Medicare: Contingency Plans to Address Potential Problems with the Transition of Dual-Eligible Beneficiaries from Medicaid to Medicare Drug Coverage

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) established a voluntary outpatient prescription drug benefit, known as Medicare Part D. The Centers for Medicare & Medicaid Services (CMS) is responsible for implementing this benefit. This new drug coverage will be provided through competing private Part D plans sponsored by health care organizations, which may charge premiums, deductibles, or copayments for drugs. As a result of MMA, on January 1, 2006, drug coverage for dual-eligible beneficiaries will transition from Medicaid to Medicare Part D. This transition will occur for approximately 6 million full-benefit dual-eligible beneficiaries--Medicare beneficiaries who receive full Medicaid benefits for services not covered by Medicare. CMS is in the process of implementing this transition. During May and June 2005, CMS mailed notices to these beneficiaries informing them of the transition in coverage and that they will receive a subsidy to cover their entire deductible and help cover any prescription drug plan (PDP) premiums. During October and November 2005, CMS automatically assigned dual-eligible beneficiaries to PDPs and mailed notices to these beneficiaries informing them of the assignment and also that they may select a different PDP if they wish. If they do not switch from their assigned PDP by December 31, 2005, CMS will automatically enroll them in that drug plan with coverage effective January 1, 2006. MMA provides that, after that date, dual-eligible beneficiaries may switch PDPs at any time. Dual-eligible beneficiaries are poorer and tend to have far more extensive health care needs than other Medicare beneficiaries. They are also more likely to be disabled, at least 85 years old, or to have cognitive impairments. Congress raised concerns that the single-day transition from one type of drug coverage to another could create difficulties in ensuring that prescriptions for this vulnerable population are filled. Congress asked us to review (1) the potential problems that may arise during the transition and (2) the contingency plans that CMS, PDPs, and states have developed to respond to potential problems with the transition.