Wednesday, September 26, 2012

Reassignment of Low Income Subsidy (LIS) (Extra Help) Beneficiaries for 2013


Beginning in October the Centers for Medicare & Medicaid Services will begin their annual reassignment of Low Income Subsidy (LIS) (Extra Help) beneficiaries.

CMS will reassign those Low Income Subsidy beneficiaries who are in a stand-alone Part D drug plan (PDP) and (1) whose plan will be leaving the Medicare program in 2013, or (2) whose plan will begin charging a monthly premium which is higher than the benchmark premium for the beneficiary’s state. (A “benchmark premium” is the highest amount that Medicare will allow for a Part D premium for a Low Income Subsidy beneficiary. These are more fully explained in my previous posting, which also lists the benchmark premiums for each state for 2013.)

CMS will also begin reassigning Low Income Subsidy beneficiaries who are in a Medicare Advantage – Prescription Drug Plan (MA-PD) or a Medicare Advantage only Plan (MA-only) and whose Plan is either leaving the Medicare program altogether, or is reducing its service area so the beneficiary can no longer be enrolled. Very importantly, these beneficiaries will be NOT be reassigned to another Medicare Advantage Plan, but will be reassigned to a stand-alone Part D drug plan (PDP) and put into Original (fee-for-service) Medicare. Because many of these beneficiaries have no other health insurance, they may need to keep the protections of being in a Medicare Advantage Plan and to take action to enroll in one effective with January 2013.

And, of course, Medicare will not reassign any beneficiary who will be loosing their Low Income Subsidy in 2013. These beneficiaries must remember that they will no longer be able to switch their drug plans each month, which Low Income Subsidy beneficiaries are permitted to do, and need to make sure, during the annual open enrollment, that the plan they are in is the best one for them.

Some additional details about these reassignments will be helpful.

With regard to the reassignment of Low Income Subsidy beneficiaries who are in a stand-alone Part D drug plan (PDP), please note that in some instances Part D plans are allowed to voluntarily waive a difference between the benchmark premium and their premium, where this difference is small. ($2.00 or less; the so-called “de minimis” rule.) In these cases, CMS will not reassign the beneficiary. Therefore, you may see instances where a Low Income Subsidy beneficiary’s stand-alone Part D drug plan’s premium is slightly higher than the benchmark, but the beneficiary is NOT reassigned.

In addition, CMS will not reassign a beneficiary if the beneficiary chose to be in their stand-alone plan, even though its premium will be above benchmark in 2013. The thinking here is that the beneficiary took specific action to join the plan, and this decision should be respected. This, of course, applies only where their plan is continuing into 2013; if the plan is terminating, CMS will reassign the beneficiary.


And with regard to the reassignment of Low Income Subsidy beneficiaries who are in a Medicare Advantage Plan which is not renewing its Medicare contract or undergoing a service area reduction, CMS will reassign these beneficiaries into a stand-alone drug plan (PDP). There are two exceptions to this: (1) If the beneficiary is in a Private Fee for Service (PFFS) Medicare Advantage Plan that does not have drug coverage (MA-only), and is also in a stand-alone drug plan (PDP), the beneficiary will not be reassigned. (2) If the beneficiary is in an employer sponsored MA-only or MA-PD plan, the beneficiary will not be reassigned.

And just to be clear, these Medicare Advantage Plan reassignments are made only if the Plan not renewing its Medicare contract or undergoing a service area reduction, and NOT because the Plan’s premium for its drug benefit will exceed the Low Income Subsidy benchmark in 2013.

And, as indicated above, these Medicare Advantage Plan beneficiaries who are reassigned will be put into a stand-alone drug plan (PDP) and Original (fee-for-service) Medicare. If they wish, they may enroll in a Medicare Advantage Plan with drug coverage (MA-PD). (If they do this, of course, their reassignment to a stand-alone plan is voided.) Or they may they enroll in a Medicare Advantage only Plan (MA-only) without drug coverage; if they do so, they will remain in the stand-alone drug plan (PDP) they were reassigned to, unless they choose a different stand-alone plan.


Notices:  Both Plans and CMS have a role in notifying Low Income Subsidy beneficiaries affected by the reassignment process. But for right now, the end of September and the beginning of October, notices will go out from Plans that are not renewing their contracts with CMS or which (in the case of Medicare Advantage Plans) are reducing their service area. In addition, for those that are staying, they will be sending out the Annual Notice of Coverage, and, as appropriate, warning Low Income Subsidy beneficiaries that their premium will exceed the benchmark in 2013. And late in October CMS will begin sending out more specific notices to affected beneficiaries, but I will blog about that in a week or two.

