What to Know When Selecting a Medicare Prescription Drug Plan

Background of Private Medicare Prescription Drug Plans

  • Legislation design by the President G.W. Bush administration and approved by Congress in 2003, resulted in the creation of a new privatized Medicare prescription drug (PDP) and Medicare Advantage (MA) plans for millions of elderly and disabled individuals. However, there was no responsible plan to pay for it. No new federal revenue sources were included nor were there cuts to existing federal expenses. Instead, federal subsidies were authorized for these new privatized Medicare benefits and these private insurers could also retain profits above and beyond their costs.
  • Traditional Medicare insurance which was already serving over 40 millions Americans in 2003, was not allowed to offer prescription drugs or other new benefits that private Medicare Advantage plans included.
  • It should also be noted that private insurers are allowed to pick and choose where and how long they want to sell plans compared to Traditional Medicare that is available to everyone that is eligible in the country.

  • As a result, two new publically funded, private health insurance plans were sold to the public on the assumption that they would cost less than Traditional Medicare and provide more benefits. However, today Medicare Advantage and PDPs cost taxpayers $328 billion/annually in federal subsidies.
  • The 2003 legislation also prohibited Medicare from negotiating drug prices on behalf of subscribers (as is done with the VA and Medicaid) and outlawed the importation of prescription drugs from Canada and other countries where they are sold at lower prices. As a result, prescription drug costs have sky-rocketed over the past 15 years.
  • Today, 43 million people are enrolled in private Medicare Part D drug plans either in stand-alone PDP how many people or integrated within Medicare Advantage plans.
  • In addition, the federal Social Security Administration subsidizes the cost of private insurer PDP premiums, deductibles and medications for 13 million low income individuals. This represents 28% of all PDP enrollees.

Important Facts to Know about PDPs

  • Today, the vast majority of Medicare Advantage Plans today include prescription drug coverage. However, Traditional Medicare and private Medicare Supplemental (Medigap) plans don’t include drug coverage, so a separate private PDP is needed for your medications and to avoid a potential late enrollment penalty.
  • Medicare-approved stand-alone PDPs are sold primarily by large, for-profit insurers such as Aetna/CVS, Cigna, Humana, SilverScript, United HealthCare and WellCare.
  • Private insurers are allowed to charge subscribers plan premiums, deductibles and co-pays/co-insurance for medications in addition to the federal subsidies that they receive.
  • Insurers also exclude specific drugs from their formulary, establish restrictions, such as requiring prior insurer authorization, limit medication quantities and require that subscribers take lower-cost drugs before higher-cost drugs.
  • Each insurer establishes their own drug classifications into pricing tiers and there are significant differences among PDPs regarding the drugs that are excluded/included and the premiums, deductibles, co-pays/coinsurance that subscribers are required to pay.
  • Although PDPs are not allowed to deny coverage or charge higher premiums to subscribers with pre-existing conditions and chronic diseases, insurers have latitude with establishing restrictions and subscriber charges.
  • There are no annual maximum out-of-pocket expenses for prescription drugs in either Medicare Advantage or stand-alone PDPs, so the cost of drugs can create serious financial problems for families.

  • In a 2019 study, reported in Health Affairs Journal, more than half of seriously ill Medicare enrollees face financial hardship with their medical bills with the cost of prescription drugs being the leading problem.
  • Unlike the rest of the developed world, in the US there is no public insurance for medications or government negotiation of drug prices, with the exception of the VA and Medicaid. As a result, the cost of medications to treat millions of Americans with life-threatening and disabling diseases such as diabetes, cancer, multiple sclerosis, Hepatitis B, inflammatory diseases, respiratory diseases, organ transplants are the highest in the world.
  • The cost of medications has become a huge burden on taxpayers; federal, state and local governments; employers; patients and families. This results in more costly health care with poorer outcomes, increases in disability, reduced work productivity and results a major cause of personal bankruptcies in the US.

A  Review of PDPs Available in Rochester, New York

Popular plans offered by Aetna/CVS, Cigna, Express Scripts, Humana, SilverScripts, United HealthCare (UHC)  and WellCare reveal the following observations.

