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 $275 as a deductible in 2008 and then Medicare will pay 75% of the next $2,235 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 $3,216.25 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 2007 AND 2008 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 Out-Of-Pocket Spending Requirement

To get past the Donut Hole and into Catastrophic Coverage beneficiaries need to meet their out-of-pocket (OOP) spending requirement, which is $4,050 in 2008. Only certain costs count toward the out-of-pocket spending requirement. 

Costs that count toward the OOP:

• 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 OOP:

• 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 you paid to your 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’ OOP 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 OOP 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 15 plans that offer some drug coverage during the Donut Hole in 2008, not a single free-standing Connecticut Prescription Drug Plan (PDP) pays for brand name drugs during the Donut Hole.  Furthermore, only 7 plans pay for all generic drugs during the Donut Hole.  The others only pay for "some" or "preferred" 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 ConnPACE, the 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.
 

Current ConnPACE Eligibility Requirements: 

• Single $23,100/year.  Couple $31,100/year. (These income limits will increase on January 1, 2008.) 

• There is no asset test for ConnPACE. (The asset information collected on the ConnPACE application is only to allow the state to determine who may be eligible for the Part D Extra Help (LIS) subsidy.) 

• To apply, call ConnPACE for a brochure and application at (800) 423-5026.  From out of state, call (860) 409-4555.  Also, an application can be downloaded from the ConnPACE website (www.connpace.com).

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 ($96.40 in 2008). Further, beneficiaries enrolled in an MSP program automatically qualify for the Part D Extra Help (LIS) subsidy. Therefore, in 2008 participants in an MSP will pay only $2.25 per medication (for a generic) or $5.60 per medication (for a brand) while in the Donut Hole.

Current MAXIMUM MSP Eligibility Requirements:

Of the three MSP programs, the one with the most generous financial eligibility limits is the Qualified Individual Program (QI-1).  It is also known as the "Additional Low Income Beneficiary Program (ALMB).

• Income limits are:  Single $1,375.85/month, Couple $1,994.35/month.

• These income limits change annually on April 1st.

• There is no asset test for this program.

To apply in Connecticut, contact the State of Connecticut State Department of Social Services.

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 2008 Donut Hole, people who have Extra Help will pay the greater of $2.25/$5.60 or 15% for each prescription, depending on the amount of their income and assets.

Current LIS / Extra Help Eligibility Requirements

• Current income limits for Extra Help are:  Single $15,315/year, Couple $20,535/year.

• The maximum asset limits for Extra Help are:  Single $10,210, Couple $20,410.  (An additional $1500 per person is allowed as a burial allowance.)

• To apply, contact the Social Security Administration, the state Medicaid agency, (in Connecticut, this is the Department of Social Services), or call the local SHIP agency.

• In Connecticut, call CHOICES at 1(800)994-9422).

2008 CONNECTICUT PART D PRESCRIPTION DRUG PLANS (PDPs)

Click HERE for the Kaiser Family foundation breakdown of plans by state, type and number.
Click HERE to search the Centers for Medicare & Medicaid Services description of plans by state.

1.  NUMBER OF PDPs

• 19 plan sponsors offer a total of 51 plans.

• There are no new plan sponsors in 2008.  However, two 2007 plan sponsors (SAMAscript # S7950-002 and NMHC #S8841-002), are gone in 2008.  (Both of these were new plans in 2007.)

• The following sponsors added new plans:  First Health added plan # 085 "Secure Plan";  Rx America added #287 "Allegiance Plan";  Unicare added plan #108 "Standard Plan";  MEDCO added #105 "Value Plan" and #173 "Access Plan".

• Total new plans added = 5.  Medco is the only sponsor that added two plans.

• Total plans dropped = 3.  HealthNet dropped plan # 072 "Option 3 Plan"; Unicare dropped plan #072 # "Premier Plan"; Wellcare dropped #070 "Complete Plan".

• Unicare is the only sponsor that both added and dropped a plan. 

2.  PDP PREMIUMS

2008 premiums range from $14.60 (First Health) to $99.50 (Envision).  NOTE:  Humana’s $7.32 plan (2006) will cost $24 in 2008.  See past years’ ranges:

In 2008, most plan premiums are under $50/month.

             Plans with premiums < $20                                           2

                                                $20 - $29.99                            18

                                                $30 - $39.99                            12

                                                $40 - $49.99                            8

                                                $50 - $59.99                            1

                                                $60 - $69.99                            4

                                                $70 - $79.99                            3

                                                $80 - $89.99                            0

                                                $90 - $99.99                            3

            Number of plans that increased their premiums              32

            Number of plans that decreased their premiums                         13

            Number of plans that stayed the same                           1

3.  PDP DEDUCTIBLES

            Plans with $0 deductible                                               32

            Plans with $275 deductible                                           16

            Other ($175, $100, $150)                                             3

4.  PDP GAP COVERAGE

            Plans with no gap coverage                                         36

            Covers brand & generics during gap                            0

            Covers all generics                                                       7

            Covers only preferred generics                                    6

            Covers only "some" generics                                       2

5.  PDP DRUG TIERS

In 2006 there were basically 4 Tiers of drugs:  Tier 1 (Generic), Tier 2 (Preferred Brand), Tier 3 (Non-preferred Brand) and Tier 4 (Specialty and Injectable drugs). 

