Medicare Part D drug coverage is provided by a variety of private plans, not by the Medicare program itself. This is different from the way Parts A and B work. Also unlike Medicare Parts A and B, people have to take action to enroll in Part D. They can choose a separate Prescription Drug Plan (PDP) and stay in the traditional Part A and B Medicare program, or they can choose a Medicare Advantage plan that has a prescription drug benefit (MA-PD).  Some types of MA plans may not offer a drug benefit; people in these MA plans can choose a separate PDP.  On the other hand, people in an MA plan that does offer a prescription drug plan must use their MA plan's drug benefit unless they disenroll from the Medicare Advantage plan.

The Medicare Part D "Standard Benefit"

The Part D drug benefit covers some of the costs for certain drugs. People have to pay the first $295 as a deductible in 2009 and then Medicare will pay 75% of the next $2,405 worth of drugs on the Plan's formulary. (A formulary is a list of the plan's covered drugs.) After that they have a gap in coverage, known as the "Donut Hole."  During this Donut Hole gap beneficiaries have to pay all the costs of drugs until they have paid another $3,453.75 out-of-pocket. At that point, Medicare will begin paying about 95% of the cost of covered drugs until the end of the calendar year.

COMPARISON OF 2008 AND 2009 STANDARD BENEFIT COSTS & OUT OF POCKET (OOP) THRESHOLDS

The basic Part D benefit is built upon a "standard benefit" design.  The standard benefit is the minimum that plans must offer as described in the chart below.  In reality, very few plans offer a true standard benefit.  Most offer variations that are different from but actuarially equivalent to the standard benefit.  For example, during the Initial Benefit Period, most plans have a tiered system of co-pays rather than a flat 25% coinsurance rate. In addition, some plans offer enhanced benefits that provide coverage in addition to the minimum standard benefit required by law.

Getting out of the Donut Hole

1.  Meeting the Annual True Out-Of-Pocket (TrOOP) Spending Requirement

To get past the Donut Hole and into Catastrophic Coverage beneficiaries need to meet their out-of-pocket (TrOOP) spending requirement, which is $4,350 in 2009. Only certain costs count toward the true out-of-pocket spending requirement. 

Costs that count toward the TrOOP:

• Costs that the beneficiary spent on formulary drugs (or non-formulary drugs that have been granted an exception by the plan)

• Costs paid by the beneficiary's family, a charity, or a State Pharmaceutical Assistance Program such as ConnPACE.

Costs that do not count toward the TrOOP:

• Costs paid for non-formulary drugs.

• Cost of drugs purchased outside the United States.

• Costs paid for by other insurance, including ADAP plans (CADAP in Connecticut).

• Premiums paid to the Part D plan.

2.  Using a Network Pharmacy During the Donut Hole 

To ensure that beneficiaries get credit for costs they incurred during the Donut Hole, and to take advantage of lower drug prices negotiated by their plan, beneficiaries must show their plan membership card at the pharmacy and must be sure to use their plan's network pharmacies.

The Part D plan has the responsibility to track beneficiaries' TrOOP spending during the Donut Hole so they can determine when the beneficiary becomes eligible for Catastrophic Coverage.  The plan will mail the beneficiary a monthly Explanation of Benefits (EOB) to show how much the beneficiary and the plan have each paid during the month.  The EOB will also show how much more the beneficiary needs to spend to reach Catastrophic Coverage.

3.  Important Information About Drug Discount Cards

Drug discount cards can be useful to reduce beneficiaries' expenses during the Donut Hole.  But remember, only the portion that the beneficiary pays out-of-pocket, not the amount paid by the discount card, can be applied toward the TrOOP spending requirement.  Again, beneficiaries must show their plan membership card at the pharmacy and must use a network pharmacy to get proper credit.

AVOIDING OR MINIMIZING THE DONUT HOLE

1.  Coverage During the Donut Hole

In previous years it could be advantageous to select a plan that offered coverage during the Donut Hole. In 2006, for example, one Connecticut plan covered both brand name and generic drugs during the Donut Hole.  The situation is very different, however, in 2008.

While there are 12 plans that offer some drug coverage during the Donut Hole in 2009 not a single free-standing Connecticut Prescription Drug Plan (PDP) pays for brand name drugs during the Donut Hole.  Furthermore, only 3 plans pay for all generic drugs during the Donut Hole.  The others only pay for "some" or "many" generic drugs.  Unfortunately, this means that people who take drugs for which there is no generic alternative (or no "preferred" generic alternative) will have to pay for these drugs completely out-of-pocket during the Donut Hole.  Thus, beneficiaries should consider carefully before enrolling in a plan that offers coverage during the Donut Hole as it may not be worth the extra dollars spent on the plan's premiums.

