Medicare Part D Drug Plan was created by Congress in 2003 to aid the elderly, disabled, and sick persons in affording their medication. Coverage for the drug plan went into affect January 1, 2006. This plan was called the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA) (Cassel, 2005). The final bill that passed, was influenced by drug-company and health insurance lobbyists and focused mainly on the needs of those industries instead of the seniors it was meant to serve (Slaughter, 2006).
These plans are operated by insurance companies and some private companies that have been approved by Medicare. Part D is optional only if a person carries health insurance that includes prescription coverage. If at retirement age a person has not signed up for a Medicare drug plan they will pay a penalty for the rest of their lives for signing up at a later date. My father took four prescribed drugs in 2007. One was not covered by the plan and the other three were non-generic. In 2007 my Dad paid over $3,300. 00, while ‘The Plan’ paid $1940. 00.
Can you imagine how much he would have paid if he took 5, 7, or 10 different prescribed medications? Due to the increased cost of prescription medication he will pay more for those three non-generic drugs in 2008. Medicare’s Part D Drug Plan was created to aid the country’s older population with the cost of prescription drugs, but instead the plan increases profits for the insurance industry. Insurance companies need to work together to develop uniform guidelines and a pricing structure that is affordable to all senior citizens. How are the insurance companies involved in this prescription drug plan?
Many elderly had to enroll in a plan by a swiftly selected deadline or face increased premiums each month beyond it, which clearly benefits the insurance companies. Older Americans had little time to choose among the many plans available (Slaughter, 2006). The insurance companies, which are contracted with or subsidized by Medicare, provide the coverage for prescription drug costs (Gustaitis, 2007). Just about all of these plans associated with Part D require a person to pay a yearly deductible, a monthly premium, co-payments for each prescription drug, and 100% of the drug cost while in the “gap” (Gustaitis, 2007).
And the plans can change formularies whenever they want to without penalty, increasing prices on doctor prescribed drugs. As Louise Slaughter stated in her article Medicare Part D – The Product of a Broken Process in 2006, “Doctors, not insurance-company bureaucrats, should be deciding which drugs their patients need”. Because there are so many different companies involved, the plans policies and features vary greatly. The way the plan works is a person will pay a monthly premium for the drug coverage the same as they do on any insurance policy.
This monthly premium is set by the insurance company that carries their plan. For this explanation the amounts used will be from the AARP MedicareRX Plan for 2007. Starting January 1 a person enrolled in this plan will pay a monthly premium of $27. 40. For each prescription that is bought there is a co-pay of $28. 00, unless the drug is classified in the formulary in tier 3 which has a higher co-pay. They will continue to pay only the co-pay until the total of the co-payments and the amount Medicare has paid for their medications combined reach a set total amount of $2400. 00.
For example, if the co-payments equal $460. 00 and Medicare’s portions of the prescriptions were $1940. 00, the total drug cost would be $2400. 00 (aarpmedicarerx. com). This is considered the first plateau or first level reached in the plan. The second plateau or level of the plan is what the industry calls “the doughnut hole” or “gap”. While in the gap people must pay 100% of their drug costs until their out-of-pocket costs of $3850. 00 is reached. Included in the $3850. 00 is the $460. 00 paid in co-payments and the total of all drugs paid at 100%, which would equal $3390. 00.
Most drugs paid for while in the gap are discounted from the retail price in an agreement between Medicare and the pharmacy. Once the out-of-pocket total maximum has been reached, the third plateau or level called “catastrophic coverage” takes affect. During the catastrophic coverage the co-payments drop to 5% and Medicare picks up the reminder of the cost of the drug (aarpmedicarerx. com). In 2007 the standard Medicare Part D benefit will work as follows: •Monthly payments of at least $25 per month depending on the plan. •A deductible of the first $250 in prescription depending on the plan.
Some plans do not have a deductible. •After the deductible is met, Medicare will pay 75% of the drug costs up to $2400. This amount is the total of co-pays and the amount Medicare pays. •After the $2400 is met, the senior pays 100% of their drug costs until the total spent equals $3850. This amount is the total of co-pays plus the total drug cost paid at 100%. It does not include the amount Medicare has paid. •After a person has spent a total of $3850 on their prescription drugs, Medicare will then pay 95% of the drug costs (ssll. benefitscheckup. org).
Sounds simple right? Well now the insurance companies step in making changes and the plan begins to get more complicated. Every year the insurance companies raise all cost associated with their particular policies. So now there are bigger premiums, larger co-payments, and some amounts not covered by the plan, so seniors will still be spending large out-of-pocket amounts for medication (Matthews & Berman, 2004). Each insurance plan has a list of drugs that they cover called a formulary (Gustaitis, 2007). Within the formulary the drugs are divided into tiers.
Co-payments are based on the tier that the drug is in and range from tier 1, the least expensive drugs, to tier 3 the most expensive drugs. Each insurance company plan is allowed to add or drop drugs from their formularies and move drugs from one tier level to another throughout the year. An insurance company can also drop a drug in the middle of the year, but must continue covering the drug for anyone taking it until the next reenrollment period, at which time a new plan will have to be chosen that covers that drug (Gustaitis, 2007). Although not used a lot there is a fourth tier that is for specialty drugs only.