 

In 2008, generics are further sub-classified into categories that are placed at Tiers 2, 3 and even 4.  These classifications are:  "Value" Generics, "Preferred/Non-preferred" Generics and "Specialty" Generics.  The addition of these sub-tiers is expected to have a major effect on the cost of co-pays for generic drugs.

 

A few plans only offer Tier 1 generic drugs (at a flat 25% co-insurance rate).

6.  PDP CO-PAY COSTS  (For a 30-day supply)

This year generic drugs may be placed at Tiers 1, 2, 3 or 4.  Therefore, co-pays for generics range from $0 to as much as $75.60 (for a non-preferred generic) – or possibly even higher if the drug is in a "specialty generic" with up to 33% co-insurance.  The ranges for different tiers of drugs are:

7.  PDP CONCLUSIONS:

1. 2008 spells bad news for people who take drugs for which there is no generic alternative, or for which the generic alternative is not a preferred generic in their particular plan.  This is because there is not a single PDP in Connecticut that will offer coverage of any brand name drugs during the Donut Hole.
   
   In addition, this year many beneficiaries will only be able to obtain "preferred" generics (or "some" generics) during the Donut Hole. (In 2006 and 2007, plans that offered coverage during the Donut Hole paid for all generics.)
    

2. People who pay extra for a policy that offers coverage during the gap will find themselves still having to pay out-of-pocket for some of their generics and all of their brand name and specialty drugs during the donut hole.  Some of these drugs may cost hundreds or even thousands of dollars.  (Provided they are on the plan’s formulary, they will at least count toward the individual’s out-of-pocket spending requirement, known as TrOOP.)
    

3. Individuals who have high prescription costs and those who largely need brand name drugs can expect to enter the Donut Hole early in the year and to pay out most, if not all, of the $4,050 OOP threshold before the calendar year ends.
    

4. As in previous years, beneficiaries who have a source of coverage that will pay for drugs during the Donut Hole (Those with Medicaid, ConnPACE or LIS) do not need a plan that offers coverage during the Donut Hole.

5. There are no "bargain" prices for Part D coverage. People need to plan in order to get the drugs they need during the year.  Beneficiaries should think carefully before enrolling in a plan that offers coverage during the Donut Hole as that coverage may not be worth the extra premium dollars required.
    

6. Notwithstanding the small decrease in the national average monthly premium ($27.32 in 2007 down to $25 in 2008), overall premium costs in Connecticut have risen tremendously since the program started two years ago.  At the low end of the premium range ($7.32 in 2006 to $14.60 this year) costs are up nearly 100%.  At the high end of the range ($65.58 in 2006 to $99.50 this year), costs are up nearly 52%.  This might be acceptable if beneficiaries were getting more for their money – but that is generally not the case.  Benefits are down, particularly with respect to the cost of generic drugs and coverage during the Donut Hole.
    

7. The addition of multiple "sub-tiers" among the generic drugs makes it increasingly difficult to make a true comparison of plan-to-plan costs.  Professionals and beneficiaries who can access and use the Plan Finder tool can still make these comparisons, but people without computers or computer skills – including many of the country’s elderly and disabled – will be at a loss to compare plans without some form of assistance.

CONNECTICUT BENCHMARK PLANS IN 2008

Click HERE for the Kaiser Family foundation breakdown of plans by state, type and number.
Click HERE to search the Centers for Medicare & Medicaid Services description of plans by state.

In this region, the 2008 Part D premium Low Income Subsidy amount is $29.17.  The de minimus threshold, the amount above which the subsidy will still pay in full, is reduced from $2 in 2007 to $1 in 2008.  Plans with premiums that qualify for the full subsidy ($30.17 or lower) are known as "benchmark" plans.

CMS has announced that it expects that more beneficiaries across the country will have to switch plans in 2008.  In 2007, very few Connecticut LIS beneficiaries had to switch to a different benchmark plan in order to continue to receive a full premium subsidy.  Given the changes in the 2008 CT benchmark landscape of plans (see Chart below), there may be more reassignments in 2008.  However, it is important to remember that CMS will only be reassigning beneficiaries who were originally assigned to a plan by CMS.  Dually eligible people, those in a Medicare Savings Program (MSP) who selected their own plans and Connecticut beneficiaries enrolled in ConnPACE should not be reassigned in 2008.  Beneficiaries who will be reassigned should receive a written notice of their reassignment by October 31, 1007.

• There were 15 CT Benchmark Plans in Connecticut in 2007, this year there are only 14.

• All of this year’s benchmark plans offer either a defined standard benefit package (DS), a basic alternative package (BA), or an actuarially equivalent benefit (AE), and have a monthly premium that is not more than $1 over the de minimus threshold (i.e., not more than $30.17 per month).