  • Each insurer generally offers 3 plans with different premiums and deductibles. Premiums range from Humana’s Walmart Value plan $13.20/mo. with a $435 deductible, to SilverScript’s Plus plan $91.20/mo. with a $0 deductible.
  • It is common that low/no premium plans have higher deductibles, co-pays/co-insurance and limitations.
  • Only 3 plans have no deductibles (down from 7 plans in 2019) but all have high premiums. The 3 plans include SilverScript Plus with a $91.20/mo. premium, United HealthCare AARP Preferred with a $85.60/mo. premium and WellCare Value Plus with a $76.60/mo. premium.  These plans are not affordable for most people, since the average annual premium is over $1,000 and doesn’t include the cost of your medication.
  • All insurers have developed strong financial disincentives for subscribers who use “non-preferred” brand name and generic medications by establishing medication exclusions, deductibles and up to 50% co-insurance for non-preferred brand name Tier 4 drugs.
  • Many insurers also charge higher prices for “standard” versus their “preferred” and “mail order” pharmacies. However, insurers are generally weak in informing current and prospective enrollees of the cost differences among pharmacy options.
  • There are significant differences among insurers in specific brand name drugs that are either excluded from their formulary or placed into either Tier 4 or Tier 5. And, there are differences among insurers regarding the price of T4 non-preferred brand name  vs. T5 specialty medications. To illustrate, it is not uncommon that T4 non-preferred drugs are billed at a high rate of 32%-50% compared to T5 speciality drugs that are billed at 25%-33%. 
  • An insurer’s “Preferred generic and brand name” medications are not the most cost-effective medications with the least side-effects. “Preferred” medications reflect the deals that the insurers have made with the pharma companies to push their drugs over their competitors drugs.
  • This often occurs with medications for common conditions including rheumatoid arthritis, multiple sclerosis, diabetes and various neurological, cardiovascular, inflammatory, autoimmune and respiratory diseases and cancer.

  • Issues of drug cost, insurance prior approvals and access to treatment is a major source of conflicts among insurers, physicians and patients. So, it is very important to compare plans to understand the differences in coverage, restrictions and cost among plans that you are considering.

In summary, in considering PDPs it is important to confirm if the plans:

  • Do they include your medications and at what cost?
  • Is there a deductible expense on your drugs?
  • What restrictions are imposed on your prescribed medications?
  • Does the plan have preferred retail and mail-order pharmacies?
  • What is the reputation of the insurer with your doctors and pharmacies?

And finally, what is the total annual cost to receive your medications from each plan and the comparative differences in the PDP quality, costs and benefits.

Resources

Free resources are available to help you in comparing costs, coverage and quality ratings among plans. These include:

Medicare Plan Finder

Provides detailed information from Medicare to compare Quality Star ratings, your estimated annual and monthly cost (premiums, deductibles, co-pays/co-insurance) for your specific medications and pharmacies among available Prescription Drug Plans and Medicare Advantage Plans sold in your community.

unknown

State Health Insurance Assistance Program

Provides free personal and group information/assistance with Medicare issues and questions.

images

MedicareRights

Helps people with Medicare understand their rights and benefits, and navigate the Medicare system

References

Congressional Budget Office, 2019 reports

Center for Medicare & Medicaid Services (CMS)

Health Affairs Journal

Kaiser Family Foundation, 2019 Data Briefs and Fact Sheets

Medicare.gov

Medicare Rights Center

Medicare Trust Fund Board of Trustees, 2019 Annual Report

 

 

What to Look for in a Medicare Prescription Drug Plan

 

