The Blind Leading the Blind: Anatomy of a Medicare Part D Monthly Premium

At least once a week one of my coworkers on our Medicare Part D team will come to me with what they think is a simple job. ‘I just need you to write a short apology letter. It should be simple,” Karen will tell me. “I have a simple project for you. All you have to do is edit this web page for Medicare Open Enrollment,” Tina will say. “We just need to ‘Medicarize’ this brochure, so it will be simple,” Chris will state.

Inevitably, I always respond, “Nothing is simple with Medicare Part D.” And then as what appeared to be an easy project becomes more complex with each new logistical problem that arises, I say, “I told you so.”

One of the most complicated “parts” of Part D – and thankfully, one that I have absolutely nothing to deal with – is what we call the annual Medicare bidding process. As our director of actuarial services notes, the process of bidding on Medicare prescription drug plans is a lot like putting together a giant puzzle. When the puzzle is completed, you end up with a monthly Part D premium of $32.07 or $41.29 or some other odd amount that seems completely random.

Unlike the commercial insurance market where providers set the premiums for a plan, Medicare Part D premiums are determined as part of a blind bidding process that begins in June of each year. Every Part D provider submits bids to the Centers for Medicare & Medicaid Services (CMS) without knowing what the competitors will offer. Then CMS sets premiums based on how the bids average out. Premiums may vary from what providers submitted depending on what their competitors bid and how they differ from expectations.

A few large competitors dominate the marketplace, so the ability to predict premiums, profitability and potential membership growth requires an educated guess as to how other Part D providers will bid. The guesswork can be quite complex and requires a detailed understanding of trends and potential growth strategies in the marketplace.

For example, is a large Part D provider going to try to maximize profits by bidding a higher number or are they looking to increase membership and so plan on submitting a lower bid to CMS? Data and historical trends are helpful, but it’s really more of an art than a science when it comes to making a good bid that has competitive premiums and features that Medicare beneficiaries want in a Part D plan.

During the next two months, CMS will thoroughly review each bid. In August, CMS will release the bid results, giving marketing departments and employees like me just barely enough time to create all the plan materials and marketing communications for Medicare Open Enrollment in mid-October.

Medicare Extends Open Enrollment Period For People Affected By Sandy

I just got some good news from The Medicare News Group for Medicare beneficiaries who are still coping with damage from Hurricane Sandy in the northeast:

The Centers for Medicare & Medicaid Services (CMS) has extended the December 7 deadline to enroll in a private medical or prescription drug plan for next year if you have been affected by Hurricane Sandy.

According to CMS, beneficiaries hit by the storm can still enroll after the midnight Dec. 7 deadline if they call Medicare’s 24-hour information line,1-800-Medicare (1-800-633-4227).  Representatives will be able to review available plans and complete the enrollment process with them over the phone. Medicare officials have not set a new deadline but are encouraging beneficiaries to make their decisions soon if possible.

The opportunity to enroll in a plan after Open Enrollment ends on December 7 applies to everyone affected by Hurricane Sandy, including those who do not live in the affected areas but rely on help making healthcare decisions from friends or family members who do live in the affected areas.

“This is a really important recognition by CMS to accommodate Medicare enrollees affected by Hurricane Sandy,” said Leslie Fried, director for policy and programs at the National Council on Aging, a Washington, D.C., advocacy group.  I wholeheartedly agree.

 

Why Medicare star ratings are important to you during Open Enrollment

Given the choice of staying in a 2-star hotel in a seedy neighborhood for $60 a night or a 4-star hotel near the ocean for $100 a night, I’m going to opt for the 4-star hotel. Even though it will cost me more, I know that the higher star rating will mean I’m getting a higher-quality room, better service, and more value for my vacation dollars. I may even get an indoor pool, hot tub, and gym, which right away makes it worth paying $40 more.

The same is true for Medicare coverage. I would never recommend a Medicare Part D or Medicare Advantage plan with a low star rating to a friend or loved one. Low star ratings in Medicare mean lower quality. And lower quality often means less value, poor customer service, and less customer satisfaction.

