Medicare Part D - Full Benefit Duals with Retiree Coverage

In some parts of the country, October brings changing leaves, but throughout the country, October also brings information about changing Medicare prescription drug coverage. While the October 1st announcement of the 2010 Prescription Drug Plans (PDPs) and Medicare Advantage (MA) plans by the Centers for Medicare & Medicaid Services (CMS) continues to tout the wide array of offerings,[1] the number of plans that are available does not tell the entire story. Private insurance companies make changes in premiums and benefit packages every year. The Part D benefit, by statutory design, includes annual increases in beneficiary cost-sharing[2], even when Social Security and other benefits do not increase accordingly.

As in previous years, the changes cause beneficiaries to shoulder more of the cost of their prescription drug coverage. The full extent of the additional costs will not be known until drug formularies and tiering structures[3] are made available later in October. These additional costs will be particularly burdensome to beneficiaries since the Social Security Administration projects that there will not be a Social Security cost-of-living adjustment (COLA) in 2010. A COLA would have provided a modest increase in resources that beneficiaries could use to offset increased drug prices. Beneficiaries and their advocates, therefore, need to review their drug coverage carefully; the drug plan that worked for an individual in 2009 may not be the best option in 2010.

The benefit design for the standard benefit changes each year. The following chart shows the increases in the deductible, initial benefit limit, catastrophic coverage limit, and cost sharing from 2006 to 2010.

2006

2007

2008

2009

2010

Annual Deductible Maximum

$250

$265

$275

$295

$310

Member pays 25% of the next…

$2,000

(25% = $500)

$2,135

(25% = $533.75)

$2,235

(25% = $558.75)

$2,405

(25% = $601.25)

$2,520

(25% = $630)

Initial Benefit Period Maximum

(what the member AND the plan have spent)

$2,250

($250 + $2000)

$2,400

($265 + $2,135)

$2,510

($275 + $2,235)

$2,700

($295 + ($2,405)

$2,830

($310 + $2,520)

DONUT HOLE

Member pays 100% of the next…

("TrOOP")

$2,850

$3,051.25

$3,216.25

$3,453.75

$3,610

Catastrophic Coverage

Begins when member (NOT plan) has spent a total of…

$3,600

($250 + $500 +

$2,850)

$3,850

($265 + $533.75 +

$3,051.25)

$4,050

($275 + $558.75 +

$3,216.25)

$4,350

($295 + $601.25 +

$3,453.75)

$4,550

($310 +

$630 + $3,610)

Cost sharing during Catastrophic Coverage

$2/$5

or 5% (whichever is higher)

$2.15/$5.35

or 5% (whichever is higher)

$2.25/$5.60

or 5% (whichever is higher)

$2.40/$6

or 5% (whichever is higher)

$2.50/$6.30

or 5% (whichever is higher)

Even though the total number of plans offered will be slightly less in 2010 than in 2009 (1,510 PDPs in 2010 instead of 1,689 PDPs in 2009), beneficiaries will continue to have an overwhelming number of plans from which to choose in 2010. Those who live in the regions with the fewest plans (Alaska and Hawaii) will still have 39 different PDP options to review. Once again, the largest number of PDPs (53) will be offered in the region that includes Pennsylvania and West Virginia.

The number of Benchmark plans (for which individuals who are eligible for the full Low-Income Subsidy (LIS) pay no premium) also continues to decline. According to Kaiser Family Foundation, there will be 212 fewer Benchmark plans in 2010 than when Part D went into effect in 2006; 11 regions will lose between 3 and 6 plans, while 8 regions will lose 1 or 2 Benchmark plans. Unlike last year, however, there will be at least three (3) Benchmark plan options in every state, making it more likely that all full LIS-eligible beneficiaries will have a choice of plans for which they pay no premium.

No new organizations have chosen to offer a PDP in every state and the District of Columbia. Furthermore, none of the twelve parent organizations that sponsor a national plan offers a Benchmark plan in all 34 PDP regions. Three organizations that offered national plans in 2009, Envision Insurance Company, Munich American Holding Company (Sterling Life Insurance Companies), and Wellcare, will no longer do so in 2010.[5]

Loss of Prescription Drug Coverage through Medicare Advantage Plan Termination

Some Medicare Advantage (MA) plan sponsors have made the business decision not to renew their contract with Medicare for 2010. Enrollees in a terminating MA plan that offers drug coverage (MA-PD) will have to enroll either in a PDP by the end of December if they return to traditional Medicare or in another MA-PD within that timeframe in order to have drug coverage on January 1, 2010.[6] LIS-eligible individuals who are enrolled in terminating MA plans will be automatically enrolled in a PDP if they do not choose a PDP or an MA-PD plan for themselves.[7]

The start of October also means that Medicare Advantage and prescription drug plan sponsors may begin marketing their plans to Medicare beneficiaries. CMS continues to remind both beneficiaries and plan sponsors that the agency has strengthened its oversight of marketing activities, and that it will focus on areas where beneficiaries may be affected by non-renewal of plan contracts.

October marks the beginning of the annual Medicare enrollment period. Beneficiaries need to look at the information available to them about their prescription drug options. In the next few weeks they will receive information from their current drug plan, the Medicare & You Handbook, and marketing materials. Beneficiaries are urged to use the Medicare Plan finder tool on www.medicare.gov and to seek assistance from their State Health Insurance Assistance Program (SHIP) (www.shiptalk.org) to ensure that they have the best Medicare prescription drug coverage available to them starting on January 1, 2010.

[1] CMS, Robust Medicare Health and Drug Plan Coverage Continues in 2010, Beneficiary Protections Strengthened (October 1, 2009), http://www.cms.gov/apps/media/press/release.aspCounter=3526&intNumPerPage=
10&checkDate=&checkKey=&srchType=1&numDays=3500&srchOpt=0&srchData=&keywordType=
All&chkNewsType=1%2C+2%2C+32C+42C+5&intPage=&showAll=&pYear=&year=&desc=&cboOrder=date

[2] The deductible, the initial coverage limit, catastrophic coverage limit, and cost-sharing after catastrophic coverage is reached increase annually.

[3] Plans that do not offer the standard drug benefit generally put drugs on different cost-sharing tiers, with generic drugs on the tier with the lowest co-payment and high- cost brand name drugs on the tier with the highest co-payment.

[4] Information about drug plan availability, premiums, and benefit design comes from Medicare Part D Spotlight: Part D Plan Availability in 2010 and Key Changes Since 2006 (Kaiser Family Foundation, Oct.1, 2009), available at http://www.kff.org/medicare/upload/7986.pdf.

[5] 2010 Medicare Part D National Stand-Alone Prescription Drug Plans, http://www.cms.gov/PrescriptionDrugCovGenIn/Downloads/NationalPDPs.pdf

[6] Of the more than 26 million Medicare beneficiaries who have drug coverage through Medicare Part D, 9 million are enrolled in a Medicare Advantage Plan with prescription drug coverage (MA-PD). Medicare Prescription Drug Plans in 200 and Key Changes Since 2009: Summary of Findings I (Kaiser Family Foundation June 2009); http://www.kff.org/medicare/upload/7917.pdf.

[7] People enrolled in a Medicare Advantage plan or PDP that is not renewing its contract should receive notice of their rights from both the plan and from CMS. The Center will describe those rights in a future Alert.