Background

  • Approximately 43 million or 72% of the people on Medicare are enrolled in Medicare-approved Prescription Drug Plans (PDP)
  • If you have Original Medicare (with or without) a Medigap plan, you likely need a PDP to have drug coverage and avoid a future penalty.
  • You need to have a PDP from the month that you were initially eligible for Medicare, or 2006 when PDPs were first established or you have subject to a penalty.
  • Most Medicare Advantage Plans include prescription drug coverage along with medical coverage.
  • There are no annual maximum out-of-pocket prescription drug expenses for either Medicare Advantage or stand-alone PDPs. Original Medicare & Medigap plans do not cover prescription drug expenses, you need to buy a separate PDP.
  • Medicare-approved stand-alone PDPs are sold primarily by large, for-profit insurers such as Aetna/CVS, Cigna, Humana, and United HealthCare. Medicare enters into contracts with private insurers to provide PDPs that meet specific requirements.
  • Private insurers are also allowed to charge subscribers plan premiums, deductibles and co-pays/co-insurance for medications. They can also exclude specific drugs from their formulary, establish restrictions: such as requiring prior insurer authorization, limit medication quantities and require that subscribers take lower-cost drugs before higher-cost drugs.
  • Each insurer establishes their own drug classifications into pricing tiers and there are significant differences among PDPs regarding the drugs that are excluded/included along with the premiums, deductibles, co-pays/coinsurance that subscribers are required to pay.
  • Although PDPs are not allowed to deny coverage or charge higher premiums to subscribers with pre-existing conditions and chronic diseases, insurers have latitude in establishing restrictions and subscriber charges.
  • Private insurers receive over $95 billion a year in taxpayer subsidies for PDPs. This represents 71% of the total prescription drug plans costs.
  • Unlike the rest of the developed world, in the USA there is no public Medicare insurance for medications or government negotiation of drug prices with the exception of the VA. As a result, the cost of medications in the United States, to treat millions of Americans with life-threating diseases such as diabetes, cancers, multiple sclerosis, Hepatitis B, inflammatory diseases, respiratory diseases, organ transplants are the highest in the world.
  • The cost of medications has become a huge burden on taxpayers; federal, state and local governments; employers; patients and families. This results in more costly health care with poorer outcomes, increases in disability, reduced work productivity and becomes a major cause of personal bankruptcies in the USA.
  • Medicare Quality Star Ratings -Medicare uses a Quality Star Rating System to measure how well Medicare Advantage and Part D plans perform. Medicare scores how well plans perform annually in several categories including quality of care and customer service. Ratings range from Poor (1 star), Below Average (2 Stars), Average (3 Stars), Above Average (4 Stars) and Excellent (5 Stars). Details of specific PDP and Medicare Advantage plan ratings are published on Medicare.gov.

A review of major insurers and their 23 PDPs in Upstate New York including plans by Aetna, Cigna, Express Scripts, Humana, SilverScripts, United HealthCare (UHC)  and WellCare reveal the following observations.

  • Each insurer generally offers 3 plans with different premiums and deductibles. Premiums range from $15.50 a month with a $415 deductible (WellCare Value Script) to $92.50/mo. with a $350 deductible (Express Scripts Medicare Choice)
  • Seven plans have no deductibles with premiums ranging from $39.70/mo.                    (SilverScriptsChoice) to $80./mo.(Humana Enhanced & SilverScript Allure).
  • The Medicare Quality Star ratings of plans vary from 3.5/5 Stars ( 3 SilverScript plans & UHC AARP Preferred) to low-rated plans (EnvisionRx Plus 1.5/5 & three Cigna plans 2/5 Stars). Other plans offered by Aetna, Humana, WellCare, and two UHC plans each received a 3 Star rating.
  • All insurers have developed strong financial disincentives for subscribers who use “non-preferred” brand name and generic medications by establishing medication exclusions, deductibles and up to 50% co-insurance for Tier 4 drugs.
  • Many insurers also charge higher prices for standard pharmacies and 30-day supplies with lower prices for “preferred” retail and mail-order pharmacies. However, many consumers and health care providers are unaware of what pharmacies are preferred and the cost differences that can be substantial.

PDPCostChronicDiseases

  • There are significant differences among insurers in the number of brand name and specialty drugs that are excluded in their formularies. Some diseases including rheumatoid arthritis, multiple sclerosis, diabetes and various neurological, cardiovascular, inflammatory, autoimmune and respiratory diseases have higher-cost Tier 4 & 5 medications and more excluded drugs than other conditions. This creates major conflicts among insurers, physicians and patients.
  • The co-insurance rate for Tier 4 “non-preferred generic and brand” medications in many cases is double the co-insurance rate for more costly Tier 5 specialty drugs. Many plans exclude specific medications or place them in Tier 4, that are used to treat common conditions such as diabetes, inflammatory, autoimmune and cardiovascular diseases in favor of other specific drugs sold by competitor drug companies. Insurers have increased “excluded medications” by 160% in the past 4 years and boast about saving billions of dollars each year by reducing access to treatment and raising patient expenses.

