In Arizona there are 25 stand-alone Part D drug plans available to people on Medicare. I usually deal with the best-known plans, Humana and AARP MedicareRx, because they seemed to cover almost all prescription drugs in past years.  This seems to be changing for 2011, and this makes selecting a Part D plan more confusing than ever.

Last weekend I met with a couple who have both chosen to stay with Medicare and get a Medicare supplement.  They need to pick a stand-alone Part D drug plan, which is a bit complicated because the husband uses several inhalers which are very expensive.  He also takes Micardis for his blood pressure along with two other drugs. The wife doesn’t take any prescriptions, so I thought the Humana Walmart plan, with a low premium, would get her into the Part D system for a small cost.

For the husband, I first checked my old standards, Humana and AARP MedicareRx (which is actually UnitedHealthcare).  As it turned out, the Humana Walmart plan, which has been widely advertised, does not cover Micardis.  More surprisingly, the AARP MedicareRx plan does not cover the Proventil inhaler the husband needs.

My next step was to go to Medicare.gov where I put my client’s prescriptions into the Plan Finder which generated a list of Part D plans he could consider.  The plans were listed in order from the lowest premium to the highest, and they ranged from $28 to $80 per month.  I noticed that most of the plans had a notation that said they did not cover all of his prescriptions.  Some plans had a $310 deductible, one had a $150 deductible, and some had no deductible.  Co-pays from plan to plan were varied, from 25% for all drugs to $85 for tier 2 drugs and then 33% for tier 3.  An $85 co-pay for a tier 2 drug? That company must tier their drugs differently than the plans I know.

I was totally confused by the choices and information provided by the Medicare.gov Plan Finder.  My clients asked for my advice on which plan they should choose, but  I had no clue what to tell them.  All I could say was that I don’t understand why there are so many plans, each with a different formulary (list of drugs covered), different deductible, and different co-pays for each drug level.

Why is Part D so complicated?

In 2010 there are over 1,500 Part D plans offered throughout the country. Why?   What value is provided by hundreds of insurance companies each offering several Part D plans?  Has this saved Medicare money?  Has this made drug coverage selection easy for seniors? Who came up with this concept – and why?  Why not have one or two plans administered by Medicare (which contracts out the work to the private sector)?  Are insurance companies making a profit from Part D drug plans?

I gave my clients a list of Part D plans from the Medicare.gov Plan Finder and pointed out two plans I thought they should look into.  I don’t represent those plans, so I suggested they call the plans directly, or they could call Medicare to ask for help in picking plans that would work for each of them.

My clients were shaking their heads in dismay and confusion.  We had determined that the husband’s prescription costs might add up to three hundred dollars or more per month, so finding a plan that could save them some money is very important. I apologized for not being able to help them further with their drug plan selection.  And I repeated my question, “Why is Part D so complicated and confusing?”

Good news for Medicare Advantage plans in Arizona!   In what Kaiser Health News called a “surprising move”, the Obama administration “will extend special bonus payments meant to reward top-performing Medicare Advantage plans to those that score only average ratings”.

With most Advantage plans in Arizona rated as average (3 stars), our plans will get additional money even as Medicare reduces payments to the insurance companies that run the plans.

Part of the health care reform law requires Medicare to reduce payments to all Medicare Advantage plans by about 15% over three years starting in 2012. At the same time, the law provides for bonus payments to Advantage plans that are highly rated, or earning 4 or 5 stars based on a range of quality measures.

In Arizona, only Cigna in Maricopa County gets 4 stars or more.  In Tucson, the major Advantage plans (Secure Horizons, Health Net and Humana) get 3 stars.

I have written previously that the three-star ratings of Advantage plans in southern Arizona would not bode well for the 45% of Medicare beneficiaries in Pima County who are enrolled in these plans. With payment cuts to Medicare Advantage looming, would all plans have to start charging premiums in 2012?  Would co-pays for doctor visits and hospital stays be increased? Would free gym memberships be dropped?

The Kaiser Health News article says the move to reward 3 star-rated Advantage plans is a way to prevent areas like southern Arizona from having a market shock in 2012 where Advantage plans drop out of the market and large numbers of seniors are forced to change plans or return to Medicare.  This happened in the late-90′s when payments to private Medicare plans were cut drastically from one year to the next and companies like Blue Cross Blue Shield dropped out of the the Medicare HMO business.

So, while Medicare is going to cut payments to Medicare Advantage plans, the plans are being encouraged to improve their ratings so they will get bonus payments.  One of my clients, who is enrolled with Humana, said she was surprised to get a phone call from Humana asking her why she hadn’t gotten her annual physical.  The Humana representative encouraged her to use the preventive screening benefits provided in her Medicare Advantage plan. This is a sign that Humana is trying to improve its rating.

The summary rating gives an overall score on the health plan’s quality and performance on 33 different topics in 5 categories:

• Staying healthy: screenings, tests, and vaccines. Includes how often members got various screening tests, vaccines, and other check-ups that help them stay healthy.
• Managing chronic (long-term) conditions. Includes how often members with different conditions got certain tests and treatments that help them manage their condition.
• Ratings of health plan responsiveness and care. Includes ratings of member satisfaction with the plan.
• Health plan member complaints, appeals, and choosing to leave the health plan. Includes how often members have made complaints against the plan and how often members choose to leave the plan.
• Health plan telephone customer service. Includes how well the plan handles calls from members.

CMS (Centers for Medicare and Medicaid Services) has ordered Health Net to suspend all marketing and enrollment activity for its Medicare Advantage and Part D Drug plans as of midnight Friday, November 19th, 2010.

According to the CMS announcement:

The immediate sanctions were imposed on Health Net because it has continued to improperly administer the Medicare drug benefit in its national prescription drug plan (PDP) and local Medicare Advantage prescription drug plan (MA-PD) contracts.  Approximately 660,000 Medicare beneficiaries are enrolled in the organization’s national and local plans.

Health Net has about 16,000 Medicare Advantage members in Pima County and 20,000 in Maricopa County. The sanctions do not affect current Health Net members who can stay in their plan for 2011 if they are happy with Health Net’s services.

Health Net is not allowed to enroll new members as of midnight Friday, November 19th, so this will seriously limit choices for Medicare beneficiaries in Pima County, as Health Net is a major player in the Medicare Advantage market here.  Current Health Net members are not allowed to change plans within Health Net, for example, moving from Ruby 1 (with a $33 premium) to Ruby 4 (with a $0 premium).

Secure Horizons and Humana must be celebrating as a major competitor has been put on the sidelines at the start of the Annual Election Period, which runs from November 15 to December 31.  Medicare beneficiaries have this short time period to change their Medicare coverage.  They can change from one Medicare Advantage plan to another.  They can choose to drop their Medicare Supplement and enroll in a Medicare Advantage plan. They can change their Part D drug plan if it is a stand-alone plan. They can drop their Medicare Advantage plan and return to Medicare, effective January 1, 2011. In this last case, they would want to enroll in a stand-alone Part D plan by December 31st so they will have Part D drug coverage for 2011.

After January 1st, everyone enrolled in a Medicare Advantage plan will be “locked into” their plan for all of 2011. If they have a problem with their Medicare Advantage (MA) plan after January 1st, they will have one opportunity to dis-enroll from the MA plan and return to Medicare and enroll in a stand-alone Part D plan. They can make this change between January 1 and February 14, 2011.