PHILADELPHIA – Know thyself. Or at least know your drug coverage and your medications before tackling the new Medicare prescription plan.
That’s the clearest advice several experts gave for tackling the vast new drug benefit that marks the largest Medicare expansion in the program’s 40-year history.
“I try to say to people, ‘Do not take this on as a big mammoth thing,”‘ said Juanita Way, a Philadelphia coordinator for the state-funded APPRISE program, which offers health insurance counseling to people 60 and older. “Know what health care coverage you have and then try to determine what your next steps are.”
The new Medicare benefit, which opened a six-month enrollment period Tuesday, is offered through a smorgasbord of insurance plans that could befuddle a medical economist.
“I have not run into anybody who bothered to understand the benefit who thinks it is simple. That includes actuaries and CPAs,” said Tom Snedden, director of Pennsylvania’s prescription drug program for older, low-income residents, PACE.
Medicare monthly premiums, for instance, are one factor. Some plans have annual deductibles. Others do not.
They set up pharmacy networks and draw up lists of drugs they will pay for. They also differ on the amount of money patients will need to contribute for each prescription.
And some plans offer coverage when drug costs hit the so-called doughnut hole – a $2,850 gap in coverage that Medicare recipients pay for after reaching $2,250 in annual drug costs.
“There is no best plan for everyone,” said Way, the APPRISE counselor who is also community relations director of the Albert Einstein Healthcare Network. “A best plan is a plan you can afford, has the doctors and hospitals you are currently using, and meets your prescription needs.”
When choosing a plan, she suggests that people know what their current health plan covers, which medicines they take, and whether their coverage is” creditable – a plan that is considered as good as the standard Medicare drug benefit.
They don’t need to enroll in the new plan if they have creditable coverage through such groups as a former employer or Veterans Affairs.
“My fear is that a lot of people signing up for benefits will be paying for premiums for what amounts to duplicate coverage,” Snedden said.
People can turn to Medicare’s toll-free number, 1-800-Medicare, and its Web site, www.medicare.gov, or to groups such as the State Health Insurance Assistance Programs, Area Agencies on Aging and AARP.
Dr. Richard G. Stefanacci, executive director of the Health Policy Institute at the University of the Sciences in Philadelphia, offered some pointers on the process. He worked on the Medicare drug benefit as a health policy scholar for the Centers for Medicare & Medicaid Services.
Q: What is the difference between a Medicare Advantage plan and the stand-alone prescription drug plans?
A: Medicare Advantage is a managed care plan responsible for all Medicare services such as hospitalizations, visits to the emergency room and doctor visits. These plans will evaluate drug use as part of an individual’s overall health care. If you don’t mind getting your care from a network, these plans typically provide broader benefits at lower costs.
Q: Does it make any sense to keep a Medigap drug policy?
A: People in most cases will save money on the new Medicare plan. Plus, if someone stayed with their Medigap drug policy and later switched to Medicare for their drug coverage they likely would be subject to the late enrollment penalty. Remember the non-drug Medigap policies are not affected by this new program.
Q: Each plan has set up its own formulary – its list of approved drugs. Can companies change their formularies during the year?
A: Yes. The plan can change its drug list after giving a 60-day notice. If your drug is dropped from the list, an enrollee can argue for its continued use on the grounds that it is medically necessary.
Q: If you need a drug that is not on your plan’s formulary, can you appeal?
A: Yes. If the medication is not on the list, you and your doctor can argue for its use. Your physician will contact your plan and will explain why you need a particular drug. If the plan rejects the appeal twice, an independent review board will hear your case. The plans have formularies to limit the number of drugs offered to enrollees.
Q: After May 15, 2006, Medicare will raise the premium by 1 percent each month an eligible enrollee delays signing up for the drug benefit and is without any other creditable coverage. Should people be concerned?
A: For young seniors, who just are starting out in the Medicare program, delaying enrollment is probably not the wisest thing to do. If they delayed being covered for three years, for instance, their premium would be 36 percent higher for the rest of their lives.
If you are a young senior and don’t use many drugs, you should consider joining a plan with a low premium or a Medicare HMO.
For older seniors, the burden likely would be less because they would probably not be in the program as long.
Q: Is there extra financial help for people on limited income?
A: Yes. Medicare beneficiaries with limited income and resources can get extra help paying for their premiums and copayments. People should apply through Social Security.
Q: Why is there a gap – the so-called doughnut hole – before someone qualifies for catastrophic coverage? The government will then pay 95 percent of the costs.
A: There was a finite amount of money to spend on the benefit. It allows the government to provide significant coverage to three groups: The average senior spending about $1,500 a year will save 50 percent. Many low-income people won’t pay monthly premiums or annual deductibles; their copayments will be $5 or below. And people who require expensive medications will get substantial government help after they spend $3,600 next year. The gap in coverage increases the benefit coverage on either side of the doughnut hole.
Q: Medicare will cover 95 percent of drug costs after an enrollee spends enough to qualify for the catastrophic drug benefit. What drug costs don’t count toward meeting that threshold?
A: What counts is out-of-pocket expenditures for medications that are received through the plan.
Unless an enrollee wins an appeal, he will pay out of pocket when using a drug that is not on the company’s formulary.
Certain medicines are excluded from the Medicare plan by law, notably a class of drugs called benzodiazepines. A large number of seniors use drugs from this class, which include such medicines as Xanax and Ativan.
Drugs bought in Canada also aren’t included in the out-of-pocket tally.
Q: Who keeps track of costs toward reaching the threshold?
A: The Medicare agency, CMS, has a contractor that will keep track. Like using an ATM, Medicare beneficiaries will know each time at the pharmacy what they are responsible for.
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