Differences in Subscribers Satisfaction with Plans

One dimension of Medicare’s quality ratings is the analysis of subscribers’ level of satisfaction with their specific PDP or Medicare Advantage plan. Medicare looks at a number of areas including quality of services and customer service. Two area that are important to look at include turnover rates (the percentage of subscribers who leave the plan) and the major reasons for leaving. The following analysis focuses on 23 PDP plans sold in Upstate New York.

SilverScript

  • SilverScript’s three plans: Choice ($37.90), Plus ($73.80) and Alure ($80/mo.) stand out from other plans in that they all have a 3.5/5 Star rating; none have deductibles and they have a low subscriber turnover rate of 6%  but 34% of subscribers who left complained about costs.

UHC

  • UHC AARP 3.5 Star Preferred plan ($77.70) with no deductible) and had a low 7% turnover rate but 56% of the people who left, complained about the high costs.
  • UHC other two plans: AARP Saver Plus ($59.90/mo. + a $415 deductible) and AARP Walgreens ($28.10/mo. + $415 a deductible) have a lower, 3 Star rating and 15% turnover rate with 45% of subscribers who left, complained about costs.

Humana

  • Humana‘s three plans earned 3 star Medicare ratings including its Walmart Rx ($35.70/mo.+ $415 deductible)Preferred Rx ($37.40/mo. + $415 deductible) and Enhanced ($80.50/mo. with no deductible. The plans all had 11% turnover and 31% subscriber complaints regarding costs.

WellCare

  • WellCare’s plans all were rated 3 stars rated and ranged in price from Value Script ($15.50/mo.+ $415 deductible), Classic ($37.90/mo.+ $415 deductible) and Extra ($81.50/mo. with no deductible) all had consistent turnover rates of 13% and 33% complaints about costs.

Aetna

  • Aetna’s 3 star Select ($17.70/mo. + $330 deductible) had 12% turnover and 33% complaints about costs while their 3-star Value Plus plan ($58.80/mo. with no deductible) had 24% turnover and 53% complaints about costs.

In summary, in considering PDPs it is important to confirm if the plans:

  • Include your medications and at what costs
  • Have a deductible expense on your drugs;
  • Have restrictions on access to your medications,
  • Have preferred retail and mail-order pharmacies,
  • Have high subscriber turnover and/or have other significant negative issues identified by subscribers and/or Medicare.

And finally, what is the total annual cost to receive your medications from each plan and the comparative differences in quality, costs and benefits.

Resources

Free resources are available to help you in comparing costs among plans. These include:

Medicare Plan Finder

Provides detailed information from Medicare to compare Quality Star ratings, your estimated annual and monthly cost (premiums, deductibles, co-pays/co-insurance) for your specific medications and pharmacies among available Prescription Drug Plans and Medicare Advantage Plans sold in your community.

unknown

State Health Insurance Assistance Program

Provides free personal and group information/assistance with Medicare issues and questions.

images

MedicareRights

Helps people with Medicare understand their rights and benefits, and navigate the Medicare system

References

Congressional Budget Office, 2018 reports

Kaiser Family Foundation, 2018 Data Briefs and Fact Sheets

Medicare.gov

Medicare Rights Center

Medicare Trust Fund Board of Trustees, 2018 Annual Report

The Doctor-Patient Rights Project

 

 

Buyer Beware in Selecting a Medicare Prescription Drug Plan (PDP)

med prices

Individuals who use original Medicare A & B for their medical care, with or without a Medigap Plan (not a private Medicare Advantage plan), need to check the formulary and costs of various private insurer PDPs that are available in your area very carefully. And, don’t assume that an insurer that provides a good value for one type of plan (eg. MA or Medigap) provides the same quality, value and coverage in their PDPs. Unlike MA plans that include the same medication formulary, PDPs often have different medications, deductibles and co-pays among their various plans, so check carefully.

An example is United HealthCare, who is a leader in sales and value for their Medigap plans in NYS, ranks much lower in sales & value for their MA and PDPs. There are also dramatic differences in the drug formularies and subscriber cost among the 3 different UnitedHealthCare PDPs that are offered.

