EPIC Program Annual Data Tables 2009-2010: Narrative

Members of the EPIC Panel and Advisory Committee

EPIC Panel

  • Nirav R. Shah, M.D., M.P.H.
    Commissioner
    NYS Department of Health
    Co-Chairperson, EPIC Panel
  • Greg Olsen
    Acting 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

Acknowledgements:

Special thanks go to the Hon. Michael J. Burgess (former Director, Office for the Aging Director) for his contributions during program year 2009-2010.

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 911,000 low and moderate income New York seniors, with EPIC pharmacy payments totaling over $7.0 billion. This Annual Report summarizes the twenty-third year of program operations from October 1, 2009, through September 30, 2010, and highlights significant program accomplishments.

By using EPIC and Medicare Part D together, members saved just over $830 million at the pharmacy and the EPIC program achieved $66.7 million in savings this program year and $364.8 million in savings since 2006 when Medicare Part D drug coverage became available through the Medicare Modernization Act of 2003.

During the program year we continued to maximize Medicare Part D coverage for EPIC members to reduce State costs and appropriately shift primary drug coverage to Part D drug plans. At the pharmacy, pharmacists were required to contact prescribers to see if Part D formulary drugs could be dispensed instead of non-formulary drugs. With the help of pharmacists and prescribers, EPIC initiated Part D coverage determinations and appeals with the aim of maximizing member Medicare Part D coverage. Enrollment in Medicare Part D increased when nearly 11,000 EPIC members in Medicare Advantage (MA) plans with no drug coverage were transitioned to MAPD (Medicare Advantage Prescription Drug) plans with comparable medical benefits that included drug coverage. EPIC increased the enrollment of eligible members in the Medicare Low Income Subsidy (LIS) and Medicare Savings Programs (MSP) to further reduce drug costs for both members and the program.

Program Overview

All eligible members were required to join a Medicare Part D plan. EPIC provides Part D premium assistance to members enrolled in a Medicare Part D Plan. EPIC assisted 6,589 members in enrolling in 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 2010, over 88 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, $2,802 of their total drug cost during the program year.

Acting as the authorized representative, EPIC also assists lower income members to enroll in Medicare's Low Income Subsidy (LIS), known as Extra Help, and the Medicare Savings Program (MSP) which saves them even more money at the pharmacy. Beginning January 1, 2010, the MSP application process was simplified due to the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) administered by the Social Security Administration (SSA). The simplified process facilitated EPIC member enrollment into Extra Help and MSP.

Enrollment

At the end of the program year, 300,774 low and moderate income seniors were enrolled in EPIC with 263,870 enrolled in Part D plans. This represents a 2.26 percent decrease in total EPIC enrollment from the prior program year due to cancellations that were not completely offset by applications. A total of 36,904 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 MA 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 9.7 million prescriptions costing $930.6 million (Appendix Table IV-A), a 2.7 percent decline in cost from the prior program year. By using EPIC along with Part D, members saved $830 million of their total drug costs. Pharmacy payments were $46 million less, a 12.2 percent decrease from the previous year. As the primary payer, EPIC expenditures were 73 percent of members' total drug expenses compared to only 31 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 $2,453 off their total drug costs.

The 4,566 pharmacies that provided services to EPIC members received $333.6 million in EPIC payments. Net State costs for the program year were $120.6 million, a decrease of $66.7 million from the previous program year. Of the enrolled pharmacies, 51 percent were chain stores, while 49 percent were independent and other types such as institutional pharmacies or nursing homes.

Comparing program year 2008-2009 to 2009-2010, brand name sole source drugs decreased from 34 to 29 percent of the prescriptions purchased, while generic drugs increased from 60 to 64 percent and multi-source brand products stayed the same at 7 percent. Similarly, the substitution rate for drugs with a generic alternative increased from 90 to 92 percent.

