EPIC Program Annual Data Tables 2008-2009: Narrative

Members of the EPIC Panel and Advisory Committee

EPIC Panel

  • Hon. Richard F. Daines, M.D.
    Commissioner
    NYS Department of Health
    Co-Chairperson, EPIC Panel
  • Hon. Michael J. Burgess
    Director
    NYS Office for the Aging
    Co-Chairperson, EPIC Panel
  • Hon. James J. Wrynn
    Superintendent
    NYS Insurance Department
  • Hon. David Milton Steiner
    Commissioner
    NYS Education Department
  • Hon. Robert L. Megna
    Director
    NYS Division of the Budget

EPIC Advisory Committee

  • Amy Bernstein, Consumer Representative
  • Doralina Colon, Consumer Representative
  • Justin Cunningham, Consumer Representative
  • Suleika Cabrera Drinane, Consumer Representative
  • Christopher Gardner, Consumer Representative
  • Sarah Hagler, R.Ph., Pharmacist
  • Alison B. King, Ph.D., Manufacturer Representative
  • Michael Lenz, R.Ph., Pharmacist
  • Maurice Van Sice, R.Ph.,Pharmacist

Table of Contents

Executive Summary

Background

The Elderly Pharmaceutical Insurance Coverage (EPIC) program is New York's senior prescription plan. Since it began in 1987, EPIC has provided prescription drug coverage to more than 875,000 low and moderate income New York seniors, with EPIC pharmacy payments totaling over $6.1 billion. This Annual Report summarizes the twenty-second year of program operations from October 1, 2008, through September 30, 2009, and highlights significant program accomplishments.

During the program year, the coordination of Medicare Part D and EPIC prescription benefits was fully integrated ensuring that member claims were billed appropriately. By using EPIC and Medicare Part D, members saved nearly $848 million at the pharmacy. The EPIC program has transitioned from providing primary prescription coverage to providing secondary or supplemental coverage for most members. As secondary payer, net State costs for EPIC were reduced by nearly $300 million since 2006 when Medicare drug coverage first became available through the Medicare Modernization Act of 2003.

Program Overview

Effective July 2007, most members, with limited exceptions, were required to join a Medicare Part D plan as a condition of EPIC eligibility and EPIC provides Part D premium assistance to these members. EPIC assisted over 150,000 members with enrolling in Medicare Part D plans that best fit their drug needs and allowed them to continue to use their preferred pharmacy. During the program year ending September 2009, over 83 percent of EPIC members were enrolled in a Medicare Part D prescription drug plan and used it as primary coverage. EPIC, as a secondary payer, was used to supplement drug costs not covered by Medicare Part D drug plans including deductibles, coinsurance/co-payments and coverage gap claims. EPIC also paid for drugs in classes not covered by Part D plans, as well as drugs that are not on the Part D plan formularies1. Having Part D as their primary coverage allowed members to maximize their coverage and save, on average, $2,761 of their total drug cost during the program year.

As the member's authorized representative, EPIC also assists lower income members to enroll in Medicare's Low Income Subsidy (LIS) also known as Extra Help and the Medicare Savings Program (MSP), which saves them even more money at the pharmacy.

Enrollment

At the end of the program year, 307,716 low and moderate income seniors were enrolled in EPIC with 254,747 enrolled in Part D plans. This represents a 4.76 percent decrease in total EPIC enrollment from the prior program year due to a decline in applications and an increase in cancellations. A total of 52,969 members were not enrolled in Medicare Part D because they were either not eligible for Part D or exempt from joining a Part D plan because they: 1) were enrolled in a Medicare Advantage plan or 2) would lose their union/retiree health coverage if they enrolled in Part D.

Costs and Utilization

During the program year, EPIC members filled over 10.1 million prescriptions costing $956.5 million (Appendix Table IV-A), a 12 percent decline in cost from the prior program year. By having EPIC along with Part D, members saved $848 million of their total drug costs. Pharmacy payments were $71 million less, a 15.8 percent decrease from the previous year. As the primary payer, EPIC expenditures were 75 percent of members' total drug expenses compared to only 33 percent of the total drug cost when the member had Part D or other drug coverage as primary drug insurance and EPIC provided supplemental coverage only. Members using EPIC as primary coverage saved an average of $2,404 off their total drug costs.

The 4,463 pharmacies that provided services to EPIC members received $379.9 million in EPIC payments. Net State costs for the program year were $187.3 million. Of the enrolled pharmacies, 51 percent were chain stores, while 49 percent were independent and other types such as institutional pharmacies or nursing homes.

Brand name sole source drugs represented 33 percent of the prescriptions purchased, while generic drugs accounted for 60 percent and multi-source brand products were 7 percent. The substitution rate for drugs with a generic alternative was 90 percent.

In order to identify potential problems and safeguard the health and safety of program members, EPIC continued to monitor the members using both prospective and retrospective drug utilization reviews.

Program Operations

EPIC helped members in a variety of ways by initiating Part D appeals2 and providing premium assistance. Program integrity was ensured through contract monitoring, auditing and oversight of program operations.

During the program year, EPIC established an Appeals Unit to pursue formulary exceptions and prior authorizations from Medicare Part D plans on behalf of its members. During the year, EPIC initiated 3,400 coverage determination requests resulting in savings to EPIC of $4.7 million and savings to members through lower co-payments.

