PART D PLANS TOUT NO-DEDUCTIBLE PLANS, BUT BENEFIT IS UNCLEAR

The Medicare drug plans did some market research before laying out their coverage options this fall and discovered through focus groups that elimination of the deductible was a selling point for people with Medicare. So a good number of plans will be charging higher premiums or higher copayments to offset the cost of providing a no-deductible plan.

But is it a good deal? For some people, a no-deductible plan may be better than the standard benefit, particularly if the $250 deductible could force them to skip needed medicines.

But a comparison of plans using market baskets of drugs shows that higher copayments and premiums can outweigh the advantage of first-dollar coverage and premiums. This comparison was conducted by the Medicare Rights Center on the same market basket of drugs developed by the Centers for Medicare and Medicaid Services (CMS) to show the savings available on the Medicare drug discount card

For example, the two lowest cost plans available in Pittsburgh, PA, are both offered by the same company. The plan with the standard deductible yields the lowest cost on a yearly basis for a patient taking medications to treat high cholesterol, hypertension, osteoarthritis and depression. The no-deductible plan winds up costing more because of higher premiums and copayments.

In Louisville, KY, someone taking relatively cheap medicines for hypertension, diabetes and congestive heart failure was still better off in with the standard benefit. Higher premiums raised the cost of the next two cheapest plans.

Will people with Medicare, especially the vast majority without the ability to use the Medicare web tool to compare plans, be lured by the offer of a no-deductible plan that sticks them with higher costs by the end of the year?

David Smith, a member of the Medicare Payment Advisory Commission (MEDPAC), a non-partisan advisory commission created by Congress, helped people at a New England community center compare plans. He found that it took a lot to convince seniors to forego the no-deductible plan in favor of one that cost less over the course of the year.

"The first dollar aversion is a big deal. It's sort of irrationally a big deal," Smith said. "[T]he first dollar aversion is a magnet in a way that trumps more rational decision-making and the tools don't help. Unless you've got an interlocutor, it's very hard to get past the attraction of getting rid of the deductible."

Well, the drug plan marketing departments certainly seem to know what they were doing. But, under the ideology of "consumer choice," allowing plans to market a mirage--a benefit feature whose advantage proves illusory--does poor service to the Medicare consumer.

Because of the way CMS reviewed plan bids, the benefit of a no-deductible plan must, for the typical beneficiary, be completed offset. For plans that provide first-dollar coverage as a "basic alternative" plan, higher cost sharing pays for the absence of a deductible. For plans that offer first-dollar coverage as an "enhancement," enrollees pay through higher premiums.

DRUG COMPANIES MAY CUT ASSISTANCE WITH PART D START

Some drug manufacturers will cut off people who sign up for the new Medicare prescription drug benefit from company-funded patient assistance programs (PAPs) because the Department of Health and Human Services (HHS) will not let the companies fill in the gaps in Medicare drug coverage.

In guidance to manufacturers issued November 7, the HHS Office of Inspector General (OIG) said that manufacturer PAPs cannot pay the cost-sharing for someone enrolled in Part D because the assistance could induce the enrollee to use a more expensive drug made by the manufacturer even though a cheaper alternative may be available. That could increase costs for the Medicare program.

But OIG and CMS said that manufacturer PAPs could continue to help people enrolled in the drug benefit if the drug that was provided for free or at a discount was not also billed to a Medicare drug plan during the course of the year. By providing the assistance parallel to the drug benefit, manufacturer PAPs would avoid any possibility that their assistance was steering beneficiaries to drugs that would be more expensive for Medicare to cover.

For example, a manufacturer could continue to give the company's drug to someone enrolled in its PAP, while that person had the remaining drugs in her monthly regimen covered by a drug plan.

Drug companies are balking at these rules and instead are threatening to cut off assistance to anyone who enrolls in Medicare Part D. According to the Philadelphia Inquirer, Pfizer, Bristol-Myers Squibb and Merck said they would let low-income and elderly patients remain on their charity programs only as long as they did not sign up for Medicare. AstraZeneca and Wyeth Pharmaceuticals have announced they will terminate charity care for all Medicare-eligible patients on January 1, a policy OIG expressed said was not required by its guidance.

"Generally, the new government guidance may make it difficult for PAPs to help low-income Medicare beneficiaries. Guidance from the OIG may impose significant limits on PAPs' ability to continue providing direct assistance to Medicare beneficiaries within their current PAP structures," Ken Johnson, vice president of the Pharmaceutical Research and Manufacturers of America (PhRMA) said in a statement.

But are manufacturers really blocked from providing assistance under these guidelines? Or are the guidelines being used as an excuse to discontinue assistance?

Consider the following:
Manufacturer PAPs are not now structured to coordinate with the Medicare drug benefit; the guidance does not prevent companies from continuing the assistance as it is now delivered.