Friday, September 7, 2012

The 2013 Part D Benefit Structure Small but Helpful Changes from 2012


After I posted the last blog about getting ready for Part D I realized I hadn’t blogged about the changes to the Part D benefit structure for 2013. Although it’s very close to this year’s structure, the good news is that, if you go into the donut hole, Part D will pay a tiny chunk more for your brand name drugs than in 2012, and, likewise, an even larger chunk more for your generics. On the other hand, there are slight increases in the annual deductible, the initial coverage limit, etc. My guess is, given that premiums will be about what they were in 2012, and the structure is a whisker more favorable for beneficiaries in 2013, that most will be paying about what they were in 2012, or a just a bit less.

And you should also know that there will be some expansion of the Part D drug formularies in 2013. This is because statutory changes now provide that Part D plans will now have to cover benzodiazepines, as well as barbiturates for people with epilepsy, certain types of cancer and chronic mental health conditions. And, in addition, as can happen when formularies are changed, new generics, some of which are alternatives to brand named medicines, have been put in a number of plans’ formularies.

In 2013 the four bands of the recommended benefit structure are as follows: (Remember, of course, that your plan’s structure, or that of any plan that you are considering, may look very close to this or not at all like it, because plans are allowed to vary from this as long as their structure is “actuarially equivalent” to it.)

Annual Deductible Band: From $0 to $325

The recommended deductible is $325, up $5 from 2012. The beneficiary is responsible to pay all of this out-of-pocket. Of course, many if not most plans will have a smaller or no deductible.

25% Coinsurance Band: From $325 to $2,970

After the deductible is satisfied, the next $2,645 of drug costs falls into this band. (In 2012, this figure was $2,610.) The plan will pay 75% of the cost of a drug, and the beneficiary, 25%. The beneficiary will remain in this band until the plan has paid a total of a $1,983.75 and the beneficiary, $661.25.

At this point, the beneficiary has spent $986.25 ($325.00 plus $661.25) and the plan, $1,983.75, for a total of $2,970. (You may see this figure referred to as the “initial coverage limit;” it was $2,930 in 2012.) The beneficiary now goes into the “donut hole.”

Donut Hole Band: From $2,970 to “Drug Expenses” of $4,750

Once in the donut hole, also known as the “coverage gap:”

For brand name drugs, the plan will pay 52.5% of the cost of a drug, and the beneficiary, 47.5%. (These figures were 50% - 50% in 2012, so in 2013 the beneficiary gets a slightly better deal here.)

For generic drugs, the government will pay 21% and the beneficiary, 79%. (In 2012 the government paid 14% and the beneficiary, 86%, so again, the beneficiary gets a better deal.)

The beneficiary will remain in the donut hole until their “drug expenses” total $4,750 (this was $4,700 in 2012). By “drug expenses” we mean anything spent to meet the deductible, anything spent in the 25% band, and whatever the beneficiary spends in the donut hole plus the 50% their plan pays for their brand name drugs in the donut hole (but not the extra 2.5% being added this year, nor anything spent by the government on their generics.)

[It never fails to amaze me how complicated Medicare can become, so a bit of explanation may be required, but disregard this if you already have had enough detail! Of the 52.5% Part D will pay on a Medicare beneficiary’s brand name drugs in the donut hole, 50% is really paid by the drug manufacturer and the additional 2.5% for 2013 is paid by your Part D plan, and you get “credit” only for the 50%, not the 2.5%. If you ask me why, I can only say, like Janet Reno, “It’s the law.” And you don’t get credit on the discount you get for generics (it was this way in 2012, too) as technically this is paid not by the plan nor by the manufacturer, but by the government.]

And while it will be different for each beneficiary, I estimate that in general you will actually pay somewhat over $2,000 of your own money on your Part D drugs before you get out of the donut hole and into the next band.

Catastrophic Band: From $4,750 Up

And once a beneficiary’s “drug expenses” reach $4,750 (this was $4,700 in 2012), the beneficiary goes into the Catastrophic Band, where the beneficiary pays 5% of the cost of a drug, and the plan, 95%. This is sometimes called the “5% Band” for obvious reasons.  There are no upper limits to this band.

And be advised that there have been tiny changes made to the minimum amount you must pay in this Catastrophic Band. The minimum you must pay on a generic or preferred multi-source drug is $2.65 (up a nickel from 2012), and, for other drugs (typically a brand-name), $6.60, (up a dime from 2012).