EPIC provides Part D premium assistance to all members. For Fee Plan members, EPIC paid up to the Centers for Medicare and Medicaid Services (CMS) benchmark amount ($27.71 per month for 2009) directly to the Part D plans. Members eligible for premium assistance were identified through a monthly data exchange with the CMS. For the program year, the total premium payments made to Part D plans totaled $27.5 million. While no payments are made on behalf of Deductible Plan members, the annual EPIC deductible was lowered by $333 for these members in order to offset the monthly payments that they are responsible for paying directly to the plans.

EPIC contracted services with Health Management Systems (HMS) to recover benefit payments from other major prescription insurance carriers that were erroneously paid by EPIC for members who had Part D or other drug coverage. In the cases where EPIC was billed as the primary payer, $33.5 million was recovered during the program year. By the end of the program year, a total of $105.9 million has been recovered since the program began in 2004.

Pharmaceutical manufacturers must enter into formal agreements with EPIC in order to have their drugs included in the program. The manufacturers pay rebates to EPIC in return. There are agreements with 350 manufacturers, including larger companies, and the EPIC rebate program invoiced over $169.4 million in rebate payments during the program year.

EPIC performed both on-site and desk audits of selected participating pharmacies. During 2008-2009, EPIC staff conducted 143 pharmacy field audits resulting in recoveries of $469,408. Throughout the program year, EPIC staff monitored contractor compliance against performance standards, through routine and special reviews.

Conclusion — During the program year 2008-2009:

  • The full integration of the coordination of Medicare Part D and EPIC prescription benefits was accomplished and EPIC transitioned from primary to secondary payer. EPIC implemented all legislative amendments in a timely manner which resulted in increased savings to the EPIC program;
  • EPIC provided supplemental coverage for those members with catastrophic drug costs who were in the Medicare coverage gap and provided reduced co-pays and deductibles for most members, which lowered out-of-pocket drug costs; and
  • EPIC enrollment declined primarily in the lower income groups because Medicare Part D with Extra Help provided those members with adequate prescription coverage and EPIC was not needed as a supplement. With Extra Help, these members had no Medicare deductible or coverage gap.

Section I: About the Program

1. Background

Since it began in 1987, the EPIC program has provided prescription coverage to more than 875,000 seniors. EPIC income limits were increased in 2001 which resulted in an expansion in enrollment to more than 375,000 members. With the implementation of Medicare Part D drug coverage in 2006, EPIC has gradually transitioned to a supplemental prescription program that provides secondary coverage to Medicare Part D and other insurance plans. Today, EPIC is the largest State Pharmaceutical Assistance Program in the nation.

2. Program Description

EPIC is available to New York State residents age 65 or older who meet the income requirements: up to $35,000 for single seniors, $50,000 joint income for married individuals. Seniors who receive full Medicaid benefits are not eligible for the program.

EPIC offers two plans based on income — the Fee Plan and the Deductible Plan. The Fee Plan serves seniors with lower incomes, charging an annual fee (from $8 to $300 per member) and then requiring only a co-payment that ranges from $3 to $20 for prescription drugs. Both plans, Fee and Deductible are based on a sliding scale of income and marital status.

The Deductible Plan is available to seniors with higher incomes than the Fee Plan and was designed to provide catastrophic coverage. Instead of paying an annual fee, these seniors have an annual deductible based on income (from $530 to $1,715 per person). After meeting the deductible, seniors are charged only co-payments for their drugs.

3. EPIC and Medicare Working Together

The Medicare Part D prescription benefit became effective on January, 1, 2006, and offered comprehensive prescription drug coverage to all Medicare beneficiaries. Subsequently, the role of the State-funded EPIC program was redirected from providing primary prescription drug coverage to one that supplements Medicare Part D drug coverage.

If eligible, EPIC members were required to enroll in a Part D drug plan and use it as primary coverage. As secondary payer, EPIC supplemented drug costs for Part D covered providing greater savings. When purchasing prescription drugs, the member showed both EPIC and Medicare Part D cards at the pharmacy. Any drug costs not covered by Medicare, including deductibles, coinsurance/co-payments, Part D non-covered drugs classes (such as benzodiazepines and barbiturates) and coverage gap claims, were submitted to EPIC. This resulted in the lowest possible co-payment and reduced the State costs for prescription coverage when Part D is the primary insurer instead of EPIC.

In addition, EPIC provided assistance by paying Part D drug premiums for Fee Plan members. While members in the EPIC Deductible Plan must pay the monthly Part D premiums, EPIC lowered their required EPIC deductibles by the average annual premium of a Medicare benchmark drug plan ($333 in 2009).

