Medicare Part D | Test Guess and Go

There is nothing special about today’s blogpost. It is just my experience choosing a new Medicare Part D drug plan. My only advice to you is to consider what you require in a drug plan and what the financial ramifications are. Don’t assume that what you used in 2018 is your best choice for 2019.

I now understand one way that Medicare drug plans make lots of money. I am only in my second year of Medicare and it is obvious that it would be easier to stay with what I am doing rather than make a change is logical and financially-expedient. Inertia. Yeah, it’s easier to do nothing than to do something. It can be laziness or just comfort in living with what you know. But you have to remember that doing nothing is a decision and that decision may not be the best decision.

My current drug plan has worked well since I went on Medicare in the spring of 2017. But I have recently started taking an arthritis drug that is not part of that plan’s formulary. It is not a hugely expensive drug; it is just a lesser-prescribed anti-inflammatory. I have received an exception-to-formulary approval for the medicine through 2019 but the monthly co-pay is almost as much as my monthly premium cost.

So I have wisely gotten off my duff and gone to the Medicare Find-a-Plan website to compare 2019 Part D plans available in my area. I entered my zip code, answered some basic questions, and listed the drugs that I take. I only take 3 drugs under my Part D plan and it didn’t take long to enter the names and dosages. If you have a long list, you can save your drugs to a password-protected drug ID so that you don’t have to enter them every time you visit the website.

I entered my desired pharmacies and selected the option to look at drug plans. You can also use this option to compare Advantage plans.

The wisdom of examining my 2019 choices was immediately apparent. Having entered Walgreens, CVS, and mail order as choices, the cheapest option combining premiums, deductibles, and drug costs was $231 for CVS mail order and $233 for CVS retail. The tenth cheapest plan would be almost $900! Staying with my current plan would be almost $700. Formulary is the name-of-the-game in choosing a Medicare drug plan….

Sometimes money is not the only decision-making factor in choosing a drug plan. As mentioned above, my cheapest drug plan option for 2019 would involve switching to CVS and I have three reasons for wanting to stay with Walgreens.

One, I have used Walgreens for most of my adult life. It has always worked well and my philosophy is “if it ain’t broke, don’t fix it.”

Two, as someone who uses an insulin pump, my insulin is covered under Medicare Part B rather than through my drug plan. The savings are huge because Medicare pays 80% of the cost of my insulin and my Medigap policy pays the remaining 20% leaving me with no out-of-pocket cost for insulin. Due to Medicare regulations and unawareness of this coverage by many pharmacies, it can be difficult to establish and maintain Part B insulin coverage. Before I started Medicare, I was advised by several Type 1 friends that Walgreens and its national Medicare department is one of the best pharmacies for setting up Part B insulin. I have online diabetes friends who get their Part B insulin successfully from CVS, Krogers, and other pharmacy chains, but once again for me “if it ain’t broke, don’t fix it.” I could probably get Part B insulin at Walgreens and other prescriptions at CVS, but I prefer having my prescriptions with one pharmacy. Convenience for me and I think that the occasional glitches in receiving Part B insulin are more easily resolved because I am well-known at my local pharmacy.

Three, I am a snowbird and leave the cold and snow of Minnesota in late December. The idea of transferring my prescriptions in 2019 to CVS through a pharmacy in Arizona seems overly complicated. I am willing to pay a premium to avoid the potential problems of the switch.

I am mostly sure of the drug plan that I am selecting for 2019. It only has two stars out of five stars and at Amazon that might scare me. But my previous Part D plan only had two stars and it was fine. I am lucky that I do not take expensive drugs and even luckier that I do not pay for insulin through Part D. But even still, a wrong part D plan could be an expensive mistake. If I do nothing, I will be automatically enrolled in my previous plan and that would be an expensive default. FYI I do not have to cancel the old plan; that will happen automatically when I I enroll in a new plan.

This blogpost is certainly not a “how-to” post. However, it is a reminder that if you are on Medicare, don’t assume that what you did in 2018 is the best choice for 2019. I’ve gotten off my duff. Be sure that you do the same. You have until December 7 to make a change or confirm that your current plan is still your best option.

When you start investigating Medicare plans, it is easy to get overwhelmed with letters and options. Parts A, B, C, and D are well-known, but depending on where you live, you may find Parts F, G, K, L, M, and N.

In this blogpost I plan to be simple and just talk about Part D Medicare prescription drug coverage. That’s a joke because there is nothing simple about Part D.

