On December 8, 2003, President George W. Bush signed the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 into law. It quickly got shortened to the Medicare Modernization Act (MMA) and Medicare, at long last, had a prescription drug benefit.
The bill passed along partisan lines, with Republicans prevailing in the House by a vote of 220-215, and in the Senate by a tally of 54-44. Democrats worried about the $394 billion price tag, and the potential implications of the increased role of private insurers in Medicare.
Despite the LTC pharmacy industry’s best efforts, we were unable to get any special considerations for LTC residents who, prior to the implementation of the MMA, relied primarily on Medicaid to pay for prescription drugs for long-term residents of nursing facilities.
The final regulations implementing the drug benefit were published in the Federal Register on January 28, 2005. This was a quick turnaround, primarily because the Centers for Medicare & Medicaid Services (CMS) was required to implement the drug discount card program and to give potential plan sponsors as much information as possible to begin planning for the full benefit in 2006. The January regulations did not include any provisions related to standards for LTC residents under Part D benefit.
After extensive consultation with CMS concerning the needs of LTC residents, CMS issued the Long-Term Care Guidance on March 16, 2005. This guidance document laid out 10 specific requirements plans were obligated to provide for residents of LTC facilities.
It also included convenient access standards, including a requirement that participating plans have an adequate network of LTC pharmacies to provide services to enrollees within their geographic coverage area. Finally, the guidance laid out formulary standards, as well as exceptions and appeals processes for LTC residents.
If a Medicare beneficiary is a resident under a traditional Medicare Part A-covered stay, the payment is included in the bundled payment to the Skilled Nursing Facility. If the resident is covered by a Medicare Advantage (MA) plan, the pharmacy is typically paid directly by the MA plan.
Traditional Medicare does not automatically include the optional part D benefit, so beneficiaries need to enroll in a Prescription Drug Plan (PDP). Pharmacies also need to be sure that they are in the pharmacy network of the PDP. Most pharmacies accomplished this through networks negotiated by their Group Purchasing Organization.
For dual-eligible long-stay residents, Medicare Part D is responsible for pharmacy payments. Recall that Medicare has a limited SNF benefit, limited to 100-day episodes of care, following a qualified stay in an acute care hospital. Before the MMA, long-stay dual-eligible residents received drug coverage through Medicaid. Since 2006, Medicare Part D (or Medicare Advantage) covers the prescription drug benefit.
It’s difficult to imagine that it’s been nearly 20 years since the Medicare Drug Benefit began delivering a much-needed prescription option to Medicare beneficiaries (2006). The transition from Medicaid to Medicare as a major payer for medicines for seniors was not as smooth as many of us had hoped, but we have watched as the program came to be among the most popular Medicare benefits for today’s seniors.
In the early years of the drug benefit relatively few nursing home residents were enrolled in MA plans. The numbers continue to rise and nursing homes struggle with the sometimes-overbearing management of resident care. MA plans typically pay less than traditional Medicare, which puts facilities in a financial squeeze.
Medication Therapy Management (MTM) is a provision of the MMA that requires plans to offer enrollees medication reviews to help them get the best outcomes. Over the years, CMS has become more prescriptive by requiring targeted quarterly reviews and annual comprehensive reviews. Unfortunately, CMS does not require MTM to be performed by a pharmacist.
MA plans have steadily become more popular to the point that more Medicare beneficiaries are enrolled in MA plans than in traditional Medicare. The increased popularity of Medicare Advantage has also resulted in the rise of MA critics, who believe MA organizations have engaged in overly aggressive prior authorization and denial of care.
Perhaps the biggest change in Medicare Part D is the passage of the Inflation Reduction Act, which authorized CMS to begin negotiating the price of drugs dispensed in Medicare. The first round has been completed and the new pricing models will become active in 2026. Since the drugs chosen for price negotiation are, almost by definition, high volume drugs, lower prices will almost certainly be less lucrative for pharmacies.
Nothing is as certain as change. Government programs are slow to respond to changes in the economy and culture. As healthcare increasingly moves away from hospitals and nursing homes toward home and community-based care, will Medicare adjust payment policies to accommodate the change?
Medicare is a massive federal program that is close to becoming insolvent, with millions of Americans becoming eligible for coverage each year. Can Medicare be sustained over the long term? Keep listening.
