Medicare Beneficiaries With Stand-Alone Prescription Drug Plans Could Face Premium Increases

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The open enrollment period for the Medicare Part D prescription drugbenefit begins Thursday and continues through the end of the year, andbeneficiaries should "look closely" at their plans because many of themare increasing premiums, copayments and deductibles, the Baltimore Sun reports. According to consulting firm Avalere Health, monthly premiums for 2008 on average are increasing 21% (Salganik, Baltimore Sun, 11/11).

The Kaiser Family Foundationon Wednesday released data showing that three-quarters of Medicarebeneficiaries enrolled in stand-alone drug plans could face premiumincreases in 2008 and monthly premiums will increase 17%, if enrolleesdo not switch plans. The Kaiser Family Foundation cites about a 5%increase in 2007, based on actual enrollment (Macias, Los Angeles Times, 11/10). A number of plans will "raise their premiums significantly in 2008," according to the Winston-Salem Journal.

UnitedHealth Group's AARP Plan-Saver, which has about 900,000 beneficiaries, will increase its premium by 87%, according to Avalere (Jackson, Winston-Salem Journal, 11/12). According to the Kaiser Family Foundation, Humana'sPDP Standard plan has increased premiums almost threefold since itsdebut in 2006. That plan has some of the "heaviest enrollment,"according to USA Today.

Tricia Neuman, a Kaiser Family Foundation vice president and director of the Foundation's Medicare Policy Project,said, "If seniors don't switch plans, they could well experience anincrease in their premiums and, for some, it could be a fairly largeincrease" (Appleby, USA Today, 11/12).

Selecting a Plan

Although some plans are reducing their premiums, beneficiaries shouldnote that the best choice might not be the "one with the lowestpremium," but rather the "one that will mean the lowest total cost,over the year" for medications, according to the Sun.Seniors should consider the so-called "doughnut hole" coverage gap,under which beneficiaries are required to pay for drugs after $2,510 incosts have accrued for the year. The gap ends once total drug costs hit$5,726.35. Some plans cover generic drugs during the doughnut hole(Baltimore Sun, 11/11). According to USA Today, only one insurer, which serves beneficiaries in Florida, covers brand-name drugs during the gap (USA Today, 11/12). Once the gap ends, beneficiaries receive all future drugs for a copay of $5.60 or less, according to the Sun.

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Inaddition to doughnut hole coverage, beneficiaries also should considerthat plans have different copays, lists of covered drugs and pharmacynetworks (Baltimore Sun, 11/11). Seniors will have plenty of choices, with most states having 50 or more plans, according to USA Today. CMSofficials said that beneficiaries will be able to keep premium costslow in 2008. Herb Kuhn of CMS said, "In every state, people will beable to find a plan that costs less than $20 a month" (USA Today, 11/12).

AvalerePresident Dan Mendelson said, "The reality of the Medicare experienceis that beneficiaries have been very loyal thus far to their initialplan selections. If consumers stick to their choices again, they arelikely to see a dramatic increase in their monthly premiums" (Winston-Salem Journal, 11/12).

Medicare Advantage Plans

Beneficiaries also have the choice of enrolling in more comprehensivehealth insurance plans that include prescription drug coverage throughMedicare Advantage. However, not all MA plans have drug coverage. An MAplan "might be a good deal," but beneficiaries should understand theterms before signing up, according to the Sun (Baltimore Sun,11/11). Critics of MA have said that federal subsidies to the plansshould be reduced, a move that is under consideration in Congress.

Kathy Batteer, vice president for Medicare of University of Pittsburgh Medical Center'sUPMC for Life HMO Rx Enhanced health plan, said that if MA payments arecut, it will be "hard, if not impossible, for Medicare Advantage plansto offer the benefits they do today" (Fahy, Pittsburgh Post-Gazette, 11/12).

Low-Income Subsidies, Special Needs Plans

The open enrollment period also will bring changes to beneficiaries whoreceive the drug benefit's low-income and disabled subsidies, accordingto the Times. The changes are taking place because theplans in which many of these beneficiaries are enrolled no longer meetthe subsidy program's requirements. Beneficiaries in the subsidy, whopay no premiums or reduced rates, automatically might be placed in anew plan for 2008 if they opted to not choose their own plan whenenrolling in the program. About 2.1 million beneficiaries will beaffected. Another 440,000 beneficiaries who elected to choose their ownplan meeting the subsidy's requirements will have to select anotherplan (Los Angeles Times, 11/10).

Meanwhile, thenumber of special needs plans, which target beneficiaries with chronicconditions such as diabetes or high cholesterol, is increasing nextyear, according to the Post-Gazette. Abby Block, directorof the center for beneficiary choices at CMS, said that the number ofspecial needs plans will rise by 58% in 2008. Block said the reason forthe increase in these plans might be because the formula used to payinsurers changed and now takes a patient's health status into account.Block said that it is unclear if the special needs plans will offerimproved benefits but that the effect is "something we're trying veryhard to measure" (Pittsburgh Post-Gazette, 11/12).

Reprinted with permission from kaisernetwork.org. Youcan view the entire Kaiser DailyHealth Policy Report, search the archives, and sign up for email deliveryat kaisernetwork.org/email. The Kaiser Daily HealthPolicy Report is published for kaisernetwork.org, a free service of The HenryJ. Kaiser Family Foundation.

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