In order to identify potential problems and safeguard the health and safety of program members, EPIC continued to monitor members drug use by 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 protected through contract monitoring, auditing and oversight of program operations.

The EPIC Appeals Unit continued to pursue formulary exceptions and prior authorizations from Medicare Part D plans as well as coverage at Level 1 and Level 2 of the appeals process for denied coverage determination requests on behalf of members. Since inception, 6,861 requests were initiated and resulted in savings to EPIC of $12.9 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 ($33.32 per month for 2010) 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 $27.0 million. While no payments are made on behalf of Deductible Plan members, the annual EPIC deductible was lowered by $400 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 erroneously were paid by EPIC for members who had Part D or other drug coverage. In the cases where EPIC was billed as the primary payer, $11.2 million was recovered during the program year. By the end of the program year, a total of $117.1 million has been recovered since the benefit recovery process 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. The EPIC rebate program invoiced over $209.3 million in rebate payments during the program year to 310 manufacturers.

EPIC performed audits of selected participating pharmacies. During 2009-2010, EPIC staff conducted 40 pharmacy field audits and 42 desk audits resulting in recoveries of $176,804. Throughout the program year, EPIC staff monitored contractor compliance against performance standards, through routine and special reviews.

Program year 2009-2010 Conclusions:

  • This program year EPIC continued to maximize federal Medicare Part D drug benefits and shifted primary drug coverage from EPIC to Part D by: requiring pharmacists to contact prescribers when a non-formulary drug was prescribed to see if an alternative formulary drug could be substituted; initiating Part D coverage determinations and appeals for medically necessary non-formulary drugs; transitioning members from Medicare Advantage (MA) plans to MAPD (prescription drug) plans with comparable medical benefits; and increasing enrollment in the LIS and MSP programs.
  • EPIC continued to provide supplemental drug coverage to members with catastrophic drug costs who reached the Part D coverage gap. Members paid the lowest copayments, coinsurance and deductibles using Part D benefits along with EPIC supplemental coverage.
  • EPIC enrollment continued to decline in the lower income groups where Medicare Part D members with LIS have comprehensive drug coverage with no Medicare deductible or coverage gap.

Section I: About the Program

1. Background

The EPIC program has provided prescription coverage to more than 911,000 New York State seniors since it began in 1987. EPIC income limits were increased in 2001 expanding to more than 375,000 members. With the implementation of Medicare Part D drug coverage in 2006, EPIC gradually transitioned to a supplemental prescription program that provides secondary coverage to Medicare Part D and other insurance plans. Today, EPIC has one of the highest enrollments among State Pharmaceutical Assistance Programs 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 a sliding scale of income and marital status — the Fee Plan and the Deductible Plan. The Fee Plan is available to 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.

The Deductible Plan is available to seniors with higher incomes than those in the Fee Plan and was designed to provide catastrophic coverage. Instead of paying an annual fee, seniors have to meet an annual deductible based on their income (from $530 to $1,715 per person). Once the deductible is satisfied, 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 drugs providing greater savings. When prescription drugs were purchased, 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 because Part D is the primary insurer rather than 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 ($400 in 2010).

Section II: Enrollment

1. Application and Cancellation Activity

On September 30, 2010, EPIC enrollment was 300,774. This represented a decrease of 6,942 (2.26 percent) members compared to the previous program year. Although applications increased 21 percent from 2008-2009 to 2009-2010 overall enrollment still decreased. Since the average EPIC member is almost 80 years old, cancellation due to death is significant and accounted for more than 11,000 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 came from 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. Enrollment in the EPIC Deductible Plan continued to increase. Minority enrollment increased from 13.0 percent at the end of 2008-2009 to 13.5 percent at the end of 2009-2010.

