Supplementing PACEthrough

Medicare Part D

Thomas SneddenDirector

Pennsylvania PACE Program

State Coverage InitiativesInvitational Summit Conference

October 7, 2004Philadelphia, 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 incomePACE =< $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 10th 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

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