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Category |
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Medicare Modernization Act
$600 Credit
First Conference April 7- 8
Medigap
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Date Created |
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| 06/07/2004 10:57 AM |
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Date Updated |
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| 07/23/2004 12:53 PM |
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Some people who will qualify for transitional assistance are also likely to have a Medigap policy with a prescription drug benefit in it. How will those benefits be coordinated with the transitional assistance, and will CMS be providing gui |
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Question |
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Some people who will qualify for transitional assistance are also likely to have a Medigap policy with a prescription drug benefit in it. How will those benefits be coordinated with the transitional assistance, and will CMS be providing guidance or a bulletin to tell an issuer how much of the cost of the drug is to apply to either deductibles or co-payments under these Medigap policies? |
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Answer |
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The outpatient prescription drug benefit in standardized Medigap plans H, I and J provides coverage for 50% of outpatient prescription drug charges (after a $250 calendar year deductible) up to the maximum benefit under the policy, to the extent the charges are not covered by Medicare. [NOTE: Drug coverage under prestandardized Medigap plans and Medigap plans sold in the “waiver” states (Massachusetts, Minnesota and Wisconsin) will vary depending on the terms of the plan].
Because the transitional assistance (TA) is being considered a benefit under Medicare, the charges incurred for drugs purchased with the $600 TA are Medicare covered charges and, consequently, cannot be applied towards meeting the deductible under the Medigap policy. However, the 5% or 10% coinsurance (the portion that is not covered by Medicare) that the beneficiary incurs when buying drugs with the TA can be applied toward meeting the deductible under the Medigap policy. Once the deductible is met, the Medigap policy pays 50% of the 5% or 10% coinsurance.
In addition, the Medigap policy would pay 50% of any remaining portion of the drug charge that is not covered by the TA. For example, if the drug charge is $100 and the beneficiary has only $40 of TA remaining, the Medigap plan would pay $30 of the remaining $60 because the Medigap policy’s obligation is capped at 50% of the charge that is not covered by Medicare. In this example, the beneficiary would be responsible for the remaining $30.
Once the $600 TA has been exhausted, the Medigap policy pays 50% of charges (after the deductible has been satisfied).
Since Medicare-endorsed card sponsors are not required to “coordinate benefits” with Medigap issuers, how the Medicare discount card will work with a Medigap policy will depend in large part on the pharmacy and the Medigap issuer having the necessary systems in place for the electronic exchange of claims information. If the pharmacy is not able to “run” or process both the Medicare discount drug card and the Medigap card for a single purchase, the individual may have to submit a paper claim to his or her Medigap issuer.
CMS does not plan to issue a bulletin at this time. Guidance is being provided through these Q&As.
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