Medicare Prescription Drug Plan

Definition

The Medicare prescription drug plan is a federal program that provides insurance coverage for prescription drugs. It is open to anyone who has

Medicare Parts A and B. People only need to be Medicare-eligible. Some people elect not to purchase Part B insurance but are still eligible for D, which provides coverage for doctor visits, lab tests, and hospital stays. The drug plan is available to people 65 years of age or older and people who have a qualified disability.

Description

Medicare is a federal health insurance program for people who are age 65 or older and who meet certain requirements. It is also open to disabled persons younger than age 65 and people with end-stage renal (kidney) disease. It is part of the Social Security Administration and began in 1965. In 2003, Congress authorized an expansion of the program to include prescription drug coverage. This coverage, called Medicare Part D, became effective on January 1, 2006, and is available to all Medicare recipients. Medicare prescription drug coverage is actually provided by private insurance companies who contract with the Medicare program and who receive governmental subsidies to provide prescription insurance. People with Medicare are not automatically covered by Part D. They must enroll in a prescription drug plan and pay a monthly premium and co-pays for prescriptions. Enrollment is not mandatory but people who do not join a drug plan when they first become eligible may have to pay a penalty if they join later.

There are two types of Medicare plans that cover prescription medication. One is the original Medicare Prescription Drug Plan in which prescription drugs are obtained through a private insurer. The second is called Medicare Advantage in which participants receive all of their Medicare services through a third-party private insurance plan, including private health maintenance organizations (HMOs), preferred provider organizations (PPOs) , special needs plans, and fee-for-service plans. Like private insurance plans , there is a monthly premium for Medicare prescription drug coverage. As of 2007, nearly 24 million Americans had enrolled in the Medicare prescription drug plan.

Costs

As of 2008, the monthly Medicare (Parts A, B, and D) premium was about $100–150. Most Part D plans also charge an annual deductible (up to $250), a monthly premium, and a co-payment for drugs. These fees vary from plan to plan, state to state, and within counties or parishes within a state. All drug plans have to provide coverage that is at least as good as the standard (original) Medicare Part D Plan. Some plans offer additional coverage and cover more drugs than the original plan, but the monthly premiums are higher. Medicare recipients who have limited income and resources may qualify for federal help in paying part or all of their monthly premium costs. Most Medicare prescription drug plans have a coverage gap. This means that when someone covered by a Part D plan reaches a certain amount of money paid out for covered drugs, coverage is basically suspended, and the Part D recipient must pay for the entire cost of prescriptions. The cap varies from plan to plan but is generally around $2,500 as of 2008. This coverage gap is commonly known as the “doughnut hole.” People in the doughnut hole have to spend about $4,050 (as of 2008) of out-of-pocket money in a calendar year before catastrophic coverage resumes. Under catastrophic coverage, Medicare drug plans resume coverage, and the Part D recipient then pays either a co-insurance amount (a percentage) or a co-payment (a dollar amount) for each prescription for the rest of the calendar year. All of these amounts vary depending on which plan the person has. Not all prescription drugs are covered by Part D plans. Each plan has a formulary that lists the drugs that are covered, and the formulary varies from plan to plan. There are certain types of medications that are not covered by Part D, including those for erectile dysfunction (Viagra, Levitra, and Cialis), benzodiazepines (used to treat anxiety ), barbiturates , and drugs for weight loss or weight gain. Generic medications almost always cost less than brand name drugs. Sometimes brand name drugs are not covered at all if another brand name drug provides the same benefit as the non-formulary drug but is cheaper. All Part D plans have a process to request coverage of a drug that is not on their formulary. All plans are required to cover most drugs in six categories: anti-psychotics, anti-depressants, anti-convulsants, immunosupressants, cancer , and HIV/AIDS.

