Pharmacy plus: the perfect cure? States are experimenting with using medicaid to cover drug costs for the "not-quite-so-poor".

• Author: Cauchi, Richard

If seniors 65 and over have reasonable care under Medicare, but lack vital prescription drug coverage, can Medicaid make up the difference?

Last year, three states were determined to find out. connecticut, Illinois and Maryland each enacted laws that defied traditional thinking and requested matching federal funds for a "stand alone," pharmacy-only benefit plan under a Medicaid 1115 demonstration waiver. The intent was to serve the not-quite-so-poor, those with retirement incomes up to $17,720 or in the Illinois case up to $28,000 for an elderly couple. The states filed waiver requests, with some hope, but no guarantees.

In January 2002, the answer emerged. Health and Human Services Secretary Tommy Thompson personally announced the approval of the Illinois Senior Rx program, and declared that Medicaid would help cover all people 65 or over with incomes between 100 percent and 200 percent of the federal poverty level. The 50 percent federal matching reimbursement meant a potential savings to the state of up to $75 million. HHS calculated that up to 368,000 people could benefit in Illinois alone.

The administration went one bold step further. Unlike previous "single-state demonstrations," Thompson announced that Illinois was the start of a new coast-to-coast model, named Pharmacy Plus. States were encouraged to apply, using simplified rules published in template form. Suddenly, the once-dreaded waiver process was user friendly!

Not surprisingly, state reactions varied. South Carolina and Wisconsin applied within days. But other states with state-funded programs were worried about fine print requirements. The Medicaid programs had to expand coverage without costing more and somehow ensure primary care coverage for enrollees. Was this really a federal entanglement that could bust budgets in the midst of the latest revenue shortfalls?

In July, four more states were approved. Florida was permitted to cover people with incomes up to only 120 percent of federal poverty. Maryland was allowed to have an assets test and a discount program where enrollees pay 65 percent out of pocket. Wisconsin was granted the authority to include copayments up to $15 per prescription, a feature never permitted in "traditional" Medicaid. For just these five states, HHS calculates that up to 740,000 people could be served.

By late fall, seven additional states had filed Pharmacy Plus waivers, and two others have legislative declarations favoring the process.

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