Advocates Settle BAE Lawsuit Addressing Low-Income Subsidy Eligibility Issues
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1 July 2008 EXECUTIVE SUMMARY MEDICARE PART D TASK FORCE Advocates Settle BAE Lawsuit Addressing Low-Income Subsidy Eligibility Issues Claudia Schlosberg, JD Director of Policy and Advocacy The American Society of Consultant Pharmacists, Alexandria, VA On June 19, 2008, the Center for Medicare Advocacy and the National Senior Citizens Law Center announced a settlement in Situ, et al. v. Leavitt, a class action filed on behalf of full benefit dual eligibles (FBDEs) in Medicare Part D against the Centers for Medicare and Medicaid Services (CMS). Many FBDEs have been unable to fully access their benefits due to enrollment problems that have lead to coverage gaps. FBDEs also have been assessed co-payments that they do not owe due to inaccuracies in CMS database. The settlement agreement is designed to resolve these problems by getting FBDE s enrolled into Part D plans and by resolving low-income subsidy eligibility issues more quickly without burdening beneficiaries or pharmacies. The settlement does not address payment issues between Part D plans and pharmacies, although it is expected that the settlement terms may help reduced the volume of disputed claims. 1 Who is covered by the settlement agreement? The settlement covers virtually all full-benefit dual eligible beneficiaries who have been unable to access benefits or who have been assessed co-payments incorrectly. Beneficiaries covered by the terms of the settlement include beneficiaries who live in the community as well as those who are institutionalized. Specifically, the plaintiff class is defined as: 1 CMS does not have authority to intervene in payment disputes between Part D plans and pharmacies. Social Security Act 1860D-11(i).
2 All full benefit dually eligible Medicare beneficiaries who have not received the full benefits of Medicare Part D prescription drug coverage or the Low Income Subsidy program because of one or more of the following: (1) the Secretary did not follow all auto-enrollment requirements after the beneficiary failed to enroll in a plan of his or her choice; (2) at the time benefits were sought, the beneficiary s Part D plan had not been informed by the Secretary of the beneficiary s enrollment in the plan or his or her entitlement to the Low Income Subsidy; or (3) the beneficiary was listed by the Secretary as a member of more than one Part D plan or as a member of the incorrect Part D plan after the beneficiary elected to change plans. Notably, to be considered a member of the class, a beneficiary must contact their plan, CMS, or the state Medicaid agency to complain of an auto enrollment or subsidy problem. How does the settlement address coverage gaps due to enrollment delays? With respect to coverage gaps, CMS has agreed to make modifications to its current system for auto-enrolling FBDEs and for deeming them eligible for the Low Income Subsidy (LIS). Specifically, CMS will begin processing state eligibility files on the first business day after they are received, rather than waiting for all state files to be submitted in a given month before processing. CMS anticipates that once this modification is made, the agency will be able to deliver enrollment and LIS eligibility information to plans in the next available weekly report after the state eligibility file has been processed. These changes will be made by August 31, CMS also will be encouraging states to transmit eligibility files more frequently than once per month. How does the settlement address incorrect co-payments charged to FBDEs? Under the terms of the settlement, CMS has agreed to promote increased utilization of the facilitated enrollment process at Point of Sale (POS) and make changes to its Best Available Evidence or BAE policy to require that Medicare Part D plans provide assistance to beneficiaries who are unable to produce evidence of LIS 2
3 eligibility. Plans will be required to contact CMS on behalf of the beneficiary. Regional offices or a CMS contractor will then be responsible for contacting the state Medicaid agency to verify a beneficiary s LIS and/or institutional status. How will CMS encourage use of the POS-facilitated enrollment process? Under the terms of the settlement, CMS is required to conduct an outreach campaign to pharmacists and pharmacy organizations to explain modifications to the POS contract that ensure the pharmacist has no liability for claims in which a prescription is filled based on reasonable evidence of LIS status, but the individual is subsequently determined ineligible for LIS. As part of the outreach campaign, CMS will encourage pharmacists to utilize the POS system. What changes are being made to CMS BAE policy? No later than two weeks after the settlement is approved, CMS will issue clarification of the BAE policy in the form of a Health Plan Management System (HPMS) Memorandum. The Memorandum will instruct plans that have mandatory obligations to: Update the subsidy status of a FBDE when the beneficiary or the beneficiary s pharmacist, advocate, representative, family member or other individual acting on behalf of the beneficiary provides the plan with any of the following documents: A copy of the beneficiary s Medicaid card that includes the beneficiary s name and an eligibility date during a month after June of the previous calendar year; A copy of a state document that confirms active Medicaid status during a month after June of the previous calendar year; 3
