A session at AMCP 2024 outlined the diversity of Medicare coverage options available to different types of populations, identified potential challenges beneficiaries may encounter among various health care payers, and explored the complexities of Medicare coverage beyond traditional pharmacy scope and coverage through case study examples.

Presenter Sean Chitwood, PharmD, MBA, Clinical Pharmacist, Medicare Stars & Clinical Quality at OptumRx, started by contextualizing Medicare within the larger “family tree” of government health insurance programs. The top of the “tree” is the Department of Health and Human Services (HHS), followed by the Centers for Medicare and Medicaid Services. Under that umbrella are Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and the Health Insurance Marketplace (HIX).

“The idea for this session came about because when I was in pharmacy school, there was a club that went to a senior center and helped them to sign up for Medicare,” shared Dr Chitwood, explaining that the goal of the session was to educate about the intricacies of Medicare. “What I want you to get from this is [that] Medicare is not easy. There are so many pieces to it.”

Despite its complex nature, the presenters also emphasized the importance of understanding Medicare. This was illustrated by Dr Chitwood explaining that in the 2019 data for retail prescription drugs by payer, Medicare accounted for the largest share after commercial payers.

Medicare is a federally-funded program and Medicaid is a state-funded program. To qualify for Medicaid, one must be a US citizen over the age of 65 who received disability benefits from the Social Security Administration. A person may also be eligible if they are 18 years of age or older with a qualifying medical condition such as end-stage renal disease (ESRD) or Lou Gehrig’s disease (ALS).

Dr Chitwood explained that Medicare has several branches. Medicare Part A primarily focuses on inpatient, hospital, and skilled nursing facility (SNF) care. Part B applies to physicians, durable medical equipment (DME), and outpatient care. Part C combines A and B and encompasses Medicare Advantage prescription drug (MAPD) plans. Part D applies to prescription drug plans (PDP). Finally, Medicare supplement (Medigap) includes plans A through F.

“For whatever part A and part B doesn't cover, that's what the Medigap can cover,” said Dr Chitwood.

The path to enroll in Medicare and gain coverage starts with enrolling in “original Medicare”, or parts A and B.

“First, you have to enroll through the SSA. There's a certain period you can enroll after which you pay penalties. Perhaps you can get it through a spouse or the Medicare Plan Finder or another way,” said Dr Chitwood. “Again, the point of this presentation is to explain it's a little crazy.”

Additional combination enrollment and coverage options for Medicare are available, such as adding PDP only to traditional Medicare coverage or enrolling in part C and standalone PDP. Coverage options for employer-group retirees were also mentioned, including Employer Group Waiver Plans (EGWPs). Within the many options under Medicare Advantage (Part C) plans, Dr Chitwood explained that CMS Special Needs Plans (SNPs) are a priority because they’re designed to help people qualify for both Medicare and Medicaid.

“What you need to know about Medicare is where the money is and where the money goes,” said Justin Bioc, PharmD, BCPS, BCGP, RPh, Head of Clinical Pharmacy at Devoted Health, who also presented in the session. “If you understand that, you understand the system.”

As of 2023, over half of Medicare beneficiaries are enrolled in Medicare Advantage individual plans, 19% in SNPs, and 18% in EGWPs. The presenters focused on walking through the funding and payment mechanics of Individual Medicare Advantage Prescription Drug (MA-PD) plans since they represent about 80% of the market.

Dr Bioc explained that “balancing the checkbook” of Medicare Advantage relies on revenue and expense. Revenue is split into 4 key components: county benchmark, risk adjustment factor (RAF), star rating bonus, and additional premiums.

“About 85% of expenses have to go to paying for medical benefits,” said Dr Bioc. “And that’s idealistic because most of the time, particularly if you're a new player in this space or launching a new product, your total cost of care is generally above that 80% mark. And so generally, similar to opening any new business, you're often losing money that first year, sometimes for multiple years.”

The remaining 15% is taken by administrative expenses, eg, what the plan can spend to administer benefits.

Dr Bioc explained that a county benchmark, or a max plan payment, is the result of projected United States Per Capita Costs in Fee-for-Service (FFS USPCC), average geographic adjustment (AGA), and a benchmark multiplier of 0.95 to 1.15. The county benchmark is then adjusted according to the RAF score based on a hierarchical condition categories (HCC) model encompassing age, sex, and multiple qualifying conditions. A bonus can also be awarded based on a high star rating and rebates. Plans with at least 4 stars qualify for further quality bonus payments (QBPs). Plans that fall below 3.5 stars are at risk of entering a “death spiral” where bonuses and rebates are lost, and there is increasingly less money to reinvest in benefits, Bioc cautioned.

When evaluating part D, the already complicated balance of revenue and expense for Medicare Advantage is adjusted again based on factors such as enrollee premiums and adjustments for low-income subsidies (LIS), reinsurance, risk corridor payments, and more.

“The reason they call it part D is because its damn confusing,” said Dr Bioc. “I am highlighting the mechanics of money within these plans because there is a lot of flexibility and differences between plans.”

Fictional case studies were presented to provide examples of various Medicare plan options. In one scenario, a beneficiary shopping for Medicare Advantage just switched to a new MA-PD plan this year because he could save money on medications and wanted to use a new incentive program that his old plan didn’t have. He liked working with a pharmacist associated with his previous plan and hoped to work with a pharmacist in his new plan through the Medication Therapy Management (MTM) program. However, upon calling the plan, the beneficiary rejected him based on eligibility, even though he thought all MA-PD plans had to have an MTM program.

The session presenters noted that this is a common scenario and that while MTM is a required program for all part D sponsors, there may be changes in coverage eligibility based on prescribed drugs, chronic conditions, and annual cost thresholds. Program build considerations must include their ability to deliver, overall clinical value, and impact on star ratings.

Presenters noted that new considerations and standardization were introduced due to the 2024 Medicare Advantage and Part D Final Rule (CMS-4201-F). New industry-wide requirements include targeting all chronic conditions, a lowered cost threshold for generic drugs, and inclusion of all part D maintenance drugs within targeting criteria. Dr Bioc and Dr Chitwood underscored that this is just one of many examples of how health care providers must educate themselves about Medicare coverage options while also expecting frequent plan changes as the health care landscape continues to evolve.

Reference

Bioc J, Chitwood S. Beyond the basics: Exploring the intricacies of Medicare. Presented at: AMCP 2024; April 16, 2024; New Oreleans, LA.