Medicare Part D Impact on Ancillary Costs

Effective immediately, Long Term Care (LTC) providers are not to bill the Medi-Cal program for the Medicare prescription drug costs of Medi-Cal recipients who are also enrolled in Medicare (referred to as “dual-eligibles” or “Medi-Medis”). LTC providers must exclude Medicare prescription drug costs from their ancillary charges and bill Medicare directly retroactive to January 1, 2006.

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 was signed into law on December 8, 2003, and the prescription drug benefit under Medicare, designated as “Part D,” was effective January 1, 2006. The Medicare program assumes responsibility for providing prescription drugs in most drug categories for dual-eligibles. In the past, dual-eligibles received their prescription drug coverage through the Medi-Cal program. Retroactive to January 1, 2006, dual-eligibles obtain their prescription drugs from a Medicare drug plan. Each Medicare drug plan has its own drug formulary and pharmacy network. Drugs offered by the plan may or may not be identical to the drugs the recipient currently obtains from Medi-Cal. In addition, under Part D, dual-eligibles are required to pay $1 or $3 copays for their drugs.

The federal government has established all policies and procedural requirements with regard to program implementation and the transition of the dual-eligibles from Medi-Cal to the federal Medicare program. The primary role of the State in this implementation process has been to assist the federal government in education and outreach to inform recipients and health care providers about the transition.