What to Do About Medicare Part D

Many nursing facility residents will require help choosing a Medicare drug plan. The Medicare prescription drug benefit is both new and complex, requiring beneficiaries to compare plan benefits, formularies and cost-sharing responsibilities, and to reconcile those options with current drug spending in order to choose the best plan.

For many Medicare beneficiaries, physicians and pharmacists will play a leading role in providing information about the new drug benefit. However, Medicare beneficiaries residing in nursing facilities are much less likely to make use of these providers-with whom they have little interaction-for this information. Also, because mail is typically sent to the beneficiary’s home address or that of a family member, nursing facility residents are less likely to receive information sent by CMS or the drug plans. Moreover, the majority of nursing facility residents have a cognitive impairment, and very few are likely to evaluate their plan choices using the CMS Web site or other Internet resources. For some residents, the nursing facility has been designated as an authorized representative and will choose the drug plan for the resident.

For all these reasons, nursing facility staff likely will play a leading role in helping residents select a drug plan that provides adequate, affordable coverage. This will be a natural extension of the role nursing facility staff currently play in educating residents and their families about payer benefits and coverage rules, and about Medi-Cal eligibility and enrollment, but will require increased facility administrative capacity. Federal guidelines detailing the extent to which nursing facilities may assist beneficiaries with plan selection has been ambiguous; it has been clearly indicated, however, that nursing facilities will not be permitted to steer beneficiaries into one or a few preferred drug plans.

Nursing facilities may not know which drug plans their residents have been assigned to. When a dual-eligible beneficiary is auto-assigned to a Medicare drug plan, CMS will notify the beneficiary (by mail, often to the beneficiary’s home address) and the drug plan. However, CMS does not intend to notify nursing facilities of the drug plan assignments for their dual-eligible residents. Until nursing facility staff are notified (by the beneficiary, a family member, or the drug plan), they may not have sufficient information to manage a resident’s prescription drug regimen in accordance with the rules of the new drug plan. The facility also may not know if its resident’s drug plan has a network relationship with the facility’s contracted LTC pharmacy. And a facility may not know if CMS has failed to enroll some of its dual-eligible residents….

New systems and processes are needed to ensure proper coordination between nursing facilities and multiple drug plans. The new Medicare prescription drug benefit is designed to promote competition among drug plans and pharmacies in price and service. To work with multiple, competing drug plans, nursing facilities must:

• Determine which drug plan a new resident is enrolled in, whether the resident’s drug plan works with the facility’s LTC pharmacy, what drugs are covered under the formulary, and how a resident or authorized representative would navigate the plan’s exceptions process. It is particularly important that this determination be made immediately upon admission for beneficiaries who enter nursing facilities without a stay covered by Medicare Part A.
• Establish systems and processes to navigate different rules for coverage, dispensing, and appeals among dozens of drug plans, so that the correct drugs are dispensed in a timely manner. For example, nursing facilities will have to alter admissions processes in order to gather information on Part D enrollment status and educate potential residents on how the facility will coordinate with its LTC pharmacy under the Part D plan rules; these changes may require the updating of admissions software, admissions manuals, drug therapy manuals et al., and the expanding of skills and tasks by admissions personnel. Also, for residents who are dual-eligible beneficiaries, nursing facilities must determine whether the resident is likely to be institutionalized for more than 30 days and notify the drug plans, so that the dual eligible does not have to pay any cost-sharing. This is necessary because an individual is defined by the new Medicare law as “institutionalized” for the purposes of determining copay amounts if he or she is expected to reside in an institution for more than 30 days.

These changes may drive up nursing facility administrative costs in two ways. First, new systems and processes require money to establish and maintain. Second, nursing facilities may have to pay for some of the services LTC pharmacies now provide free of charge. These changes could have a spillover effect both on Medi-Cal spending and the level of resources nursing facilities will have for staffing and other areas that affect quality of care. Recent research shows that half of nursing facilities in California are now operating at no profit or losing money. The additional administrative burdens of managing Part D will likely worsen their financial outlook.

Many nursing facilities may try to maintain a “one facility, one pharmacy” arrangement by encouraging (or requiring) their preferred LTC pharmacies to participate in all available drug plan networks. Although this approach would allow residents to choose any drug plan, it does not address the underlying challenges nursing facilities and pharmacies would face in dealing with multiple formularies, plan benefit rules, and plan billing requirements. Another strategy for nursing facilities may be to encourage all residents to enroll in one drug plan (or some small subset of available drug plans), taking advantage of the residents’ right to switch plans monthly. This approach would greatly reduce the administrative and clinical complexity of providing drugs to residents. Its success, of course, would hinge on residents’ agreement to enroll in the facility’s selected drug plan. A significant problem with this approach, however, is that not all residents’ medication needs are likely to be best served by one plan. As a result, CMS has stated that steering beneficiaries to particular drug plans is inappropriate. CMS has not explicitly defined “steering,” but it is likely that some actions taken by a nursing facility to encourage the selection of a single plan would be deemed improper.

Recommendations
Nursing Facility Operators and Staff
Nursing facilities will play an integral role in implementing the new prescription drug benefit, and face many challenges in doing so. Some of the high-priority actions they should take to prepare for the changes include:

• Develop systems to ensure that current and new residents are quickly assessed for drug coverage; for those without coverage, facilitate their enrollment into a Medicare drug plan, and into the low-income subsidy if appropriate. This could include designating a Medicare prescription drug benefit staff expert, with responsibility for coordinating with residents, their families, LTC pharmacies, CMS and the Social Security Administration to ensure that all residents have appropriate drug coverage on January 1, 2006 and after.
• Identify which residents require drugs that their Medicare prescription drug plan does not include in its formulary, and develop individual transition plans for each resident. Transition planners should not necessarily rely on CMS guidance that Medicare prescription drug plans provide non-formulary drug coverage for up to 180 days to nursing facility residents; plans are not required to comply with the agency’s guidance, and are less likely to do so when, as in this instance, it would impose higher costs on the plan.
• Develop systems to ensure that nursing facility staff and prescribing physicians have accurate information on plan formularies and cost-sharing levels for each resident, and ensure that exceptions are promptly and properly requested when prescriptions are written for non-covered drugs. Nursing facilities should collaborate with pharmacists, physicians, and drug plans to facilitate exceptions and appeals processes.

Conclusion
The new Medicare prescription drug benefit will bring tremendous changes to the way drugs are financed and delivered in nursing facilities. Among the greatest changes are the transformation from a system with one dominant payer, Medi-Cal, to one with multiple payers and formularies, and potentially the end of the “one facility, one pharmacy” structure. These and other likely changes will increase the complexity of providing drugs to nursing facility residents and will require active new steps by facilities, pharmacies, and government officials to ensure quality of care and patient safety.

Reprinted from “The Medicare Drug Benefit: Impact on Nursing Facilities,” courtesy of the California HealthCare Foundation at www.chcf.org.