HIV
Medicare and Medicaid Working Group

Medicare Part D: ADAP
Expenditures Must Count Towards TrOOP

What
is the Issue? 
When Congress established the Medicare Part D program, drug spending by
other government programs was prohibited from counting toward the calculation
of so-called true out-of-pocket costs (TrOOP), with one exception, state
pharmaceutical assistance programs.  The Centers
for Medicare and Medicaid Services (CMS) has interpreted the law such that AIDS
Drug Assistance Programs (ADAPs) are not to be considered state pharmaceutical
assistance programs even though they are supported by significant state
contributions and must ensure that they are the payer of last resort.  

 How
does it affect people living with HIV and AIDS?  TrOOP spending is a critical issue because it
determines when “catastrophic coverage” begins. 
Catastrophic coverage begins when individuals with exceptionally high
drug costs move through the coverage gap by spending $4,050 in out-of-pocket
costs and their cost sharing falls to 5% of drug costs.  TrOOP also is significant because these
expenses are used to determine when individuals exit the coverage gap known as
the donut hole.  Because ADAP spending does
not count toward TrOOP, individuals can not move out of the coverage gap and
are therefore unable to access their Medicare drug formularies for
approximately between 9 to 10 months out of the plan year. These individuals
must rely only on ADAP, which in almost all cases has a much more limited
formulary than the typical Medicare plan.

 Reasons
to Support Policy Change:

• Cost to Medicare
  is Minimal:  The
  CHAMP Act passed by the House last session included a provision to allow ADAP
  and Indian Health Service spending to count towards TrOOP.  Those two programs combined were only expected
  to cost $100 million over five years.
• States Make
  Significant Contributions to ADAPs: 
  On average, state spending
  accounts for 22% of the total ADAP budget. Fifteen states contribute more
  than 25% of their state’s overall ADAP budget (Alabama, California,
  Colorado, Georgia, Idaho, Illinois, Iowa, Missouri, Pennsylvania,
  Tennessee, Texas) and five states contribute 40% or more of the ADAP
  budget (Idaho, Nebraska, North Carolina, Rhode Island, Wyoming).
• Provide Cost
  Savings to Lifesaving Discretionarily Funded Program:  Total ADAP
  spending reached almost $1.4 billion in FY2006, with states
  contributing $305 million to the total. 
  ADAPs provide access to critical medications for approximately
  140,000 individuals in communities across the U.S.
  every year.  Unfortunately, ADAPs
  are limited in their services by the annual appropriations process and
  meeting demand for HIV drugs is an ongoing challenge. A number of states
  have been forced to maintain waiting lists over the last several years.
• Catastrophic Coverage
  Frees Up ADAP to Cover Other Unmet Needs: 
  When ADAP does not count toward
  TrOOP, it requires ongoing ADAP spending that cannot be used to help other
  needy people with HIV/AIDS. 
  However, when ADAP does count toward TrOOP, catastrophic coverage
  frees up ADAP dollars to help other needy individuals.  The National Alliance of State and
  Territorial AIDS Directors has estimated that if ADAP expenditures counted
  towards TrOOP, it would save ADAP programs $25 to $44 million. 
• The Majority of
  ADAP Clients Live in Poverty:  82%
  of ADAP clients live at or below 200% of the poverty level ($1,701 a month
  in 2007) and 55% are at or below 100% FPL. 
  For those who just miss qualifying for the Medicare low income
  subsidy, the cost of drugs can easily total $3,000 per month during the donut
  hole period. In addition to their HIV regimen, people with HIV/AIDS also
  need to pay for a host of other medications to treat co-occurring
  conditions and side effects from their HIV treatment.
• On Average, 17%
  of ADAP Clients are Medicare Beneficiaries:  69% of these
  ADAP clients who are Medicare beneficiaries are also eligible for the full
  or partial LIS.  Approximately 30%
  of these clients are standard beneficiaries who currently experience the
  coverage gap. 

 The
HIV Medicaid and Medicare Working Group (HMMWG) HMMWG is a coalition of nearly 100
national and community-based AIDS service organizations that represent HIV
medical providers, advocates and people living with HIV/AIDS and provide
critical HIV-related health care and support services. For more information,
contact the HMMWG co-chairs Laura Hanen with the National Alliance of State and
Territorial AIDS Directors at 202.434.8091 or Robert Greenwald with the
Treatment Access Expansion Project at 617.390.2584.

TO GET INVOLVED LOCALLY, ACT RIGHT NOW - WORK NEED TO BE DONE THIS MONTH APRIL 2008 * Contact Duane@alphaidaho.org.