Medicare Part D's Impact on Wisconsin Diabetes Mandate

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) creates Medicare Part D, which provides coverage for prescription drugs. These Medicare prescription drug benefits will be provided by prescription drug plans (PDPs) that contract with Medicare. The MMA includes in its definition of covered prescription drugs, insulin and medical supplies associated with the injection of insulin for the treatment of diabetes. Medical supplies for injection of insulin include syringes, needles, alcohol swabs, and gauze. It does not include test strips and lancets, as these supplies are covered under Medicare Part B, and therefore may not be covered under Medicare Part D.

Wisconsin's diabetes mandate, s. 632.895 (6), Wis. Stat., regarding coverage of equipment and supplies for the treatment of diabetes applies to Medigap policies. The statute mandates coverage for all equipment and supplies, including insulin or any other prescription medication, used in the treatment of diabetes.

The MMA provides that Medigap policies issued beginning January 1, 2006, may not provide prescription drug benefits that duplicate those covered by Medicare Part D. It also provides that existing Medigap policies for individuals who enroll in Medicare PDPs may not continue the prescription drug coverage under the Medigap policies. Therefore, prescription medications, insulin and medical supplies associated with the injection of insulin for the treatment of diabetes will no longer be covered under new Medigap policies issued beginning January 1, 2006. Prescription medications, insulin and medical supplies associated with the injection of insulin for the treatment of diabetes will no longer be covered under existing Medigap policies for those individuals who enroll in Medicare PDPs. However, the coverage under the diabetes mandate will remain for those individuals with policies issued prior to January 1, 2006, and who do not enroll in Medicare PDPs.

Insurers with existing Medigap policyholders who enroll in Medigap PDPs will issue exclusionary riders or new Medigap policies without the prescription medication, insulin and medical supplies for injection of insulin benefits formerly covered by these policies. Insurers who issue policies beginning January 1, 2006, may market their policies only if they include exclusionary riders or have new approved Medigap policies that do not cover the prescription medication, insulin and medical supplies for injection of insulin.

The prescription drug coverage under Medigap policies currently in effect differ based on the date the policies were issued.

• Medigap policies issued beginning September 1, 1994, to present are required to cover catastrophic outpatient prescription drug expenses including coverage for at least 80% of the charges for outpatient prescription drugs after a drug deductible of no more than $6,250 per calendar year. Prescription medication for the treatment of diabetes is subject to the $6,250 deductible.
• Medigap policies issued beginning January 1, 1992, to present may include an optional outpatient prescription drug rider that provides benefits for at least 50% of the charges for outpatient prescription drugs after a deductible of no greater than $250 per year to a maximum of at least $3,000 in benefits received by the insured per year. Prescription medication for the treatment of diabetes is subject to the $250 deductible and annual maximum.
• Medigap policies issued in the 1980s and prior to January 1, 1992, when the optional outpatient prescription drug riders became available, may or may not provide comprehensive outpatient prescription drug coverage. Some of these policies paid 75% or more of prescription drug costs. Prescription medication for the treatment of diabetes would be paid to the same extent benefits are paid toward other prescription drug costs.
• Medigap policies issued between January 1, 1992, and September 1, 1994, the date of the Wisconsin mandate requiring catastrophic drug coverage, most likely do not include outpatient prescription drug coverage. However, Wisconsin's diabetes mandate requires that these policies provide coverage of prescription medication for the treatment of diabetes to the same extent as other expenses subject to the same deductible and coinsurance provisions of the policies.

If you have questions regarding the Medicare Part D Prescription Drug Program, e-mail OCI at ocicomplaints@wisconsin.gov or call 266-0103 (In Madison) or 1-800-236-8517 (Statewide).