NOVEMBER 4, 2008
Expect Changes in Drug Co-Pays for Medicare
On Eve of Open Enrollment, Many Plans Announce Shifts; Poring Over the Fine Print
By JANE ZHANG
WSJ
Millions of older Americans are bracing for big increases in their Medicare drug-plan premiums next year. But consumers also need to watch for changes in co-payment costs, which often can represent the biggest out-of-pocket expense for plan beneficiaries. In recent weeks, people enrolled in the Medicare Part D program have been receiving information about changes in their plans for next year. Premiums at the 10 largest drug plans are expected to rise 31% on average next year, with some increases topping 60%, according to an analysis by consulting firm Avalere Health LLC. But some insurers also are sharply adjusting co-payments, which consumers generally pay each time they purchase a medication. Adding to the difficulty: People may need to dig deep into the insurance literature to find how their plans are changing.
Signing Up for Part D
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For example, the country's biggest Medicare drug plan, AARP MedicareRx Preferred, sponsored by UnitedHealth Group Inc., is expected to boost average premiums by 18% next year to $34.92 a month, according to an Avalere analysis of pricing in five big states. The plan, which had 2.7 million beneficiaries nationwide as of August, will have the same $7 average co-payment for generic drugs. But consumers buying brand-name medications on the insurer's preferred-drug list -- such as cholesterol drug Lipitor and Nexium for heartburn -- will have to shell out $36.40 in average co-payments, up 21%, for each purchase, according to the five-state study. "The pricing of prescription-drug plans is determined every year by the trends in drug pricing and the number and types of drugs purchased by the members within a plan," said a UnitedHealth spokeswoman.
Even bigger price changes are expected at Humana Inc.'s PDP Enhanced plan, the third-largest with 1.4 million enrollees. Premiums will jump 51% on average to $39.56 a month, according to Avalere. Average co-payments for generics will surge 75% to $7, and 60% to $40 for preferred brand-name drugs. Avalere's study averaged expected prices for plans in Florida, New York, California, Texas and Illinois. A Humana spokesman said: "Our prices reflect the experience we've seen over the past three years, and our expectations around what will most interest our members and potential members going forward."
The government doesn't regulate how insurers set premiums and other prices on Part D plans, though the companies must get approval from the Centers for Medicare and Medicaid Services before they can market their plans. Today's presidential elections could bring changes to Medicare's drug benefit. Democratic candidate Sen. Barack Obama has said he wants the government to be able to negotiate directly with pharmaceutical companies for lower prices, an idea Republican rival Sen. John McCain also supports. Sen. McCain also supports making wealthier beneficiaries pay more for their drug benefit. Consumers' total out-of-pocket expenses, including premiums, deductibles and co-payments, will vary depending on such factors as what part of the country they live in and what specific drugs they use. The plans have various tiers of drug types that each insurer can define differently. In the most basic structure, Tier 1 contains generic drugs; Tier 2 is preferred brand-name drugs; Tier 3 is non-preferred brand-name drugs; and Tier 4 is specialty drugs.
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Some costs are coming down. The Humana PDP Standard plan, the country's second-largest with 1.5 million enrollees, is expected next year to lower its average co-insurance rate on generic drugs to 14%, from 25% this year, according to Avalere's five-state study. The average rate on preferred brand-name drugs will stay at 25%, but the rate on non-preferred brand-name drugs, which will include Actonel for osteoporosis, and cholesterol drug Zetia, will jump to 42% from 25%... Consumers should gather a list of the drugs they take, along with the dosage, and plug the information into the Plan Finder calculator. Consumers who have trouble navigating the Internet can enlist help from friends or family or get individual help from the State Health Insurance Assistance Program.
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Insurers next year will continue cutting back on supplemental coverage of the so-called doughnut hole, the coverage gap where consumers generally must begin paying the full cost of their medicines, says Tricia Neuman, vice president and director of the Medicare policy project at the Kaiser Family Foundation. In 2009, the doughnut hole will open up after beneficiaries and their drug plans have spent a total of $2,700, up from $2,510 this year. Consumers then must pay the full cost until their own out-of-pocket spending reaches $4,350. After that, the drug plan picks up most of the tab. Analysts say the latest price increases might prompt more beneficiaries to switch to Medicare Advantage plans, in which private insurers combine coverage for physician and hospital services, often with prescription drugs. Currently about one-third of Medicare drug-benefit enrollees are in Advantage plans. The plans tend to have lower premiums than traditional fee-for-service Medicare programs, but might have other disadvantages, such as higher co-payments for hospitalization. A flood of consumer complaints about Medicare Advantage plans prompted the Bush administration this year to bar insurance agents from using aggressive tactics to market the plans.
http://online.wsj.com/article/SB122575598227995061.html (subscription)
Many Medicare drug plans are adjusting premiums and co-pays next year. Here's what you need to know:
* Open enrollment runs from Nov. 15-Dec. 31.
* Thick enrollment packets can be confusing. Call your insurer to confirm your expected costs.
* Use the online tool at medicare.gov to make sure your plan offers you the best deal.
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