Choosing a plan

There are several points to consider when choosing a plan or changing plans (which can be done once a year). These include:

• Coverage—Check to see if the plan covers the prescription drugs the Part D enrollee is taking. All plans are required to have available a list (Formulary) of every drug that they cover.
• Cost—Check the cost of each prescription drug in each plan available. Monthly premiums, deductibles, and the beneficiary's share of cost varies from plan to plan.
• Convenience—Make sure the plan the Part D beneficiary chooses includes the pharmacy or pharmacy chain the person wants to use. Pharmacies vary by plan. Some plans allow for receiving prescriptions through the mail as well. Often, this is cheaper than picking up prescriptions at a pharmacy.

People can get personalized help in choosing the plan best suited for them by calling Medicare at (800) 633-4227 or by visiting the Medicare Web site at http://www.medicare.gov, going to the Search Tools option, and selecting compare “Medicare prescription drug plans.”

Viewpoints

There was much controversy and confusion when the Medicare prescription drug plan was introduced in 2006. Medicare was late in releasing details of the plan, and many seniors found the guidelines, options, and enrollment process long and confusing. The Medicare help line was overwhelmed with calls, and many seniors reported it took weeks or months before they could get their calls answered. The confusion extended to pharmacies, which often gave misinformation or were unsure themselves of the rules and procedures. Most of this confusion was resolved after the first year as the initial influx of enrollees subsided and details of the program became better known. However, some senior advocacy groups say there were problems as of 2008 with the Medicare prescription drug program. A review of 21 studies that looked at prescription payment polices reported in 2008 that co-pays and annual caps on drug expenditures could make vital medications unavailable to people who need them. The main issue was determining what is the best way for insurers to pay for medications, according to the Web site Senior Journal (http://www.senior-journal.com.). Many Medicare prescription plans encouraged patients to use cheaper generic drugs, even if they were less effective than brand name drugs. Reduced expenses for the insurance companies often led patients to Some individuals did not get the drugs they needed, including life-sustaining drugs, the study reported.

KEY TERMS

Doughnut hole —A gap in insurance coverage between the point when the annual regular coverage limit is reached and before catastrophic coverage takes effect.

Formulary —A list of prescription medications that are covered by a particular insurance plan.

Health maintenance organization (HMO) —A healthcare organization whose members pay fees and receive medical care from participating physicians, hospitals, pharmacies, and other providers.

Preferred provider organization (PPO) —A healthcare organization composed of physicians, hospitals, pharmacies, and other providers that provide healthcare services at a reduced fee. A PPO is similar to an HMO, but care is paid for as it is received instead of in advance.

The Medicare prescription drug program was supported by AARP , the largest senior advocacy group in the United States with 22 million members. It offers information to its members through the “Health” section of its Web site (http://www.aarp.org). Information is available in English and Spanish and can be viewed online, or publications can be ordered online and mailed to members.

Resources

BOOKS

Consumer Guide to Medicare Prescription Drug Coverage. Jupiter, FL: Weiss Ratings, 2006.

The New Medicare Prescription Drug Coverage: What You Need to Know. Washington, DC: AARP, 2005.

PERIODICALS

Moller, Glen. “Generic Drugs Can Help Seniors Avoid Medicare Part D Doughnut Hole.” Managed Care Outlook (August 1, 2007): 1(4).

Moskowitz, Daniel B. “Medicare Prescription Drug Coverage—Part D Program Continues to Be Popular with Seniors.” Drug Benefit Trends (March 1, 2007): 103.

Paul, Reid. “Medicare Part D Sees Flurry of Late Changes.” Drug Topics (January 22, 2007): 26.

Schneider, Mary Ellen. “Medicare Part D Hassles Continue in Second Year.” Clinical Psychiatry News (June 2007): 62.

ORGANIZATIONS

AARP, 601 E St. NW, Washington, DC, 20049, (888) 687-2277, http://www.aarp.org.

Centers for Medicare and Medicaid Services, 7500 Security Blvd., Baltimore, MD, 21244-1850, (800) 633-4227, http://www.medicare.gov.

Ken R. Wells