Each year, the Centers for Medicare & Medicaid Services (CMS) rates how well health plans and prescription drug plans perform in different categories, such as customer service, prescription drug safety, and member satisfaction. The Medicare star ratings are important because they help you compare the overall quality of plans during Medicare Open Enrollment. Star ratings range from 1 star (poor performance) to 5 stars (excellent performance), so look for a plan with high ratings (4 or 5) to ensure you get the level of service and safety you deserve.

Use the following resources to get Medicare plan star ratings:
• The overall plan star ratings are available at the Medicare Plan Finder.   
• You can call 1-800-MEDICARE (1-800-633-4227). TTY users: 1-877-486-2048.
• You can call your plan’s customer service number and ask for the plan’s Medicare
   star rating.

More high-quality Medicare plan choices in 2013
According to Health and Human Services Secretary Kathleen Sebelius, more 4- and 5-star plans will be available in 2013 than ever before.
In 2013:
• People with Medicare will have access to 127 four- or five-star Medicare Advantage plans. In 2012, people with Medicare had access to only 106 four- or five-star plans, which served only 28 percent of enrollees.
• People with Medicare will have access to 26 four- or five-star prescription drug plans, which currently serve 18 percent of enrollees. This is an improvement from 2012, in which only 13 plans with four or five stars serve just 9 percent of enrollees.

Switch to a 5-star Medicare Advantage or Part D Plan at any time during the year
If you’re fortunate enough to find a 5-star plan that serves your area and meets your health and budget needs, you can enroll in that plan any one time during the year, starting as early as December 8, 2012.

Medicare Open Enrollment Deadline Extended for Those Who Seek Help

In my very first Med Diva blog, I predicted that the phones would be ringing off the hook at the Centers for Medicare & Medicaid Services (CMS) and other senior assistance centers this week. I was right on the mark — and I didn’t even need to put on my “Carnac the Magnificent” hat.

According to counselors at State Health Insurance Program (SHIP) offices, the Medicare Rights Center, and other various agencies on aging, the new December 7 deadline for Part D Open Enrollment has created a crush of last-minute enrollment requests. “Our phones have been ringing off the hook,” said Gina Upchurch, executive director of Senior PharmAssist, which helps seniors choose drug plans and Medicare Advantage health plans.

To accommodate the late rush, federal officials are extending the December 7 deadline for two days for some people—in particular, for those who contact any of several sources of assistance on or before the close of business Wednesday (today). According to a Brian Cook, a spokesman for CMS, seniors can call counselors at SHIPs, the National Council on Aging, local agencies on aging, and the Medicare Rights Center, or call Medicare’s toll-free information line at 1-800-633-4227. Anyone who asks for assistance must be enrolled in a plan by 12:01 a.m. Sunday.

“We are committed to providing Medicare beneficiaries with the information and time they need to make these important decisions about their care,” said Cook.

That’s all well and good, Mr. Cook, but what about all those people who don’t find out about this extension and don’t reach out for help?  I know a lot of senior advocates agree that everyone deserves an extra two-day pass or more, especially those 10 percent of seniors or so who are still not aware that today is their last day to switch their Medicare Part D plan.

Spread the Word: Only 2 Shopping Days Left for Medicare Part D Open Enrollment

There may still be 19 shopping days left until Christmas, but this year the shopping season for Medicare Part D ends on December 7. That means there are only 2 more days (after today) in which you can switch your prescription drug plan for 2012.

You can thank Healthcare Reform for the early deadline this year: The 2010 Patient Protection and Affordable Care Act mandated the earlier enrollment period to give you more time to weigh your plan options and the drug plans more time to complete paperwork and get membership cards and plan materials to beneficiaries by January 1, 2012. The intention was good, but unfortunately, the execution has been poor.

In fact, one recent survey shows that almost 20 percent of seniors are still unaware of the Wednesday deadline.

