Four Strategies for Reducing your Medicare Drug Costs

Why is the Cost of Medications so High?

Medications are a major out-of-pocket expense, especially for anyone with acute or chronic medical conditions. Unlike other countries with national health insurance systems, our Congress has supported the financial interests of Big Pharma and themselves and over interests of citizens to have access to affordable health care.

In return,Big Pharma has been a major source of more than $10 million a year in political contributions. In addition, they spend more on marketing to health care providers and  consumers than they spend on research and development of new medications to safely treat serious health conditions.

Medications that are critical to individuals’ health and well-being, are substantially more expensive in the US than in Canada, Europe and other countries.

Pharmaceutical companies are free to establish high prices for their government-protected patented drugs and this results in high consumer and government debt due to taxpayers subsidizing Big Pharma.

The US spending on pharmaceuticals is approximately $300 billion dollars a year. Political efforts to reform these  out-of-pocket expenses for medicare recipients have been very limited primarily to pharma companies agreeing to offer discounts to Medicare patients once they exhaust their initial Medicare coverage limits.

However, there are some strategies that consumers can use  to reduce and control their  medication expenses.

Strategies for Lowering Your Drug Costs

1. Know The Differences in Medication Cost and Coverage Before you a Select a Plan.

Medicare Advantage (MA) and stand-alone Prescription Drug Plans (PDP) are difficult to compare and can be very confusing for most people. However, not knowing the consequences of the plan that you select can be very costly.

Use Medicare’s Plan Finder at http://www.medicare.gov to compare the cost of medications among the different plans available in your service area. If you are changing insurance plans, don’t assume that the plan that you are considering includes the same medications and pharmacies.

Plans can often differ in their restrictions (eg. prior approval, quantity limit & step therapy) that they place on medications as well as the significant differences in Tiers and associated  co-pay/co-insurance that they establish for each medication.

Insurance companies and their pharmacy benefit managers (PBM) establish the plans detailed policies and procedures including:their drug formulary, medication restrictions, negotiated prices paid to pharmaceutical companies and pharmacies,  preferred medications and pharmacies, and the co-pays and co-insurances that consumers will pay.

2. Use your Plan’s Preferred and Mail Order Medications along with in-network, Preferred Pharmacies, Costco & Sam’s

Consumers can experience considerable savings by using your plan’s generic and preferred brand name meds whenever possible; making use of your plan’s mail order pharmacies for maintenance drugs and using your plan’s in-network and preferred pharmacies. And don’t forget to check with Costco and Sam’s. Many people don’t realize, you don’t have to be a club member to benefit from their low drug prices.

3. Check your Eligibility for Financial Assistance Programs.

If your income is low enough, your medical expenses are high enough or you meet other special criteria, you may be eligible for low or no cost medications.

Financial assistance can come from the federal (e.g.. Medicare’s Extra Help, Medicaid, Veteran’s Administration), state (State Pharmacy Assistance Programs such as NYS’s EPIC), private (Pharmaceutical Assistance Programs) or from specific clinical research programs.

4. Make Lifestyle Changes and Reduce Your Need for Medications

While you don’t have control of your genes, there are many things you can do for your health and reduce your risk of medical problems and need for medications.

Eating a healthy diet, exercising, getting adequate sleep, managing your stress, not smoking, limit your intake of alcohol, caffeine, sugar, salt, fat and processed foods will go a long way in reducing your risk of diabetes, cardiovascular diseases, hypertension, cancer and many other debilitating conditions can substantially reduce your quality of life and increase the need for costly medications.

When it comes to your health care, ‘buyer beware”.

Remember, no one has a greater interest in your health  or your pocketbook than you.

Feel free to share your comments and general questions.We all can learn from one another. Go to http://www.healthplanadvisor.org for more articles.

Thanks

Jim Sorrentino

Which is Better: Original Medicare, Medigap or a Medicare Advantage Plan?

Seniors and individuals, who are on Medicare, due to a disability, have three options for the type of Medicare plan they can select:

  1. Original Medicare with/without optional Prescription Drug Plan (PDP)
  2. Original Medicare plus a Supplemental (Medigap) Plan with/without PDP
  3. Medicare Advantage (MA) plan with/without PDP.

No plan is ideal for all people. Each plan option has its own strengths, limitations, cost and coverage differences.

Which Type of Plan Should You Select?

You want to be able to comfortably afford your insurance that is protecting you against the cost of treating illnesses and diseases. You should look for the plan that provides you with the best value of your desired coverage at a reasonable total cost.

Remember, you can change the type of plan that you want, need and can afford each year during the open enrollment period (October 15 to December 7).

