Baby Boomers U. S. (The Blog)

Is the Donut Hole Closing Fast Enough for All Medicare Beneficiaries?

Posted: 24 Apr 2011 04:33 AM PDT

This is a Guest Post by Ross Blair, President and CEO of Plan Prescriber, Inc.

Is the donut hole closing fast enough for all Medicare beneficiaries?

In 2011, many Medicare recipients could hit the Medicare prescription drug donut hole faster, and pay more out-of-pocket on their way to the donut hole if they don't have the right Medicare prescription drug benefit.

Why? The average cost of brand-name prescription drugs increased by the highest percent in 11 years according to an analysis by Barclays Capital. Prices for some drugs increased by more than 10%. Popular drugs like blood-pressure pill Benicar® (29.3% increase), blood thinner Plavix® (13.2% increase), and cholesterol drug Lipitor (12.4% increase) all saw double-digit increases.

Last year 3.8 million Medicare beneficiaries got $250 rebate checks hitting the donut hole. In 2011 a 50 percent discount on brand-name drugs is available. But, price increases in the cost of branded drugs can negate some of the savings from that discount. And, drug prices may increase more as drug manufacturers try to maximize last-minute profits on popular drugs like Lipitor®, Lexapro®, Seroquel®, and Plavix® that go generic in 2011 and 2012.

What does this mean for people on Medicare? It means that you could hit the Medicare prescription drug donut hole faster, pay more out-of-pocket on your way to the donut hole, and while you're in the donut hole if you don't have the right Medicare prescription drug benefit.

The Medicare prescription drug coverage gap – the donut hole – begins when the customer and insurer spend a combined total $2,830 on medications. That number includes the co-pays and deductibles paid by the customer. Once the customer reaches the donut hole, they pay for pay for their own drugs but receive a 50% discount on brand drugs and a 7% discount on generic drugs. The donut hole continues until the customer has used $4,550 worth of branded and prescription drugs. This year the customer only pays 50% of the price for a brand-name drug, but the entire price of the drug counts as out-of-pocket spending, which gets them out of the donut hole faster. Once you're through the donut hole, you reach the catastrophic coverage level. At this point, your drug plan steps back in to cover almost all your remaining drug costs for the rest of 2011.

Here's where it gets complicated. All Medicare prescription drug plans are not the same. If the medication you're taking isn't covered by your prescription drug plan, you'll have higher co-pays, and pay more out of your own pocket before you reach the Medicare prescription drug donut hole, while you're in the donut hole, and once you reach the catastrophic coverage level.

Here are four tips to help you avoid paying too much on prescription drugs:

1. Take advantage of available discounts on prescription drug costs: By enrolling in a Medicare Advantage plan with Medicare Prescription Drug Coverage (MAPD) or a Medicare prescription drug plan (PDP), you get the benefit of these 50% rebates on Medicare prescription drugs when you hit the donut hole. An analysis of 337,000 user sessions between January 1, and March 31, 2010 on PlanPrescriber.com estimated that PDP enrollees would save an average of $586 by switching to a lower cost plan. Actual savings on prescription medications depends on a variety of factors like geographic location, the actual plan selected and other factors. Benefits and coverage may vary between plans; the average savings examines only plans presented by PlanPrescriber that offer only prescription drug coverage.

2. First-time enrollees be sure to choose the right plan: Medicare prescription drug plans do not have to cover the same drugs in the same quantities or for the same price. Medicare only requires Medicare PDPs to cover two drugs in each therapeutic class. If your drug isn't on the plan you choose, expect to pay more. There are several PDP comparison tools available online like PlanPrescriber.com and eHealthMedicare.com. A good online tool can point you to the lowest cost plan based on the specific drugs you take.

3. With an existing Medicare prescription drug plan, talk to your doctor about alternatives: Outside of the annual enrollment period, most people cannot switch drug plans. If you're one of those people, and you feel you are paying too much for your drugs, talk to your doctor about other possible copayment/coinsurance exceptions and medications that may be available to treat you. Then, use a plan comparison tool to see if any of those alternatives are covered by your existing plan. If so, your doctor may be able to switch your prescription to save you money.

4. Talk to an expert if you have questions: Advice from a licensed agent doesn't cost you any additional money. The price of the plan you choose must – by law – be the same, no matter how you enroll in it. You can contact a PlanPrescriber agent at no cost by phone at 800-404-6968 or call your State Health Insurance Assistance Program (SHIP). SHIPs receive federal funding to counsel people with Medicare questions. The federal government has created 1-800-MEDICARE to provide information about Medicare coverage.

Ross Blair is President and CEO of Plan Prescriber, Inc. (www.PlanPrescriber.com), a leading provider of comparison tools and educational materials for Medicare-related insurance products.

(Medicare has neither reviewed nor endorsed the information provided in this article.)

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