Employer Group waiver plan
Employer Group Waiver Plans (EGWPs) are well-positioned solutions to help you keep costs down and offer valuable retiree benefits. An EGWP has financial benefits that significantly exceed current RDS payments.
You should consider an EGWP if you are:
• An employer currently participating in the RDS program
• A non-taxable entity
• A taxable entity with little or no tax liability
• An employer offering prescription drugs to Medicare-eligible retirees
• A plan sponsor with a drug plan that does not pass the actuarially equivalence test for RDS
• A government entity that wishes to reflect Medicare Part D impact in its GASB 43/45 accounting
• A plan with at least 100 Medicare-eligible retirees and covered dependents (available funding options will vary based on PBM)
• A plan contemplating an end to post-65 retiree benefits due to the cost
• A plan looking for strategies to better manage retiree premiums
How an EGWP works
An EGWP is a Medicare Part D prescription drug plan (PDP). Employers partner with a Pharmacy Benefit Manager (PBM) that has contracted directly with Medicare to be a Part D provider. The EGWP provides the standard Medicare Part D prescription drug coverage only to the Medicare-eligible retirees and covered Medicare-eligible dependents of the sponsoring employer. An EGWP is not open to the individual market. It is a specific plan only available to employer plans.
The Medicare Part D portion of the EGWP has the same stages as the standard Medicare Part D plan:
• Stage 1: Annual deductible ($310 in 2014)
• Stage 2: Initial coverage period when retiree pays 25% and plan pays 75%
• Stage 3: Coverage gap where retiree pays most of the cost
• Stage 4: Catastrophic coverage where the plan pays most of the cost (but is reimbursed 80% of the cost by Medicare)
In addition, Medicare Part D excludes certain classes of drugs, including prescription drugs for treatment of coughs and colds, erectile dysfunction, etc.
To mirror your current prescription drug benefit, you can contract separately with your PBM to supplement, or wrap, your EGWP.
• Covers drugs not included on the PBM’s Medicare Part D formulary, as well as drugs excluded by Medicare
• Allows you to offer the same plan design available through your commercial plan, including copayments, coinsurance, and maximum out-of-pocket, if applicable.
In the example below, the chart compares the value of an employer’s current plan to an EGWP with a wrap. In both scenarios, the retiree is in the coverage gap and pays the same 20% coinsurance for a brand-name drug. However, with the E GWP+wrap, the plan saves $100 due to the manufacturer’s discount
Benefits of an EGWP
Once all EGWP subsidies are received, your organization could realize an additional annual cash savings of $500- $700 per Medicare-eligible retiree or covered dependent per year compared to RDS. If you are a plan sponsor with a large Medicare-eligible population, this additional cash savings can amount to hundreds of thousands or even millions of dollars per year. In addition, EGWP subsidies are generally paid more frequently than RDS subsidies.
For government entities subject to GASB accounting, an EGWP offers accounting advantages over RDS. EGWP savings can be reflected in the current year liability calculation under GASB accounting where future projected RDS reimbursements cannot. These cash savings and accounting advantages can be achieved without reducing benefits.
Medicare Modernization Act of 2003
CMS can waive select Medicare Advantage (MA) program requirements to create MA-EGWPs:
•Employers can offer Part D prescription drug coverage
•Service areas can be tailored to serve retirees living in widespread areas
•Network benefits can be adjusted to allow for in- and out-of-network similar coverage
•Premiums can be modified to meet the needs of employers and retirees
•C MS waives prior review of materials and communications
•Bidado not have to be submitted
EGWPs Offer Viable Solutions Employers
•Flexibility to maintain consistent retiree coverage, while lowering their immediate costs and long-term liability
•Varied plan and risk formats to include a single or multi-carrier exchange and self-funded to full-insured plans
•Participate in Medicare risk adjustment payments
•EGWPs generally achieve strong stars performance due to employers partnering with health plan to increase member engagement
•Additional benefits such as dental and vision and alternative solution for future changes in Medigap plans due to MACRA Retirees
•Care management provided through MA-EGWPs can lead to better health outcomes and higher quality of care
•Retirees experience less out-of-pocket expense and access to health and wellness programs above traditional Medicare coverage
•Most retirees report higher satisfaction and better navigation of the health care system
Policy Changes that Could Impact EGWP
• Future payment structure tied to individual market payment rate
• Health Insurer Tax and its effect on premiums
• Volatility in future accounting costs due to premium and tax changes
• Network access for rural or low-income areas
• Enabling more flexibility to coordinate care
• Expanding definition of plan sponsors
The Future of the Medicare Advantage Employer Group Waiver Plan Market
Approach and Key Findings
To evaluate the trends and outlook for the Medicare Advantage Employer Group Waiver Plan (MA-EGWP) market, Aetna engaged Avalere, a public policy and business strategy consultancy in Washington, DC, to conduct a series of interviews. In 2014, Avalere interviewed ten employers offering MA-EGWPs to retirees, including two unions,
six public employers, and two private employers, totaling around 19% of national 2014 MA-EGWP enrollment (or approximately 554,000 individuals).
In 2015, Avalere conducted five interviews with key thought leaders, including high-ranking government officials and prominent scholars to discuss the future of the retiree market. Most recently, in 2017, Avalere spoke with two benefits consultants at two different leading consulting firms who focus on MA-EGWP coverage.
Avalere shared an interview guide with all interviewees before conducting telephone interviews.
Key findings from the interviews include:
• Despite an overall decline in the number of employers that offer retiree healthcare, those that do offer coverage are intent on “keeping the promise” they made to employees.
• Employers are hesitant to disrupt their retirees’ coverage by changing benefit designs, but rising costs are putting pressure on them to do so.