According to the survey conducted by Opinion Research Corporation and sponsored by PlanPrescriber, one in five seniors 65 years of age and older with Medicare prescription drug coverage were still aware that the Open Enrollment period ends December 7. The national phone survey was conducted between October 28 and October 31, 2011.

Please spread the word

Hopefully, this number has improved during the past month. Ideally, 100 percent of seniors are now aware of the early deadline. However, it’s more likely that a small percentage of beneficiaries are still in the dark about the deadline – which means we must still work hard to get the word out. That’s why I’m asking all of my readers, Facebook friends, and Twitter followers to talk to all the seniors in your lives and remind them that the last day to switch their Medicare Part D plan is Wednesday, December 7.  Thank you everyone!

When to enroll in a Medicare Part D prescription drug plan

Today I spent the day monitoring phone calls from my company’s Medicare Part D plan enrollment call center. Several seniors who called to enroll in our plan said they were very confused about the Open Enrollment deadline, especially those people who are eligible for both Medicare and Medicaid.

To help clear up some of this confusion, here is some basic information about when you can enroll in a Part D plan or switch Part D plans. In a nutshell:

• Most people can enroll in a Part D plan when they first become eligible for Medicare and then once a year after that during Open Enrollment if they want to switch plans.
• People who receive both Medicare and Medicaid can enroll when they first become eligible and then once a month after that if they want to switch plans.

Enrolling for the first time: Turning 65 or new to Medicare

If you are new to Medicare, it’s important to enroll in a Part D plan as soon as you become eligible (during your Initial Enrollment Period) to avoid paying any late-enrollment penalties. When first eligible for Medicare, you have a full 7 months to enroll in a Medicare Part D plan:
• Up to 3 months before you turn 65
• During the month of your 65th birthday
• Up to 3 months after you turn 65

If you join a prescription drug plan during the 3 months before you turn 65, your coverage will start on the first day of your birth month. If you join during or after your birth month, your coverage will begin on the first day of the next month.

Here are 3 examples to show you when your coverage will go into effect:
Let’s assume your 65th birthday is May 3, 2012. That means your Initial Enrollment Period is from February 1 – August 31, 2012 (3 months before to 3 months after your 65th birthday).

1. If you join a Part D plan before your birth month (February 1 – April 30, 2012)
Your coverage will begin the first day of your birth month: May 1, 2012

2. If you join a Part D plan during your birth month (May 1 – May 31, 2012)
Your coverage will begin: June 1, 2012

3. If you join a Part D plan after your birth month (for example, July 1 – July 31, 2012)
Your coverage will begin: August 1, 2012

When you can switch Part D plans

If you are already enrolled in a Part D plan, you can generally switch plans only once a year during Open Enrollment (also called the Annual Election Period). Open Enrollment runs from October 15 through December 7 for the 2012 plan year. Outside this time period, you may make other changes during the year only if you qualify for a Special Enrollment Period (SEP).

For example, you may qualify for an SEP for the following reasons:
• You lose creditable coverage (that is, coverage as good as or better than Medicare) through no fault of your own  (for example, your former employer or union stops providing coverage for retirees)
• You move to a new permanent address that is not in your current plan’s service area
• Your current plan no longer offers Part D coverage
• You receive Medicaid or get Extra Help with Part D costs
• You are enrolled in a State Pharmaceutical Assistance Program (SPAP)

Dual Eligibles can switch plans once a month

If you have both Medicare and Medicaid, you are considered a “dual eligible” individual. “Dual eligibles” may change plans once every thirty days. You can ignore the Open Enrollment dates and the December 7th deadline because they do not apply to you.

Expect higher Medicare co-pays for brand-name drugs in 2012

I’ve said it once and I’ll say it a hundred times: Lower-priced, FDA-approved generic drugs are the best way to go if your doctor says they are right for you and your condition. Here’s just one more reason why.