4. Statutory Changes to EPIC

Since January 2006 when Part D began, EPIC has implemented a series of programmatic changes mandated by amendments to Title 3 of the NYS Elder Law. These amendments were designed to maximize participation and utilization of Part D benefits while protecting EPIC coverage provided to seniors:

  • EPIC was authorized to represent members for Medicare Part D, effective July 1, 2006. Income eligible members are required to provide information needed to apply for LIS up to 150 percent of the Federal Poverty Level (FPL) under Medicare Part D. Those approved were required to enroll in a Medicare drug plan unless enrollment results in significant additional financial liability to the member. Extensive educational and outreach efforts were undertaken to encourage others to join Medicare Part D. By September 30, 2006, a total of 156,000 (42 percent) were enrolled in Part D drug plans and 254,747 (83 percent) were enrolled in Part D by September 30,2009.
  • Effective July 1, 2007, all eligible EPIC members were required to enroll in a Medicare drug plan unless enrollment resulted in significant additional financial liability on behalf of the member. EPIC began to pay Part D premiums up to the annual benchmark amount computed by CMS for Fee Plan members. For Deductible Plan members, the EPIC Deductible was lowered by the annual benchmark amount. Members with income from 135 percent to 150 percent of the FPL were also required to apply for Partial LIS. As of September 2007, the number of EPIC members enrolled in Part D Plans was 263,948 (76 percent). By September 2009, over 150,000 of these members were facilitated into Part D drug plans by EPIC; another 52,969 were exempt from the Part D requirement or not eligible to join Part D.
  • The EPIC pharmacy reimbursement methodology was statutorily changed effective July 1, 2008, limiting reimbursement for brand name drugs to the Average Wholesale Price (AWP) minus 16.25 percent, plus a dispensing fee. A State Maximum Allowable Cost (SMAC) program was added to the EPIC pricing for generic drugs. The reimbursement for generic drugs was limited to the lower of AWP minus 25 percent, SMAC and Federal Upper Limit (FUL), each with a dispensing fee added, or the pharmacy's usual and customary price. The current dispensing fees ($4.50 for generics, $3.50 for brands) continued. This change was consistent with that of the New York State Medical Assistance Program.
  • Effective October 1, 2008, the EPIC definition of a covered drug was amended to require generic substitution for multi-source brand drugs, with some exceptions. A prior authorization (PA) exception process was implemented to cover brand multi-source drugs that are medically necessary. As a result, approximately 18,000 brand multi-source claims were initially denied where EPIC was the primary payer. However, over 4,000 of the claims were approved after a PA was pursued and EPIC saved $900,000 for the program year as a result of this initiative.
  • Since EPIC continued to be billed as the primary payer for a large number of claims that should have been covered by Part D drug plans, an enhanced coordination of benefits program was initiated at the point of sale effective October 1, 2008. This statutory change required an EPIC participating pharmacy to consult with the prescriber to determine if a Part D covered drug could be alternately prescribed, before billing EPIC as the primary payer for a non-formulary drug. This new process allowed EPIC members to continue to receive needed medications, while maximizing their Part D plan, when appropriate. If a non-formulary drug was determined to be medically necessary by a prescriber, EPIC approved the claim and initiated an appeal to the Part D plan for coverage of the non-formulary drug. As a result, many members received drugs covered by their Part D formulary and paid lower EPIC co-payments. EPIC initiated 3,400 coverage determinations with Part D plans for medically necessary medications and saved $4.7 million when Part D approved the drug.
  • Effective July 1, 2009, EPIC began covering Part D plan formulary drugs purchased at participating out-of-state mail order pharmacies registered with the NYS Board of Pharmacy. This provided another option for Part D plan members to save on medication purchases. By July 2009, 49 provider agreements had been received from qualified mail order pharmacies and EPIC continued to work with others to gain full participation.
  • Also, effective July 1, 2009, income eligible EPIC members were required to apply for either LIS or an MSP benefit as a condition of EPIC eligibility. The MSP program has three benefit levels that provide payment of medicare Part A and/or Part B premiums: Qualified Medicare Beneficiary (QMB), Specified Low-Income Medicare Beneficiary (SLMB), or a Qualifying Individual (QI). Members approved for a MSP are deemed eligible and receive LIS from Medicare. MSP requires income eligibility but does not require the reporting of assets. EPIC identified members who did not qualify for LIS based on assets, but who appeared eligible for MSP based on income. During the program year, EPIC assisted 22,800 members to apply for MSP. A total of 5,200 applications were submitted to local Department of Social Services offices for processing and 2,191 members were approved by the end of the program year.

Section II: Enrollment

1. Application and Cancellation Activity

On September 30, 2009, EPIC enrollment was 307,716. This represented a decrease of 15,388 (4.76 percent) members compared to the previous program year. The primary reasons for the decrease in members were the continuing decline in new applications coupled with an increase in cancelations. Since the average EPIC member is almost 80 years old, cancelation due to death is significant and accounted for more than 13,000 members.

Enrollment has been steadily declining since 2007. This pattern coincides with the implementation of Medicare Part D drug coverage. The largest drop in enrollment were members in the lower income Fee Plan, where LIS and MSP benefits are available, and Part D prescription coverage is provided at no cost, with low co-payments and no coverage gap. Conversely, there has been an increase in enrollment in the EPIC Deductible Plan since 2006. Minority enrollment was 13 percent at the end of the program year.

Figure 1
Annual Application Activity
Program Year New Applications
Received*		 Cancelations Annual Net Change
in Enrollment		 Enrollment at End
of Program Year
2006-200728,34031,170(21,489)345,451
2007-200826,07535,831(22,347)323,104
2008-200926,48535,621(15,388)307,716

* Not all applications are approved

2. Enrollment by Plan Type

By the end of the program year, 65.6 percent of EPIC members were enrolled in the Fee Plan and 34.4 percent in the Deductible Plan. Enrollment in the EPIC Deductible Plan has steadily increased since 2006 when it was 25.3 percent. There is no cost to join the Deductible Plan which provides a safety net for members with catastrophic drug costs. Any out-of-pocket drug costs not covered by Medicare Part D, including drugs purchased in the coverage gap or non-covered drugs are applied to the EPIC deductible. Once met, EPIC supplements Part D coverage for members by reducing out-of-pocket costs.