2.  If Eligible, Participate in your State Pharmaceutical Assistance Plan (SPAP)

Some states offer a "State Pharmaceutical Assistance Plan" (SPAP).  In Connecticut, the SPAP is known as ConnPACE.  ConnPACE members pay a maximum of $16.25 per prescription while they are in the Donut Hole.

3.  If Eligible, Participate in the Medicare Savings Program (MSP)

Beneficiaries should find out if they qualify for a Medicare Savings Program (MSP). There are three MSPs that pay for all or some of the Medicare cost-sharing requirements. These programs are very worthwhile. At a minimum, they pay for the Part B premium. Further, beneficiaries enrolled in an MSP program automatically qualify for the Part D Extra Help (LIS) subsidy (see below).

4.  If Eligible, Participate in the Part D Low Income / Extra Help Subsidy (LIS)

Beneficiaries should find out if they qualify for the Part D "Extra Help" subsidy. (Also known as the Low Income Subsidy or "LIS.")  Social Security administers the Extra Help subsidy program.  The subsidy is to help people pay for their Part D premiums and co-pays.  During the 2009 Donut Hole, people who have Extra Help will pay the greater of $2.40/$6.00 or 15% for each prescription, depending on the amount of their income and assets.

2009 CONNECTICUT PART D PRESCRIPTION DRUG PLANS (PDPs)

1. NUMBER OF PDPs

This year there are 20 sponsors offering 47 plans.  This is down from 19 sponsors offering 51 plans in 2008.

No sponsors have dropped out.  There is one new sponsor (Bravo) offering single basic plan called Bravo Rx.

Five sponsors have reduced the number of plans they offer.  E.g., United Healthcare (AARP sponsor) is down from 5 plans to 4 plans.  First Health, RxAmerica, Sterling and Unicare have also dropped one plan each.

2. PDP PREMIUMS

Premiums are up! up! up!  All but two plans increased monthly premiums.  Notably, the Humana plan that was $7.32 in 2006 is up to $41.40 in 2009.  The increases ranged from $1 more per month to a high of $34.80 more per month.

Two plans dropped premiums.  One plan dropped by $2.30 per month, the other dropped premiums by about $30 but it also dropped all coverage during the gap.

The overall range of PDP premiums in 2009 is $19.40 (First Health) to $111.30 (Aetna).  The historical range is shown in the table below.

Seventy percent (70%) of Connecticut plans offer premiums below $50/month. The largest single category is the $30-$39.99 range. The breakdown is as follows:

3. PDP DEDUCTIBLES

The maximum deductible in 2009 = $295.  Twenty-seven (27) plans have $0 deductible, 16 are at $295 and the four remaining are at $195, $180, $175, and $50.

4. PDP GAP COVERAGE

Like 2007 and 2008, there is not a single PDP that pays for brand name drugs during the donut hole.  CMS has revised coverage gap definitions for 2009 and the percentages of coverage for brand name and generics are calculated separately.  Since brand name drugs are not covered during the gap in CT, the following definitions apply:

• "Few" means less than 10% (of formulary generic drugs) are covered during the gap.  (NOTE:  must equal at least 15 drugs)

• "Some" means 10% - <65% (of formulary generics) are covered…

• "Many" means 65% - <100% (of formulary generics) are covered…

• "All" means 100% (of formulary generics) are covered.

This year, 35 out of 47 PDPs (74%) provide NO COVERAGE during the gap.  Two (2) out of 47 (4%) offer SOME coverage.  Seven (7) out of 47 (15%) offer MANY generics, and 3 out of 47 (6%) offer ALL generics.

5. PDP PREMIUM RANGES BY "GAP COVERAGE"

The range of premiums for various types of gap coverage is shown below.

• "No Coverage" premiums range:       $19.40 - $68.60 (N = 35)

• "Many" covered range:                       $65.10 - $79.60 (N = 2)

• "Some" covered range:                       $50.60 - $111.30 (N = 7)

• "All" covered range:                           $ 69.00 - $79.60 (N = 3)

6. PDP DRUG TIERS – definitely NOT "apples to apples"!

Like previous years, very few plans (3 out of 47) offer the defined standard benefit, which has a flat 25% co-pay during the Initial Benefit Period.  All other PDPs have tiered co-pays or co-insurance. 

