Beneficiary-Centered Assignment

For Medicare Part D

Tammie Chau, University of California - San Diego

By matching beneficiaries’ current medication regimen with the right prescription

drug plan, the states’ Department of Health Services can improve beneficiaries’
access to necessary drugs while lowering the cost to the beneficiary, states, and
the federal government.

Beneficiary-Centered Assignment, a method of matching individuals’ drug needs to a for-

mulary plan, is a cost effective strategy to better serve Medicare-Medicaid dual eligibles.
Over 6.2 million low-income seniors and disabled citizens qualify for both Medicare and
Medicaid coverage. These dual eligibles are randomly assigned to prescription drug
plans (PDPs). These privately-administered PDPs can vary depending on covered drug
benefits, premiums, co-payments, and the low-income federal subsidy. As consumers,
enrollees have the option of changing their drug coverage using Medicare’s Web-based
Plan Finder. However, the majority of dual eligibles do not explore available online op-
tions and remain enrolled in randomly assigned PDPs.

Using Maine as an example,

states should assist in enrolling Key Facts
and reassigning dual eligibles to • “Dual eligibles” are those who qualify for both
low-cost drug plans that fit bene- Medicare and Medicaid. They disproportion-
ficiaries’ needs. The process be- ately have multiple chronic conditions requir-
gins by reviewing the last three ing an average of ten (10) or more prescriptions
months of an individual’s drug per month.
regimen and comparing the po- • An estimated total of $47 billion and $53 billion
tential out-of-pocket expenses. will be spent in 2009 and 2010, respectively,
States should collaborate with on Part D drug benefits.
their pharmacist associations • Random assignment of common pharmaceu-
including pharmacy students to ticals can cost a monthly difference of $242
use Medicare’s Plan Finder. In more than the least expensive drug plan.
Maine, if an enrollee’s plan does
not cover 85 percent of the
medications they currently take,
then the state can switch drug plans on behalf of the beneficiary. Each participant is then
notified by letter about the switch and can opt- out if they prefer not to have their plan
changed.

On January 1, 2006, dual eligibles transitioned from Medicaid’s comprehensive drug

coverage to automatic enrollment in Medicare Part D’s PDP. This random assignment
ensured that each drug plan had equal amounts of enrollees instead of tailoring a plan
to beneficiaries. Random assignment of eligible enrollees not only complicated benefi-
ciaries’ access to prescription drugs, but also resulted in higher costs for the federal
government and states.
Random assignment of PDPs to dual eligibles makes it more difficult for enrollees to ob-
tain necessary drugs. For example, if a drug is not included on the approved list, then the
beneficiary must pay out-of-pocket or forego the drug entirely. Allowing states to better
accommodate dual eligibles with Beneficiary-Centered Assignment provides coverage
for current medication regimens without causing discrepancy in access to prescription
drugs. The potential savings for states and the federal government is substantial in main-
taining this coverage.

Widespread use of Beneficiary-Centered Assignment could streamline enrollees into

just several of the available PDPs. In turn, this could influence private plans to compete
for enrollment based on
adding common drugs to
Talking Points formularies.
• Current assignment of dual eligibles is random and
based upon equalizing the number of enrollees in Next Steps
each private drug plan. There is an ongoing chal-
• Beneficiary-Centered Assignment or intelligent as- lenge to better serve dual
signment assigns dual eligibles to a prescription drug eligibles with their special
plan that meets the individual’s needs. health needs. Decreasing
• Maine is the only state with authority granted from the widespread confusion
the Centers for Medicare and Medicaid Services for dual eligibles, Medi-
(CMS) to reassign dual eligibles to plans that cover care Part D should find an
60 percent to 95 percent of their drugs by evaluating alternative method of en-
beneficiaries’ drug regimens and plan options. rolling beneficiaries into
a prescription drug plan.
State legislators can enact
Beneficiary-Centered Assignment by taking steps to obtain authority granted from CMS
to give state pharmacist associations authorization to automatically enroll dual eligibles
into cost saving plans that match the beneficiaries’ current drug regimen.

Sources
Laura Sumner et al, “Improving the Medicare Part D Program for the Most Vulnerable Beneficiaries.” Com-
monwealth Fund, May 2007.
Jack Hoadley et al, “The Role of Beneficiary-Centered Assignment for Medicare Part D” MedPAC, June 2007.
“The Medicare Prescription Drug Benefit- An Updated Fact Sheet.” Henry J. Kaiser Family Foundation, March
2009.
Vernon Smith et al, “The Transition of Dual Eligibles to Medicare Part D Prescription Drug Coverage: State
Actions during Implementation” Henry J. Kaiser Family Foundation, February 2006.

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