3. Enrollment in Part D

EPIC requires enrollment in Medicare Part D drug plans in order to provide maximum savings as well as to limit State expenditures for benefits. Through extensive enrollment efforts, the program has been able to consistently improve the rates of Part D participation while ensuring the quality of coverage for EPIC members.

4. Medicare Low Income Subsidy (LIS) Application Process

Throughout the year, EPIC sends out Request for Additional Information (RFAI) forms to new members or renewing members that are income eligible for LIS from Medicare. As the authorized representative for members, EPIC receives the information and then transmits it electronically to the Social Security Administration (SSA) where it is evaluated for approval of the LIS benefit. LIS is a subsidy from Medicare providing savings for medications. Members approved for full LIS paid $2.40 for generics and $6.00 for brand drugs in 2009. Medicare also pays the Part D premiums for the member and there is no Part D coverage gap. In addition, the EPIC enrollment fee is waived for members approved for full LIS. By the end of the program year, EPIC applied to SSA for LIS on behalf of 30,423 members and had a total of 77,864 EPIC members receiving LIS from Medicare.

EPIC facilitates the enrollment of income eligible members who are over the asset limit for LIS in MSP by assisting them with the completion of the MSP application. If approved, Medicare provides assistance for payment of their Medicare Part A and/or Part B premiums and the member also receives LIS from Medicare, which lowers their drug cost. The EPIC program worked with Medicare Rights Center and Benefits Data Trust to assist members to apply for MSP during this program year.

5. Facilitated Enrollment in Part D Plans

EPIC also facilitates the enrollment of members into Part D plans on a routine basis using Intelligent Random Assignment. This process compares all the benchmark Part D plans' formulary drugs (excluding those that require prior authorization or step therapy) to drugs a member purchased during the last 3 months at a local pharmacy. It then identifies the plan that covers all or most of the member's drugs. If multiple plans cover the same number of drugs, the member is randomly assigned to one of those plans. This maximizes the Part D plan benefit for EPIC members. During the program year, the number of new members that were facilitated into Part D drug plans was 7,095. EPIC reassigned 30,817 members into new Part D plans effective January 2009 because the plan they were enrolled in was no longer designated a benchmark plan by CMS in 2009.

Figure 2
Part D Enrollment
Category September 2007 September 2008 September 2009
Total EPIC Enrollees345,451323,104307,716
Part D Members263,948262,742254,747
Percent Part D76%81%83%
Receiving LIS/Deemed76,08378,34277,864
Exempt/Not Eligible81,50360,36252,969

6. Exemption from Part D

Most EPIC members are required to join Medicare Part D drug plans. There are a few exceptions. These include members who are not eligible for or enrolled in Medicare Part A or Part B; those in Medicare Advantage health plans whose cost sharing would significantly increased if they joined Part D; those with union or retiree coverage who would lose, or their family member would lose health coverage by joining Part D, as well as those in the EPIC Deductible Plan with low drug costs who never meet their EPIC deductible and would incur significant financial costs by joining Part D. As of September 30, 2009, a total of 52,969 EPIC members were not eligible for Part D or exempt from the Medicare Part D drug plan requirement and EPIC provided primary drug coverage during the program year.

Section III: Costs and Utilization

1. Costs

a. Overview

A total of 314,122 seniors used their EPIC benefits to fill one or more claims during the program year, purchasing over 10.1 million prescriptions at a total cost of $956.5 million. By using EPIC and Part D, members saved nearly $848 million at the pharmacy. Of the $848 million, $380 million is attributable to EPIC supplemental coverage. After deducting member fees, rebates from manufacturers, and coordination of benefit recoveries from Part D plans or other insurers and adding the cost of Medicare Part D premiums, the net cost to the State was $187.3 million (Appendix Table IV-A). EPIC members purchased prescriptions at an average annual cost of $3,045 per year and saved $2,699 (89 percent) after paying EPIC co-payments and deductibles.

b. Deductible Plan and Fee Plan Utilization

Enrolled for a full year with EPIC and Part D

EPIC Deductible Plan seniors averaged $3,492 in total drug costs and saved on average 82 percent using EPIC and Medicare. Members in the Fee Plan averaged $3,234 in total drug costs and saved on average 93 percent with EPIC and Medicare. EPIC members with LIS averaged $2,870 in total drug costs and saved on average 96 percent using EPIC and Medicare. It should be noted that the total drug costs for members with LIS are lower than other Part D members because some claims are not submitted to EPIC as a secondary payer. The co-payments of $2.40 for generic drugs are lower than the $3.00 minimum EPIC co-payments. During the 2008 calendar year, 78,000 (49 percent) of EPIC members with Part D reached the Part D coverage gap and 22,400 (29 percent) reached catastrophic coverage.

Enrolled for a full year with EPIC Alone (Not Enrolled in Part D)

EPIC Fee Plan members averaged $3,232 in total drug costs and saved an average 90 percent when using EPIC as their primary prescription insurance. EPIC Deductible Plan members averaged $2,689 in total drug costs and saved 72 percent using EPIC as their primary prescription insurance. The savings is less because these members have a higher deductible than those in Part D plans.