Figure 1
Annual Application Activity
Program Year New Applications
Received*		 Cancellations Annual Net Change
in Enrollment		 Enrollment at End
of Program Year
2007-200826,07535,831(22,347)323,104
2008-200926,48535,621(15,388)307,716
2009-201033,67330,575(6,942)300,774

* Not all applications are approved

2. Enrollment by Plan Type

By the end of the program year, 63.8 percent of EPIC members were enrolled in the Fee Plan and 36.2 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 drug costs.

3. Enrollment in Part D

EPIC requires enrollment in Medicare Part D drug plans in order to provide maximum savings to members 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 who 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 $2.50 for generics and $6.30 for brand drugs in 2010. 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 40,576 members and had a total of 89,336 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. A total of 5,291 applications were submitted to local Department of Social Services offices for processing and 3,231 members were approved by the end of the program year.

Beginning January 1, 2010, the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), administered by the Social Security Administration (SSA) has automated the process of applying for the Medicare Savings Program. When EPIC applies electronically to SSA for the Medicare LIS through the RFAI process, the application is also submitted to Medicaid for the member to apply for an MSP program.

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 drug plans' formulary drugs (excluding those that require prior authorization or step therapy) to drugs the member purchased during the last three 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 6,589. EPIC reassigned 7,001 members into new Part D plans effective January 2010 because the plan they were enrolled in was no longer designated a benchmark plan by CMS in 2010.

Figure 2
Part D Enrollment
Category September 2008 September 2009 September 2010
Total EPIC Enrollees323,104307,716300,774
Part D Members262,742254,747263,870
Percent Part D81%83%88%
Receiving LIS/Deemed78,34277,86489,436
Exempt/Not Eligible60,36252,96936,904

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 be significantly increased if they joined Part D and those with union or retiree coverage who would lose, or their family member would lose, health coverage by joining Part D. As of September 30, 2010, a total of 36,904 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. The number of member exemptions was higher last program year because we transitioned almost 11,000 members from MA only to MAPD plans during this program year.

Section III: Costs and Utilization

1. Costs

a. Overview

A total of 305,108 seniors used their EPIC benefits to fill one or more claims during the program year, purchasing approximately 9.7 million prescriptions at a total cost of $930.6 million. By using EPIC and Part D, members saved just over $830 million at the pharmacy. Of the $830 million, $333.5 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 $120.6 million (Appendix Table IV-A) a savings of $66.7 million from 2008-2009. EPIC participants purchased prescriptions at an average annual cost of $3,050 per year and saved $2,721 (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 $3,565 in total drug costs and saved on average 83.5 percent using EPIC and Medicare. Members in the Fee Plan averaged $3,254 in total drug costs and saved an average of 93.6 percent with EPIC and Medicare. EPIC members with LIS averaged $2,862 in total drug costs and saved on average 96.2 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 $2.50 for generic drugs are lower than the $3.00 minimum EPIC co-payments. During the 2009 calendar year, 69,026 (44 percent) of EPIC members enrolled in Part D for a full year reached the Part D coverage gap and, of the 69,026, 19,580 (28.4 percent) reached catastrophic coverage.

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

EPIC Fee Plan members averaged $3,368 in total drug costs and saved an average of 89.8 percent when using EPIC as their primary prescription insurance. EPIC Deductible Plan members averaged $2,621 in total drug costs and saved 73.3 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 70,596 EPIC Deductible Plan members reached the EPIC annual deductible limit by program year end. There were 4,128 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 approximately 9.7 million prescriptions during the 2009-2010 program year at a total cost of $930.6 million, which represents a 2.7 percent decrease in cost compared to the prior year. Payments to pharmacies decreased $46 million (12.2 percent) from the prior year. The net EPIC State cost was $120.6 million (a reduction of $66.7 million from the previous program year) 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 10.7 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 2009-2010 program year, 8.5 million claims (83.7 percent) were billed to EPIC as the secondary payer. Medicare and other primary prescription insurance plans paid $496.5 million, an increase of $28.5 million from the previous program year, on those claims saving EPIC 53.4 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 drug 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 had approved approximately 1,500 medically necessary prior authorizations out of more than 11,000 claims that were denied for the mandatory generic substitution requirement. The number of authorizations dropped by approximately 2,500 from the previous program year due to the fact that such authorizations are long term and Part D participation increased. Savings to the EPIC program has been estimated at about $400,000 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 by the end of September 2009 was 90 percent; by the end of September 2010, the generic substitution rate rose to 92 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, provisions of the Patient Protection and Affordable Care Act, and the implementation of EPIC effective January 1, 2012 as supplemental coverage for drugs that are first covered by Medicare Part D only when a member is in the coverage gap. These program changes are expected to result in payments to pharmacies projected at $235 million in the 2010-2011 program year and $107 million in 2011-2012. Net State costs are projected to be $73 million in program year 2010-2011 and $96 million in 2011-2012.

