Medicare Plan D gets mixed grades

New drug benefit works for some seniors, not others

Bill Scanlon, Rocky Mountain News

Published October 23, 2006 at midnight

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To some Colorado seniors, the new Medicare drug benefit is a godsend. To others, it's a pain in the neck.

But to most, Medicare Part D is somewhere in between, say seniors advocates and the doctors who provide care to Coloradans over 65.

"It's a lot of smoke," said Dr. Aaron Snyder, who works for Kaiser Permanente. To him, the government is cleverly concealing the fact that the benefits are relatively modest.

Now 9 months old, Medicare Part D offers seniors prescription drugs at little or no cost, in exchange for a monthly premium. There are 42 plans; some carry high premiums but tiny co-pays, others cost almost nothing per month but require the senior to meet a deductible or make higher co-pays.

Only one of the plans gives seniors a way out of the so-called "doughnut hole," the time in the year when, after $2,250 in expenses have accumulated, seniors have to pay the entire cost of their prescription drugs out of pocket. Benefits don't kick back in until a senior has paid $3,600 of his or her own money.

And the single plan that covers brand-name drugs through the doughnut hole period has such high monthly costs that few seniors are opting for it - unless they know in advance that their drug costs are going to be huge.

Medicare Part D isn't the literal lifesaver that earlier incarnations of Medicare were - programs that brought basic and extended health care to seniors who would have died without it, Snyder said.

"I've never had a patient say, 'Oh, my government's Medicare Part D has improved my life,' " Snyder said. "Some have said it's good. But its low level of funding is somewhat concealed."

The trouble, he said, is that the people most in need of a lot of medications still will be paying a lot out of pocket because of the doughnut hole. Some 3.4 million seniors are expected to hit the doughnut hole this year, according to PricewaterhouseCoopers. Some expensive cancer medications, for instance, can cost $2,500 a month.

All that out-of-pocket money would be worth it if it meant lives were being saved. But those same people weren't dying before, maintained Alice Ierley, a Medicare ombudsman for Boulder County. Instead, they most likely were enrolled in a pharmacy discount plan that got them their drugs at a price they could afford.

Now, with Part D, those plans have largely disappeared, even as drug manufacturers laud Part D and take in hefty profits.

Part D does have extra benefits for couples earning less than $20,000 a year or for individuals earning less than $15,000 a year.

But Ierley worries most about the seniors who just barely miss qualifying for the benefits of low-income status.

"Just yesterday, I was talking to someone who now has to pay $500 a month because of the doughnut hole," she said Thursday. "He can't afford it, so he's worse off now."

But advocates of Part D, who have formed a coalition called the Medicare RX Education Network, say the benefit is popular among most seniors.

A September survey commissioned by Medicare RX of 800 seniors enrolled in a Medicare Part D plan found that 53 percent were very satisfied and 29 percent somewhat satisfied.

Sixty-nine percent said they were better off than before and 32 percent said they no longer had to skip medications or reduce doses.

The survey didn't poll seniors who were on employer plans or others who chose for a variety of reasons not to enroll in Part D.

Medicare RX Education Network members include AARP, which has been criticized for advocating for the drug benefit while sponsoring its own Part D plan. Other Medicare RX members include such groups as the Alzheimer's Association and the American Academy of Family Physicians.

There are winners in Part D, particularly those seniors who were on a less-than-robust plan before, Ierley said. They could be saving 40 percent on drug costs, even after factoring in the co-pays and premiums.

Snyder said middle-class seniors who now get a break on their one or two meds are somewhat happy, "but they're not the ones we were worried about" when the Part D debate was waged, he said. "The general reaction is one of disappointment."

The open enrollment window this year is Nov. 15 through Dec. 30. That's when seniors who've balked previously can pick a plan, and when seniors already on a plan can switch to another.

Ierley expects to be slammed with calls during the enrollment window.

Already she hears daily from people complaining that they're suddenly ineligible for a certain drug, or that they want to change plans, or that they're confused.

She tries to sort it out and is thankful for some cyber-help.

Ierley credits the federal government for greatly improving its search tool on the www.cms.gov Web site. Seniors, or their children who are Web-savvy, can compare plans, input their medications and find out exactly what they'll be paying month to month.

The site can generate a bar graph that shows the relatively modest amount from, say, January to August, that the senior will be paying out of pocket, and then the big bucks from September to the end of the year, once they've hit the doughnut hole.

For their part, pharmacies aren't sold on Part D.

When the program started, many Colorado pharmacies had to take out loans to stay in business, said Brad Young, who heads government relations for RX Plus Pharmacies Inc.

Pharmacies had to pay their suppliers in a week, but weren't getting reimbursed from the government for a month or two, he said.

"That's been somewhat corrected over time, but some are still having trouble," he said.

Val Kalnins, executive director of the Colorado Pharmacists Society, said half of members surveyed said they had to get loans to weather the slow reimbursements - and 25 percent borrowed $100,000 or more.

The doughnut hole

• Why: When Congress crafted the Medicare Part D prescription drug benefit, members knew the government couldn't afford a blanket plan to pay for all drugs for all seniors. They wanted to give seniors an incentive to avoid drugs they didn't truly need and to opt for generic, rather than brand-name drugs, when possible. Congress came up with the doughnut hole to address both goals.

• How it works: The government pays for most of a senior's prescription drugs up until the expenditures for the calendar year reach $2,250. After that, the senior pays out-of-pocket until personal expenditures have reached $3,600. After that, the benefit kicks back in. Some Part D plans, with higher premiums, pay some or most of the costs during that doughnut hole period, but it's hard for seniors to completely bypass the doughnut hole without paying very high monthly premiums.

• Downside: Critics argue the doughnut hole hurts the seniors who need it most - those with modest incomes who aren't able to anticipate their medical needs for the upcoming year, or who can't afford the premiums for a "Cadillac plan."

• Upside: Proponents say relatively few seniors reach the doughnut hole in any given year, and that among those who do, there are good discount programs for those with incomes of under $15,000 a year.

scanlon@RockyMountainNews.com or 303-442-8729

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