When Part D began in 2006 the tiering structure was simple and easily defined.  Tier 1 drugs were generics, Tier 2 drugs were preferred brand name, Tier 3 drugs were non-preferred brand name and Tier 4 were injectibles and specialty drugs.

Since that time, however, the plans have taken full advantage of their ability to define their own tiers.  Some plans have four tiers while others have five.  The placement of drugs within tiers also varies among plans.  For example, the same generic may be a Tier 1 drug in one plan, a non-preferred Tier 3 drug in another plan, and a Tier 4 or 5 "specialty" generic in yet another plan. This lack of standardization among the tiered plans means that it is virtually impossible to compare plans and Part D cost-sharing without the use of CMS’s on-line Plan Finder tool.  While the Plan Finder is relatively easy to use, Medicare beneficiaries who lack confidence in their computer skills should ask family, friends, their local pharmacy, or their area SHIP agency (CHOICES in Connecticut), to help them compare plans on the Plan Finder.

7. PDP COST SHARING (CO-PAYS AND CO-INSURANCE)

Like monthly premiums, cost sharing for beneficiaries is generally up.  However, it is difficult to perform an exact comparison to 2008 cost sharing because some plans have changed their number of tiers (e.g., going from four to five separate tiers), or changed particular tiers from a co-pay to a co-insurance status (or vice-versa), or increased costs in some of their tiers while staying the same or even lowering costs in other tiers.  A quick survey reveals little or no increases – and even decreases – at opposite ends of the spectrum, that is, among Tier 1 generics and Tier 4/5 specialty drugs.  Most changes in cost sharing are at the Tier 2 and 3 levels.  Most of the changes are increases, some moderate, others quite high, e.g., one plan increased their Tier 2 costs by $23 per 30-day script.

Of special note is the fact that while some plans offer coverage of certain drugs during the donut hole, cost sharing for the same drug may be higher during the donut hole.  For example, a generic drug that costs $7 during the Initial Benefit Period costs $10 during the donut hole.

To the extent that PDP members qualify for the following programs, their 2009 maximum cost sharing will be as follows:

2009 CONNECTICUT BENCHMARK PLANS

The benchmark plan threshold for 2009 is $31.74.  There are 12 benchmark plans this year, compared to 14 in 2008.  Further, there is no "de minimus" factor this year.  For beneficiaries, the most significant change is that Humana is no longer a benchmark plan.  (Sources have indicated that Humana deliberately bid high to get out this less profitable line of business.)

Since Humana has been such a popular plan (for example 32% of Medicare-eligible ConnPACE members are enrolled in Humana plans), a large number of LIS-eligibles who were auto-assigned into this plan will be reassigned in the near future.  (LIS eligibles who selected their own plans will not be reassigned, but in states other than CT they will have to pay out-of-pocket for the excess over benchmark.)  Advocates need to be prepared for a many calls on this year’s reassignment.
 

NOTE:  At this writing the Connecticut Department of Social Services is still paying full premiums, i.e., the excess over benchmark, for full dual eligibles and ConnPACE members. 

2009 CONNECTICUT MEDICARE ADVANTAGE PLANS WITH PRESCRIPTION DRUG COVERAGE (MA-PDs)

1. NUMBER and TYPE OF MA-PDS

In 2009 there are nine (9) sponsors offering 32 plans.  Humana is no longer offering an MA-PD in Connecticut.  No other sponsors have left the area, but the total number of plan offerings is down.  Significantly, the number of Private-Fee-For-Service (PFFS) plans is down from 22 to 12 in 2009.  Sources indicate this decline is due to low market penetration.  This year, the majority of MA-PD plans are local HMOs.

2.         MA-PD REGIONS

Only one plan sponsor (Secure Horizons) offers a single plan (R7444) that has coverage throughout the state of Connecticut.  Other plans (Anthem, ConnectiCare, Universal American Today’s Option, and HealthNet) each offer different plans that together offer coverage throughout the state.  Aetna, Wellcare and Advantra offer coverage only in some counties of Connecticut.  Every county in Connecticut has several MA-PDs to choose from.

3.         MA-PD PREMIUMS

Like PDPs, MA-PD premiums have increased, although most sponsors continue to offer one plan with a $0 consolidated premium.  Consolidated premiums (for hospital, medical and drug coverage) range from $0 to a high of $179 per month.  There is a broad distribution of premiums, as follows:

4.         MA-PD DEDUCTIBLES

One of Aetna’s plans has a $215 deductible.  All of the other MA-PD plans in Connecticut have $0 deductible.