4 A print out from the state electronic enrollment file showing Medicaid status during a month after June of the previous calendar year; A screen print form the state s Medicaid systems showing Medicaid status during a month after June of the previous calendar year; or Other documentation provided by the state showing Medicaid status during a month after June of the previous calendar year. With respect to institutional status, it is anticipated that the HPMS Memorandum will contain the same elements as are listed in current guidance. As soon as plans are presented with one form of BAE, they must provide the beneficiary access to covered Part D drugs at a reduced cost-sharing level that is no greater than the higher of the LIS cost-sharing levels for full subsidy eligibles, or at zero if the BAE also verifies the beneficiary s institutional status. What are Part D plans obligations to provide assistance to beneficiaries? Plans must provide assistance to beneficiaries who claim to be subsidy eligible but who cannot provide the plan with BAE. Beneficiaries will not be required to demonstrate incapacity or inability to provide BAE. Once a beneficiary (or someone acting on the beneficiary s behalf) requests assistance, plans will be required to submit a request to the appropriate CMS Regional Office or CMS contractor, if applicable, within one business day of being notified that the beneficiary claims to be subsidy eligible, but cannot provide the plan with one of the documents listed above. Plans also are required ask beneficiaries when they will run out of medication and forward that information to the CMS Regional Office. How will beneficiaries be notified about the results of CMS inquiry to the state Medicaid agency? 4
5 Plans must make an initial attempt to notify the beneficiary of the results of the CMS Regional Office or CMS contractor inquiry within one business day of receiving those results. The plan must attempt to notify the beneficiary a total of four times; the fourth time must be in writing. If a request for a subsidy was made on the beneficiary s behalf by an advocate or authorized representative, it shall be sufficient for the plan to contact that advocate or representative. If beneficiaries do not agree with the results of the inquiry, the plan must provide appropriate contact information for the CMS Regional Office caseworker or CMS contractor. What happens if CMS confirms the beneficiary s LIS status? The Memorandum will instruct plans that, if the Regional Office or CMS contractor confirms the LIS status of the beneficiary, the plan must provide the beneficiary access to covered Part D drugs at the proper LIS cost-sharing level, or zero cost-sharing if the evidence documents the beneficiary s institutional status, as soon as it receives confirmation that a beneficiary is subsidy eligible. How will CMS respond to a plan s request for assistance on behalf of a beneficiary? CMS will implement internal procedures in response to a plan s request, under which a Regional Office caseworker or a CMS contractor will contact the state Medicaid agency in the individual s state to confirm whether the individual was Medicaid eligible in any month after June of the previous calendar year. These procedures will require the Regional Office or contractor to communicate any information it receives from the state Medicaid agency back to the plan. In non-immediate need cases, the Regional Office or contractor will have ten days to communicate back to the plan. In immediate need cases (for example, where the beneficiary has 0-2 days of medication left), the Regional Office or contractor must contact the Medicaid agency within one business day and communicate back to the plan within one business day. CMS will continue to implement a protocol authorizing manual updates of an individual s LIS status in response to requests made directly to CMS by beneficiaries or pharmacists. 5
6 How will the settlement be monitored? The Settlement Agreement will be monitored for two years. A key element to be monitored is the number of complaints relating to BAE in CMS complaint tracking system. CMS will include a special subcategory to track complaints relating to BAE policy. Advocates Settle BAE Lawsuit Addressing Low-Income Subsidy Eligibility Issues 2008 is published by the American Health Lawyers Association. All rights reserved. No part of this publication may be reproduced in any form except by prior written permission from the publisher. Printed in the United States of America. Any views or advice offered in this publication are those of its authors and should not be construed as the position of the American Health Lawyers Association. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. from a declaration of the American Bar Association 6
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