May cause confusion: Medicare prescription drug benefit plan options create problems for participants
By Sarah Kucharski • Staff Writer
Arthur Pitts sat in a plastic lawn chair waiting to pick up prescriptions from The Village Pharmacy in Waynesville Monday afternoon (March 13).
At 73, he is one of the nation’s many Medicare subscribers. His coverage comes through a Blue Cross Blue Shield plan, which he says has been fairly reliable so far.
However, Pitts has yet to sign up for prescription drug coverage.
“You have to have a PhD to figure it out,” he said.
Consequently, Pitts is paying for his eight prescriptions out of pocket — a cost that reached $4,000 last year. Paying for the prescriptions is only possible due to an adequate income.
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“I don’t see how anybody without an average income or insurance can pay for it,” he said.
Pitts is not alone. When it comes to buying insurance of most any type — car, homeowners, health — consumers often fight a losing battle as they try to make sense of institutional jargon. The wording used, conditionals applied, fine details and costs of competing policies make it a sellers’ market. Customers might either purchase more than they need just to feel safe, or get taken in by companies offering discounted coverage that, when needed, may turn out not to be worth the premiums paid.
Medicare’s prescription drug coverage is no exception. The system is notoriously difficult to understand, and as the first enrollment period since coverage was revamped comes to a close on May 1, many have chosen not to deal with it at all rather than try to make sense of the multitude of plans offered.
“Thousands, thousands,” said Floyd Rogers, an insurance broker at Haywood Insurance Services Inc. in Waynesville, of the number of people who have yet to enroll due to confusion.
Pitts plans to contact Blue Cross Blue Shield directly to see what they offer by way of drug coverage under Medicare.
“I don’t want to get confused anymore than I have to,” he said.
Medicare vs. Non-Medicare Prescription Insurance: In Short
Medicare is for patients ages 65 and over, or those who have severe medical conditions such as cancer or liver disease. Those who are eligible for Medicaid — which provides coverage to those with low income — also may be eligible for Medicare. To qualify for Medicare Part D — the prescription drug portion of the plan — customers must also qualify for Parts A and B — general health coverage.
Due to the necessary qualifications, the majority of middle America is not having to deal directly with the Medicare issue. Their health coverage comes mainly from group policies such as North Carolina State Employees’ Blue Cross Blue Shield policy or other office policies. Also individuals may purchase a private policy. However, middle America is feeling the effects of Medicare through trying to deal with aging parents’ coverage — an issue even further complicated by the Health Information Personal Privacy Act, which prevents outside parties from speaking with doctors or insurance companies about illnesses.
But that’s a whole other quagmire.
Generally speaking, Medicare aims to lower customer’s costs, both in terms of the premiums paid and the drug costs at the pharmacy counter. But regardless of the type of plan purchased, insurance is not something to buy bargain basement — what you pay for is what you get.
“You cannot buy this product on premium,” Rogers cautioned.
And as for the often held belief that an insurance broker may sell customers more than they need in order to make a profit, Rogers said it’s his responsibility to let customers know exactly what their insurance will do for them when it’s needed.
“I have an obligation to my clients to inform them as to how the insurance product performs within a medical facility,” he said.
The Formulary
Before enrolling in a Medicare plan customers must take steps to know the exact names, dosages and the cost of their prescriptions as it would be without insurance.
“If you come to me and say these are my drugs, I can help you, but I can’t be exact,” Rogers said.
That cost information that can be culled from doctors’ offices and pharmacies, but it’s information that the general public most likely wouldn’t know off the top of their heads.
“There’s no way that you know that,” said Bill King, a pharmacist who works in several locations across the region, including Main Street Pharmacy in Highlands.
Once a customer has gotten together the information about the prescriptions they take, the next step is to work through the Formulary.
“Therein is the key to this whole bowl of spaghetti,” Rogers said.
