CMS guidance on Part D prescription drug expenses and spenddown
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CMS guidance on Part D prescription drug expenses and spenddown


Revised November 19, 2013



Purpose: This is an overview of guidance given by CMS regarding Medicare D and spenddown expenses. The same guidance can be applied to reducing LTC participation by a Medicare D related expense.

  • When are prescription drugs for Medicare beneficiaries an allowable expense under spend-down?

 

A.  For the purposes of Medicaid spend-down, incurred Part D pharmacy costs are treated in the same manner as any other costs incurred for medical care.   All usual rules for determination of an applicant’s liability, insurance coverage and spend-down eligibility are applicable.  Costs paid in whole or in part by an SPAP, or other public program of the state or a political subdivision of the state, which involves no federal funds may be counted as an incurred medical expense to establish eligibility under a Medicaid spend-down.  Note that if a State’s Medicaid program provides coverage of any of these costs, they are not allowable under spend-down.

Enrollment in Part D is voluntary, therefore not all Medicare beneficiaries will be enrolled in a Medicare Part D plan (PDP) or a Medicare Advantage plan (MA-PD).  For those enrolled in a PDP or MA-PD, not all drugs will be covered.  Each plan may have a different combination of deductibles, co-pays and coverage gaps.  To determine if drug costs incurred by Medicare beneficiaries are allowable under spend-down, apply the following rules:

 

  • If the Medicare beneficiary was not enrolled in a PDP or MA-PD on the date of service, allow the prescription drug cost.
  • If the Medicare beneficiary was enrolled in a PDP or MA-PD on the date of service, the plan must issue a periodic (at least monthly) statement to the beneficiary explaining all benefits paid and denied, and amounts attributed to cost sharing.  If the drug charge is identified on this statement as a beneficiary liability, i.e. part of a deductible, co-pay or coverage gap, allow the expense under spend-down.
  • When a plan denies coverage of a prescription the beneficiary has the right to request an exception for coverage of the drug.  The beneficiary is notified in writing of the decision on any exception requested.  If the drug charge appears on the statement as a denial, and no exception was requested, do not allow the charge.
  • If the drug charge appears on the statement as a denial, and an exception was requested and denied, allow the charge.

 


 

These procedures will help ensure that legitimate part D cost sharing expenses are allowed under spend-down, as well as expenditures for drugs not covered by the PDP or MA-PD.  By relying on the statements and exception notices, eligibility workers will not need to be concerned with knowing the cost sharing rules for each plan, the plan formularies or non-formulary drugs covered under a transition plan or under the exception process.  Applicants should be advised to maintain their statements and other related documentation for consideration under spend-down. 

 

Additional Clarification.

 

If the Medicare beneficiary is not enrolled in a Part D plan (PDP or MA-PD) on the date of service allow the prescription drug cost toward spenddown.  It doesn’t matter why the beneficiary is not enrolled only that he is not enrolled. The reverse would also be true if a Medicare beneficiary is enrolled in a PDP or MA-PD on the date of service, we would not allow the prescription drug cost, whether self-paid or not,because the drug is covered drug under the beneficiaries Medicare Part D plan.

 

Enrollment in Medicare Part D is voluntary. Therefore a Medicaid client could tell Medicare that they are “affirmatively declining Medicare Part D coverage but this would not make them eligible for Medicaid to cover their prescription expenses.  We could, however apply the costs they incur for prescription drugs towards a spenddown liability upon confirmation from CMS that the client had affirmatively declined coverage. 

 

Since Medicare is primary payer for drugs covered under Part D and not Medicaid, there is no prescription drug coverage available to full benefit dual eligible individuals, including those not enrolled in a Part D plan—for (1) Covered Part D drugs; or (2) any cost-sharing obligations under Part D relating to covered Part D drugs.  This means that if a CN or MN Medicaid client with Medicare chooses to “affirmatively decline” Medicare Part D coverage, Medicaid will still not pay for any prescription drug costs that would have been covered under Medicare Part D or any Part D cost-sharing.

 

Clients need to understand that dis-enrolling from their current Part D plan will not prevent Medicare from re-enrolling him in the same or a different plan. The client must actually get his Medicare records documented with his statement that he is declining prescription coverage under the national Medicare Part D prescription drug program” in order to prevent re-enrollment.

 

 

 

 

 

Modification Date: November 19, 2013