Medicare Part D Coverage: Does The "D" Stand For Dazed?
By: Amos Goodall
On January 1, 2006, prescription drug coverage will be offered as Medicare, Part D. However, unlike some other Medicare programs, where coverages are defined by the government, prescription drug plans will be offered by private suppliers. The average senior citizen (and disabled person on Medicare) will have to expand his or her vocabulary to include several new terms discussed in this article. The most important two are:
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PDPs Prescription Drug Providers, or private insurance companies offering drug benefit programs in your service area
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Formularies Lists of drugs approved by PDPs, which generally will be the only prescription drugs they will pay for.
There is also a warning from the Social Security Administration about possible scams discussed at the bottom of this article.
The new plan is different from the Medicare-approved drug discount cards, which phase out by May 15, 2006, or upon enrollment Part D, if earlier. Medicare prescription drug plans provide insurance coverage for prescription drugs.
Like other insurance, if you join you will pay a monthly premium (generally estimated to be around $32.20 in 2006, according to a recent article in the Chicago Tribune) and pay a share of the cost of your prescriptions. Costs will vary depending on the drug plan you choose. Drug plans may vary in what prescription drugs are covered, how much you have to pay, which pharmacies you can use, and what supplemental benefits you choose. All drug plans will have to provide at least a minimum level of coverage. However, with all the options that are expected to be available, the Center for Medicare Education suggests insurance products be offered I a “bewildering array.” It is important to study plans carefully, enlisting the advice of insurance and other knowledgeable professionals. It is important for you to choose a plan that meets your prescription drug needs.
For the first year, for people already on Medicare or becoming eligible by January 1, there is an enrollment period between November 15, 2005, and May 15, 2006. If you join by December 31, 2005, your Medicare prescription drug plan coverage will begin on January 1, 2006. If you join after that, your coverage will be effective the first day of the month after the month you join. In general, you can join or change plans once each year between November 15 and December 31, called the “Annual Election Period.”
Persons on Medicare who are also eligible for some degree of prescription drug coverage through Medicaid (called “Dual Eligibles”) will may lose their prescription Medicare drug coverage. These include many persons in the various programs offered in Pennsylvania like Health Horizons, Medical Assistance for Workers with Disability (MAWD) and a number of other programs. In an Operations Memorandum, the Department of Public Welfare indicates that its offices will be involved in outreach efforts in conjunction with the federal government whose direct mail outreach campaign will begin in October. Many Dual Eligible persons should be automatically assigned to a Part D program, but they should check with their County Assistance office or APPRISE to be certain. The fees discussed below are reduced or even eliminated for some Dual Eligible persons. Medical Assistance may continue to pay for some drugs that were available for Dual Eligible persons but which are not offered through Part D programs
While the PACE and PACENET programs are expected to continue, participants MUST COMPLETE AND SUBMIT THE MEDICARE PART D APPLICATION WHEN IT IS RECEIVED.
The standard Part D benefit will require a monthly premium payment to the insurance company, and individuals will have a $250 deductible. The next $2,000 in drug costs will have a 25% insurance co-payment, and for drug expenses in excess of $2,251, there is no coverage until a person has incurred out of pocket expenses of $3,600 (this is being called the “Doughnut Hole)”. Finally, for drug expenses after that, there is a $2 co-insurance charge for generic drugs and $5 (or 5% whichever is greater) for other drugs. Thus, a person with $5,100 in drug expenses on a standard Part D coverage will pay nearly will pay nearly $4,000 out of pocket, assuming the drugs prescribed are on the insurance company’s formulary!
Of course, insurance companies will probably offer different plans, with various optional coverages available at additional costs. Medicare promises to have information available on the various benefits and formularies available at its website, www.medicare.gov, (Or 800-MEDICARE) after October 13, 2005. Already, there is a great deal of general information on the
site. One example of the difference in plans may be to establish “preferred” relationships with certain pharmacies whose locations must be within a certain mileage radius of plan participants, although plans will also be required to provide access to mail order pharmacies.
It is important for persons currently on Medicare to enroll prior to the effective date of Part D, because there will be penalties assessed against eligible persons who fail to do so, including higher premiums for the rest of their lives. The exception to the requirement of enrollment is if you have a current plan that provides better benefits than the standard Part D coverage (called “Creditable Coverage”), such as through some employers for example. If you do not have such a plan, you will be penalized if you do enroll in Part D at the rate of 1% for each month you failed to enroll. The latest available information is that PACE and PACENET are not considered creditable coverage.
It is important to check an insurance company’s list of drugs which are offered (called its “Formulary”) prior to enrolling in a program, because while there is a process to go outside a company’s formulary, there is no right to an exception. Incidentally, companies are permitted to change their formularies even after a person enrolls, after giving sixty days notice. Formularies are required to include at least two drugs from each therapeutic category or class of drugs. While the US Pharmacopeia has issued guidelines on what therapeutic classes should be included in each plan’s formulary, Part D plans do not have t follow this guidance. Theoretically, the CMS will review each plan’s drug list to be certain that they do not discriminate towards certain beneficiaries. Over the counter drugs and those excluded from Medicaid coverage are among those which are not covered by Part D plans.
Finally, it is important to stay tuned. Insurance companies are scrambling to put insurance policies together, all of which should meet minimum Plan D guidelines but which will undoubtedly contain various “bells and whistles” which a particular person may or may not actually need. In addition to the highly regarded health insurance providers offering programs in central Pennsylvania, there may be some questionable companies trying to move into the market, just like some of the living trust mills that have recently been prosecuted by the Pennsylvania Attorney General. Although final regulations have been issued, Commonwealth and federal agencies have not started to implement those regulations. Clients of the County Assistance Office have a great resource, and persons eligible for services from the Area Agency on the Aging can access knowledgeable professionals there as well. The Pennsylvania Departments of the Aging and Public Welfare have websites which will be offering information as it becomes available, as will the federal Social Security Administration and the CMS. Finally, experienced local insurance representatives can best explain the plans their companies offer.
The Social Security Administration has indicated that it MAY be calling applicants, if some questions on the application were not answered or if they cannot read the answer. They may also call to resolve discrepancies between answers on the application and information they receive from other Federal agencies about the applicant's income or resources. According to the Social Security Administration, “When an SSA employee calls for more information, he or she should never ask you for bank account numbers, credit card numbers or life insurance policy numbers. In most cases, an SSA employee will not ask for a Social Security Number. The only time we will do so is if the number on the application is invalid and we need to know the correct number. If a person who receives a call from someone claiming to be an SSA employee is at all suspicious, he or she should hang up and call SSA back at 1-800-772-1213 to confirm that the call is legitimate.”