I got a call yesterday from a client who was very upset about her Part D plan. She gets her medications by mail order and just received her first re-fill for 2013.  She was upset that she paid $12 for one drug and $24 for another. Both these drugs are generics and the one-month supply co-pay is $4 for one and $8 for the other – so I couldn’t figure out why she was upset.

Then I realized her plan used to give her a deal for using mail order.  The plan encouraged people to use their mail order by providing three months for the price of two.  So last year my client would have paid $4 x 2, or $8, and $8 x 2, or $16.   This year she’s paying $12 and $24. My memory is not very good, but I’m thinking she she might have paid $0 for her tier 1 generic when she used mail order.

Paying $12 and $24 for 90-day supplies might not seem like a big deal, but it reminded me that at least one Medicare Advantage plan made a major change to their mail order pricing for brand drugs for 2013.  This Advantage plan used to have $45 co-pays for “preferred brand” drugs. But if people used the company’s mail order, they paid only $90 for a three-month supply rather than $135 at a pharmacy. This cost saving was a big reason for many people to be enrolled in that Advantage plan – but that changed for 2013. Now that savings is gone.

I have a feeling there will be many unhappy people as they refill their prescriptions for the first time in 2013.  I have talked to a few clients who told me they were never told about these changes. I explained to them that they received an Annual Notice of Change from their Medicare Advantage plan, or Part D plan, at the end of September last year. This is a Medicare requirement.

“I’m sure I never received any such information”, is a statement I have heard from several clients. I don’t want to argue with them, so I don’t insist that they most certainly did receive materials from their plan.  Of course, I’d bet about 10% of seniors actually read the Annual Notice of Change (ANOC). The ANOC is generally 30 pages or more and is not clearly labeled with something like, “YOU MUST READ THIS!”.  On about the fifth page, there are two columns that clearly show changes from 2012 to 2013.  Of course, a person has to get to page 5 to see this information.

Things can change in Part D plans from year-to-year.

**Certain drugs might be moved from one tier to another.  I recently wrote about Lipitor being moved from “preferred brand” to non-preferred brand” with a price change from $45 to $90.  Two years ago a Medicare Advantage plan moved Metoprolol Succinate ER from a tier 2 generic ($8 co-pay) to a preferred brand tier with a $40 co-pay. And these are just the changes I can remember.

**Mail order deals can be discontinued.

**Some drugs can be dropped from the plan formulary. This happens when there is more than one generic for a brand drug.

**The plan premium can go up (a little or a lot). Last year, a stand-alone Part D plan went from a $32 premium in 2011 to $72 in 2012.

All of this information is in the Annual Notice of Change (ANOC). But if people don’t read the ANOC, and they don’t realize they need to change their plan, they are in for a shock in the new year.  And there is nothing they can do because they are stuck in their Advantage plan or stand-alone Part D plan for the rest of the year.

In 2008, Medicare spent $68.3 billion dollars on drugs purchased through Part D plans.  This is too much money! Seventy-five percent of the $68.3 billion was spent on brand name drugs like Lipitor, Plavix, and Nexium.

Generics used to treat high cholesterol cost less than $10, while brand drugs cost $100 or more. Although most people on Medicare use generics, the chart below shows how the higher cost of brand drugs overwhelms the Part D budget.  If everyone used generics, the Medicare Part D budget could be cut by billions of dollars.

In 2008 Medicare spent $68.3 billion
on drugs purchased  through Part D.

Lipitor is going generic soon. Fosamax now has a generic replacement, so Part D plans are not covering this drug for treating osteoporosis. I learned this when I was searching for a Part D drug plan for a client and discovered that Fosamax was not on any plans’ formularies (list of drugs covered).

See my recent post on the top ten drugs purchased through Part D.

FOR MORE INFORMATION ON YOUR MEDICARE CHOICES SEE ARIZONAMEDICARENEWS.COM

Yesterday I wrote about Jerry, who moved to Tucson and was able to drop his Colorado Medicare Advantage plan and enroll in a Medicare supplement without answering any medical questions.  Because the move from Colorado to Arizona required Jerry to drop his Colorado Medicare Advantage plan, Jerry had “guaranteed issue” for  a Medicare supplement.

The Medicare supplement choice was simple, but then Jerry had to sign up for a stand-alone Part D prescription drug plan.  Jerry takes several prescriptions, so selecting a Part D plan requires doing some research to make sure all of his prescriptions are covered by the plan he chooses. So I went to Medicare.gov and clicked on “Health and Drug Plans”. Then I clicked on “Compare Health and Drug Plans”.  I put in each of Jerry’s prescriptions, and the Medicare “Plan Finder” gave me a list of Part D plans that covered his drugs, starting with the plan that would cost him the least amount of money for monthly premiums and co-pays.  The first plan on the list was the Humana-Walmart Part D plan for $14.80 per month.

I was going to have Jerry call up Humana to enroll over the phone, so I called him up and began to explain what he needed to do. Well….. this is where I remembered that Part D is rather confusing. You see, the plan that the Medicare Plan Finder gave as #1 for Jerry has a $310 deductible, so I began to explain this. Then I went on to explain co-pays for drugs on the Humana-Walmart plan, which can vary based on where he buys his drugs: at a Walmart store, by mail, or at a non-preferred pharmacy like Walgreens.   Things got complicated and confusing pretty quickly, so I told Jerry I’d drop by his house and explain everything in person. (Note to Medicare insiders: I had gotten a scope of appointment form signed by Jerry before we met to talk about the Medicare supplement.)

To prepare for my meeting with Jerry, I went to the Humana website and put in his list of prescriptions. The Humana website, if you can figure out how to use it, provides a monthly breakdown of what a person will pay for their prescriptions and how much Humana will pay.  The Humana Rx calculator provides lots of details, and I printed them out to help me explain the plan to Jerry.

So I went to Jerry’s house and showed Jerry the printouts, drew him diagrams, and explained the difference between the monthly premium and the co-pays for his drugs. And then there was the $310 deductible….. and we spent nearly an hour talking about this Part D plan.  After going over the details several times, Jerry got the full picture, but he still asked me to write up a summary of everything he had signed up for and what his monthly costs would be.

Jerry wants to use use the Humana mail order service for his prescriptions, and this will save him a lot of money.  I told Jerry to call me when he gets his package of information from Humana so I can help him set up the mail order.  This is another confusing process, but once it’s set up it should be simple to use – I think.

Why is Part D so complicated?

During our meeting, I apologized several times to Jerry for how complicated Part D is,  and I reassured him that it was not his fault that he was confused by it.  In 2011 there are over 1,000 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? Why not have one or two plans administered by Medicare (which could contract out the plans’ management to the private sector)?

I just can’t  understand why Part D is so complicated.