5.         MA-PD GAP COVERAGE

Like PDPs, there are no MA-PDs that offer coverage of brand name drugs during the donut hole.  Using the same terminology as for PDPs (see #4 under PDPs), in 2009:

•  50% (16 out of 32) of the MA-PDs offer "NO COVERAGE" during the gap.

•  about 41% (13 out of 32) cover "MANY" generics during the gap

• about 9% (3 out of 32) cover "ALL" generics.

6.         MA-PD COST SHARING

Analysis of MA-PD co-pays and co-insurance is pending at this time.  However, to the extent that MA-PD members qualify for the following programs, their 2009 maximum cost sharing will be as follows:

2009 CONNECTICUT SPECIAL NEEDS PLANS

1. NUMBER AND TYPE OF SNPs

This year there are 4 sponsors offering a total of 8 plans, compared to 2008 when there were 5 sponsors offering 10 plans.  Senior Whole Health, which offered 1 plan last year, is gone.  In addition, HealthNet, which offered two plans last year, has eliminated its SNP for dual eligibles and now just has one plan for people with chronic and disabling conditions.  There are no new sponsors all of the 2009 plans are carried over from 2008.

All of the 2009 SNPs are HMOs.

2. SNP COVERED POPULATIONS

Three (3) of the 2009 SNPs are for dual eligibles, 4 are for individuals with chronic or disabling conditions, and 1 is for institutionalized individuals.

3. SNP MONTHLY PREMIUMS

Premiums range for $0 to $119 per month.

4. SNP DEDUCTIBLES

One plan has a $215 deductible.  The remaining plans have $0 deductibles.

5. SNP GAP COVERAGE

Using the same terminology as for PDPs (see #4 under PDPs), in 2009

• 6 out of 8 SNP plans (75%) have no gap coverage

• 1 plan pays for "MANY GENERICS AND FEW BRANDS"

• 1 plan pays for "FEW GENERICS AND FEW BRANDS"

3. SNP COST SHARING

Analysis of SNP co-pays and co-insurance is pending at this time.  However, to the extent that SNP members qualify for the following programs, their 2009 maximum cost sharing will be as follows:

PDP CONCLUSIONS:

Like previous years, Part D costs continue to increase.  Monthly premiums and beneficiary cost sharing are up. 

Also like the past two years, there are no PDPs or MA-PDs that cover brand name drugs during the donut hole.  People who take drugs for which there is no generic alternative may face very high costs for their prescription drug coverage, even if they have a plan that pays for most or all generics.

Many – but far from all - generics are now available for about $4 at Wal-Mart, K-Mart, Target, etc.  In addition, some generics on the market are surprisingly expensive (e.g., some are Tier 3 drugs in certain plans).  Taken together, these two facts mean the value of purchasing a more expensive plan that offers some or all generics during the donut hole is very much an individual calculus.

Looked at another way, it could be said that an individual’s maximum out-of-pocket "exposure" is $4,350 (the TrOOP maximum for 2009).  With this in mind:

• People who take a lot of very expensive brand name drugs will probably enter and get out of the donut hole very quickly, making Part D a real bargain and extraordinary benefit for some.

• People who take very few or inexpensive drugs will probably never reach the donut hole, and will typically get maximum benefit if they select a plan with no deductible.

• People in the middle can look forward to spending all or most of that $4,350 (plus premiums) and will never reap the catastrophic coverage benefit.   (That, of course, is why it’s called "insurance"….)  Averaged out, including an average $28/monthly premium, but not counting any potential non-formulary drugs, this means that in a "worst case" scenario, Medicare beneficiaries who do not qualify for the LIS or ConnPACE should budget about $390/mo for prescription drug costs in 2009.  This amount is roughly equivalent to a monthly car payment for many individuals.

As in previous years, Medicare beneficiaries who qualify for the Extra Help (LIS) subsidy, including dual-eligible individuals, and those who are on MSP or SSI, and individuals who have ConnPACE, have coverage during the deductible period and the donut hole and do not need a plan that offers gap coverage.

Finally, in order to choose the best and most economical plan for each individual, beneficiaries must avail themselves of, or find someone to conduct a search for them on,  the Medicare on-line Plan Finder tool.  Without the assistance of this resource, it is not possible to conduct an accurate comparison of 2009 plans to each other.  With the Plan Finder, beneficiaries can pin-point anticipated costs per year (based on the drugs the beneficiary takes), but can also determine if their drugs are on plans’ formularies, and whether those drugs are subject to restrictions such as step therapy, prior authorization and quantity limits.