Members Who Reached Their EPIC Deductible Limit or Co-payment Limit

A total of 67,162 EPIC Deductible Plan members reached the EPIC annual deductible limit by program year end. There were 6,091 members who reached their annual out-of-pocket co-payment limit by program year end. After reaching the limit, members do not have to pay any additional co-payments for drugs purchased for the remainder of their annual coverage year (Appendix Table IV-B).

2. Claims, Expenditures, Revenue and Utilization

EPIC members filled 10.1 million prescriptions during the 2008-2009 program year at a total cost of $956.5 million, which represents a 12 percent decrease in cost compared to the prior year. Payments to pharmacies decreased $71 million (15.8 percent) from the prior year. The net State cost was $187.3 million due to revenue received from manufacturer rebates and member fees, less the co-payments and EPIC deductibles paid by members, claims paid in part by Medicare or other third party insurers at the point of sale and through retroactive claim recoveries. EPIC member out-of-pocket costs averaged 11.3 percent of the average total cost of the drugs (Appendix Table IV-A).

3. EPIC and Medicare Part D Coordination of Benefit Outcomes

The maximization of Medicare Part D by coordinating benefits with other insurance when drugs are purchased at the pharmacy resulted in substantial savings to the EPIC program. During the 2008-2009 program year, 8.4 million claims (83.2 percent) were billed to EPIC as the secondary payer. Medicare and other primary prescription insurance plans paid $468 million on those claims, saving EPIC 49 percent of the total cost of drugs (Appendix Table XII).

4. EPIC Mandatory Generic Drug Substitution Program

In October 2008, EPIC implemented a mandatory generic substitution program. This program requires the substitution of brand name multi-source drugs for a specific list of drugs with an “A” rated generic equivalent when EPIC pays for the claim as the primary insurer. A brand named multi-source drug is only covered if a prescriber obtains a prior authorization from EPIC. If the prescriber cannot be reached, a three-day (72-hour) emergency supply prior authorization may be obtained by the dispensing pharmacist. Emergency overrides also may be granted to pharmacies if a generic equivalent is in short supply.

During the program year, EPIC has approved over 4,000 medically necessary prior authorizations out of more than 18,000 claims that were denied for the mandatory generic substitution requirement. Savings to the EPIC program has been estimated at about $900,000 by program year end. If a prescription drug is changed by the prescriber to a generic at the point of sale, Medicare Part D may pay the claim as primary. Therefore, the actual savings is most likely higher. The generic substitution rate at September 2008 was 89 percent; by the end of September 2009, the generic substitution rate rose to 90 percent.

5. EPIC Two-Year Enrollment and Cost Projections

Enrollment and cost projections for the next two years (Figure 3) reflect a number of recent trends and developments including the savings generated by the implementation of the Medicare Part D drug benefit. These program changes are expected to result in payments to pharmacies projected at $313.1 million in the 2009-2010 program year and $289.1 million in 2010-2011. Net State costs are projected to be $125.8 million in program year 2009-2010 and $128.6 million in 2010-2011.

Figure 3
Two-Year Enrollment and Cost Projections
Category Oct 2008 -
Sept 2009		 Oct 2009 -
Sept 2010		 Oct 2010 -
Sept 2011
Net State Costs =
(Expenditures + Premiums - Revenue)		$187.3$125.8$128.6
Enrollment307,716303,574296,626
Cost of Drugs*$956.5$953.3$985.9
EPIC Expenditures$379.9$313.1$289.1
Premium Payments$27.5$27.3$31.2
RevenuesFees$17.1$16.8$16.7
Benefit Recovery$33.5$10$5
Rebates$169.5$187.8$170.0
Total Revenues$220.1$214.6$191.7

* Dollars in millions

6. Payments to Pharmacies

Across New York State, 4,463 pharmacies provided services to EPIC members this year. Pharmacies received $379.9 million in EPIC payments. Each pharmacy received an average annual payment of $85,123 (Appendix Table XI.)

More than half (51 percent) of enrolled pharmacies are chain stores, 47 percent are independently operated and the rest are institutions or mail order pharmacies. Chain stores received 64 percent of EPIC expenditures during the current program year, while independent pharmacies received 35 percent (Appendix Table X).

7. EPIC Utilization

a. Top Medications Used by EPIC Members

More than 26 percent of the of the 10 most frequently purchased drugs by therapeutic classification (Appendix Table VII) are used to treat cardiac disease or hypertension. Antidepressants, proton-pump inhibitors (for gastrointestinal disorders), beta-adrenergic agonists (for breathing problems), opiate agonists (for pain) and thyroid agents/hormones account for the balance of the most frequently utilized therapeutic classes in the EPIC program.

b. Brand versus Generic Drug Use

Sole source drugs represented 33 percent of the prescriptions purchased, while generic drugs accounted for 60 percent. The use of brand multi-source products was 7 percent. During the program year, the substitution rate for drugs with a generic alternative was 90 percent, a rate comparable to programs with strong generic incentives. Under the New York State mandatory generic drug substitution requirement, a generic drug must be dispensed when a multi-source product is prescribed, unless the prescriber indicates that the brand name product is required. In addition, an EPIC mandatory generic drug substitution program was established in October 2008, which requires prior authorization for EPIC coverage of multi-source brands.

c. Therapeutic Drug Monitoring: Pro-DUR System

In response to concerns about overuse and misuse of medications by members, the EPIC Therapeutic Drug Monitoring (TDM) system attempts to identify potential problems through its Prospective Drug Utilization Review (Pro-DUR) to safeguard members' health and safety. By issuing a “drug alert,” the Pro-DUR system notifies the pharmacist at the point of sale of possible inappropriate drug therapy such as: drug-to-drug interactions, therapeutic duplications or early refills. The system compares the drugs dispensed for that member over the last three months at any of the 4,400 participating EPIC pharmacies to identify potential clinical issues when a new or refill prescription is being filled. When potential problems are identified, the Pro-DUR system issues a drug alert and the pharmacist then exercises clinical judgment in dispensing the medication.