The UHC Rx Preferred plan includes over 3,500 drugs on their formulary and has their most expensive premium ($91/mo. but does not include a deductible). By comparison, the RX Savers Plus plan excludes over 400 drugs that are included in the Preferred plan for $55/mo. and includes a $405 deductible. And their lowest cost premium plan is the UHC RX Walgreens plan for $26.50/mo. with a $405 deductible, but it doesn’t cover 500 medications that are included in the high premium cost UHC Preferred plan.

Other popular insurers such as SilverScripts, Humana and Cigna that offer multiple PDPs in NYS also share similar issues which makes it difficult for an individual to clearly understand and choose a plan that includes their medications at a price they can afford.

Medicare.gov provides a valuable, free Plan Finder service that allows you to anonymously enter your medications and your preferred pharmacies and then compare the total cost of different plans (including MAs and PDPs) from different companies that you are considering.

Once you enter your medications You will also see differences in:

  • Your medications that are not included on the plan formulary.
  • Your medications that have restrictions.
  • Your brand named medications that have generic alternatives.
  • Your cost or a one month or a 3 month supply of medications from different pharmacies.
  • And, finally the total comparative cost differences of each plan including their premiums, deductibles and co-pays that you are considering.

unknown-1

Another nice added feature is that your Plan Finder medication data can be printed and is stored anonymously online. It can be retrieved (with your assigned Drug List ID number and Password date for your future review and updating.

Investing some time in objectively comparing coverage and costs differences of your Medicare plan options can save you money and problems in the future.

If you or your family members needs assistance, you can contact the free State Health Insurance Assistance Program at http://www.shiptacenter.org or 800-Medicare.

unknown

 

Aetna’s Pharmacy Controversy Affects 400,000 and Medicare Allows Subscribers to Disenroll

According to the 2/3/15 Kaiser Health News (KHN) report, Aetna’s errors and omissions in providing prospective and existing Medicare subscribers with accurate network Pharmacy information has affected 400,000 individuals.

The inaccurate and confusing information can affect the individual’s actual cost of their medications as well as potentially ending subscribers’ relationships with their preferred pharmacist and most convenient pharmacies. As a result, the federal Center for Medicare and Medicaid Services (CMS) is offering Aetna subscribers to either select a participating pharmacy that meets their needs or use a special enrollment period through February 28, to disenroll from Aetna and enroll in another Part D prescription drug plan.

Aetna, like a number of other insurers, has established a pharmacy benefit program that utilizes their size and national clout to drive hard deals with drug companies and pharmacies. They want to reduce their cost in exchange for offering a higher volume of business with less competition to their preferred drug companies and pharmacies.

Insurance companies through Pharmacy Benefit Managers (PBM) establish a complex structure of classifying drugs in different classes or tiers with associated co-pays or co-insurances and then add different restrictions such as requiring deductibles,prior authorization, step-therapy and quantity limit for subscribers.

Aetna’s program is a little more complex than other insurers in that they have a limited number of network pharmacies (especially local vs. national) that are grouped into either standard pharmacies and  a smaller number of preferred pharmacies. They also operate their own Aetna Rx Home Delivery pharmacy.

Aetna does offers subscribers choice for the meds and pharmacies that they use, but at a very high price. To illustrate, in the Aetna Medicare Premier PPO plan offered in Rochester, NY, if you want to use a “non-preferred brand” name medication on Aetna’s list of approved meds you will have to pay 50% of the cost for a 30 day supply vs. $45 for a “preferred brand”. Your co-pay for a 90 day supply of a “preferred generic” will be $8 (80%) more at a “standard” vs. ‘preferred” pharmacy and your co-pay for a 90 day supply of a “non-preferred generic” will be $18 (180%) more than a “preferred generic’ medication. Each insurance company through their PBM choses which drugs to include/exclude and in what tier and co-pay/co-insurance. These decisions vary among companies and are only subject to broadly written Medicare rules.

While Aetna has made a major push to expand their presence in the national Medicare Advantage market for 2015, they have not been ready for last year’s Fall Medicare open enrollment period. They heavily advertised and marketed their zero premium “Premier” plan but I have witnessed and heard numerous consumer complaints about their call centers and website regarding the accuracy of participating doctors and hospitals and being very slow in establishing provider contracts.

Hopefully Aetna will learn from this year and make changes in their plans that are responsive to seniors needs and priorities.