Figure 3
Two-Year Enrollment and Cost Projections
(Dollars in Millions)
Category Oct 2009 -
Sept 2010		 Oct 2010 -
Sept 2011		 Oct 2011 -
Sept 2012
Net State Costs =
(Expenditures + Premiums - Revenue)		$120.6*$73.0**$96.00
Enrollment300,774286,536276,732
Total Cost of Drugs$930.6$894.4$333.6
EPIC Expenditures$333.6$234.7$106.6
Premium Payments$27.0$29.0$39.8
RevenuesFees$17.6$13.2$1.7
Benefit Recovery$13.1$7.8$4.0
Rebates$209.3$169.7$44.7
Total Revenues$240.0$190.7$50.40

* Net State Costs are lower based on the timing of rebate receipts.

** Beginning January 1, 2012 the EPIC Program will only cover drugs in a member's Medicare Part D coverage gap.

6. Payments to Pharmacies

Across New York State, 4,566 pharmacies provided services to EPIC members this year. Pharmacies received $333.6 million in EPIC payments. Each pharmacy received an average annual payment of $73,053 (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 65 percent of EPIC expenditures during the current program year, while independent pharmacies received 34 percent (Appendix Table X).

7. EPIC Utilization

a. Top Medications Used by EPIC Members

Of the 10 most frequently purchased drugs by therapeutic classification (Appendix Table VII), 6 classifications comprised 29 percent (3 percent more than 2008-2009) of the claims for the program year and are used to treat cardiac disease or hypertension. Antidepressants, proton-pump inhibitors (for gastrointestinal disorders), opiate agonists (for pain), and thyroid agents account for the balance of the most frequently utilized therapeutic classes in the EPIC program.

b. Brand versus Generic Drug Use

Sole source drugs constituted 29 percent of the prescriptions purchased while generic drugs accounted for 64 percent which represents a 4 percent shift from sole source to generic drugs from 2008-2009. The use of brand multi-source products was 7 percent. During the program year, the substitution rate for drugs with a generic alternative rose by 2 percent to 92 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. The 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 4,500 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.

Approximately 9.7 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 its 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 2009-2010. As a result, 1,129 letters were sent to prescribers on behalf of 539 members, advising them of potential problems with drug interactions, duplicative therapies, overuse or the use of multiple pharmacies or multiple prescribers. Over 30 percent of prescribers receiving the letters responded thanking EPIC for the information.

