There are No Bargains in Part D Prescription Drug
Plans: Center for Medicare Advocacy
CMA takes a detailed look at the drug program as open
enrollment begins Nov. 15
Nov. 14, 2007 – The Centers for Medicare & Medicaid
Services (CMS) declared victory for Medicare Part D, in an August press
release, claiming that the average premium of $25 was nearly forty
percent (40%) lower than had been predicted when the drug benefit was
first enacted into law. The CMS Press Release, while accurate, does not
tell the entire story. In 2008 most beneficiaries will be paying
substantially more for their drug coverage, and many will be getting
less coverage, according to the Center for Medicare Advocacy.
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Part D Premiums Are Up
CMA says CMS calculates the average premium by
taking into account both stand alone prescription drug plans (PDPs) and
Medicare Advantage plans with drug coverage (MA-PDs). However, it is
important to remember that the federal government overpays Medicare
Advantage plans (see the CMA Weekly Alert discussing MA subsidies
at
http://www.medicareadvocacy.org/MA_Overpayments.htm).
MA-PDs can then use these overpayments to reduce
the cost of their drug coverage, often charging no premium or a small
premium to their enrollees. Without this unfair subsidy, it is unlikely
that any plan would reduce their premium.
Contrary to what CMS indicates, according to CMA,
most people who do not want to be locked into receiving all their
coverage from an MA plan, and thus would rather stay in traditional
Medicare with a PDP, will actually see their premiums increase in 2008 –
and in some cases the increases will be substantial.
For example, in Connecticut, thirty-two of the
forty-six returning PDPs increased their premiums. The Humana standard
PDP, the lowest premium plan in Connecticut in 2006 ($7.32), will cost
$24 in 2008. At the high end of the premium range, costs are up nearly
52% ($65.58 in 2006 to $99.50 in 2008).
Further, in 2006, people in Montana, for example,
could purchase a PDP for $1.87; the lowest premium PDP in Montana in
2008 will cost $13.90. In fact, according to the Kaiser Family
Foundation, only one state, Arizona, will have a PDP with a premium
below $10 in 2008, and that premium is $9.80. (http://www.kff.org/medicare/upload/7426_04.pdf).
Cost Sharing is Up
Beneficiaries may have to pay more for their
prescriptions as well, explains CMA. In 2006, PDPs basically had four
Tiers of drugs: Tier 1 (generic), Tier 2 (preferred brand), Tier 3
(non-preferred brand) and Tier 4 (specialty and injectable drugs). In
2008, generics are further sub-classified into categories that are
placed at Tiers 2, 3 and even 4. These classifications are: "value"
generics, "preferred/non-preferred" generics and "specialty" generics.
CMS has provided no definition of these terms; each
plan is free to determine the category into which a generic drug is
placed. The addition of these sub-tiers is expected to have a major
effect on the cost of co-pays for generic drugs. In Connecticut, which
is typical of other states, the co-payments for generic drugs range from
$0 to as much as $75.60 for a "non-preferred" generic, and it is unclear
how high co-payments would range for "specialty generic" drugs, which
would have up to 33% co-insurance.
The addition of multiple "sub-tiers" among the
generic drugs makes it increasingly difficult to make a true comparison
of plan-to-plan costs. Professionals and those beneficiaries who can
access and manipulate the CMS Plan Finder tool can still make these
comparisons, but people without computers or computer skills – including
many of the country’s elderly and disabled – will be at a loss to
compare plans without assistance.
Coverage in the “Donut Hole” Gap is Down
CMA says No PDP will provide coverage for all brand
name drugs in the “Donut Hole” (or “coverage gap”) in 2008. The Kaiser
Family Foundation reports that only one PDP in Florida offers brand name
gap coverage, but that plan, Citrus Health plan, will not cover all
brand name drugs. This is a significant change for some people, and will
increase costs for people who must rely on brand name drugs. While all
states will have PDPs that offer some coverage during the Donut Hole,
the extent of the coverage varies, with many plans only covering some,
but not all, generic drugs on their formularies.
The Kaiser Foundation also reports that all states
except Delaware and the District of Columbia will have at least one
MA-PD that offers some brand name gap coverage.
In most states Humana will offer some brand-name
gap coverage through a “private fee-for-service” (PFFS) plan.
Advocates should exercise extreme caution when
discussing this plan with their clients. See the recent CMA Weekly
Alert discussing PFFS plans,
http://www.medicareadvocacy.org/MA_PFFSReport.htm.