Original Medicare Strengths:

  • Provides comprehensive inpatient, outpatient and rehabilitation medical services.
  • 50 years old and accepted by providers nationwide in every state and county.
  • If you and your employer(s) paid into Medicare for at least 10 years, there is no additional premium for Part A – hospitalization coverage.
  • Your monthly Part B outpatient premium ($122/mo. as of 2016) is deducted from your Social Security benefit. Your premium is higher, if income is greater than $85K individual/$175K couple.
  • No restricted networks, required prior approvals or expensive out-of-network charges
  • If you are hospitalized, you pay a deductible of $1,288.
  • If you use Part B outpatient services, you pay a deductible of $166 and then 20% co-insurance for most medical services.
  • Charges for outpatient services are established by Medicare and are relatively easy to understand compared to Medicare Advantage plans.
  • Medical office visits commonly result in a $10-$20 charge.
  • If you want more coverage, you can generally join a Medigap plan during the year.

Limitations of Original Medicare

  • Many costly treatments including: surgery, chemotherapy, dialysis and radiation therapy are routinely performed on an outpatient basis and Medicare and Medicare Advantage plan subscribers can pay substantially more with a 20% co-insurance, than a fixed dollar co-pay.
  • There is no annual maximum out-of-pocket limit of medical expenses as compared to MA plans.
  • Medications are not included. A separate Prescription Drug Plan needs to be purchased.

Medigap Plan Strengths

  • Plans use Medicare as the primary coverage that is widely accepted across the country.
  • Plans are available in every state.
  • There are 11 different Medigap plan designs that pay for different Medicare medical deductibles, co-pays and co-insurances for an annual premium.

Medigap Plan Limitations             

  • State insurance departments and Medicare regulate Medigap plans. As a result, states have different requirements regarding: when you can enroll, waiting periods for pre-existing conditions, allowed differences in rates based on age, marital status, health status and smoker status.
  • There may be up to a 6-month delay in coverage, when you enroll, if you have pre-existing medical conditions.
  • Plan premiums vary widely by insurers, states and counties for the same coverage. For example, you can buy a comprehensive Medigap Plan F in Rochester NY from 11 different insurers with premiums ranging from a high of $356.36/mo. (Bankers Conseco) to a low of $180.50/mo. (United HealthCare). This represents a 97% premium difference for identical coverage.
  • Plans only cover services that are part of Original Medicare not Medicare Advantage plans.
  • Plans do not cover prescription drugs. A separate PDP is required along with additional out-of-pocket expenses for any premiums, deductibles, co-pays and co-insurance charges.
  • Private insurers sell plans directly and through agents and brokers. Many people need and can benefit from independent advice to select the best plan that meets their needs and budget.

Medicare Advantage Plan Strengths         

  • There are three major MA plan designs: Health Maintenance Organization (HMO), HMO-Point of Service (HMO-POS) and Preferred Provider Organization (PPO). Plan designs are sold in specific geographic areas where subscribers live and where provider networks have been established.  Coverage and costs vary significantly among plans.
  • MA plans often include extra benefits, not included in Original Medicare, such as a fitness club, an allowance for dental cleanings, glasses/contacts and occasionally hearing aids.

Medicare Advantage Plan Limitations

  • MA plans are much more common in urban (86%) versus rural (13%) states and counties.
  • People may experience limited choices and high costs for MA plans
  • Insurers are under no obligation to offer or continue MA plans.
  • HMO plans restrict services to network providers.
  • HMO-POS plans allow limited out-of network services (generally $3,000 to $5,000).
  • PPO plans do not have a limit on out-of-network services but providers are under no obligation to serve out-of-network patients or accept the insurers’ rates.
  • MA plans usually charge subscribers more for using out-of-network providers.
  • Plan subscribers are expected to follow the plan’s terms, polices and procedures which can be restrictive, costly and frustrating.

Conclusions

  • Medical debts are a major cause of personal bankruptcies.
  • You have a significant responsibility to select a Medicare Plans that meets your medical needs and budget.
  • If you lead a healthy lifestyle with few medical  and prescription drug needs; a high quality, low premium MA plan with prescription drugs coverage may meet your needs and provide you with benefits that will save you money on extras (e.g. health club, eyewear allowance, preventative dental care etc.).
  • If you: live in a rural area with few good MA options; and/or you have multiple medical problems that are expensive to treat; and/or you want maximum provider choices, you may want to consider a Medigap and PDP plans that meets your needs and budget. These plans can be very competitively priced and offer a good value for your needs.
  • If your area has a variety of MA plans- compare what they offer for your needs, what providers are in their networks, what restrictive policies they have and what is their estimated total annual cost.

