) Rx credit for Medicare beneficiaries with incomes less than 135% of FPL -- 151, 000 PACE enrollees meet TA criteria (30, 000 of which are also enrolled in Medicare HMO) -- PACE pharmacy benefit administrator (First Health) aapproved as exclusive Medicare card sponsor in effort to facilitate TA enrollment of qualified PACE enrollees -- PACE will “auto-enroll” TA eligibles, unless enrolled in Medicare HMO -- PACE pays TA coinsurance and waives PACE copay for its TA enrollees -- Net PACE savings of $150 million in ’ 04 / ’ 05

` Medicare Part D Rx -- Need final regs and Part D carriers -- Maintain PACE as stand alone benefit -- Auto-enroll low income subsidy eligibles in exclusive part D carrier -- Establish seamless COB interface -- Offset $200 million in annual PACE costs -- Expand PACE eligibility in 2006