Advocates are also advised to remember that in 2006
Humana offered one PDP with brand-name drug coverage in the gap, but
dropped that coverage in 2007 because of the cost. PDPs and MA-PDs can
change their benefit structures on a yearly basis. Thus, advocates and
beneficiaries need to be aware, based on Humana’s history, that the
company may decide to drop the brand name Donut Hole gap coverage in
future years, according to CMA.
Part D Deductibles Are Down – Look Beyond This
When Choosing a Plan
Although the deductible for the standard Part D
plan has increased to $275, more plans are choosing to offer zero or
reduced deductible plans in 2008. Beneficiaries need to be cautious
when choosing these plans, however. Part D plans generally must offer a
benefit package that is the actuarial equivalent to the standard benefit
package. Those plans with reduced deductibles often compensate by
increasing the cost-sharing for their formulary drugs. For example, a
beneficiary in a $0 deductible plan may pay the equivalent of 33% for a
particular drug, rather than the 25% cost sharing in a standard drug
plan that does have a deductible.
Low Income Subsidy (LIS) Eligible Plans Are
Changing
The plans with premiums below the “benchmark”, and
are therefore eligible for auto-assignment of dually eligibles, will
also change for 2008. CMS has announced that it expects that
substantially more beneficiaries across the country will have to switch
plans in 2008 – 1.6 million beneficiaries as compared to 250,000
beneficiaries in 2007.
A number of states have seen a reduction in the
number of such plans. For 2007 CMS instituted a "de minimis" rule that
allowed plans to retain their dual eligible enrollees if their premiums
were $2 or less above the benchmark. The de minimis threshold has been
reduced from $2 in 2007 to $1 in 2008. Note that dual eligibles who
selected their own plans (called choosers) and those who were assigned
by a state pharmacy assistance program (SPAP) will not be reassigned
automatically, but will have to choose their own new plan. See the
recent CMA Weekly Alert on LIS Issues at
http://www.medicareadvocacy.org/PartD_07_09.13.LISUpdate.htm.
Of particular significance, notes CMA, the largest
plan sponsors, UnitedHealth, Humana, and WellCare, are losing their
low-income subsidy (LIS) status in many parts of the country.
United is expected to lose 650,000 LIS
beneficiaries; its AARP plan will only be eligible for auto-enrollment
in four states. Humana is estimated to lose more than 400,000 of its
enrollees. CMS has recently released data about the number of
individuals who will need to be reassigned, which is available at
http://www.cms.hhs.gov/limitedincomeandresources/.
California and Texas are the states most affected
by these changes.
Low Income Subsidy (LIS) Cost Sharing is Up
At the same time that there are fewer plans
available to those eligible for the Low Income Subsidy, LIS co-payments
will increase. Full benefit dual-eligibles with incomes below 100% of
the Federal Poverty Level (FPL) will pay $1.05 for Generic/Preferred
Drugs - up 5% from 2007 - and $3.10 for other drugs (no change). Full
benefit duals with incomes above 100% FPL will pay $2.25 for
generic/preferred, and $5.60 for other drugs - both up almost 5%.
Full benefit duals will still have no co-payment
above the catastrophic limit. Partial subsidy eligible beneficiaries
will pay a $56.00 deductible, up over 11% from 2007. They will continue
to have a 15% co-pay up to the catastrophic limit, after which they will
pay $2.25 for generic/preferred drugs, and $5.60 for others, each an
almost 5% increase from 2007.
Conclusion
There are no "bargains" in Part D prescription
drug coverage.
People need to plan carefully in order to get
coverage for the drugs they need during 2008. Notwithstanding the small
decrease in the national average monthly premium ($27.32 in 2007 down to
$25 in 2008), overall premium costs have risen tremendously since the
program started two years ago.
Beneficiaries should think carefully before
enrolling in a plan that offers coverage during the Donut Hole as it may
not be worth the extra premium dollars spent. Beneficiaries need to
check to make sure that all of their generic drugs are covered.
Those who qualify for the Low Income Subsidy may
face the most disruption if they need to transfer to a different drug
plan that qualifies for the subsidy, particularly if the remaining LIS-eligible
plans do not cover all of their drugs.
About Source:
The Center for Medicare Advocacy, Inc. is
a national non‑profit, non-partisan organization that provides
education, advocacy, and legal assistance to help elders and people with
disabilities obtain Medicare and necessary health care. The Center was
established in 1986. We focus on the needs of Medicare beneficiaries,
people with chronic conditions, and those in need of long‑term care. The
organization is involved in writing, education, and advocacy activities
of importance to Medicare beneficiaries nationwide. The Center's central
office is in Connecticut, with offices in Washington, DC and throughout
the country.
The Center is staffed by attorneys, nurses, legal
assistants, and information management specialists. A complete
explanation of the organization's publications, products, and services
is available upon request and on the
products and services page.
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