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CMS also projects that for 2011, 1.2 million beneficiaries will have to change plans as a result of plans leaving the market or reducing their service area. The vast majority of people who will need to change, 925,000 of them, are in Private Fee for Service (PFFS) plans that have decided they no longer want to participate in Medicare as a result of additional requirements passed in the 2008 Medicare Improvement for Patients and Providers Act (MIPPA), not the recent health care reform law. The changes from 2008 go into effect for the 2011 plan year.

Beneficiaries whose plans leave Medicare will still have health insurance through the traditional Medicare program. They will have a special enrollment period in which to enroll in a Part D plan or another MA plan, and they will have guaranteed issue rights to certain Medigap policies. Beneficiaries and helpers should pay attention to the plan non-renewal notice if a plan is leaving Medicare, and, if a plan will be available in 2011, they should be sure to read the Annual Notice of Change (ANOC). The ANOC will explain exactly how the plan is changing for next year. If the plan no longer fits a beneficiary's needs, it's time to "shop around" for a new plan.

A lot about Part D is changing this year – some of it very good. For one thing, the infamous coverage gap called the "Donut Hole" is being phased out as a result of the Affordable Care Act. Drugs will be much more affordable for people who reach the Donut Hole in 2011. In addition, plan sponsors were required to consolidate their plan offerings so that there are fewer plans, and differences between plans are more meaningful and easy to compare.

Closing the Donut Hole

The Donut Hole will be phased out over the next 10 years. In the first phase, eligible individuals who reach the Donut hole in 2010 receive a one-time $250 rebate check. The check is mailed about 45 days from the end of the quarter in which the member entered the Donut Hole.

The second phase, in 2011, will bring dramatic changes to the Donut Hole. Eligible plan members who purchase formulary drugs during the Donut Hole will get a 50% discount on brand name drugs and a 7% discount on generic drugs. These discounts will gradually increase each year until everyone is paying a flat 25% for drugs in 2020. The discounts will be given right at the pharmacy – members will not have to fill out forms or do anything to get the discount. Members will have to pay a small dispensing fee (cost to the pharmacy for filling the drug), which will not be discounted.

The full amount (negotiated price) of the brand name drug (not the discounted amount paid by the member), will count toward TrOOP. (Only the amount the member actually pays for a generic drug will count toward TrOOP. This is because the 7% discount is being provided in additional subsidy from Medicare, rather than through rebates from the drug manufacturers themselves.) This means members will not need to spend as much to get out of the Donut Hole beginning in 2011.

Example: Mrs. Smith is in the Donut Hole. She fills a prescription for a brand name drug that costs $100, with a $3 dispensing fee. With her 50% discount, Mrs. Smith's actual cost for the drug is $53 ($50 + $3), but the full $100 will be applied toward getting out of the Donut Hole.

People on the Part D Low Income Subsidy (LIS) are not eligible for the rebate or the discounts because they already have very low cost sharing during the Donut Hole. But people enrolled in an SPAP (State Pharmaceutical Assistance Program) are eligible for the rebate and discount. A few more important facts about the 2011 Donut Hole:

• The discount is only available if the drug's manufacturer has signed an agreement to participate in the Discount Program. Drugs sold by manufacturers who do not sign an agreement will not be covered under Part D and cannot be requested by exception. CMS anticipates that most, if not all, manufacturers will sign agreements.
• The discount is only available if Medicare Part D is the primary payer. If there is secondary insurance (such as SPAP), it will pay after the Part D discount has been applied.
• If a beneficiary is in a plan that already offers coverage during the Donut Hole, the discount will be applied to the price of the drug he or she would pay under the plan's Donut Hole coverage.
• If a beneficiary fills a prescription that crosses Part D stages of coverage, i.e., a "straddle claim," the discount will only apply to the portion of the prescription that falls in the Donut Hole.

The Standard Benefit

The Part D Standard Benefit is the most basic coverage available under Part D. The chart on the next page describes the changes in standard benefit cost sharing from 2006, when Part D began, to 2011. Note that there are few changes in the standard benefit this coming year. Only the Initial Coverage Limit has changed – it has gone up slightly – meaning that members will fall into the Donut Hole a little less quickly than before.

The Out-of-Pocket Threshold, $4,550, will not change in 2011, but it will be gradually reduced from now until 2020, when the Donut Hole is completely eliminated.

The discount available during the Donut Hole completely changes the cost-sharing equation for consumers. The bottom line is that Part D members who reach the Donut Hole in 2011 will spend much less on prescription drugs than they did in previous years.

