Medicare Part D: How Can You Assist Seniors in Your Life?

Tim Jongerius, FSA, MAAASr. Actuary

Wellmark Blue Cross Blue Shield of Iowa

Iowa Actuaries ClubFebruary 28, 2006

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Medicare Part D Program Effective 1/1/2006 Created by Medicare Modernization Act (MMA)

of 2003 Features of Medicare Part D Program include...

Drug coverage on either stand alone basis (PDP), or when purchasing a Medicare PPO product (PD or MA-PD)

US divided into 34 PDP regions Minimum standard benefit design prescribed

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Regions Map

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Standard Coverage MMA defines a minimum benefit design Member pays...

$250 deductible first 25% of next $2,000 (i.e., yearly drug costs from $250 to

$2,250) 100% of next $2,850 At this point, member has paid $3,600 in out-of-pocket

costs (TrOOP) Beyond $3,600 in TrOOP (or $5,100 in drug costs),

member pays 5% of drug costs (or small copayments)

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More Features of Part D- Coverage Beyond Standard Coverage

Benefit design can be richer than standard coverage

Some designs eliminate $250 deductible Some designs provide benefits in the

“coverage gap”

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More Features of Part D - Financial Aspects Member Elements

May pay penalty if don’t enroll by May 15, 2006 Premium assistance and cost-sharing assistance for

low income members and dual-eligibles Industry Elements

Risk-adjusted payments from CMS to carriers Risk-sharing components

Overall risk corridors (±2.5% of expected claims, government has 75% share; ±5.0%, government has 80% share)

Low income subsidy (LIS) support for premium and cost-sharing

Reinsurance payments for catastrophic claims

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Products Offered in Region 25

Organization Name Drug Plan

Premium 1Drug

DeductibleNo Premium

with Full Low Income

Subsidy

Offers Variable

Copayments(Tiers)

Type of Extra Coverage Offered

in the Gap (G=generics;

G/B=generics & brands)

Number of Top 100

Drugs on Formulary 2

Number of Top 100 Drugs Requiring Prior Authorization or Step

Therapy 2

Number of Top 100 Drugs with Cost

Sharing below $20 2

Mail Order Offered

Aetna Medicare $35.94 $250 86 5 54

Aetna Medicare $48.40 $0 G 86 5 54

Aetna Medicare $64.78 $0 G 100 38 78

CIGNA HealthCare $33.62 $250 99 31 86

CIGNA HealthCare $38.97 $0 99 31 57

CIGNA HealthCare $46.59 $0 G 99 31 57

Coventry AdvantraRx $21.05 $0 78 9 57

Coventry AdvantraRx $33.43 $0 100 12 57

Coventry AdvantraRx $43.64 $0 100 12 N/A

FOX Insurance Company $57.58 $250 98 5 92

Humana Inc. $1.87 $250 99 8 N/A

Humana Inc. $4.91 $0 99 8 56

Humana Inc. $38.70 $0 G/B 99 8 56

Medco Health Solutions, Inc. $31.28 $250 98 10 95

MEMBERHEALTH $29.46 $250 95 10 58MEMBERHEALTH $37.52 $250 95 10 91MEMBERHEALTH $41.48 $100 95 10 58PacifiCare Life and Health Insurance Company $30.11 $0 78 9 53

PacifiCare Life and Health Insurance Company $45.76 $0 87 3 54

PacifiCare Life and Health Insurance Company $49.40 $0 G 78 9 53

Pennsylvania Life Insurance Company $25.29 $250 92 1 N/A

Pennsylvania Life Insurance Company $34.76 $250 92 1 57

Pennsylvania Life Insurance Company $46.87 $0 92 1 57

RxAmerica $29.48 $250 88 12 N/A

RxAmerica $32.15 $250 100 12 N/A

SilverScript $23.84 $250 92 5 92

SilverScript $50.29 $100 98 5 56

Sterling Prescription Drug Plan $54.30 $100 98 5 56

Unicare $20.65 $250 92 5 56

Unicare $28.56 $0 92 5 56

Unicare $38.07 $0 G 98 5 57

United American Insurance Company $34.70 $0 99 10 58

United Healthcare $22.67 $50 100 2 58

United Healthcare $25.25 $0 100 2 58

United Healthcare $28.37 $0 100 2 58

WellCare $24.45 $0 88 12 56

WellCare $43.41 $0 85 9 74

WellCare $45.97 $0 85 9 56

Wellmark Blue Cross and Blue Shield of Iowa $13.58 $250 92 0 N/A

Wellmark Blue Cross and Blue Shield of Iowa $53.90 $0 100 13 92

Wellmark Blue Cross and Blue Shield of Iowa $99.90 $0 G/B 100 13 N/A

Includes contracts/plans approved as of November 13, 2005. The data does not reflect information for PACE organizations, Employer sponsored plans, or plans that were not approved by the 'As of' date of the chart. 1 The beneficiary drug premium covers prescription drugs only and does not cover medical or hospital benefits. Beneficiaries are also responsible for their Part B premium and any premiums for Medigap coverage to meet their individual needs.2 Formulary data as of November 16, 2005.

