Medicare Part D: Time to celebrate progress?

It’s been a little over two years since the groundbreaking program called Medicare Part D—prescription drug coverage for the Medicare-eligible—went into effect. The sheer size, scope and complexity of the program were daunting—even more so for long-term care providers because the program had not been designed for their field, facility-based residential care of the chronically ill and disabled. Even so, there is always a learning curve, so it would seem reasonable to anticipate that Medicare Part D had ironed out some kinks and is serving even long-term care residents with some degree of accuracy and efficiency. But is it? Recently Long-Term Living Editor-in-Chief Richard L. Peck asked Claudia Schlosberg, JD, policy director for the professional organization most directly involved in implementing Part D for long-term care—the American Society of Consultant Pharmacists (ASCP)—to provide a “progress report.” And Schlosberg is well-qualified to do so, having come to ASCP this February after two decades of legal and policy work on both institutional and community-based care for the elderly and people with disabilities, including over three years with the U.S. Department of Health and Human Services.

Peck: The administrative challenges of Medicare Part D to long-term care providers seemed daunting from the start. Has there been any improvement in this situation?

Claudia Schlosberg, JD

Schlosberg: Not only do the issues remain challenging, but in certain areas, they may well be increasing. In preparing for this interview I did an informal poll of our membership. What I got back is by no means a scientific survey, but I received several telling responses. One pharmacist, for example, described Part D as the most labor-intensive process for long-term care pharmacies. The administrative burdens do not just involve identifying and dispensing appropriate covered medications and dealing with prior authorizations, but in dealing with beneficiary eligibility for cost-sharing subsidies. The copayment issue is huge. Most long-term care pharmacies have had to increase staffing to deal with the added administrative burdens of Part D.

Peck: What are the factors behind the copayment problem?

Schlosberg: Well, nursing facilities know the dual-eligible resident’s payment status, and long-term care pharmacies serving those residents know it, but state Medicaid agencies are communicating with the Centers for Medicare & Medicaid Services [CMS] about eligibility issues on different timetables, so the prescription drug plans [PDPs] have been charging copays to residents who by law are entitled to full subsidy status—in other words, they have zero copay obligations. CMS has tried to remedy the problem with their database by requiring plans to collect paper documents from beneficiaries that prove they are entitled to the subsidy payments. This policy is called “best available evidence,” or BAE. If a PDP obtains BAE, then they must amend the resident’s copay eligibility status based on those paper records. As you know, pharmacy claims are processed electronically, so the notion that PDPs must now collect paper to document a beneficiary’s copay status to satisfy CMS payment and audit requirements is a tremendous administrative burden for PDPs. Not only must PDPs collect BAE, but once they receive it they must go back and refile prescription drug event files with CMS to correct CMS’s payment records. Many PDPs have resisted this policy and since long-term care pharmacies are prohibited from collecting copayments from residents they know to be subsidy-eligible, long-term care pharmacies are carrying millions of dollars in receivables for unpaid copayments owed by PDPs.

Peck: How are facilities faring in terms of getting the appropriate medications to the residents?

Schlosberg: Again, my informal survey—as well as a formal study published recently in the journal Health Affairs—indicate that performance in this area is highly variable. Claims rejection rates vary widely from plan to plan. And pharmacists are saying they’re having difficulty determining why rejections occur. Pharmacists also note that while plans are covering more drugs, there are more prior authorizations (PAs) and formulary edits, so formularies in 2008 are more restrictive than formularies in prior plan years.

There is a tremendous amount of inconsistency, as well, in compliance with CMS regulations, particularly with respect to transition policies. Some pharmacists say they’re spending too much time on the phone educating PDP supervisors and staff on CMS policies. Pharmacists are working extremely hard to ensure that appropriate medications get dispensed without delay.

Peck: Would you expand a bit on that regulatory inconsistency?

Schlosberg: For example, when a resident is transitioning from one level of care to another—hospital to nursing home, say—or is having a drug or dosage changed, CMS requires medications to be provided and covered during that period even if they’re uncovered by a plan’s formulary. CMS recognizes that under the federal regulations governing nursing facilities, residents in long-term care facilities must be able to obtain their medications, as ordered, without delay. Sometimes plans approve these transition fills, sometimes not. Many pharmacists complain that plans do not provide accurate formulary information so, if a claim is rejected because the prescribed drug is not covered by that plan’s formulary, it is difficult and time-consuming for the pharmacist to identify a therapeutic alternative that will be covered.

Another problem is coverage of medications obtained from “e-boxes.” All nursing facilities are required to maintain a supply of emergency medications. However, some pharmacists are reporting problems with obtaining coverage for certain medications or that a drug dispensed from an e-box will trigger a “refill-too-soon” reject. Also, some plans allow pharmacists to process PAs without the physician’s signature, but some won’t. It’s confusing and pretty frustrating because pharmacists are spending more time on administrative matters and billing issues.

Peck: The situation sounds chaotic, compared to the Medicaid coverage days. Why is that, and why doesn’t it seem to be improving?

Schlosberg: There are multiple responses. One issue is the benefit design. Part D was never designed to meet the needs of highly complex and fragile patients who have multiple comorbidities and take multiple medications. A good example is the auto-assignment process for dual eligibles. As conceived by Congress, consumers were supposed to be given choices so that they could evaluate and choose a plan that best fit their needs and resources. But the most vulnerable beneficiaries not only don’t really have choice, they are auto-assigned into Part D plans without any consideration of the fit between the plan’s formulary and coverage policies and their needs. A second example is lack of continuity. Because of the way the bid process works, every year, hundreds of thousands of these most vulnerable beneficiaries have to be reassigned to plans and start all over again. This does not promote continuity of care. Another structural issue has to do with financial incentives. PDPs are highly motivated to manage the cost of medications, but they are not responsible for down-stream medical costs. So there is a lot of emphasis on managing the cost of the medication and less emphasis on ensuring appropriate medication use.

With respect to long-term care, very little attention was paid to how long-term care pharmacies actually operate or the important role they play in ensuring appropriate medication use and compliance with stringent federal nursing home regulations on pharmaceutical care. For long- term care pharmacies, Medicare Part D has been the proverbial square peg in the round hole.

Peck: Do we know whether these difficulties are impacting the health or well-being of long-term care residents?

Schlosberg: Unfortunately, we don’t. We are not studying outcomes the way we should. Even though the plans are cost-driven, we are not studying the overall impact on healthcare costs of Part D administration. It could be that the costs being saved by Medicare Part D are being picked up by Medicare Part A. We just don’t know.

Peck: What is ASCP doing to try to rectify the situation?

Schlosberg: We are working with our members to document issues and working with CMS and other stakeholders to resolve them. There also are many bills in Congress addressing various aspects of Part D. There is one school of thought that says we should try to improve the program by legislatively addressing the issues of copays, transition overrides, medical necessity determinations, and so on. There is another that says we should simply carve out dual eligibles in long-term care, so that plans with specialized expertise could bid to manage the benefit for these special populations. Others think that duals should be assigned to a government-run program. All these proposals have merit. ASCP’s priority is to ensure that seniors, regardless of care setting, have access to effective, safe, and appropriate medication therapy.

For more information on Claudia Schlosberg, JD, and the American Society of Consultant Pharmacists, (703) 739-1316, ext. 128; e-mail; or visit To send your comments to the editors, e-mail

Topics: Articles