Note

If a State’s Medicaid program provides coverage of any of these costs, they are not allowable under spenddown.

Enrollment in Part D is voluntary, therefore not all Medicare beneficiaries will be enrolled in a Medicare Part D plan (PDP) or a Medicare Advantage plan (MA-PD). For those enrolled in a PDP or MA-PD, not all drugs will be covered. Each plan may have a different combination of deductibles, copays and coverage gaps. To determine if drug costs incurred by Medicare beneficiaries are allowable under spenddown, apply the following rules:

If the Medicare beneficiary was not enrolled in a PDP or MA-PD on the date of service, allow the prescription drug cost.

If the Medicare beneficiary was enrolled in a PDP or MA-PD on the date of service, the plan must issue a periodic (at least monthly) statement to the beneficiary explaining all benefits paid and denied, and amounts attributed to cost sharing. If the drug charge is identified on this statement as a beneficiary liability, i.e. part of a deductible, copay, or coverage gap, allow the expense under spenddown.

When a plan denies coverage of a prescription the beneficiary has the right to request an exception for coverage of the drug. The beneficiary is notified in writing of the decision. If the drug charge appears on the statement as a denial, and no exception was requested, do not allow the charge.

If the drug charge appears on the statement as a denial, and an exception was requested and denied, allow the charge.

These procedures will help ensure that legitimate part D cost sharing expenses are allowed under spenddown, as well as expenditures for drugs not covered by the PDP or MA-PD. By relying on the statements and exception notices, eligibility workers will not need to be concerned with knowing the cost sharing rules for each plan, the plan formularies or nonformulary drugs covered under a transition plan or under the exception process. Applicants should be advised to retain their statements and other related documentation for consideration under spenddown.