Let’s start with a few straightforward facts:

Part D is regulated by Medicare but all drug plans are administered by private companies.
Part D plans provide coverage for generic and name-brand drugs. All plans must provide at least a Medicare-approved level of coverage, but can vary by specific drugs covered, rates, and pharmacy networks.
In order to purchase a Part D plan, you must be eligible for Medicare Part A and/or enrolled in Part B. You must also live in the plan’s service area.
You may purchase Part D as part of a Cost/Advantage plan or as a stand-alone Part D plan.
Part D coverage is not required. However, if you do not purchase it when you are first eligible, you may be subject to penalties and higher premiums when you do. Those penalties will continue for as long as you participate in Part D. Like for the rest of your life.

The most complicated part of standard Medicare drug coverage is understanding the four cost stages, particularly the coverage gap or donut hole.

The first stage is the Deductible Stage where you pay 100% of your prescription drug costs. The maximum deductible allowed by Medicare in 2016 is $360. Some plans have lower deductibles.

Once you satisfy your deductible (doesn’t take long if you have diabetes!), you enter the Initial Coverage Stage. In this “cost sharing” phase you pay either a copay or a percentage copayment depending on your drug plan. In 2016 this stage continues until the payments by you and your plan combined total $3310. For example, you buy 4 vials of Lantus with a total contracted price of $1000. You have a coinsurance plan where you pay 25% or $250 and the plan pays 75% or $750. The entire $1000, not just your out-of-pocket cost, counts towards the $3310 amount to put you into the Coverage Gap or Donut Hole.

If you use insulin, you can see how quickly you will enter the donut hole where the out-of-pocket drug costs increase significantly. In 2016 under a standard Medicare Part D plan, you can expect to pay 45% of the cost of covered name-brand drugs and 58% of the cost of generics once you reach the coverage gap. I could write a book trying to explain the donut hole, but here are a few things to put it in context.

The donut hole terminology came from the Medicare Modernization Act of 2003 (MMA) in which prescription drug coverage became available to all Medicare beneficiaries. If you are interested in the history of this law, check out this publication by Jonathan Blum who was a professional staff member to the Senate Finance Committee at that time.

As recently as 2010, most Medicare beneficiaries paid 100% of drug costs once they reached the coverage gap. One of the few changes made to Medicare by the Affordable Care Act was the implementation of a blueprint to gradually eliminate the donut hole by 2020. A good explanation of these changes can be found in this Medicare publication “Closing the Coverage Gap—Medicare Prescriptions are Becoming More Affordable.”

Part D Rectangle

One unanswered question I have about the coverage gap is how the $4850 to enter the catastrophic stage is computed. I have attended two Medicare information meetings and both insurance companies indicated that the $4850 is totally paid by me. However, the Medicare publication mentioned above states: “Although, you’ll only pay a certain percentage of the price for the brand-name drug, the entire price (including the discount the drug company pays) will count toward the amount you need to qualify for catastrophic coverage.” If you know the answer, please leave a comment. Once I get to Medicare, I suspect I’ll figure it out.

The last stage of Part D prescription drug coverage is the Catastrophic Coverage Stage. In 2016 you pay either $2.95 for generics and $7.40 for brand-name drugs or 5% of drug costs, whichever is greater.

Just when things look complicated enough, there is another consideration for those of us who use insulin pumps. Although insulin is usually purchased through a Part D plan, it is covered under Part B for pump users. Fine and dandy, but it can be extremely difficult to find a supplier for Part B insulin. To get a clue how difficult, read Sue from Pennsylvania’s post “Hey, He Needs his Insulin!” One reason is that many pharmacies rarely deal with this and plead ignorance. Another reason is that the reimbursement rate for Part B insulin is so low that pharmacies/suppliers lose money when selling Part B insulin. A 2013 Lincoln Journal Star article states:

“A Medicare spokeswoman said the price is set in federal law — at 95 percent of the average, wholesale price in effect on Oct. 1, 2003. So it requires Congress to change it, she said in an email to the newspaper.“

The cost savings for buying insulin under Part B are substantial. Medicare pays 80% of the cost and a supplemental/advantage/cost plan should pay the remaining 20%. Insulin is therefore usually provided at no cost to someone using a pump. In addition, insulin under Part B is excluded from Part D donut hole calculations.

That’s it for today. I hope that this blogpost has provided some information without totally putting you to sleep. I have done my best to research Medicare drug coverage and if any of what I have written is incorrect, please send me a message along with a dozen donuts.

Most of us think that when we grow old, we will play golf, watch TV, do crossword puzzles, and relax on the patio. I am beginning to think that I’ll be sitting at my desk trying to figure out Medicare….

*************

Most of the information in this blogpost comes from current publications of Blue Cross Blue Shield of Minnesota and HealthPartners. I attended community meetings offered by those companies in July. The official Medicare website is also an excellent resource.