The Formulary is an online resource located on the Medicare.gov Web site that allows customers to input their prescriptions one by one and generate a list of plans that cover each of those drugs and breaks down whether prior authorization is required and if there are quantity limits.
While the number of elderly Internet users is on the rise, many won’t turn to an online resource to make their insurance decisions.
Pitts, the 73-year-old Medicare customer who has yet to sign up for prescription drug coverage, said that while he has a computer, a Medicare Web site wasn’t the answer.
“I wouldn’t know what online was,” Pitts said.
There is a hotline to call, and brokers and counselors to walk customers through the Formulary — but all in all, Rogers said the way the new Medicare system was presented to its customer base was just flat out “wrong.”
Using the Formulary to input three relatively common prescriptions as an example — a 160/12.5 tablet of Diovan, five-milligram tablet of Prednisone and 20 milligram tablet of Citalopram Hydrobromide — generates more than 40 insurance plans to choose from. Customers must go through each to look at the breakdown of how each drug is covered.
Under the AdvantraRX Value plan the Diovan is not covered, while under the BCBSNC Plus Plan it is. The AdvantraRX plan also imposes quantity limits on Citalopram Hydrobromide, while the BCBSNC Plus Plan does not.
A customer just shopping based on a plan’s monthly cost and not taking the time to look at the breakdown may choose the AdvantraRX plan, but end up paying more by having to pay for the drug that isn’t covered. The AdvantraRX plan costs approximately $22 per month. The BCBSNC Plus Plan costs approximately $59 per month.
The Doughnut Hole
Within many plans exists “The Doughnut Hole.” Though somewhat charmingly named, The Doughnut Hole is a foreboding gap in coverage.
Drugs are ranked by generic, brand or specialty drugs, most often called Tiers 1, 2 and 3 respectively. Coverage differs based on what tier a drug is in.
Under the BCBSNC Plus Plan, generic drugs are subject to a $10 co-pay up to a total of $3,600, and then a customer pays 5 percent of the cost thereafter. Diovan is considered a brand or Tier 2 drug and thereby is subject to a $25 co-pay up to $2,250. Between $2,250 and $3,600 customers are responsible for 100 percent of the drug’s cost — hence The Doughnut Hole. A similar gap exists for specialty drugs, for which a customer is responsible for 25 percent of the cost up to $2,250, and 100 percent between $2,250 and $3,600.
The upshot is that once costs reach $3,600 Medicare picks up 95 percent of the tab.
There are plans that offer greater coverage in The Doughnut Hole for higher premiums. However, once customers sign up for a Medicare plan, that plan may only be changed between Nov. 15 and Dec. 31 each year. And note that anyone who signs up for a Medicare plan after the May 1 deadline will be subject to a 1 percent penalty cost.
What’s Right For You
Picking a Medicare prescription drug plan may seem like a daunting task, but there are resources available to help guide customers along. There are consultants at many larger pharmacies customers may schedule appointments with to review plan options, there are professionals at many local departments on aging or senior centers that also can offer help. The important thing to remember is — take your time.
“You can’t learn this in a seminar, you can’t learn this in a group,” Rogers said. “You have to go one-on-one.”
Pitts agreed. In a nursing home about three months ago, Pitts saw a flyer advertising an upcoming program in which an insurance agent would come explain the new Medicare system. What good is that going to do people who aren’t of the capacity to care for themselves physically, Pitts asked.
“Half of them couldn’t find the cafeteria,” Pitts said.
Regardless, customers must do their best to choose a plan that’s right for them — plans may differ even between spouses. And before customers begin comparing plans, they should decide what it is that they’re trying to accomplish with an insurance plan in the first place. Someone who’s relatively healthy and takes one common prescription a year probably doesn’t want as much coverage as someone who knows they’re facing a chronic illness.
“A plan with the lowest premium in your area would keep costs to a minimum while providing coverage you might need later on,” states an American Association for Retired Persons Bulletin on the issue. “A plan with a zero annual deductible would cover even very low drug costs immediately.”
