The Unveiling of Medicare Part D


The Unveiling of Medicare Part D

What to expect and how to make the most of the prescription-drug benefit that debuts January 1.

YOU�VE PROBABLY DEVOTED far too much time over the past few months trying to sort out Medicare�s new Part D prescription-drug benefit. Think of it as carefully plotting, scheming and cajoling to get tickets for the opening of a long-awaited Broadway show. Now, the curtain is rising�25 months after a controversial three-hour vote in the House of Representatives to okay the biggest expansion of Medicare benefits since the program was created four decades ago. So it�s time to shift your thinking from �How in the heck do I choose a plan?� to �How in the heck does my drug plan really work?�

We�ve asked an array of experts�Medicare officials, insurance- and drug-industry sources, consumer advocates, and providers�for answers to questions you�ll likely be asking in the weeks ahead. First off, two trends retirees will see in the months ahead:

Second-guessing. �A lot of beneficiaries lured into a PDP [prescription-drug plan] by promises of low premiums may be shocked the first time they go to the pharmacy and have a high co-payment,� says John Gorman, a former Medicare official who now runs Gorman Health Group. Whether you�ve fallen into such a trap or discover other shortfalls with your plan, most beneficiaries get a free do-over, the opportunity to switch plans one time before May 15.

Remain flexible. �There�s no doubt this market will be radically different at the end of 2006 than it is now,� says Robert Hayes, president of the Medicare Rights Center. Some plans are likely to flee; others will change their pricing and benefits structure.

Meanwhile, Congress could make changes the program. The result: There�s a good chance you�ll need to reexamine your options later this year.

A Quick Part D Recap
Medicare�s voluntary Part D prescription-drug benefit started January 1. Beneficiaries with coverage considered to be as good as or better than the new Part D benefit�either through a former employer, union or other means�should not enroll in Part D. All other beneficiaries probably should. Most retirees have until May 15 to do so. Failing to enroll in Part D by that time will trigger a 1% premium penalty for each month you dally. The program requires you to spend $3,600 out of pocket before you hit so-called catastrophic coverage, with Medicare paying 95% of subsequent drug costs. Now, answers to the questions that are bedeviling beneficiaries. Q: How do I pay my Part D premium?
A: Either directly to your insurer or by having the premium deducted from your Social Security benefit each month, just as the Part B premium is.[ad break]

Q: When I buy drugs, do I show my Medicare card or do I have a separate card?
A: You�ll get a special card to present at a pharmacy and pay a portion of your medication�s cost. If it�s your regular drug store, the pharmacist will have your prescription on file, and the card simply indicates your Part D coverage. Some beneficiaries may need to switch pharmacies because their old one isn�t in their PDP�s network or is a �nonpreferred network pharmacy� where cost-sharing is higher.

Q: Do I pay only my co-payment when I pick up my pills, or do I pay the full cost and get reimbursed by my PDP?
A: If your prescription is covered under your plan and your pharmacy participates in the PDP�s network, you pay the co-pay amount. However, if you fill your prescription through an out-of-network pharmacy, you will likely have to pay the full price and seek reimbursement from your Part D plan. But be aware: Some plans will not reimburse a portion of the cost of drugs obtained at an out-of-network pharmacy.

Q: What do you mean by �if the pharmacy participates� in the PDP? My plan won�t work everywhere?
A: No, your plan won�t work everywhere. In most cases, you�ll pay more for drugs if you get them at a pharmacy outside of your plan�s network. Also, you�ll get no help on the cost of drugs not included on your plan�s formulary, or list of covered drugs. Although the government requires plans to have a comprehensive formulary, there�s wide latitude on what�s covered. And some drugs�including some used for anxiety, insomnia and seizure disorders, as well as prescriptions for vitamins�aren�t covered by Medicare Part D at all. You pay the full cost yourself.

Q: Who keeps track of the payments I make toward my deductible and my cost-sharing obligations?
A: That job falls to your Part D plan. Your pharmacist will enter each prescription into a computer system that will know whether the drug is on your plan�s formulary and what your out-of-pocket costs will be. Your deductibles and co-payments will be tracked so the plan knows where you stand in the Part D universe�that is, whether you�re in the initial deductible phase, the coverage phase, the notorious �doughnut hole� phase where there is no coverage, or the catastrophic phase. Consumer advocate Hayes advises that you keep tabs on your purchases, too. �Smart consumers don�t let foxes guard the henhouse,� he says.

