How do Part D plans work with compounding pharmacies?

I have a client, Kate, who is turning 65 soon and uses a compounding pharmacy for her medications. Over the years, Kate realized that medications in hard pill form are not absorbed by her body, so she uses a compounding pharmacy that puts her medications into a capsule, and this works for her.

Kate gave me a list of her medications, taken from the labels on her pill bottles. I went to Medicare.gov and used the Plan Finder to see which of the 26 Part D plans in Arizona would work best for her.

Part D plans have networks

I also had to make sure there are Part D plans that have compounding pharmacies in their network. You see, Part D plans have networks, and if a person goes “out-of-network”, the Part D plan will not work. Most pharmacies are “in-network”, but smaller, local pharmacies might not be contracted with Part D plans.

I always wondered why the Plan Finder requires me to put in a pharmacy, and now I know.  Most of the pharmacies are national chains, but I recognized Avella on the list as being a compounding pharmacy in Tucson. Avella used to be known as The Apothecary Shop. So I chose Avella as the pharmacy Kate would use with her Part D plan.

The list of 26 Part D plans was sorted from least expensive to most expensive.  But since Kate’s medications are all generic, there wasn’t a lot of difference in co-pays. But there were wide variations in premiums and deductibles. However, most of the plans did not have Avella in their network.

The plan that did have Avella in-network was First Health Value Part D. I am not contracted with this company, but I told Kate to call them and tell them her situation and give them her list of medications, so they can confirm that their plan will work for her.

Kate made the call and was disappointed. She called me to say the First Health representative told her they do not work with compounding pharmacies. He could not find her drugs on their formulary. And he said information on Medicare.gov is often wrong.  Yikes!

I told Kate she might have been unlucky to get an inexperienced rep.  I decided check the first Health website and then  called First Health.  I was fortunate to talk to a more experienced person who told me about their pharmacy network, which includes “preferred pharmacies” and non-preferred pharmacies”.

I told the First Health rep that their website shows Avella as a “non-preferred pharmacy”, which means Kate would pay $7 for each generic prescription rather than $0. The rep assured me that Avella is “in-network” and can be used with the First Health Part D Value plan.

The rep then told me to talk to a pharmacist at Avella because that person would know how Avella works with Part D drug plans. So I called Avella in Tucson and spoke to a very helpful pharmacist whose quick and concise answers gave me confidence she knew what she was talking about.

The Avella pharmacist said they had experience working with Part D plans, and she told me how two medications that are put together in one capsule are priced by Part D plans.  When I mentioned Kate’s prescriptions, which Kate said were E-2 and E-3, she knew right away the drug names.

This last point is important to the story because the inexperienced rep at First Health did not find “E-2” or “E-3” when he searched on the plan formulary. He did not know that E-3 is Estradiol, which he would have found on the formulary.  There were three other drug names Kate had given me that the Avella pharmacist knew how to translate into the actual drug names – which are on the First Health formulary.

So maybe the First Health rep wasn’t at fault, because only a pharmacist would be able to translate “E-3” and “T-4” to actual drug names.  But this points out another challenge for finding a Part D plan:  Pill bottle labels may not provide information that matches what is in a drug plan formulary, or choices provided on the Medicare.gov Plan Finder.

Anyway, my conversation with the very helpful pharmacist at Avella gave me confidence that Kate would be able to use this compounding pharmacy if she enrolls in the First Health Part D Value plan.

Most of my work for clients who need a Part D plan is pretty straightforward.  Kate’s situation is quite a bit more complicated. But I learned something new this week about Part D and compounding pharmacies. It’s always good to learn something new.

If anybody out there is taking Lipitor, they  need to get their doctor to write a prescription for Atorvastatin, which is the generic form of Lipitor.

Yesterday, I got a call from a client who picked up her husband’s prescription at the pharmacy. Betty’s husband, Harry, has been taking Lipitor for several years, and the co-pay has been around $45 for a one-month supply.  Harry usually gets a 90-day supply of Lipitor and the bill has been around $135.  But this time the bill was $270, so Betty called me to ask, “What’s going on?”

I knew right away what is going on because I have written previously about Lipitor going generic in 2012.  Atorvastatin is the generic name for Lipitor and it is a tier 2 generic, which means it would be $8 on Harry’s Part D plan. But Harry’s prescription is still for Lipitor, and when his wife picked up the 90-day supply, she was shocked by the $270 bill.  You see, Harry’s Part D plan has moved Lipitor from a “preferred brand” with a $45 co-pay to a “non-preferred brand” with a $90 co-pay for a one-month supply.

