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Prior to the enactment of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) in December 2003, many states provided some level of drug coverage to low- to moderate-income elderly or disabled residents who do not qualify for Medicaid drug coverage. In 2003, state pharmacy assistance programs (SPAPs) served more than 1.5 million Medicare beneficiaries in 22 states. The new environment created by Medicare Part D represents numerous challenges and opportunities for states in deciding: 1) whether to create, maintain, or end their SPAP programs, and 2) how to coordinate their programs with the new federal benefit. Given the financial and design constraints of the Part D pharmaceutical coverage program, there continues to be an important role for additional assistance from states, whose ability and willingness to do so will continue to be influenced by federal policies and a host of other factors.
As the national dialogue over Part D legislation, regulations, and implementation progressed, the Commonwealth Fund–supported project on state pharmacy assistance at Rutgers worked with the states to identify and analyze the many complex issues involved for states in the Part D transition and provide a forum for public discussion of these issues and for exchange of information. Developed as part of this work, this chartbook documents the pre-Part D landscape of state pharmacy assistance programs. This information serves as an important baseline in assessing the evolving role of the states going forward in the MMA era, and the impact of policy choices on that role.
In 2003, states spent a total of $2 billion on prescription drug costs in SPAPs—a considerable investment of state funds that would be lost to beneficiaries if federal policies tend over time to "crowd-out" the state role. On the one hand, some provisions of the MMA explicitly acknowledge the role of states and seek to avoid "crowd-out" of these important programs by extending special privileges to states that opt to continue to subsidize coverage for their residents as a supplement to the Part D benefit. Under the MMA, SPAP contributions count toward the calculation of TrOOP (true out-of-pocket costs) thereby allowing them to help their beneficiaries reach the Part D catastrophic cap sooner, and making it even more important to sustain existing SPAPs and indeed to expand them to additional states. Nonetheless, other MMA policy choices constrain the states' role. Understanding the current coverage provided by these programs and the persons they serve, relative to the new Medicare benefit, may help to inform future decision making by federal and state policymakers.
Since the inception of Medicare Part D on January 1, 2006, many changes have taken place for SPAPs. In 2005, some states created new SPAPs to wrap around Part D (Hawaii, Kentucky, Montana, and New Hampshire), but others ceased operation of their SPAPs (Florida, Kansas, Michigan, Minnesota, and North Carolina.)
The remaining SPAPs have pursued varied courses of action, including providing state funds to wrap around Part D, providing emergency coverage during the initial transition period, expanding programs to cover non-Medicare eligible populations, and reducing or eliminating benefits that are now covered by Part D. As states journey through the uncharted territory of Medicare Part D, more changes are likely to develop; however, it is important to take into account the vital role that states have played in providing prescription drug assistance to their residents and to encourage their ongoing participation.
This chartbook updates a previous one that was released in August 2004 reporting SPAP data from 2002 and trends over time. The present report provides 2003 SPAP data on the number and types of programs, eligibility requirements, benefit design, and program administration in comparison to the new Medicare Part D benefit, as well as most recent annual enrollment, utilization, and program expenditures.
This chartbook is intended to serve as an information source about these programs and as a baseline to compare and contrast these benefits with the new Part D benefit. Unless otherwise stated, the data in the chartbook are from surveys of SPAPs conducted in 2000, 2002, and 2003 by the Rutgers University Center for State Health Policy.
For cross-sectional charts, where 2003 state survey data was incomplete, we utilized the most recent data available and note this in the source citations. The results of CSHP's survey as well as supplemental qualitative interviews on specific SPAP issues have also been discussed in several reports published by The Commonwealth Fund or CSHP. CSHP has also written a detailed report on coordination of benefits issues and SPAP plans for coordinating with the Medicare benefit. These reports may be found at www.commonwealthfund.org and www.cshp.rutgers.edu/.