Q: What drug purchases will count toward catastrophic coverage, and which won�t?
A: The cost of medications excluded from Part D (including benzodiazepines, barbiturates, over-thecounter medications, herbal products and nutritional supplements) don�t count toward the $3,600 of annual out-of-pocket costs needed to trigger catastrophic coverage. In addition, drug plans can exclude other medications. Costs for drugs not on a plan�s formulary will not count toward reaching catastrophic coverage, says Thomas Clark of the American Society of Consultant Pharmacists. Q: Can a PDP take a drug I take off its formulary?
A: Yes, but it must seek permission from Medicare to do so and give you 60 days� notice or allow you to obtain a 60-day supply of that drug.[ad break]

Q: Will I get statements from my PDP on my drug purchases and associated costs?
A: Yes, for every month in which you purchase drugs. It will show the drugs purchased, your costs and exactly where you are in the benefit phase.

Q: If I join a drug plan now and two years later decide I don�t like it, can I switch?
A: You can change plans once a year during the annual enrollment period, which will run from November 15 through December 31. The new plan will be effective the following January 1, says Vicki Gottlich, of the Center for Medicare Advocacy. This year, however, you can also switch one time between January 1 and May 15, 2006.

Q: What happens if I develop a condition or need a medication in the future that�s not on my plan�s formulary? Can I change to a plan that covers the drug, or am I out of luck?
A: Generally, you won�t be able to change plans until the next enrollment period. However, you can ask the plan for an exception so it will pay for the nonformulary drug. Your plan must have an exceptions process for drugs your physician can show are medically necessary. Another alternative is to ask your doctor if there is an alternative medication that is covered by your plan.

Q: How involved is the exceptions process?
A: There are several layers of appeals. If your initial request is denied, there are other avenues to get a drug plan to pay for that medication. But the process can take months, and it is likely to be burdensome.

Q: Can a Part D plan move a drug to a different co-pay tier at any time?
A: Yes, a plan can move a drug to a higher co-pay tier during the plan year, but the plan must give members 60 days� notice before doing so. A member can also request an exception as described above. Q: I�ve heard that even if drugs are on my PDP�s formulary, I may not be able to get those drugs. Is that true?
A: Yes. Plans may use cost-management tools to restrict access to drugs on their formularies, says Clark. These procedures may require your physician to ask for special permission to use certain meds or require that you try a cheaper medication before the plan will pay for a more expensive drug.[ad break]

Q: If I go on vacation and need to refill a prescription, can I go to any pharmacy and still have it covered by the plan?
A: Although beneficiaries cannot routinely use outof- network pharmacies, you can get medicine from an out-of-network pharmacy in emergency situations. You�d pay the full cost at a nonnetwork pharmacy, then submit a claim for reimbursement. Many drug plans, though, have contracts with national stores, such as CVS, Rite-Aid and Walgreen�s, that are part of the network wherever they are.

Q: I shop with an online pharmacy to get discounts on my drugs. Can I still do that under Part D?
A: Only if that online pharmacy is part of your PDP�s network. If it�s not, you�ll get no help paying for the drugs, nor will the amount you pay count as an out-of-pocket cost for purposes of reaching catastrophic coverage.

Q: Will I pay the same amount for Part D every year?
A: Premiums can change every year, and your cost for prescriptions will fluctuate. If you�re in a plan with a 25% co-insurance, for example, your out-of-pocket cost will rise or fall as the cost of the drug changes. And the $3,600 you must pay out-of-pocket to reach catastrophic coverage in 2006 will rise each year based on the overall rate of inflation for prescription drugs.

Q: I take a lot of different drugs. Will my doctor know which are covered by my plan?
A: Unlike pharmacists, physicians won�t necessarily have all plan formulary information at their fingertips. But many physician offices already have ways to check and the formularies are found at When your doctor is prescribing a new medication, make sure he or she knows which prescription plan you have.

Q: I turn 65 in September. When can I enroll in Part D?
A: You sign up during the three months before and three months after the month of your 65th birthday.

Q: How do I know I�m not being scammed?
A: In order to protect yourself against fraud, ignore door-to-door solicitations. Companies approved by Medicare are allowed to pitch their products over the phone and through the mail�not at your door. If someone calls saying they are from a drug plan, ask the person the name of the plan, and then hang up. Call Medicare (800-633-4227) to check whether the company is Medicare-approved in your area, and ask for the plan�s number. Then, if you�re interested, call the plan�s toll-free number yourself.