So instead of paying $24 for a 90-day supply of the generic, Betty paid $270 !!!  Why didn’t the pharmacy tell Betty about the generic option??? Why didn’t the Part D plan inform its members who take Lipitor that they should switch to the generic? Why didn’t Harry’s doctor tell him he could change to a lower cost generic?

I told Betty she should return the pills to the pharmacy and get her money back. I don’t know if this is possible, but she should give it a try. Then she needs to tell Harry’s doctor to write him a prescription for Atorvastatin.

Lots of people get a three-month supply of their prescriptions. This being the end of March,  a lot of people are picking up their first refills this year.  People taking Lipitor will be shocked by their bill and will wonder why it is so high. Many people may not be aware that Lipitor now has a generic substitute.

I just went on the Medicare.gov PlanFinder, and I see that some plans are not even covering Lipitor, which has a retail price of around $150 for a 30-day supply.  Harry’s plan does cover Lipitor, but doubled the co-pay by making it a “non-preferred brand“.  I tell my clients, “The plan would prefer that you not take that drug, so that’s why they charge you such a high co-pay”.

I guess the co-pay increase did it’s job by shocking Betty into asking “What’s up?”.  Now she knows.  I just hope it doesn’t cost her $270 to find out Lipitor has gone generic.

There are 1,736 Part D prescription-drug plans available to people on Medicare. In Arizona, seniors have 26 plans to consider.  According to a recent study by Health Affairs, seniors on on average overspend by $368 more per year on their Medicare prescription drug plans because they tend to pay for more than they need.  The study concluded that only 5.2% of seniors chose the most economical Part D plan available to them.

I’m sure the folks who studied Medicare Part D are very smart people – but it doesn’t take a PhD to figure out what’s wrong with the program. There are too many plans!

There are too many plans, and each plan is a bit different from the others: Some drugs aren’t covered on some plans.  On one Part D plan a brand drug co-pay might be $45, while that same drug will cost $95 on another plan.

Another problem I see with Part D is that the plans change every year. Some plans change a lot while others change just a little.

Last year, one Part D plan raised its premium from $32 in 2011 to $72 for 2012. I wrote about that last year around this time. In January, a woman read my blog and emailed me to say she had just realized she was in that plan and had not read her Annual Notice of Change (ANOC).  At that point it was January, and she was stuck in that $72 per month plan for the rest of 2012. I told her to call Medicare and ask for an exception – but I told her they’d probably say, “Tough luck! You should have read the materials your Part D plan sent you in September!”

Part D plans come as “stand-alone” when a person is on “Original Medicare”. These folks use their Medicare card when they go to the doctor.  But Part D also comes as part of most Medicare Advantage plans.  The Part D in a Medicare Advantage plan works the same as the stand-alone plan. They all have co-pays and they all have the donut hole.

Some Advantage plans offer some very good benefits in their Part D. One company covers the full cost of insulin for people enrolled in their Diabetes plan.  Another Advantage plan has a $10 co-pay for insulin, and this plan even covers insulin pens for a $10 co-pay.  Sorry, I can’t name names, or I’d be seen as promoting these plans.

Another Advantage plan has always had a really good deal for their enrollees who use their mail order.  Brand drugs could be ordered by mail and a person would get three months for the price of two. So instead of paying $135 for a 90-day supply, people would pay just $90. But in 2013, people in this Medicare Advantage plan are going to be surprised (maybe shocked) to learn they no longer get this big price break.

I wonder how many people have found this bit of information in their annual notice of change. Advantage plans and stand-alone Part D plans are required to inform people of changes to their plans for the next year – but very few people read the details of the ANOC.  In January or February, when they get the bigger bill for their meds, it will be too late to change their Advantage plan.

I really get peeved by Part D because of the things I’ve written about here. It just seems so wasteful that 1,700+ plans are spending money on marketing and materials, and figuring out how to make a profit.  Sure, seniors have lots of plans to choose from.  But do they really want so many choices? And can they deal with the changes that happen every year? And are they saving money because of all the choices?

The Health Affairs study says the answer to my last question is “no”. Seniors are not benefiting from having so many choices. And I’m pretty sure Medicare is not saving money. It really seems like a dumb way to offer prescription coverage to people on Medicare. Of course, the insurance companies (and Paul Ryan) think it is a brilliant way to run a very expensive Medicare program that is vital to so many seniors and people with disabilities.