A proposed arrangement under which a state agency would subsidize copayments for outpatient prescription drugs owed by financially needy Medicare Part D enrollees would not constitute grounds for the imposition of civil money penalties or administrative sanctions, according to the Office of Inspector General (OIG). The state agency functions as the planning agency for alcohol, drug addiction, and mental health services.
Facts. Under the arrangement, if a patient is eligible for Medicare Part D, an independent mental health center (“center”) contracting with the state agency would determine whether the individual is financially eligible for a Part D copayment subsidy. A patient would be eligible for a Part D copayment subsidy if eligible, on the basis of income and if not a Medicare beneficiary, for subsidized services from the center. If a patient is eligible, the center would inform him or her that the center would pay part or all of the copayment to the pharmacy of the patient’s choice for Part D covered medications. The copayment subsidy would not be advertised. When a Medicare beneficiary enrolled in Part D takes a prescription to be filled, the pharmacy bills the beneficiary’s Medicare drug plan for the cost of the prescription less the applicable copayment. The pharmacy would then bill the center for the copayment subsidy amount. Funds for the copayment subsidies would be provided by the state agency to the centers. These funds could not be used for any other purpose and at the end of the fiscal year, any amounts not used for copayment subsidies would be returned to the agency. The subsidy payment is not contingent on a beneficiary’s choice of any particular Part D plan.
Analysis. Here, the state agency would provide something of value (Part D copayment) to the federal health care program beneficiary. The risk is low, however, that this remuneration would influence the beneficiary to choose any particular provider, practitioner, or supplier because: (1) the copayment subsidy would not be advertised, the beneficiary would be screened for eligibility by the center, and at that time, the beneficiary would have already selected the center as a provider; (2) while the provider may assist the beneficiary in enrolling in a Part D plan, the subsidy is not contingent upon the selection of any particular Part D plan; and (3) payment of the copayment subsidy is not contingent upon the use of any particular pharmacy.
State autonomy. In addition, the OIG notes that the arrangement is part of a comprehensive regulatory scheme to care for the mental health needs of the residents served by the state agency. State law requires the agency to plan and make arrangements for items and services to meet these needs. Failure on the part of financially needy Medicare beneficiaries to obtain prescription drugs from pharmacies may result in additional costs to the state agency and the state's taxpayers, which can be avoided by the copayment subsidies. States and their agencies should have sufficient flexibility to carry out their responsibilities in an efficient and economical manner.
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