Monday, September 3, 2012

New Prepayment Review of and Preapproval Process for “Over-Limit” Outpatient Therapy Services


[NOTE: See the blog of 1-8-13 for how all this works in 2013.]

If you have had outpatient physical, speech language, and / or occupational therapy services covered by Medicare this calendar year, and Medicare has approved $1,700 or more for this type of care by August 31, you may get a notice from Medicare telling you that limits or caps are bring imposed on outpatient therapy for the remainder of the year. (You may get this even if you are no longer actually getting therapy.)

What’s this all about?

Beneficiaries who are or will be receiving outpatient physical, speech language, and / or occupational therapy from October 1 to December 31, 2012 need to be aware of a new requirement being imposed on therapy providers beginning October 1. This new requirement was mandated by a recent statute. Interestingly, the law specifically granted the government, in this case the Centers for Medicare & Medicaid Services (CMS), the authority to enforce the provisions without going through the normal process of publishing regulations and seeking public comment.

Currently there is a statutory limit, or cap, on the dollar amount of outpatient therapy services a beneficiary can receive in a year. This limit has been in place for some years, and although the dollar amount changes each year, in 2012 the limit is $1,880 for physical and speech therapy combined, and a separate limit of $1,880 for occupational therapy. But for several
years Congress has allowed exceptions to these limits, by permitting therapists, when these caps are exceeded, to certify that the additional, over-limit therapy services they are providing are medically necessary for the beneficiary.

The new provision in the law requires Medicare Administrative Contractors (MACs), which are the companies that Centers for Medicare & Medicaid Services contracts with to review and process Medicare claims, to individually review all therapy claims that exceed a limit of $3,700 for a beneficiary. This limit is, as are the statutory limits, imposed on physical and speech therapy services combined, and, separately, on occupational therapy. So there are two, separate $3,700 caps. In addition, this provision requires that the review must be made before the MAC processes and pays the claim.

Because these reviews would hold up payments of appropriate claims, Centers for Medicare & Medicaid Services is also permitting therapy providers to request, from the Medicare Administrative Contractors, preapproval of any therapy services they render to a beneficiary. In this way, when they have actually performed the therapy and submit a claim, the medical necessity of the services had already been approved, and the claim can go right to payment. And rather than preapprove each and every therapy session, therapists must request the preapproval of blocks or chunks of 20 therapy days at a time.

This should concern beneficiaries, but only to a limited extent. These limits do not apply to beneficiaries in Medicare Advantage (Part C), but only to those in Original (fee-for-service) Medicare. And they are only for outpatient therapy, not for therapy you may get in as an inpatient during a Medicare covered hospital or Skilled Nursing Facility (SNF) stay. Nor does it apply to therapy you get under a home health plan of care. And, finally, it does not apply to therapy you get as an outpatient of a so-called “critical care hospital,” typically these are in rural areas; but contrary to what you may have heard, as this is new in 2012, it does apply to outpatient therapy you receive in all other hospitals.

But if these exceptions don’t apply, and you have gotten a lot of therapy this calendar year, you may get a voluntary Advance Beneficiary Notice (ABN) from your therapy provider that your services may not be covered. And whether you get one or not, beneficiaries need to understand that Centers for Medicare & Medicaid Services is taking the position that if you receive therapy over and above the statutory $1,880 limit and it is not medically necessary, you are not protected by the limitation-of-liability provision as the care is statutorily excluded, like eyeglasses or dental care. Normally, if a beneficiary gets a service that is not medically necessary, even when Medicare denies the claim, the beneficiary does not have to pay the provider for the care as it is assumed the beneficiary had no way of knowing that the care was not covered, unless of course they got an Advanced Beneficiary Notice saying that it wasn’t. So that’s why you may get one from your therapist, even if in this case they are not required to give it to you. But if you do get one, or if you think your therapy may exceed the $3,700 cap, you may wish to defer your therapy and ask that your therapist get preapproval from Medicare for your therapy. The Medicare Administrative Contractors have to OK or deny a preapproval request in 10 working days, or it is automatically approved, so the decision should not be too long in coming, and you may prefer waiting a bit to make sure whether or not you’ll be liable for the therapy services.

And there are a few more quirks. One is that as part of its implementation strategy, Medicare will be phasing the new requirement in gradually. So on October 1 not all therapists will come under this, but only about a third, and then the next third on November 1, and the final third on December 1. So it’s possible that this will keep you from falling into it. The other is that this whole thing is scheduled to go away December 31, 2012, so unless Congress passes new legislation concerning this, you can forget about it in 2013!


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