Most manufacturer PAPs provide help by giving drugs to needy patients for free or for a nominal charge. That type of assistance can continue under the HHS guidelines. If assistance from manufacturer PAPs wrapped around the Part D benefit, as the companies want, PAPs could no longer provide free drugs but would have to find a means to pay for enrollees' coinsurance.

OIG also made clear that it would give companies leeway during the start of the Medicare drug benefit and would not be overzealous in prosecuting violations of the anti-kickback laws.

So what underlies the grumbling from PhRMA companies about the guidance?

Drug companies have known for a long-time that they could avoid any risk of violating fraud and abuse laws if they provided assistance through independent charities that help patients regardless of which company made the drugs they take. But the companies pushed to be able to use programs targeted at patients receiving their products. Now that they have that ability, they are complaining that they can not use their assistance to wrap around the coverage provided by Medicare--that is, to ease the cost to the person with Medicare, but not to the Medicare program itself for their high-priced drugs. Maybe the OIG is on the mark when it raises the possibility that such "help" could steer patients to higher cost drugs and leave Medicare footing the bill.

Part d plan copayments may exceed retail price

A number of Medicare drug plans are charging copayments for certain drugs that exceed the retail price of the drugs, but plan enrollees should be able to pay the lower retail price at the pharmacy counter, according to plan representatives and the terms of a recent settlement with a leading pharmacy benefit manager (PBM).

The copayments charged by some Medicare Advantage and stand-alone Medicare prescription drug plans may be higher than the retail prices for cheap generics and brand name drugs placed on higher tiers. Plans place "non-preferred" brand name drugs on higher tiers generally when they are expensive--seeking to steer customers toward more competitively priced brands and generics.

WellCare's Signature plan lists copayments as high as $71; Coventry's AdvantraRx Premier Plus charges copayments between $60 and $70 for Tier 3 drugs. Other national Medicare Part D companies charging flat copayments include: Aetna, Cigna HealthCare, Humana, MEMBERHEALTH, PacifiCare, SilverScript, Unicare, and United American.

As part of a recent settlement between the HHS Office of Inspector General and AdvancePCS, a PBM bought by its competitor Caremark last year, unless the contract between AdvancePCS and a health plan provides otherwise, the PBM must now require contracted pharmacies to inform customers if the retail price for a drug is lower than the applicable copayment, and allow the customer to pay the lesser amount.

A government lawyer was quoted in Inside CMS saying that while the settlement agreement is not binding on other companies, "the hope is that this becomes standard as these settlement terms get passed around within the industry."

Representatives of companies offering Part D plans say that in cases where the drug retail price is lower than the copayment, the pharmacists' point-of-sale claims adjudications systems will automatically bill the lower amount.

CMS' web tool for comparing drug plans tool reflects the lower price when the retail price is less than the copayment.

However, the government lawyer cautions that the assurances provided by plans are not legally binding and may not be followed. Even though the point-of-sale system can indicate the price discrepancy, it can still allow pharmacists to charge the higher amount.

Consumer advocates voiced concern that drug plans will charge the higher amounts because it is in their economic interest. That can lead to additional financial harm to the plan customer. If the customer comparison shops and buys the drug retail without using her plan card, none of those purchases count towards the limit in out-of-pocket spending, potentially extending the coverage gap.

5. CASE FLASH: WHEN THE GOVERNMENT GIVES THE WRONG INFORMATION

Mr. G turned down Medicare Part B when he was first eligible because he was covered by his employer group health plan. When he retired he decided to take COBRA to extend his health insurance. A Social Security Administration (SSA) representative told him that COBRA counts as a group health plan, so he would have an eight month Special Enrollment Period when it ends during which he could enroll in Medicare Part B without a premium penalty.

When his COBRA ended, Mr. G enrolled in Part B and was informed that he had missed his Special Enrollment Period, so he would have to pay a premium penalty for the time that he did not have coverage from either his employer or Medicare. Mr. G was told that he would have to wait to sign up for Medicare in the General Enrollment Period and that his Part B coverage would not start until July, leaving him uninsured for eight months.

Mr. G called his local State Health Insurance Assistance Program (SHIP) hotline, and a counselor confirmed for him that COBRA does not qualify a person for a special enrollment period. The information that Mr. G received from Social Security was wrong. The counselor helped Mr. G appeal to Social Security by writing a letter that explained how misinformation from a Social Security representative caused him to miss his special enrollment period. The letter cited the relevant Medicare law (42 U.S.C. § 1395p section h), which states that in any case where it is found that a person enrolls or declines to enroll in Medicare because of an error on the part of a representative of the Federal Government, then Social Security can correct the mistake.

Mr. G was retroactively enrolled in Part B, without penalty, to the date his COBRA coverage ended.

To read more cases by subject, go to "Interesting Cases" on our web site at www.medicarerights.org/interestingcasesframeset.html.

This message was generated by the Medicare Rights Center