Resources to Help You Select a Plan

  • Medicare.gov is a valuable resource with information including: Original Medicare, Medigap, Medicare Advantage and PDP. Medicare.gov also has a Personal Plan Finder feature to assist you in comparing MA and PDP plans and estimating expenses in your area.
  • Contact your State Insurance Department Each state has an Insurance Department that regulates Medigap plans. All states have websites that includes Insurance Department information insurers that offer Medgap plans, their comparative costs and other helpful information.
  • Contact SHIP- State Health Insurance Assistance Program- 877-839-2675 to locate a free local program to provide personal assistance in selecting a Medicare program that is right for you.

How to Choose the Best Medicare Plan for You?

October 15th was the start of Medicare’s Annual Open Enrollment Period that runs through December 7th. During this time, Medicare subscribers can make changes from their current plan.

Changes can include joining or changing:

  • a Medicare Advantage (MA) plan;
  • a Medicare Supplemental (Medigap) plan;
  • a Prescription Drug Plan (PDP) or
  • returning to original Medicare coverage.

Background

Original Medicare is the government run health plan for seniors and disabled people that utilizes private doctors, hospitals and other service providers.

By comparison, Medicare Advantage plans, Prescription Drug plans and Medicare Supplemental plans are all run by private insurance companies. These including a variety of for-profits (eg. UnitedHealthcare, Humana, Aetna), national non-profit organizations such as Blue Cross and many regional non-profit insurers.

In addition, some individuals maybe eligible to receive their health insurance, as a retiree or spouse, through their former employer. Service veteran may be eligible for health care and/or medications from the federal department of Veteran Affairs. And, many people may be eligible for federal, state or county financial assistance with the cost of their Medicare insurance, medical services and medications.

The Importance of Having a Good Medicare Plan

Selecting the best plan for you or your family member is a very important responsibility since the consequences can be significant both to your pocketbook and your ability to receive needed health care from your preferred providers.

However, the vast majority of people seldom make any changes in their insurance unless a crisis occurs. Your decision to stay or change your insurance plan in the Fall, generally results in a year long commitment, with few exceptions.

The Importance of Objective, Comparative Plan Information

Consumer Reports provides over 7 million subscribers with independent, comparative information and ratings of thousands of products and services. This information has proven to be highly valued by prospective buyers for over 70 years.

Health insurance is a billion dollar, a very large and profitable private industry with millions of dollars spent on marketing and sales. Understanding the complexities of different health insurance options and eligibility for financial assistance is a very challenging task. People should look for assistance early from knowledgeable family and friends, non-profit agencies and professionals with objective expertise in this field.

Keep in mind, the advertisements, written literature and presentations that you receive from insurance companies and agents are aimed at selling you their policies for a commission. They are not assessing your medical needs, priorities, budget, comfort with risk and then sharing with you, all of your options.

An insurance broker, who represents multiple companies, may provide you with broader options but is still making their living by selling the plans they represent, not providing you with objective, comparative information to help you make an informed decision.

How to Avoid Problems and Select the Best Plan for You.

  1. Invest time to become aware of the services your buying, what is excluded and your full costs as you would for any major purchase or commitment.
  2. Define your current medical needs
  3. Identify any upcoming or potential for major tests, surgeries or intensive treatment
  4. Prioritize your preferences – what is most important to you?
  5. List your preferred service providers ( eg.doctors, hospitals, pharmacies)
  6. List out your generic and brand-name medications and their costs.
  7. Define your travel plans for the next year.
  8. Define what you can afford to pay for your insurance and health care.
  9. Compare your Medicare plan options and their advantages, disadvantages and cost:
  • Original Medicare,
  • Medicare Advantage plans,
  • Supplemental (Medigap) plans
  • Employer plan (if available)
  1. What to look for in plans
  • Do your preferred providers have contracts with the plan(s) that you’re considering?
  • What is the extent of out-of-network coverage?
  • What is the cost difference between in and out-of-network services?
  • Are all of your medications and preferred pharmacy covered and at what cost?
  • What are the plan’s premiums, deductibles, co-pays and co-Insurance rates?
  • What is annual Maximum Out-of- Pocket limit of your health care expenses?

Resources to Help You Evaluate Various Medicare Advantage and Prescription Drug Plans

  • Medicare.gov – 800-633-4227, is an excellent resource with general information and specific help in evaluating the differences among Medicare Advantage and Prescription Drug Plans (which are used with original Medicare and Medigap plans). If you are not comfortable using a computer, ask for help from a family member, friend or social agency.
  • State Health Insurance Assistance Program (SHIP) 877-839-2675– Medicare contracts with states, counties and non-profit organizations throughout the country to provide individuals with personalized education, support and assistance. These free services include comparative plan information, information regarding eligibility for financial assistance as well as help with selecting a Medicare plan, enrolling, and resolving problems.

To subscribe to blog for more articles on the political/economic dimensions of Medicare plans and policies and their impact on patients’ access to affordable, effective treatment go to http://healthplanadvisor.org.

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.