DATE: August 11, 2004
SUBJECT: Medicare Discount Drug Cards and Deductibles
DISTRIBUTION: COUNTY DIRECTORS OF SOCIAL SERVICES
MEDICAID ELIGIBILITY STAFF
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 authorized the Medicare-Approved Drug Discount Card. These cards offer Medicare beneficiaries negotiated prices that result in discounts off the regular price of prescription drugs. The federal government will pay the discount drug card enrollment fees for low-income seniors. In both 2004 and 2005, certain low income Medicare beneficiaries who have a discount drug card may also qualify for additional assistance in the form of a $600 credit (Transitional Assistance) that the beneficiary can use to pay for prescription drugs.
The beneficiary will access the $600 in transitional assistance through the Medicare discount drug card. When the discount drug card is presented at the pharmacy, the beneficiary is able to ‘draw down’ from the $600 to purchase the medicine. Generally, once a person qualifies for the $600, he is qualified until the new Medicare drug benefit begins in 2006. He will receive $600 in 2004 and another $600 in 2005. Medicare beneficiaries who qualify for the $600 may also realize additional savings from prescription drug manufacturers who are partnering with the Medicare-Approved drug card sponsors. This partnership will provide significant discounts, and, in some cases, free drugs to beneficiaries who have used up their $600 credit.
A Medicaid recipient authorized for full Medicaid benefits is ineligible for a discount drug card. However, a Medicaid a/r who is not authorized for full Medicaid may be approved for a discount drug card. Once authorized for full Medicaid, he can use his Medicaid card and the Medicare discount drug card.
Medicaid policy requires that to apply expenses to a deductible, only those charges for which the a/r is responsible for paying may be used for the deductible. This normally would mean if the a/r used the transitional assistance to pay for his prescriptions, these charges could not be applied to the Medicaid deductible. On July 19, 2004, CMS issued a State Medicaid Director letter providing policy for Medicare beneficiaries who are enrolled in the Medicare discount drug card and the transitional assistance program who later become eligible for Medicaid. This letter states to use the prescription drug charges, even if paid from Transitional Assistance, toward meeting a deductible.
Under the new law, do not delay or deny Medicaid benefits because a MN a/r has a discount drug card that may yield savings on medical expenses.
In other words, in the absence of an actual “pre-discount” price, a prescription purchased by a MN a/r under a Medicare discount drug card will be assumed to have a “pre-discount” price of $48.17 per prescription.
Use that amount as the incurred medical expense for that prescription for Medicaid deductible purposes. However, if a Medicaid client can provide evidence satisfactory to you that he paid more than the assigned value of $48.17 for a prescription, use the amount the beneficiary can document as the incurred medical expense.
For Medicaid third party liability purposes, do not treat the $600 credit used to pay for prescription drugs as an available third party insurance under Medicaid. A Medicaid client with a Medicare discount drug card and transitional assistance does not have to spend the $600 credit before Medicaid will pay for the individual’s prescription drugs.
Individuals who become eligible for Medicaid after receiving the $600 credit will not lose the credit. In this case, Medicaid becomes the primary payer for drugs covered by Medicaid. The individual can save whatever remains of the $600 credit to use in the future should he lose Medicaid benefits (or to use for drugs that are not covered by Medicaid), up until the time that outpatient drug coverage becomes available from the new Medicare Prescription Drug Plans.
This policy is effective upon receipt.
If you are aware of any denied or terminated cases that might be impacted by this policy, evaluate if there were bills incurred on or after June 1, 2004, that you did not apply toward the deductible because of the discount drug card and transitional assistance. Determine if the client would be eligible. If eligible, reopen the case and authorize benefits. If the case remains ineligible, document this in the record.
If you have any questions regarding this information, please contact your Medicaid Program Representative.
Gary H. Fuquay
(This material was researched and written by Debbie Pittard, Medicaid Eligibility Unit.)
For questions or clarification on any of the policy contained in these manuals, please contact your local county office.