The Medicare D shell game
It's a pain for seniors to pick from the myriad drug insurance programs, but it pays to do it - every year.
Kim Andrews had just helped a woman save a couple of hundred dollars on her new Medicare drug plan.
"I asked her about her husband," said Andrews, the Delaware County coordinator for Apprise, the Pennsylvania health insurance counseling service. The woman said " 'Oh, my husband loves his plan. He won't change.' "
"Well, I checked his drugs anyway, and it turns out his plan was no longer going to cover two of his drugs," Andrews said. "I found him another plan that would save him $2,771. That's huge. People are just unaware, it seems."
Since the new Medicare Part D prescription drug program went into effect three years ago, there has been a warren of plans, each with its own parameters, for seniors to muddle through. It is not as if there weren't choice - dozens of companies are marketing to seniors - but the complexity can be confounding. Finding the best plan can seem like a blindfolded darts game.
For the approximately 2.1 million Pennsylvanians and 1.2 million New Jersey residents on Medicare, open enrollment for the plans started in mid-November and lasts through Dec. 31, and those experienced in advising seniors say it is imperative that recipients reevaluate their plans during each enrollment period.
"Premiums are going up and the number of drugs the plans are covering is going down, and drug-specific payments - copays - are generally going up," said Daniel Mendelson, president of Avalere Health, a health-care advisory firm in Washington. "The most important overarching message is, once again, that seniors have to evaluate their plans to see if they still serve their needs. This is not like buying life insurance, where you do it once and that's it. Each person has to evaluate every year to see if he or she is getting the most for his or her money."
The average Medicare D prescription premium is up 44 percent from the first plans in 2006. And a typical senior with four to six medications could save $500 if he changed to the lowest-cost plan available, concluded a study by the Brookings Institution and others.
Though there are fewer plans to choose from in 2009 - 57 are available in Pennsylvania this coming year, down from 63 in 2008 - that is not a big worry, according to Richard G. Stefanacci, founding executive director of the Health Policy Institute at the University of the Sciences in Philadelphia.
"There are still enough plans, so that is not the issue," said Stefanacci, a geriatrician in South Philadelphia. "The biggest thing this year is that the premiums are going up and that seniors have been lulled into a false sense of security. This year, especially, they should know that changes have occurred in almost every plan."
Stefanacci said that this being the third year of the Medicare Part D program, the "land rush" for initially signing up customers has passed and the idea that there might be discounts or cheaper premiums offered by health-care providers is less likely.
Fortunately, he said, many people have become savvy and are visiting the official Medicare homepage (www.medicare.gov), whose comprehensive list of health-care plans provides a "formulary finder," enabling seniors to plug in their drugs and determine which plan would be best on cost and customer service. Still, Stefanacci said, seniors often don't use it - or maybe don't believe it.
"The name of the game initially was enrollment, and the companies gave low prices and more choices initially to get people in," he said. "They know that seniors tend to stay with whatever they have, so now they can raise prices and have more restrictions and, unless you are really angry or disenfranchised, you probably won't change plans. That could be a big mistake."
Most Medicare prescription plans have this in common: After what the recipient has paid and the insurer has paid totals $2,700, up from $2,510 in 2008, coverage goes into what is called the "doughnut hole." That means coverage resumes only after the recipient's out-of-pocket payments - deductible, copayments, and cost of medicines - exceed $4,350. After that, "catastrophic coverage" starts and the recipient pays 5 percent of the cost of the drugs.
In 2007, 26 percent of standard Medicare Part D consumers had spending high enough to reach the doughnut hole. Four percent got past that doughnut hole to "catastrophic coverage."
Frank Coffman, 79, a retired mechanical engineer, has been volunteering in Burlington County as a State Health Insurance Assistance Program (SHIP) Medicare benefits adviser for 13 years. He said he got involved after remembering how his mother had to cope with the paperwork of Medicare and other things after his father died. He was determined to help others fight through the morass.
"People seem fixated on the plans that have the lowest initial premium," Coffman said. But premiums represent only 20 percent of the total cost.
Those plans "are not always the best," said Coffman, who noted that he and other SHIP volunteers went through a five-day initial instructional clinic and then attended update seminars three times a year. "We don't choose a program for them, but it does take a lot of steering sometimes, given that there are 52 providers just in New Jersey."
Sometimes, said Delaware County's Andrews, she advises Medicare recipients to ditch the prescription plans when buying certain drugs. Discounters such as Wal-Mart, Costco and Target provide generic drugs at significant markdowns, she said, in order to get other business. If seniors can get those drugs cheaply and not have them count against the Medicare Part D deductible, that could save them in the long run.
"If they can avoid reaching that 'doughnut hole' where they pay everything, that is something they should shoot for," she said.
Medicare recipients do have to sign up for a Part D plan within 64 days of being eligible if they do not have another source of prescription drug coverage. Otherwise they face a penalty, which could add up to several hundred dollars, said Kevin Prindiville, a staff attorney at the National Senior Citizens Law Center, based in Oakland, Calif.
"The biggest thing, though, as everyone notes, is to look again," he said. "Nationally, 34 percent of the people just stayed in the same plan last year, and that just won't work all the time. Nationally, many plans are putting penalties on certain brand-name drugs if they feel you could use generics. They think they have you, but not if you are savvy and check everything out."
Help for Those on Medicare Part D
Apprise health insurance counseling (Department of Aging)
(Center for Advocacy for the Rights and Interests of the Elderly)
outside Philadelphia: 1-800-356-3606