The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) requires that all entities providing prescription drug coverage to Medicare Part D-eligible individuals periodically disclose to those individuals and to the Centers for Medicare & Medicaid Services (CMS) whether the prescription drug coverage offered is creditable or non-creditable to Medicare Part D.

Creditable coverage disclosure to Part D-eligible individuals must be made by November 15, 2007. In addition, a separate Creditable coverage disclosure to CMS must be made within 60 days after the beginning of the group's plan year. For example, the filing deadline for groups with January - December plan year would be March 1; the deadline for groups with September - August plan year would be November 1. Refer to CMS' Creditable Coverage Web site at http://www.cms.hhs.gov/CreditableCoverage/ for additional information on both notices.

Entities that provide confirmation of creditable coverage are in essence confirming to the government that they are certifying the plan design meets certain minimum CMS requirements. It is not appropriate for Health Care Service Corporation to assume neither the employer's certification function nor the resulting risk that goes along with it.

Therefore, a notification was developed that will allow you to understand your obligation for creditable coverage and provide an easy-to-use tool for to make a decision. By providing the tool, we provide support; however, we stop short of doing the certification.

Creditable Coverage Benefit Plan Assessment

Actuarial has completed the assessment of Health Care Service Corporation's standard prescription drug benefit plans to estimate Medicare Part D creditability. The analysis is based on a gross value test explained in creditable coverage guidance from CMS. Under that test, the expected amount of paid claims for the coverage must be at least equal to the expected amount of paid claims under the standard Medicare Part D benefit. Our estimates indicate that the value of the Part D benefit is 51 percent of the covered drug costs (the remainder is the member's responsibility) and therefore, a plan that pays at least 51 percent of the covered drug costs should be “creditable.” All estimates are based on a standard Medicare eligible population and the types of coverage shown.

The tables in the attached letter identify benefit designs that are estimated to satisfy creditable coverage using the gross value test.

Please note: BAE/ BluePrint/ BlueAdvantageSM HMO and any 151+ standard drug plans are all estimated to be creditable. For any custom plans, please review the various plan features using the three tables to determine if they would be estimated to be equivalent to Medicare Part D.

Client Communication

The attached letter describing the benefit designs that are estimated to satisfy creditable coverage will be mailed to all employer groups by October 23, 2007 (except those noted below). Account Executives serving Major/National (including Labor and Municipal) and/or HMO Illinois clients are responsible for providing the appropriate notice to their clients.

If you have any questions pertaining to Creditable Coverage requirements please contact your Blue Cross and Blue Shield of Illinois Account Executive.