• Switching to MA-EGWPs has allowed many employers to maintain consistent coverage for retirees, while lowering their immediate costs and long-term liability.
• Additionally, the care management that MA-EGWPs provide can lead to better health outcomes and may contribute to the satisfaction with MA-EGWPs retirees report; in a recent survey, 92% of beneficiaries in MA report that they are satisfied with the quality of their coverage.1
• Preserving stable payment policy, allowing MA-EGWP plans more flexibility to tailor benefits, and expanding the information about MA-EGWPs available to employers can help the MA-EGWP market continue to grow and give employers a robust, sustainable option for continuing to provide coverage for retirees
Overview of MA-EGWPs
The Medicare Modernization Act (MMA) of 2003 provided additional flexibilities for employers offering health benefits to their retirees by allowing the Centers for Medicare & Medicaid (CMS) to waive select MA program requirements to create a new type of MA plan, MA-EGWPs. Unlike other types of MA plans, MA-EGWPs can offer benefits only to the retirees of a particular employer or union and offer different premiums to beneficiaries living in different regions while providing the same benefit design nationwide.
Currently, just under 58% of MA-EGWP enrollees are enrolled in combined MA-PD plans, compared to nearly 100% of non-EGWP MA enrollees.6 In some cases, employers choose to use the Retiree Drugs Subsidy (RDS) option or a separate EGWP Prescription Drug Plan (PDP) in combination with a separate MA-EGWP that provides only medical benefits, particularly if they provided separate medical and drug coverage prior to switching to MA-EGWP coverage. Like other types of MA plans, MA-EGWPs can be either local or regional preferred provider organization (PPOs) or Health Maintenance Organizations (HMOs). However, the vast majority, approximately 71%, of MA-EGWPs are local PPOs.7 Employers interviewed noted that using extended service area PPOs allow them to provide coverage for retirees living in widespread geographies
and to give retires access to in- and out-of-network providers at the same cost.
Employer Group Waiver Plan (EGWP) FAQs
• CMS has a list of drugs that require pre-authorization. You may have to get a pre-authorization for drugs where it was not previously required or seek preauthorization for drugs that have already been pre-authorized through Aetna under the current plan. You or your doctor can start the pre-authorization process in December 2018, or the next time you fill a prescription during or after January 2019.
• If you have multiple medical conditions and high drug utilization, you may be enrolled in the Medicare Medication Therapy Management Program by the State. CMS developed this program as a member protection. This program helps you and your doctor make sure that your medications are working to improve your health and provides a comprehensive review that includes: how your medications are working; if they have side effects; and any interactions between drugs you are taking. You can opt out of this program.
• The appeals process may change. If you fill a prescription that is not covered by Medicare, the prescription will automatically be processed under the wrap and any appeals will follow the current process. In very rare cases, a member may follow the Medicare appeals process instead. This process is the same as what is in place today for medical claims covered under Medicare Parts A and B. We anticipate that this will only apply in rare circumstances. A comparison of the two appeals process is below:
EGWP – Part D AlaskaCare Wrap (current AlaskaCare appeal process)
Step 1 Redetermination by PBM Redetermination by PBM
Step 2 (clinical) Independent Review Organization Independent Review Organization
Step 3 Federal Administrative Law Judge Division of Retirement and Benefits
Step 4 Medicare Appeals Council State Administrative Law Judge
Step 5 Federal District Court State Superior Court
2) Will all my current prescriptions be covered in an AlaskaCare EGWP? How and when can I verify this?
Yes. The Division will provide a full list of covered drugs in November 2018.
3) How will I know if one of my prescriptions must be pre-authorized by CMS? What can I do to ensure I can still get my prescriptions filled on time?
You will receive a welcome kit with information about your pharmacy benefits in November 2018, and beginning in December 2018, you or your health care provider can begin the pre-authorization process by contacting OptumRx, who will work with you on pre-authorizations. In addition, the Division will work with OptumRx to provide targeted communications to members who are known to be taking medications that require pre-authorization.
4) Why do I need to obtain pre-authorization of medicines that I have been taking for years?
Medicare does not allow pre-authorizations from another plan to be transferred to the EGWP. Medicare may also require pre-authorization for drugs that previously did not require pre-authorization.
5) Could the pre-authorization decision result in a determination that I must try a new, less expensive drug before the plan will cover the medication I am currently taking?
(This is known as step therapy.)
No. Pre-authorization is used to determine if Medicare will cover the drug under the Medicare Part D (pharmacy program), under the Medicare Part B (medical program), or will not cover the drug at all because it is excluded under Medicare. If your current prescription is not covered by Medicare, it would be covered through the wrap as part of the AlaskaCare EGWP. If your prescription is covered under Medicare Part B, your copay will remain the same.
6) Does EGWP mean the Pharmacy Benefit Manager (PBM) will decide what medication my doctor can prescribe?
No. Your doctors can still prescribe whatever medication they think is most appropriate for you and your co-pay will remain the same as it is today, $0 mail order, $4 generic, and $8 brand. Depending on what they prescribe, the medication may require pre-authorization. And just like today, all claims, not just prescription drug claims, must be medically necessary in order to be covered by the health plan. Determinations of medical necessity are part of the claims processing function for
all health care plans and can be complex depending on the situation. AlaskaCare has long relied on our Pharmacy Benefit Manager (PBM) to make evidence-based decisions on medical necessity as part of the pharmacy claims processing function, and this process will continue under an AlaskaCare EGWP.
There may be instances in which a member’s doctor will disagree with coverage decisions related to medical necessity. In these cases, we encourage members to appeal the PBM’s decision.