Section IV: Program Operations

1. Outreach

a. Outreach Operations

Outreach is accomplished in a variety of ways 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 maintained a Hot Line and website that provided information about 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 505,286 calls during the program year. In addition, the Provider Helpline responded to 135,552 calls from pharmacists. There also were 26,203 written requests from seniors for information about the program. The EPIC Helpline phone number is 1-800-332-3742 or TTY 1-800-290-9138.
  • Internet Services - The EPIC website http://www.health.ny.gov, (EPIC for Seniors) provides additional resources for individuals interested in obtaining program information. The Department of Health reported 122,298 visitors to the EPIC homepage with over 46,200 hits on applications and 43,800 on coordination of benefits, with over 21,600 looking into Part D plans. Additionally, interested parties contacted EPIC electronically at EPIC@health.state.ny.us. There were 1,447 email inquiries received through the mail log during the 2009-2010 program year and an additional 67,600 email letters sent to prescribers and providers notifying them of changes to the program effective October 1, 2010.
  • EPIC Letters - Written communication is a primary means of explaining program changes to members, providers and prescribers. In addition to specialized messaging and letters sent to individuals, the EPIC program also mailed 1,062,234 large-scale system generated letters involving eligibility and enrollment issues, including changes in 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 statutory changes and updated pricing. Items developed for distribution and training include: EPIC identification cards, brochures, fact sheets/flyers, posters, bulletins, forms/applications and PowerPoint presentations. Select items, including updated Program Highlights fact sheets, were translated into Spanish, Chinese and Russian. Two general information sheets also continued to be distributed in Braille. An EPIC Information Sheet (translated into the following languages: Arabic, Haitian Creole, Korean, Italian, Russian, Polish, Chinese and Yiddish) is used to promote the program in minority neighborhoods and among disparate populations.

b. Community Events

Community outreach continued to be the primary strategy for distributing program information and increasing EPIC program awareness. During the program year, outreach representatives participated in 4,650 events that promoted EPIC to 410,803 seniors and agency staff. Of these events, a total of 1,041 information, enrollment and training sessions were attended by 22,302 seniors and agency staff. The programs were discussed at senior centers, libraries, pharmacies, senior housing facilities and health/wellness fairs. These and other special programs were sponsored by state legislators and other county and local officials.

There were 1,272 EPIC 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 206,448 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 33,673 new applications at a cost of $22.89 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 SSA. The income limits are the same as those of the EPIC program. At the end of September 2010, enrollment in NYPS was 14,567 and 48 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 website had over 20,000 visitors between April 1, 2009, and September 30, 2010.

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. Development and testing for the new Temporary Coverage Request (TCR) Helpline and claims processing edits were completed in preparation for the statutory changes that were signed into law and scheduled to be implemented on October 1, 2010.

Overall, the contractor continued to exhibit commitment to the success of the EPIC program. The contractor printed and mailed over 304,000 EPIC identification cards with new ID number successfully protecting the privacy of members in response to a change in NYS Public Officer's Law § 96-a. The statutory amendment prohibits State programs from using Social Security numbers (SSN) on any card required for persons to access services or benefits provided by the State. The format for the new ID number is nine characters and begins with the letters EP followed by seven numbers (i.e. EP1234567). The card was redesigned and follows industry standards defined by the National Council of Prescription Drug Programs. Additionally, the new card, without a printed expiration date, provides savings since renewal cards are no longer issued.

3. EPIC Medicare Part D Appeal Process2

The EPIC Appeals Unit continued to pursue formulary exceptions and prior authorizations from Medicare Part D plans on behalf of its members. During this program year, EPIC started Level 1 and Level 2 appeals for drugs denied during the coverage determination process. A total of 6,861 coverage determination requests were initiated since the 2008 inception resulting in savings to EPIC of $12.9 million and savings to members through lower co-payments.

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. While no payments are made on behalf of the Deductible Plan members, their deductible is lowered by an equal amount ($400 for 2010) to offset the monthly payments. The law limits EPIC payments to the benchmark or basic plan amount ($33.32 per month for 2010) 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 are processed in a subsequent month's routine payment based on updated data received through CMS. Medicare makes monthly premium payments up to the benchmark amount for individuals who are approved for a full or partial subsidy. If necessary, EPIC will augment 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 the member-level detail that supports the monthly payment amount. Premium payments made to plans, for the period of October 1, 2009, through September 30, 2010, totaled $27 million, an average of $2.25 million per month.

