Medicaid with Medicare Part D

Medicare Part D (Medicare Rx) is the Medicare prescription drug benefit, enacted as part of the Medicare Modernization Act of 2003. CMS states that people eligible for Medicare Part A or who are enrolled in Medicare Part B are also eligible for Medicare Part D.

Medicare Part D offers optional drug coverage to all Medicare-eligible people through private prescription drug plans (PDPs) or Medicare Health Maintenance Organizations (HMOs). Prescriptions reimbursable by Medicare Part D are not eligible for additional reimbursement through Medicaid.

Medicaid does not pay for Medicare Part D covered drugs and cannot be billed after payment is collected from Medicare Part D for dual-eligible people. Certain drugs can be excluded from coverage by the PDP. Each plan has their own formulary and the person must choose the plan that is best for their prescription drug needs. Part D sponsors are required to implement reject messaging that will allow pharmacies to identify claims for excluded Part D drugs that can be billed to the state.

Medicaid may choose to pay for some drugs excluded from Medicare Part D coverage. Texas Medicaid will pay for wrap-around drugs/products for dual eligible people after commercial insurance has been billed or if there is no commercial insurance on file. These drugs include non-prescription (over the counter medications), some products used in symptomatic relief of cough and colds, and some prescription vitamins and mineral products.

Medicaid will pay for a limited set of home health supply products. CMS states that medical supplies directly associated with delivering insulin to the body (including syringes and needles) are considered Medicare Part D covered. However, test strips, lancets, and needle disposal systems are not considered medical supplies directly associated with the delivery of insulin for purposes of coverage under Part D. These items should be covered under the Medicare Part B DME benefit, and Medicaid will pay the cost share for covered home health supply products after

Medicare Part B provides a paid response. If the person does not have Medicare Part B, Medicaid will pay for these items. Refer to the Home Health Supplies for more information regarding coverage of hone health supply products for people dually enrolled in Medicare and Medicaid.

Claims submitted to Medicaid with a Medicare Part D covered drug and/or product will reject to bill Medicare Part D and/or commercial insurance (if there is commercial insurance on file) if the person is eligible for Medicare Part D. If a pharmacy receives a rejection from Medicaid to bill the person’s PDP, then the pharmacy should submit the claim to the person’s PDP. If the person does not have plan information or says that they are not enrolled in a plan, then pharmacy provider should do one of the following:

  • Call Medicare for PDP information
  • Utilize the Facilitated Enrollment process
  • Submit the claim to the Medicare Limited Income (LI) NET program if the person has never been enrolled in a Medicare PDP

Opting out of Medicare Part D

People that are deemed dual-eligible are automatically enrolled in a Medicare PDP.  Some people may choose to disenroll, or opt out, from their PDP, meaning the person has chosen to not participate in the Medicare Part D plan. Medicaid is not liable for the person’s prescription drug coverage if the person opts out of enrolling in a Part D plan.

The VDP pharmacy claims system returns a message on paid claims for people that will soon become eligible for Medicare Part D.  This message will be returned several months prior to the person’s Medicare coverage effective date to alert the pharmacy that Medicare will become liable for prescription drug coverage. The message is returned in the "Additional Message Information" field (526-FQ) and read "Part D liable for this client's Rxs no later than XX/XX/XXXX".

Pharmacy providers should advise the person that Medicaid will no longer pay for prescriptions for Part D covered drugs as of the date returned in the message. The person must choose a Medicare Part D plan by that date in order for their prescription benefits to continue.  After the date returned Medicaid will only be responsible for the Part D-excluded wrap-around drugs.

Extra Help with Medicare Prescription Drug Plan Costs

People with limited incomes may qualify for extra help to pay for their prescription drug costs. The person will be charged the reduced copayment based on the level of Extra Help they receive. The program also covers prescriptions that eligible people may have filled within the last 30 days.

Refer to the "Medicare" section of the Contact Information section to learn about this program.

Limited Income NET Program

The Limited Income Newly Eligible Transition (LI-NET program) provides immediate and temporary Part D prescription drug coverage for low income Medicare people not already in a Medicare PDP. The LINET program covers all Part D covered drugs, and there are no network pharmacy restrictions during the time period covered by this program. Contact Medicare to learn about this program.

Medicare Facilitated Enrollment

Facilitated Enrollment is the process by which low-income subsidy (LIS) people are enrolled in a Part D plan. The point-of-sale facilitated enrollment process ensures that dual-eligible people who are not yet enrolled in a Medicare PDP are still able to obtain prescription drug coverage when evidence of Medicare and Medicaid eligibility is presented at the pharmacy. Pharmacy providers can submit an eligibility verification transaction to Relay Health to identify whether the person is already enrolled in a PDP. Refer to the "Medicare" section of the Contact Information section to learn about this program.