Some plans use a flat-rate or assign a percentage co-pay to the higher tier drugs (Gustaitis, 2007). Other characteristics of the insurance company plans that they have control over are requiring prior authorization for a drug, using step therapy, limiting the quantity, participating at certain pharmacies, and having preferred pharmacies (Gustaitis, 2007). The amounts in the table below are what my father has paid in the last two years and what he will be paying in 2008 through AARPMedicareRX. As his caregiver I signed my Dad up for Medicare Part D during the initial enrollment period in 2005.
Since Dad had no prescription coverage and after reading the information sent to him in the mail I thought Medicare Part D’s drug plan was a good option. But after being in Medicare Part D for two years and doing more research on the drug plan it turns out not to be as good an option as we were all led to believe: 2006 2007 2008 •Monthly Premium $ 25. 03 $ 27. 40 $ 29. 70 •Deductible $ . 00 $ . 00 $ . 00 •Co-payment – Tier 2 $ 28. 00 $ 28. 00 $ 30. 00 •Co-payment – Tier 3 $ 55. 00 $ 55. 00 $ 75. 40 •Total Drug Costs $2250. 00 $2400. 00 $2510. 00 •Out-of-pocket $3600. 00 $3850. 00 $4050.
00 In 2008 AARPMedicareRX offered three different plans. Most insurance companies that offer Medicare Part D coverage will offer their customers more than one plan to entice them to stay with that company. The amounts for the monthly premiums, co-payments, and deductible vary from company to company and range from as low as $25. 00 and up. Each year a person has the option of staying with the Part D plan and insurance company that they are currently with or during Nov. and Dec. looking around for another insurance companies plan that they feel will better suit their needs. Enrollment in Medicare Part D is optional with a twist.
If a person becomes eligible for Medicare, they have 90 days prior and 90 after receiving Medicare to sign up for the drug plan. If you decide not to join the Medicare Prescription Drug plan when you first are eligible but at a later date enroll, a penalty of 1% per month will be assessed for each month that you did not join. And they will have to pay this penalty for the rest of their lives. For example say my father, who did not have private, employer, union, or other creditable health insurance did not sign up for Medicare Part D right away. Instead he waits 15 months to enroll.
His monthly premium on the Medicare Part D plan that he chooses would be 15% higher for the rest of his life (Gustaitis, 2007). The only exception to this is if a person already has prescription coverage through a private insurance carrier such as a previous employer. Then if by chance they lose this insurance coverage they will have 63 days to find other insurance with prescription coverage or enroll in Medicare Part D without penalty (Gustaitis, 2007). Since we don’t know what the future will bring, some people are saying that it may be wise to sign up when first eligible to avoid the penalty.
But with the monthly premiums, co-pays, and total out-of-pocket always going up it would seem more logical to invest in a good health insurance policy that provides prescription coverage. The money that would be paid in when first eligible, if the plan were not used for several years, would just be more profit money for the insurance companies.. It does not seem like Medicare Part D is helping the elderly afford their medication.
It seems like the insurance companies are making a profit off of the elderly by raising fees every year, putting name brand drugs that don’t have a generic equivalent in the higher price tiers, removing well known drugs from their formularies, and putting so many restrictions on their plans. Why can’t the insurance companies, the health care industry, the drug manufacturers, doctors, and the government work together to come up with one plan that works with all levels of income and cover all the drugs on the market. The drug manufacturers are not going to change the prices of the drugs that they make, but may restrict the constant rise in prices if the everyone would come to an agreement.
Why should our elderly, who are just trying to live, have to continue to pay for a prescription coverage that is not really helping them? Congress, the insurance companies, and the American public need to develop a plan that REALLY DOES aid our elderly and not put more money in the pockets of the insurance industry. As a potential caregiver to a spouse, parent, or disabled person knowing how Medicare Part D operates and the cost involved is a must. Read everything available on Part D, visit the Medicare website, and compare different insurance plans.
Ask questions of the insurance companies as to how they decide which drugs to cover and which ones to drop. Don’t let a loved one spend more on their medication than they have to because of the insurance companies. Medicare Part D Drug Plan was created to help the elderly. Let’s make sure that it does! References Cassel, C. (2005).
Prescription Drugs The Challenge Remains. Medicare Matters: What Geriatric Medicine Can Teach American Health Care. Berkeley University of Ca. Press. Retrieved Jan. 14, 2008 from http://libsys. uah. edu:3059/Reader Fact Sheet: Medicare Prescription Drug Coverage.
Retrieved December 14, 2007, from National Council on Aging Website: https://ssl1. benefitscheckup. org. Gustaitis, J. (2007). Mastering Medicare Part D. Arthritis Self-Management, 8(6), 12-15. Matthews, J. L. & Berman, D. M. (2004). Social Security, Medicare and Government Pensions. Berkeley: Calif Nolo. Retrieved Dec. 11, 2007 from http://libsys. uah. edu:3059/Reader Medicare Part D AARP MedicareRX Plans – Cost estimate. Retrieved December 15, 2007, from http://www. aarpmedicarerx. com. Slaughter, L. , M. P. H. (2006). Medicare Part D – The Product of a Broken Process. Retrieved on Jan. 10, 2008 from www. neim. org.