• Ten (10) of last year’s 15 benchmark plans continue to be benchmark plans in 2008.  Beneficiaries in these 10 plans will not have to be reassigned.

• There are 4 new Connecticut benchmark plans in 2008.  Two of these were in existence in 2007 but were not benchmark plans at that time.  Two (2) are newly created plans in 2008.

• Four (4) of last year’s Connecticut benchmark plans are not benchmark in 2008.  Because none of these plans’ premiums are below the 2008 deminimus threshold ($30.17), their LIS members will be reassigned (if they were auto-enrolled by CMS last year).  Again, beneficiaries who enrolled in a plan on their own will not be reassigned, even if they are in a non-benchmark plan.

At this writing (November 2007), Connecticut continues to pay the full premium for all dual eligible beneficiaries and ConnPACE recipients.  In most other states, that do not pay the full premium, LIS members who are not reassigned (because they enrolled in a plan on their own) will have to pay the difference above the benchmark threshold.  The chart below compares the 2007 and 2008 Connecticut Benchmark plans.

COMPARISON OF 2007 AND 2008 CONNECTICUT BENCHMARK PLANS
 

2008 CONNECTICUT MEDICARE ADVANTAGE PLANS WITH  PRESCRIPTION DRUG COVERAGE (MA-PDs)

Click HERE for the Kaiser Family foundation breakdown of plans by state, type and number.
Click HERE to search the Centers for Medicare & Medicaid Services description of plans by state.

1.  NUMBER OF MA-PDs

• 14 sponsors offer a total of 37 plans.   (Note:  As in previous years, the same corporate entity may sponsor different types of plans.  For example, this year Aetna Medicare offers two PFFS plans, two PPO plans and two MA/HMO plans – for a total of 6 plans.  It has a different sponsor identifier number for each of these categories; therefore, for purposes of this comparison it is counted as three separate sponsors.  If the sponsor count were unduplicated the data would read as 9 sponsors offering 37 plans in 2008.)

• All 2007 sponsors continue into 2008.

• Two new sponsors in 2008:  ConnectiCare and Advantra.

2.  TYPES of PLANS

Of this year’s 37 plans, the majority are Private Fee For Service plans (PFFS)

3.  MA-PD REGIONS

Four (4) sponsors cover all of Connecticut: Anthem, ConnectiCare, HealthNet, and Today’s Option.  (In 2007, only HealthNet covered the entire state.) 

4.  MA-PD PREMIUMS

Premiums continue to rise each year.  However, some plans still offer $0 premiums for       Parts C (Medicare Advantage / MA) and D.

5.  MA-PD DEDUCTIBLES

Nearly all of the MA-PDs have a $0 deductible.  Aetna and Humana are the only sponsors that offer plans with a higher deductible ($275).

6.  MA-PD DONUT HOLE GAP COVERAGE

In 2006, none of the 16 MA-PD plans in CT offered coverage during the Donut Hole.  In 2007, nearly 20% of plans offered gap coverage (7 out of 24). This year nearly 60% (21 out of 37) have coverage during the Donut Hole gap. 

Of the plans with some Donut Hole gap coverage, Humana is the only MA-PD that has coverage of "some generics and some brands" during the coverage gap.  The others either have coverage of "all generics," "some generics" or "all preferred generics." 

The two plans that will pay for brand name coverage during the gap are both Humana PFFS plans.

7.  MA-PD CO-PAY COSTS (For a 30-day supply)

8.  MA-PD CONCLUSIONS
 

1. Medicare Advantage plans continue to expand in Connecticut.  Since 2006 we have gone from 4 to 14 sponsors (a 250% increase).  The number of plans offered has risen from 16 to 37 plans (a 131.25% increase).  While the overall numbers are still relatively low, the percentage increases are startling.
    

2. More than half of this year’s MA-PDs are PFFS plans (21 out of 37).  PFFS plans offer to pay any provider who is willing to accept the plans terms and conditions of payment on a service-by-service basis.  It is possible, therefore, that a provider may see a patient who has this type of coverage for an initial visit, but may decline to provide subsequent treatment.
    

3. More MA-PD plans are offering coverage of drugs during the Donut Hole.  Like the PDPs, however, MA-PDs have pulled back on the drugs they will cover during this period.  Whereas fewer plans offered such coverage last year, those that did paid for all generic drugs during the gap.  This year, like the PDPs, many MA-PDs that will pay for drugs during the gap will only pay for "some" or "preferred" generics.  Humana’s two PFFS plans are the only two plans of any type in CT that offer coverage of brand name drugs in the donut hole, albeit, they will pay for only "some" brand drugs, not all.
    

4. MA-PDs continue to offer "no cost" or relatively low cost packages that offer hospital, medical and prescription drug coverage – particularly in comparison to the combined cost of a Medigap plan and an inexpensive free-standing PDP.  For beneficiaries looking to save money, these plans may seem irresistible.  BUT, beneficiaries considering these plans need to weigh their priorities, especially the value of seeing providers of their own choosing, which is often not possible in a Medicare Advantage plan.  The watchwords remain, caveat emptor – buyer beware.