Medicare Users May Find Drug Coverage Leaves Them With a ‘Gap’
By Silvia Cernea
Nov. 28 (Bloomberg) -- Renata Rafferty, a philanthropic adviser in Indian Wells, California, said she started cutting her husband’s pills in half when his Medicare drug coverage reached its limit and his monthly prescription bills shot up to $900.
People enrolled in Medicare’s Part D drug benefit will face higher drug premiums next year and fewer plans offering so-called gap coverage. The Part D program, introduced in 2006, allows Medicare recipients to choose from insurer and company-sponsored drug-coverage plans that are approved by Medicare. Consumers pay a monthly premium, co-payment and deductible.
“In the first year that Part D was offered, there were several plans available which offered gap coverage,” Rafferty, 52, said. “The higher premium was well worth the savings. Last year and this year, no one in our region offered gap coverage.”
Gap coverage kicks in once consumers and their plan have $2,510 of drug costs. Consumers are then responsible for 100 percent of drug costs until they have paid $4,050, including what they paid as part of the $2,510. When that amount has been paid, Medicare’s “catastrophic” coverage assumes most of the cost. Next year, the $2,510 amount set by Medicare’s Part D will increase to $2,700; the $4,050 amount climbs to $4,350.
Before Part D, beneficiaries who didn’t have other types of drug coverage paid the entire cost of their prescriptions. There are now about 25.6 million people enrolled. These days, however, fewer plans offer gap coverage, and premiums and co-payment charges have gone up, said Michael Burgess, director of the New York State Office for the Aging.
Monthly premiums for insurers offering coverage under Part D will increase next year by an average 24 percent, according to management consultants at Washington-based Avalere Health.
“In many cases Medicare beneficiaries live on fixed incomes, and with the state of the economy, they’re forced to make even harder decisions on whether they can afford to fill up their prescription every time or take their pill every day,” said James Dau, a spokesman for AARP, the Washington-based nonprofit that focuses on issues for persons age 50 and older.
“Between heating costs and the costs of food going up, people are squeezed a lot more,” Burgess said. “Unfortunately the costs of these drugs and these plans are going up as well, so they will want to make sure that they get a plan that doesn’t cost them much more but will still provide the kind of coverage that they need.”
Too many people pay more than they should for coverage, said Patricia Barry, a senior editor at AARP and author of “Medicare Prescription Drug Coverage for Dummies.” Consumers should compare plans and not enough do it because it seems so complicated, she said.
There are at least 45 plans to choose from, and they all have different benefits and different costs, Barry said.
To compare offerings, consumers should use the Prescription Drug Plan Finder on Medicare.gov, said Esther Koch, chief executive officer of Encore Management in San Mateo, California. The finder allows users to enter the prescriptions taken, including dosages and frequency, and to get a list of all plans available in a region by total annual cost.
A Medicare beneficiary living in Brooklyn, New York, with high blood pressure and high cholesterol and taking Clondine HCL, Hydralazine HCL, and Zocor, can choose from among 48 prescription drug plans.
The estimated annual cost would be $5,200 for someone in Original Medicare not enrolled in Part D. Under Part D, and using a retail pharmacy, costs range from $1,061 for a plan with Health Net Inc., to $3,151 for a plan with Humana Inc. of New York, according to Medicare’s plan finder.
The estimates include monthly premiums, deductibles, co- payments, co-insurance, and pharmacy dispensing fees, according to Mary Agnes Laureno, director of Medicare’s Office of Beneficiary Information Services, who developed the plan finder.
“When I’m helping a relative or someone with a plan, that’s the first number I look at because it takes the entire cost of the package into consideration,” Laureno said.
“A lot of people just look at the monthly premium or the initial deductible in order to choose a plan,” AARP’s Dau said. “But in determining the cost there are many moving pieces, not just how you’re going to pay every month by the premium.”
People should make sure the plan they choose covers most of the drugs they use, according to Koch of Encore Management.
Plan providers can place restrictions on certain drugs, which means users may need prior authorization or require a user to take a cheaper drug before they cover the one that the doctor has prescribed. There also may be quantity limits.
“You can get around this by getting your doctor involved and applying for an exception,” Barry said. “Different plans put different restrictions on different drugs, so when you use the plan finder, you have to look at restrictions.”
Open enrollment for the Medicare Part D lasts until Dec. 31 and Medicare users can change plan providers. Unless they sign up before Dec. 31, some recipients may have no drug benefit for 2009.
According to RetireSafe.org, an advocacy group for seniors based in Reston, Virginia, 92 percent of seniors enrolled in Part D this year were satisfied with their coverage. The phone survey was conducted in November by Voter Consumer Research Inc. of Woodlands, Texas. The survey had a 3.2 percent margin of error.
“My mother was very suspicious of the whole Part D plan - she thought it was a government scam to get money out of old people,” Rafferty said. “I had to fight with her the first year to let me sign her up for a plan. She’s a believer in part D now. She was astounded at the savings on the prescriptions.”