5. Retrospective Benefit and Plan 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 but 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 claims 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, $117.1 million has been recovered of which $11.2 million was for the program year of 2009-2010.

The EPIC program also received $1.9 million in recoveries from Part D plans. The plan recoveries were due to retroactive approvals for LIS.

6. Manufacturer Rebates

The EPIC program requires drug manufacturers to have rebate agreements in order for their drugs to be covered. EPIC maintained agreements with 310 manufacturers, an 11 percent decrease from last program year (due to: mergers, business closures and non-participation terminations), which ensured that most pharmaceuticals were covered by the program. Quarterly invoices sent to manufacturers contained a detailed listing of the drugs and quantities that were purchased by EPIC members and the manufacturers paid rebates back to EPIC for those medications. During the 2009-2010 program year, the Manufacturer Rebates Program invoiced over $209.3 million in rebate payments. In total, $2.1 billion in rebate payments have been invoiced since 1991, with over 9.9 percent of that amount invoiced in 2009-2010.

Figure 4
Manufacturer Rebates
Rebate Year Total Manufacturers
Rebate Payments
Program Life $2,105,345,857
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
10/09-09/10*****$209,301,480

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.
*****Increases in rebate percentages for covered outpatient drugs under the Affordable Care Act effective January 1, 2010.

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 was used to confirm claim reimbursements were appropriate and correct by the program. In 2009-2010, the EPIC audit unit completed 40 pharmacy field audits and 42 desk audits that resulted in recoveries of $176,804 due to erroneous billings.

EPIC also continued its Verification of Benefits (VOB) process to identify potential inappropriate billing. More than 144,000 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 42 percent of the selected members responded. All negative responses were referred to the EPIC audit team for further investigation.

Section V: Conclusion

The EPIC program provided benefits to 305,108 seniors during the program year. The total net State costs continued to decrease and were $120.6 million, a reduction of $66.7 million from the previous program year (Appendix Table IV-A). EPIC continues to maximize Medicare Part D coverage for members and is the secondary payer at the pharmacy, through the point of sale claims processing for members with Part D coverage. This resulted in savings of more than $496.5 million for EPIC during the year, an additional $28.5 million from the last program year (Appendix Table XII).

EPIC provided supplementary coverage to 69,026 members who reached the Medicare Part D coverage gap and 19,580 who required catastrophic coverage. EPIC covered the Part D deductible and supplemental co-payments for the remaining 175,264 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, 2010, enrollment declined to 300,774 members (2.26 percent). Although, the number of applications increased from the previous year by 6,000, the program had a high number of cancellations. More than 11,000 deceased members were canceled from the program. Cancellations by members in the lower income Fee program also increased because they 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 2009-2010 Appendix

EPIC Staff

Management:

  • Alan D. Ball
    Director
  • Rhonda Cooper
    Assistance Director
    Program Development and Review
  • Scott Franko
    Manager
    System Development and Research
  • Diane Reed
    Supervising Pharmacist
    Pharmacy
  • Sandra Knapp
    Program Operations
  • Gloria Le Besco
    Rebate Unit
  • Santina Roberts
    Audit Unit

Staff:

  • Kiki Blair
  • Anne Blanchard
  • Alexandra Bontempo
  • Lubna Chauhan
  • Karen Cummings
  • Nicole Grieves
  • Lori Maiwald
  • Deborah Martins
  • Donna Ross
  • Deborah Rougas
  • Sheila Rounds
  • Charles Teuscher
  • Lisa Tice
  • Rich Underwood

Acknowledgements:

Special thanks go to the Hon. Richard F. Daines, M.D. (former Commissioner, Department of Health and EPIC Panel Co-chair), Julie Naglieri (former Director, EPIC Program) and Michael J. Brennan (former Acting Director, EPIC Program) for their contributions during program year 2009-2010.

Footnotes:

  1. Effective 10/01/2010, due to a statutory change, EPIC no longer covers 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 a statutory change, 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.