More than 11 million prescriptions were submitted electronically and processed by the EPIC online point of sale system during the past program year. If the claims are suspended for potential therapeutic problems, pharmacists are alerted and complete clinical reviews, which may include contacting the prescriber, before dispensing medication. As a result of these alerts and clinical reviews, some prescriptions were not filled, thereby preventing possible adverse consequences and saving the program money.

d. Therapeutic Drug Monitoring: Retro-DUR System

Additionally, the EPIC TDM system tries to identify medication problems with it Retrospective Drug Utilization Review (Retro-DUR) system. The Retro-DUR System identifies potential drug therapy that may be inappropriate over time and communicates these findings directly to prescribers. Following clinical reviews by EPIC pharmacists, prescribers are sent informational letters and detailed claims profiles for selected members.

Using specific therapeutic criteria that are ranked by severity level, staff pharmacists reviewed 750 selected member medication histories every month during the program year, for a total of 9,000 clinical reviews in 2008-2009. As a result, 1,619 letters went to prescribers on behalf of 766 members, advising them of potential problems with drug interactions, duplicative therapies, overuse or the use of multiple pharmacies or multiple prescribers. Over 31 percent of prescribers receiving the letters responded thanking EPIC for the information.

Section IV: Program Operations

1. Outreach

a. Outreach Operations

Outreach uses a variety of means to attract new members and to educate current members about how to coordinate their benefits by using EPIC with Medicare Part D or other prescription drug coverage.

  • Partnerships - The New York State Office for the Aging (NYSOFA) also maintains a Hot Line and web site that provided information on EPIC. During the program year, NYSOFA staff handled EPIC-related telephone calls and referred numerous callers to the EPIC Helpline. The Health Insurance Information Counseling and Assistance Program (HIICAP) administered by NYSOFA, New York City Department for the Aging (NYC DFTA) and the Medicare Rights Center are partners with EPIC and assist members and advocate for them. EPIC also worked with CMS and SSA to secure low income subsidies and other benefits for eligible members.
  • Helpline - The EPIC Helpline provided support and assistance to members, caregivers and applicants by responding to 512,209 calls during the program year. In addition, the Provider Helpline responded to 116,406 calls from pharmacists. There also were 33,754 written requests from seniors for information about the program. The EPIC Helpline is 1-800-332-3742 or TTY 1-800-290-9138.
  • Internet Services -The EPIC web site http://www.nyhealth.gov, (EPIC for Seniors) provides additional resources for individuals interested in obtaining program information. The Department of Health reported 121,592 visitors to the EPIC homepage with over 41,600 hits each on applications and coordination of benefits and over 21,700 looking into Part D plans. Additionally, interested parties contacted EPIC electronically at EPIC@health.state.ny.us. There were 1,479 email inquiries received through the mail log during the 2008-2009 program year.
  • EPIC Letters - Written communication is a primary means of explaining changes to members, providers and prescribers. The implementation of the Medicare Part D requirement in 2007 generated the highest volume of letters given that facilitated enrollment was implemented to help members select a plan. More than 800,000 letters were sent to assist members during this transition. In addition to special messaging and letters sent to individuals, the EPIC program also sends large-scale system generated letters involving enrollment issues, eligibility, change in enrollment status and coverage.
  • EPIC Materials - A variety of materials were developed to explain how the EPIC benefit works with Medicare Part D. The materials were continuously revised to incorporate new information, such as legislative changes and updated pricing. Items developed for distribution and training include: brochures, fact sheets/flyers, posters, bulletins, placemats, tent cards, postcards and PowerPoint presentations. Select items were translated into Spanish, Chinese and Russian and two general information sheets were produced and distributed in Braille. An EPIC Information Sheet (translated in the following languages: Arabic, Haitian Creole, Korean, Italian, Russian, Polish, Chinese and Yiddish) is used to promote the program in ethnic and minority neighborhoods. EPIC also produced a public service announcement in English and in Spanish that was distributed statewide and used with Department of Health media buys.

b. Community Events

Community outreach continued to be the primary strategy for distributing program information and increasing awareness of EPIC. During the program year, outreach representatives participated in 4,276 events that promoted EPIC to 284,000 seniors. Of these events, a total of 950 information, enrollment and training sessions were attended by approximately 24,000 seniors and agency staff. The programs were presented at senior centers, libraries, pharmacies and senior housing facilities, health and wellness fairs. These and other special programs were sponsored by legislators or county and local officials.

There were 1,300 events that were specifically intended to reach diverse ethnic and minority communities that included African Americans, Hispanics, Asians and Russians, as well as individuals with disabilities. One-third of the EPIC outreach staff includes bilingual representatives.

