Access to Drugs Questionable for Medicaid Patients Under New Law

APA is on track to resolve a potentially serious problem raised by the recently passed Medicare legislation.

Dual eligibles (individuals eligible for Medicare and Medicaid) will lose Medicaid prescription drug coverage on January 1, 2006. They will be expected to receive such coverage through enrollment in a Medicare Part D program.

Under Medicaid, states that provide prescription drugs in their Medicaid program must cover all FDA-approved drugs of every manufacturer that has agreed to pay rebates to the states for the products they purchase.

Part D plans, however, have broad flexibility to determine the array of drugs that will be covered. They can limit to two the number of drugs they will cover in any therapeutic class. The plans have authority to define what constitutes a therapeutic class.

The change in coverage has the potential to decrease access to the full range of psychotropic medications.

Michael Strazzella and Nicholas Meyers, deputy directors of APA’s Division of Government Relations, worked with the staffs of Sen. Pete Domenici (R-N.M.) and Rep. Jim Ramstad (R-Minn.) to ensure that the Senate and House conferees protected access to needed medication for people with serious mental illness.

They secured agreement from the conferees on the following nonbinding language:

“It is the intent of the conferees that Medicare beneficiaries have access to prescription drugs for the treatment of mental illness and neurological diseases resulting in severe epileptic episodes under the new provisions of Part D. . . .[T]he Centers for Medicare Choices shall take the appropriate steps before the first open-enrollment period to ensure that Medicare beneficiaries have clinically appropriate access to pharmaceutical treatment for treatments of mental illness, including but not limited to schizophrenia, bipolar disorder, depression, anxiety disorder, dementia, and attention-deficit disorder/attention-deficit hyperactivity disorder, and neurological illnesses resulting in epileptic episodes.”

Meyers pointed out that implementation of the drug benefit does not take place until 2006. “We are a long way from enactment to implementation,” he said. “DGR will follow the drug plan implementation carefully, and physician-directed access to clinically appropriate medications for the treatment of mental illness is an area of particular and ongoing concern.”

Medicare will pay the Part D deductible and premiums for all dual eligibles who enroll in an average- or low-cost Part D plan. The secretary of Health and Human Services is required to develop procedures that include means of enrolling dual eligibles in a Part D plan for which a premium subsidy is available, but the legislation does not provide any timeframe for enrollment of dual eligibles or guidance on how to identify dual eligibles in need of such subsidies.

It is now apparent that the Medicare legislation does not provide the level of fiscal relief state legislators had wanted. All 50 governors were united in their view that Medicare-eligible people on Medicaid should be covered by the Medicare drug benefit (see page 6).

States, which must provide matching funds for Medicaid, would have saved an estimated $115 billion over 10 years in prescription drug costs if Medicare, which is funded totally by the federal government, had picked up all prescription drug costs for the dual eligibles, according to the Congressional Budget Office (CBO), as reported on MEDLINE Plus on December 9, 2003.

Instead, although the federal government initially will pay those costs, states must return to the federal government a significant portion of the savings. The federal government will use a formula to estimate what states must pay back each month based on their Medicaid spending for the dual eligibles in 2003.

Because of the payback requirement (termed a “clawback”), the CBO estimates that the states will realize only 25 percent of the $115 billion savings over the 10-year period. New administrative costs will eat into those savings, leaving only an estimated $17 billion in savings, according to the CBO.

Selby Jacobs, M.D., chair of APA’s Committee on Public Funding for Psychiatric Services, said, “This is the latest chapter in the cost-shifting saga between the federal government and the states. The states wanted relief from the costs of drugs for dually eligible persons as one strategy for solving their budget problems. It looks like the relief is limited in scope and far less than expected. This will put pressure on states to cut their budgets in other ways, which may impinge on seriously ill persons served through state departments of mental health.”

“Slim Savings, Unknowns for States in New Medicare” is posted online at www.nlm.nih.gov/medlineplus/news/fullstory_15050.html. “Implications of the New Medicare Law for Dual Eligibles: 10 Key Questions and Answers” is posted at www.kff.org/medicaid/4160.cfm. ▪