Number of Plan Offerings

CMS required that plan sponsors consolidate under-enrolled or duplicative plans in 2011. Accordingly, the number of both Prescription Drug Plans (PDPs) and Medicare Advantage Prescription Drug Plans (MA-PDs) is lower nationwide. Many plans now offer only one "basic" plan and one "enhanced" plan. This change means that it will be much simpler to draw meaningful comparisons between plans from the same sponsor. Take advantage of this opportunity to compare plans, and shop carefully!

Premiums

CMS indicates that the national average monthly premium will increase about $1 (to $30) in 2011, but the overall range of premiums is up among PDPs. In part, this may be because more plans are offering some coverage during the Donut Hole. The most important thing we can say about premiums is: Don't shop by premium alone! Consumers need to look at total annual costs, including the premium and cost sharing (the deductible, co-pays and co-insurance). Even more importantly, consumers need to compare plan formularies to be sure the drugs they take are offered by the plan with as few restrictions (such as prior authorization) as possible. Beginning October 15, plan premiums, deductibles, co-pay amounts, formularies and formulary drug restrictions can be viewed and compared on-line at www.medicare.gov.

Part D Standard Benefit 2006 – 2011  

*Total price of the brand name drug counts toward TrOOP, even though member is paying 50%.  For generic drugs, only the amount the member pays – 93% - counts toward TrOOP.

Important Information for People on the Part D Low Income Subsidy (LIS)

People who get "Extra Help" through the Part D LIS may be auto-enrolled into "benchmark" plans so their premiums will be covered in full or on a sliding scale. Benchmark plans offer basic coverage and have a premium below regional thresholds established for different parts of the country. They work very well for many people, but it's important to remember that LIS-eligibles are not restricted to benchmark plans.

LIS-eligible individuals should shop around for plans that cover all their drugs with as few restrictions as possible. If they cannot find a benchmark plan with a formulary that meets their needs, they may enroll in a more compatible non-benchmark plan. They will be responsible for the difference in premium (in excess of the benchmark threshold for their region), but the excess cost may be worth it to obtain the drugs they need. LIS-eligibles in non-benchmark plans have the same coverage and co-pays as those enrolled in benchmark plans.

Benchmark plans are listed in the "Medicare & You" book, issued by the Medicare agency by November 15 of every year. To view regional benchmark threshold amounts, see the link below.

One additional note: Every year many LIS-eligible individuals are reassigned to a new benchmark plan because the plan they were in no longer qualifies as a benchmark plan. As a result of changes made by the Affordable Care Act to how benchmark plans are calculated, only about 500,000 beneficiaries will have to be reassigned for 2011- the lowest number of reassignments since Part D began. CMS estimates that 1.5 million more beneficiaries would have had to be reassigned if the law had not been changed. The Affordable Care Act also requires that those beneficiaries who are reassigned get more detailed information that compares how the drugs they take were covered under their new plan with the coverage they had under the old plan.

Reminders for Selecting a Plan

• First and foremost, compare needed drugs to the drugs on the plan's formulary. Make sure the needed drugs are on the formulary and have no restrictions (such as prior authorization, quantity limits and step therapy).
• Consider whether or not coverage is needed during the Donut Hole, keeping in mind that this year, most people will get a 50% on brand name drugs purchased while in the Donut Hole.
• If the beneficiary travels, look for a national plan.
• If it is an issue, find out the circumstances when the plan will cover brand name drugs when a generic alternative is available.
• Even after finding a compatible plan, compare annual cost per year, including premium, deductibles and co-pays. Don't assume that a deductible will make the plan more expensive overall, and don't assume that mail order is always less expensive.

There are several sources for help in choosing a plan. Compare plans on-line using the Plan Finder tool at www.medicare.gov. Read the "Medicare & You 2011" handbook that will arrive in November. Call 1-800-MEDICARE, or contact your local SHIP agency.

To find the local SHIP contact, go to: www.shiptalk.org

To view regional benchmark thresholds, go to: http://www.cms.gov/MedicareAdvtgSpecRateStats/Downloads/RegionalRatesBenchmarks2011.pdf 

For a synopsis of 2011 Health and Drug plans in all 50 states go to: http://www.cms.gov/Partnerships/downloads/statefactsheets_all.pdf 

To view listing of PDPs, MA-PDs and SNPs in all 50 states, including benefit type, premium and deductible amounts, benchmark status, and type of coverage during the gap, go to: http://www.cms.gov/PrescriptionDrugCovGenIn/Downloads/PDPSource2011.zip 

For more information, contact Jocelyne Watrous (jwatrous @ medicareadvocacy.org) in the Center for Medicare Advocacy's Connecticut office at (860) 456-7790.