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CMS Enrollment as of 2/11/2006-- Nationwide

42 - 43 million Medicare beneficiaries 25 million beneficiaries with drug coverage

5.3 million voluntary sign ups Approximately 10 million on employer coverage Approximately 10 million from others who already

had drug coverage (duals and MA)

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CMS Enrollment as of 2/11/2006-- Region 25

EstimatedMedicare Medicare- Medicare Federal Total with

Stand Alone Advantage with Medicaid Retiree Drug Retirees Drug State PDP RX drugs (auto-enrolled) Subsidy (Tricare, FEHB) Coverage

IA 72,238 14,953 54,813 39,832 19,409 201,245

MN 72,314 87,137 58,986 73,584 27,934 319,955

MT 19,246 2,051 14,774 12,494 12,980 61,545

NE 45,400 11,033 31,519 21,768 16,914 126,634

ND 16,853 854 10,492 4,780 5,705 38,684

SD 22,572 1,234 11,564 6,012 9,009 50,391

WY 12,521 502 5,443 6,792 6,686 31,944

TOTAL 261,144 117,764 187,591 165,262 98,637 830,398

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Initial Operational Results IT/file issues with moving so many people at

one date (1/1/2006) Accretion process Some states have stepped in to cover drug

costs as a result of enrollment issues

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How to Help the Seniors in Your Life? Use the internet to get information Agents of carriers which offer drug plans Public assistance

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Use the Internet First and foremost, go to the CMS

website...”www.medicare.gov/pdphome.asp” Select “Medicare Prescription Drug Finder” 5 steps within the site

a. search optionsb. current coverage informationc. review plan results and optionsd. medication and pharmacy selectione. review plan details and enroll

Also, refer to specific company’s website

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Case Studies

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Items Needed Drugs used in calendar year 2005 Dosage Quantity Costs of drugs Canadian drugs used?

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Case Study #1“Mr. X” – Low/Moderate Drug User

Drugs used Monthly Annualin 2005 Dosage Quantity Days Cost Cost

Lipitor 20 mg 15 30 $30 $360

Flomax .4 mg 30 30 $36 $432

Imdur 30 mg 30 30 $6 $72

Enalapril 20 mg 60 30 $11 $132

Total $83 $996

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Case Study #2“Mrs. X” – Moderate/High Drug User

Drugs used Monthly Annualin 2005 Dosage Quantity Days Cost Cost

Lipitor 40 mg 30 60 $52 $624

Protonix 40 mg 30 30 $61 $732

Evista 60 mg 30 30 $59 $708

Naproxen 375 mg 120 30 $42 $504

Triamterene 75/50 30 30 $4 $48

Atenolol 50 mg 30 30 $10 $120

Total $228 $2,736

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Case Study #1 Results

[---Expected 2006 Total Drug Spend (cost-sharing + premium--]

(ie, Mr. X's out-of-pocket copays, deductible, etc, plus premium)

2005 Annual BCBS PDP Humana PDP Pennsylvania Life--Drug Spend Option #1 Standard Bronze PDP

"Mr. X" (annual) $996 $766 $947 $995

portion of above thatis monthly premium n/a $13.58 $1.87 $25.29

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Case Study #2 Results

[---Expected 2006 Total Drug Spend (cost-sharing + premium--]

(ie, Mrs. X's out-of-pocket copays, deductible, etc, plus premium)

2005 Annual Humana PDP BCBS PDP UnitedHealthRXDrug Spend Complete Option 3 (lowest option)

"Mrs. X" (annual) $2,736 $2,110 $2,388 $2,535

portion of above thatis monthly premium n/a $38.70 $99.90 $22.67

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Other Sources of Assistance- Agents Note: need to be sure most appropriate

comparison is being done

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Other Sources of Assistance- Public Federal

Website: www.medicare.gov Publication: “Medicare & You” booklet Phone: 1-800-Medicare

(1-800-633-4227) ... available 24/7 State

Senior Health Insurance Information Program (SHIIP) at www.shiip.state.ia.us ... Select “Drug Assistance”

Talk to your Pharmacist

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Notes and Comments to Consider Remember insurance aspect of decision Try to sign up before 15th of month Penalty if don’t enroll by deadline of May 15, 2006 Beneficiary can switch plans each enrollment

period (November 15 of each year) Canadian drugs Don’t succumb to “paralysis by analysis” Prepare for some bumps in the road, but problems

will be resolved

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