Starting in 2012, your Medicare prescription drug plan co-payments for many brand-name drugs could go up significantly.*

According to a recent study by data analysis firm Avalere Health, co-payments (the portion of the prescription cost that you pay the pharmacy) for Tier 3 preferred brand-name drugs will increase by 40 percent on average next year, from $29.01 in 2011 to $40.60.  Preferred brands are those drugs for which your Part D plan has negotiated a discount with the manufacturer.

In addition, Tier 4 non-preferred brands will average nearly 30 percent more, from $71.52 this year to $91.67. You’ll also pay a bigger share of the cost of specialty drugs—about 32 percent compared to about 27 percent this year. That may not sound like much, but when you consider specialty drugs can cost $1,000 or more per prescription, a 5-point cost-share increase could be huge.

 

Co-pays for generics will remain stable or decline

Now for the good news. According to this same study, co-pays for preferred generics will remain stable (about $3.79 on average) in 2012 while co-pays for non-preferred generics will decrease to $9.90 on average. This drop is a 43 percent reduction from the current average cost of $17.29.

According to Avalere CEO Dan Mendelson, the study emphasizes how important it is for Medicare beneficiaries to review all of their Part D plan’s costs before Open Enrollment ends December 7.

As I’ve mentioned before, if you’re shopping around for a new Medicare Part D plan, you should look for a plan that offers the lowest total cost based on the medications you take. It doesn’t help to choose a plan with the lowest monthly premium, only to find out weeks or months later that you’re going to pay more in the long run because the co-payments for your medications are higher in this “low-cost” plan or the cost of your annual deductible has increased.

* Avalere figures shown are averages for the entire Medicare Part D program. Actual costs could vary markedly by medication, plan, and region of the country.

No “Oops” Allowed: 3 Facts to Remember About Medicare Part D Open Enrollment

In honor of Texas Governor Rick Perry’s most recent gaffe during the CNBC Republican presidential debate, I want to briefly review three questions about Medicare Part D Open Enrollment that seniors have often asked me. You don’t want to go “oops” when it comes to something as important as your health, so please remember the answers!
    
1. Do I have to re-enroll every year if I want to keep the same prescription drug plan?
No, if you are happy with your plan and it is meeting your needs, you do not need to do anything – your coverage will automatically continue each year. However, if your current plan has earned less than 4 stars from Medicare, or will no longer cover one or more of your medications in 2012, you should consider switching to another plan that is better suited for you.

It’s also a good idea to use the Medicare Plan Finder tool each year to make sure you’re not paying more than you have to for your prescription drugs. Recent studies show that seniors can save a few hundred dollars or more by doing some research and switching Medicare Part D plans.

2. My spouse and I use the same insurance company for our health coverage. Is it a good idea for us to enroll in the same prescription drug plan, too?
For most couples, it is not a good idea to choose the same Medicare Part D plan. Chances are you have different health needs and take different medications, so picking the same plan is usually not the best option.

For example, you may take only one generic medication, so your needs are minimal. Therefore, you would probably choose an inexpensive plan that has a low monthly premium but no extra bells and whistles. Your spouse may be taking several medications for a chronic condition such as diabetes or asthma, and therefore needs a plan that offers better coverage, a higher star rating, and a mail-order pharmacy for extra savings. It does not make sense for you to pay more for coverage you don’t need, or for your spouse to be enrolled in a plan that does not meet his or her prescription drug needs.

3. If I sign up for a Medicare Part D plan today, will my coverage start immediately?
When you join a Medicare plan during the Open Enrollment period, your new coverage will not begin until January 1st of the following year. So if you join a plan on November 15, 2011, your coverage will begin January 1, 2012. You will continue to be covered under your current prescription drug plan through December 31. You will be automatically disenrolled from your current plan as soon as your new coverage begins on January 1st.

And don’t forget: Open Enrollment ends early this year on December 7!

