Medicare Drug & Improvement Act 2003

After much contentious debate, the Senate passed the Prescription Drug and Medicare Improvement Act of 2003 on November 25, 2003, and the president signed it on December 8, 2003. The following is an outline of resolutions to the major issues in the bill:

* Part B: Late Enrollment Penalty

This section will waive Medicare Part B late enrollment penalties for those Military retirees who have not yet signed up for Part B or who signed up since January 2001 in order to become eligible for TRICARE For Life. They must be able to demonstrate to the Secretary that he/she was a covered beneficiary before December 31, 2004, (as defined in section 1072(5) of title 10, United States Code). A method will be established for providing rebates for penalties paid for months on or after January, 2004.

* Rx Drug Discount Card

Medicare-endorsed prescription drug discount cards would be available to all Medicare beneficiaries in April 2004. HHS estimates savings between 15% and 25% per prescription. Low-income beneficiaries receive $600 of assistance per year for 2004 and 2005.

* Prescription drug benefit. Standard Benefit parameters available in 2006 include:

a. A $275 deductible.

b. 75-25% coverage up to $2,200.

c. $3,600 out-of-pocket catastrophic coverage (low-income below 135% of poverty have no copayments above catastrophic, between 135-150% $2/$5 copayments. Above 150% of poverty 5% coinsurance.)

d. Risk corridors. (Plans at risk for 50% of costs above 2.5% of bid; 80% above 5%.)

e. A $35 average premium.

NOTE: DoD has assured that this legislation will have NO impact on the TRICARE Senior Pharmacy Program. The statutory authority for the TRICARE Senior Pharmacy (TSRx) program is independent of any rights or benefits under Medicare, and is not replaced or modified by any Medicare prescription drug benefits.

* Low-income Assistance

a. Duals have access to Medicare benefit.

b. Federal rules apply throughout benefit.

c. 10 year phase-down to 75% state contribution, 75% applies thereafter.

d. Cost-sharing and premium assistance for those up to 150% of poverty with no gap in coverage.

e. For dual eligible with incomes below 100% of poverty $1 for generics and $3 for brand name.

f. Up to $2 co pays for generics drugs and up to $5 copayment for brand name/and non-preferred drugs (indexed) for all other low-income beneficiaries under 135% of poverty.

g. Medicaid can provide coverage for classes of drugs not covered by Medicare (e.g. prescribed over-the-counter, benzodiazepines etc.).

h. House asset test ($6,000/$9,000 and indexed to inflation) for those below 135% of poverty.

i. Below 150% of the FPL -- $50 deductible and a sliding scale premium; 15% coinsurance up to the catastrophic limit; $2-$5 copayments thereafter. Asset test ($10,000/$20,000 single/couple indexed to inflation).

* Retiree Coverage

a. Retiree plans offering actuarially equivalent coverage receive 28% payment for the drug costs between $250 and $5,000. The subsidy for retiree prescription drug coverage is excludable from taxation.

b. Qualified retiree plans have maximum flexibility on plan design, formularies and networks.

c. Employers can also provide premium subsidies and cost-sharing assistance for retirees that enroll in a Medicare prescription drug plans and integrated plans.

d. Employers can negotiate preferential premiums from integrated plans.

e. Medicare annual $1,500 cap on physical therapy payments will be eliminated.

f. TRICARE For Life beneficiaries can enroll in Medicare+Choice plans and TRICARE will reimburse their co-payments.

* Physicians

a. The 4.5% cut in 2004 and additional cut in 2005 would be blocked. Instead, physicians would receive a 1.5% increase in 2004 and 2005.

b. An increase of 1.0% on work geographic payment adjuster (GPCI) in 2004 through 2006.

c. Physician scarcity bonus payment 2005-2007.

[Source: NAUS Legislative Update 26 NOV 5 & DEC 03 www.naus.org]

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