Despite the fact that the Replacement Drug Demonstration Project (the Demonstration Project) is supposed to cover expensive medications not generally covered under Medicare Part B, some of the medications covered by the Demonstration Project may be covered under Medicare Part B when they are administered incident to a physician’s professional services. The multiple sclerosis drug Avonex is an example of such a medication.
Medicare beneficiaries who receive coverage of prescription medications under Medicare Part B who are considering enrolling in the Demonstration Project, should first compare the out-of-pocket costs of each program. After this comparison, they may find that they have fewer out-of-pocket costs under Part B than they would have in the Demonstration Project.
People who are currently receiving their medications through a pharmaceutical company’s prescription assistance program should also be concerned about additional costs if they enroll in the Demonstration Project. These individuals may go from paying nothing or nominal fees for their prescription medications to paying significant out-of-pocket costs if they enroll in the Demonstration Project. Unfortunately, Medicare beneficiaries who are currently enrolled in prescription assistance programs sponsored by pharmaceutical companies may find that they have no choice in the matter. If they do not enroll in the Demonstration Project, the pharmaceutical companies may disenroll them from their prescription assistance programs.
THE DEMONSTRATION PROJECT:
What is the Demonstration Project? The Medicare Modernization Act of 2003 authorized Medicare to pay for expensive medications not generally covered under Medicare Part B for 50,000 of approximately 500,000 eligible Medicare beneficiaries.
Who is Eligible for the Demonstration Project? Any Medicare beneficiary with both Part A and B who is without comprehensive drug coverage under Medicaid, TriCare, or an employer plan. Also, Medicare beneficiaries with both Part A and B who have prescription drug coverage, but who have co-pays that are greater than the co-pays established under the demonstration project.
What are the Out-of-Pocket Costs Associated with the Demonstration Drug Project?
Standard Benefit: 2004 2005
Deductible: $85 $250
Coinsurance: 25% 25%
Initial Coverage Limit: $660 $2,250
Catastrophic Coverage available: after $1,200 spent out-of-pocket after $3,600
Low Income Beneficiaries:There are fewer out-of-pocket costs for individuals with incomes below 150% of the federal poverty level. (In 2004: $13,965 for 48 contiguous states, $17,445 for Alaska, and $16,050 for Hawaii).
MEDICARE PART B:
What is Medicare Part B? Supplemental Medical Insurance that pays for a host of services including: physician services; services and supplies incident to a physician’s professional services; outpatient hospital services; physical and occupational services; x-ray, laboratory, and other diagnostic tests; surgical dressings and devices for reduction of fractures; durable medical equipment; and prosthetic devices.
Does Medicare Part B Pay for Prescription Medications? Generally, Medicare Part B does not pay for prescription medications. However, prescription medications are covered under Part B when the medication cannot be self-administered and thus must be administered incident to a physician’s professional services.
What are the Out-of-Pocket Costs Associated with Prescription Drug Payments Made under Medicare Part B? It depends. If beneficiaries receive prescription medication at the physician’s office, “incident to [the] physician’s professional services” they will initially be responsible for an annual Part B deductible ($100 in 2004 and $110 in 2005), after which they will be responsible for a 20% co-payment per service.
If beneficiaries receive their prescription medication at an outpatient or community health care center, theywill still have to pay the annual deductible. However, due to the outpatient prospective payment system, they may either be responsible for a 20% co-payment or a fixed co-payment. The fixed co-payment is determined by taking into account a number of factors including the national median charge for the particular service received and the hospital wages in which the service was provided.
There are Medigap policies that assist with these out-of-pocket expenses, whether incurred at the doctor’s office or in an outpatient or community health care center.
Before enrolling in the Demonstration Project, individuals who already receive Medicare coverage for one or more of the medications covered by the Demonstration Project should compare their current out-of-pocket costs with the out-of-pocket costs they will accrue under the Demonstration Project. They may find that their out-of-pocket costs will be more expensive if they enroll in the Demonstration Project than they are under Medicare Part B or through a pharmaceutical company’s prescription assistance program.
For assistance with this calculation, beneficiaries with multiple sclerosis should contact the local chapter of the National MS Society or should call 1-800-FIGHTMS. Other beneficiaries should contact their state’s State Health Assistance Program (SHIP).