’Tis the season to shop: Seniors could save hundreds of dollars by switching Medicare Part D plans

Don’t Miss Your Chance to Save: Open Enrollment Ends December 7

Whether you’re a senior on Medicare, a caregiver for a Medicare beneficiary, or just helping your parents with their money matters, ’tis the season to go shopping. Even if you are satisfied with your current prescription drug plan, you could save a few hundred dollars or more by comparison shopping and choosing a plan that better meets your needs.

According to a recent survey of 71,000 people enrolled in Medicare prescription drug plans, 81 percent lowered their costs by an average of $298 by switching plans from 2006 to 2007. This number is promising, because it shows that even though Medicare Part D is complex and often confusing, seniors are using available tools and services to choose plans that cost them the least based on their prescription drug use.

Despite the results of this one survey, however, advocates like me still have a long way to go to convince Medicare beneficiaries that it’s a good idea to compare plans every year during the Open Enrollment period. According to the Centers for Medicare and Medicaid Services, only about 7 percent of the 17 million seniors on Medicare drug plans switch plans each year. Another survey conducted by KRC Research confirms CMS’s findings, with two out of three seniors stating they are unlikely to shop around for Med D plans. Medicare experts say this suggests that millions of beneficiaries could be paying more than they have to for prescription drug coverage.

Top 5 Reasons Why Seniors Don’t Make a Switch

According to senior advocates and insurance advisors, there are several reasons why people are hesitant about switching their drug plans:

1. Many believe that once they join a drug plan, they should stick with it long term, just as they stayed with the same private health insurance plan for many years before enrolling in Medicare.
2. A lot of seniors aren’t as aware as they should be of changes to the Part D benefit or of the opportunity to change plans during the Open Enrollment period.
3. With up to 30 or more drug plans on the market in each state, many seniors get overwhelmed or frightened at the thought of changing plans, even if another one would better suit their prescription drug needs and lower their costs.
4. Although Medicare’s easy-to-use Plan Finder tool allows beneficiaries to enter their medications to find a plan with the lowest overall annual costs, many seniors are uncomfortable going online or unable to use computers.
5. Many seniors are very satisfied with their current plan—even if it does cost more—and feel that “if it’s not broken, why fix it?”

Yes, shopping around and switching plans does take some time and can be a bit daunting.  But keep in mind these two good reasons for adding this annual task to your “to do” list:

• Medicare plans can and often do make annual changes to their offerings or formulary (list of covered drugs), which can increase drug costs by thousands of dollars, or make it more difficult for you to get certain drugs.
• If your drug needs have changed since you last enrolled in a Part D plan, your current plan may not be meeting all of your needs.

Remember, the Medicare Part D open enrollment season, which began October 15, continues only through December 7. If you need more information on Medicare Part D coverage, visit the Medicare website or call 1-800-MEDICARE.

New online tool available for comparing Medicare Part D plans

Although I always promote use of Medicare’s Plan Finder Tool during Open Enrollment to help you find the right Medicare Part D plan, today I came across another handy prescription drug plan search tool on the Q1Medicare website. This tool gives Medicare beneficiaries a chance to review all of the different Part D plans available for 2012 for their areas quickly and easily. Plus, it has advanced options to help you further refine your search.

What is the maximum you want to pay?

One of the best features of this tool is the option to limit your search by the maximum monthly premium, annual deductible, and co-payment for generic drugs you want to pay. For example, if you don’t want to pay any more than $50 a month for your premium, you can enter this amount and eliminate all the plans that are out of your budget. You can also select the type of coverage you need in the Coverage Gap (aka, donut hill), such as no coverage at all or coverage for generic drugs.

The tool also allows you to get other information about the plans, such as which plans offer mail service, how many people nationwide (or in your state) are members of the plan, and the number of drugs covered on the plan’s formulary (list of covered drugs). You can also ask the tool to display plans by premium (lowest to highest or vice versa), star ratings, state enrollment, or plan name.    

Remember, Open Enrollment ends early this year – December 7^th.  So to avoid a last-minute rush—especially smack in between Thanksgiving and the winter holidays—consider doing your homework now. This new plan comparison tool is a great place to start.