A total of 448,535 EPIC enrollment applications and brochures were distributed to seniors, family members and caregivers as well as pharmacies, legislators and health care providers. EPIC annual outreach cost effectiveness was based on the yearly staffing cost of EPIC outreach representatives and the distribution of brochures, which generated 26,485 new applications at a cost of $31.69 per application. Applications are available in English and Spanish.

Outreach representatives also distributed materials and attended events aimed at enrolling individuals in the New York Prescription Saver (NYPS). This is a discount prescription card program that was introduced in April 2009 and is administered by EPIC through its contractor. The card is available to income eligible New York State residents who are 50 to 64 years of age or persons of any age, who have been determined disabled by the SSA. The income limits are the same as those of the EPIC program. At the end of the September 2009, enrollment in NYPS was 10,074 and 42 percent of enrollees are individuals who have been determined disabled by the SSA. Applicants can apply on-line at http://nyprescriptionsaver.fhsc.com or call the NYPS Helpline at 1-800-788-6917 (or TTY 1-800-290-9138) for more information or to complete an application over the phone. The NYPS web site had almost 30,000 visitors between 4/1/09 and 9/30/09.

2. Contractor Performance

The EPIC program is administered by a fiscal intermediary contractor secured through a competitive procurement process. Major operational functions are performed by the contractor including: application and enrollment processing, member and provider relations, pharmacy enrollment and reimbursement, claim processing, outreach and systems development, as well as support to the State operation of the Manufacturer Rebates and TDM programs.

Throughout the program year, State staff monitored contractor compliance with the contract performance standards through routine and special reviews, emphasizing areas that directly affect members and pharmacy providers. Reported to the EPIC Panel during the year were the successful implementation the Part D mail order option for members on July 1, 2009; and the issue that the contractor also provided needed resources to support the Medicare Savings Program initiative

Overall, the contractor continued to display commitment to the success of the EPIC program and completed several significant initiatives during the year including: monthly updates to the SMAC pricing for generic drugs that went into effect July 1, 2008; the implementation of a Mandatory Generic Substitution Program effective October 1, 2008; and implementation of the NYSPS cash discount prescription drug card program effective April 1, 2009.

3. EPIC Medicare Part D Appeal Process2

In September 2008, EPIC established an Appeals Unit to pursue formulary exceptions and prior authorizations from Medicare Part D plans on behalf of its members. The unit reviewed claims denied by Medicare Part D that meet selection criteria, for which EPIC paid as primary and initiated a coverage determination request. A signed coverage determination request form and additional documentation that is necessary from the prescriber was collected by the Appeals Unit and submitted to the Medicare Part D plan. If the initial coverage determination was denied by the plan, EPIC may pursue additional levels of appeals.

As of September 30, 2009, EPIC initiated 3,400 coverage determination requests and has reported total EPIC savings of $4.7 million. EPIC savings reflected initial claims approved by Part D plans that are reversed and re-billed for primary insurance as well as the savings accrued from refills.

4. Medicare Part D Premium Payments

EPIC is required by law to pay a portion of the Part D monthly premium that is the responsibility of Fee Plan members. No payments are made on behalf of Deductible Plan members but their deductible is lowered by an equal amount ($333 for 2009). The law limits EPIC payments to the benchmark or basic plan amount ($27.71 per month for 2009) established by CMS each calendar year.

Each month, EPIC calculates and remits payment to Part D carriers for Fee Plan members based on their enrollment in a Part D plan as identified through a monthly data exchange with CMS. EPIC payments are made based exclusively on CMS data, which is the same data utilized to coordinate EPIC coverage with Part D coverage at the pharmacy. Any necessary EPIC payment adjustments will be processed in a subsequent month's routine payment based on updated data received through CMS. Medicare makes premium payments up to the benchmark amount for individuals who are approved for a full or partial subsidy. If necessary, EPIC will supplement the premium payment that is paid by Medicare for partial or full LIS members up to the benchmark amount.

Each plan is sent a monthly Premium Remittance Advice (PRA) file, which contains member-level detail that supports the monthly payment amount. Premium payments made to plans, for the period of October 1, 2008, through September 30, 2009, totaled $27.5 million, an average of $2.3 million per month.

5. Retrospective Benefit Recovery Program

EPIC contracts with Health Management Systems (HMS), an independent contractor, to pursue claim recoveries from Part D drug plans and other major prescription insurance carriers. These are claims that were paid by EPIC as the primary payer and should have been paid primary by Medicare or other insurers and secondary by EPIC.

HMS executed data sharing agreements with a number of major insurance carriers and Medicare Managed Care plans. These accounted for a majority of EPIC members with other prescription coverage. After receiving EPIC enrollment and claim data, HMS performs matches of the EPIC data against other insurer databases to identify members with other prescription coverage. Since the inception of the Retrospective Benefit Recovery Program, $105.9 million has been recovered of which $33.5 million was for the program year of 2008-2009.

6. Manufacturers Rebates

The EPIC program requires drug manufacturers to have rebate agreements in order for their drugs to be covered. EPIC maintains agreement with 350 manufacturers, which ensured that most pharmaceuticals are covered by the program. Quarterly invoices are sent to manufacturers containing a detailed listing of the drugs and quantities that were purchased by EPIC members and the manufacturers pay rebates back to EPIC for those medications. During the program year, the Manufacturer Rebate Program invoiced over $169.4 million in rebate payments. In total, $1.9 billion in rebate payments have been invoiced since 1991, with over 9 percent of that amount invoiced in 2008-2009.

Figure 4
Manufacturer Rebates
Rebate Year Total Manufacturers
Rebate Payments
Program Life$1,893,044,377
04/91-9/91$3,475,121
10/91-9/92$8,676,544
10/92-9/93$10,206,040
10/93-9/94$10,475,058
10/94-9/95$12,103,099
10/95-9/96*$15,079,708
10/96-9/97$21,459,988
10/97-9/98$22,991,368
10/98-9/99$28,160,422
10/99-9/00$35,246,774
10/00-9/01**$66,471,413
10/01-9/02***$116,396,192
10/02-09/03$159,650,887
10/03-09/04$184,095,071
10/04-09/05$246,214,041
10/05-09/06****$295,721,272
10/06-09/07$263,864,871
10/07-09/08$226,262,168
10/08-09/09$169,494,340

Footnotes:
* New rebate formula based on total cost of drugs implemented July 1, 1996.
** Modified CPI- component added to rebate formula effective October 1, 2000.
*** Full CMS CPI- component added to rebate formula effective April 1, 2002.
**** Medicare Part D coverage became effective the first quarter of 2006.

7. Audit Functions

EPIC verifies that pharmacies are in good standing with the Medicaid Program. During the program year, EPIC performed on-site and desk audits of selected participating pharmacies. Audit staff directly verified the validity of claim information at the pharmacy by reviewing paper and electronic prescriptions to support claims submitted electronically to EPIC. This process is used to confirm claim reimbursements were appropriate and correct by the program. In 2008-2009, the EPIC audit unit completed 143 pharmacy field audits that resulted in recoveries of $468,408 due to erroneous billings.

EPIC also continued its Verification of Benefits (VOB) process to identify potential inappropriate billing. More than 140,000 members, whose drug utilization met specific criteria, were asked through the VOB process to verify that they received the drugs billed on their behalf. More than 70 percent of the selected members responded. All negative responses were referred to the EPIC audit team for further investigation.

Audits were also conducted relating to specific drugs dispensed, based on high dollar parameters or numbers of claims filled per member. The contractor produced 400 provider profiles per quarter, which were reviewed for appropriateness and accuracy. When necessary, follow-up was conducted directly with pharmacies.

Section V: Conclusion

The EPIC program provided benefits to 314,122 seniors during the program year. The total net State costs continued to decrease and were $187 million (Appendix Table IV-A). EPIC has successfully transitioned from being primary payer to secondary payer at the pharmacy, via the point of sale claims processing, for members with Part D coverage. This resulted in more than $454 million in savings to EPIC during the year (Appendix Table XII). EPIC implemented five legislative amendments during the program year all within the specified effective dates. The intent of each of the changes was to reduce state costs while preserving member access to low cost medication. Three of the changes were designed to maximize member's Medicare Part D coverage.

EPIC provided supplementary coverage to 78,000 members who reached the Medicare Part D coverage gap and 22,400 who reached catastrophic coverage. EPIC covered the Part D deductible and supplemental co-payments for the remaining 176,700 members. EPIC also provided Part D premium assistance for members enrolled in Part D drug plans and initiated Part D appeals on behalf of members for drugs that were not covered by Medicare drug plans.

By September 30, 2009, enrollment declined to 307,716 members (4.76 percent). This was due to a decrease in applications received and an increase in cancellations. More than 13,000 members were canceled from the program due to death. There was also an increased rate of cancellations by members in the lower income Fee program. These members were eligible for LIS or MSP which provided them with comprehensive drug coverage from Medicare Part D with no deductible or coverage gap and low co-payments. Throughout the upcoming program year, EPIC will continue to assist eligible members with the coordination of their Medicare Part D and EPIC benefits to ensure they have comprehensive drug coverage and achieve even greater savings.

EPIC Program Annual Report 2008-2009 Appendix

EPIC Staff

Management:

  • Michael Brennan
    Acting Director
  • Alan Ball
    Project Director
    Program Operations
  • Rhonda Cooper
    Assistance Director
    Program Development and Review
  • Scott Franko
    Manager
    System Development and Research
  • Diane Reed
    Supervising Pharmacist
    Pharmacy
  • Edward Hart
    Principal Accountant
    Audit Unit

Staff:

  • Kiki Blair
  • Anne Blanchard
  • Alexandra Bontempo
  • Lubna Chauhan
  • Lindsay Clark
  • Karen Cummings
  • Nicole Grieves
  • Sandra Knapp
  • Gloria Le Besco
  • Lori Maiwald
  • Deborah Martins
  • Santina Roberts
  • Donna Ross
  • Sheila Rounds
  • Amritesh Singh
  • Charles Teuscher
  • Lisa Tice
  • Rich Underwood
  • Deborah Vitale

Acknowledgements:

Special thanks to Julie Naglieri (EPIC Program's Director during program year 2008-2009) and Marilyn Desmond for their contributions to this report.

Footnotes:

  1. Effective 10/01/2010, due to legislative statute, EPIC does not cover Part D non-formulary drugs unless a coverage determination and two levels of appeals have been denied by the Part D plan.
  2. Effective 10/01/2010, as a result of legislative statute, EPIC no longer initiates Part D appeals for non-formulary drugs but assists prescribers who call the EPIC Temporary Coverage Request (TCR) Helpline by providing information to help them start the appeal process.