THURSDAY NIGHT IS HEALTH CARE CHANGE NIGHT, a weekly Daily Kos Health Care Series.
Tonight's installment is intended to be a primer, if you will, on Medicare D and also Medicare C, aka "Medicare Advantage." I thought it would be helpful, however, to first give a brief bit of background on Medicare A and B.
It is important to remember that Medicare is an insurance plan that functions in our healthcare system as a payor for services rendered, and that there are eligibility requirements for Medicare. You, or your spouse, needs to have worked for at least ten years in a job that has paid into the system, or you need to have been diagnosed with a permanent disability or diagnosed with kidney failure requiring dialysis to qualify. This article provides some good background.
Medicare A
Medicare part A is available to those who qualify for Medicare without paying for premiums. Medicare A covers hospital costs as well as other facility costs, and hospice care falls under Part A. There is limited outpatient coverage under Part A; for example, the hospital where I work provides clinic services under Part A, for which the hospital bills a facility fee as opposed to a professional fee.
Medicare B
Medicare part B is what covers outpatient care and professional fees, what doctors get paid in their private offices. The eligibility is the same; however, Medicare B requires payment of monthly premiums, and there are copays required for office visits. Medicare B covers some medications, some that are injectible or require infusions, but otherwise does not cover medications.
Medicare supplemental (briefly)
Medigap coverage provides payment for those things that are not covered by Medicare; these are private programs and beyond the scope of this diary at this point.
However, some people who have Medicare may have secondary insurance, such as medigap type coverage. When you hear about retiree health benefits, for retirees over the age of 65 these are often private programs that have covered aspects of care not included under Medicare; this often included prescription medications. For the indigent, who were unable to afford medications for example, this secondary insurance was often provided by Medicaid.
Now, on to the meat of the diary.
Medicare C
What many people may not realize is that Medicare Part C, now known as Medicare Advantage, actually predates the Bush administration. It was created as part of the Balanced Budget Act of 1997 (which has had more ramifications than originally intended - but that's beyond the scope of this diary.) Under the terms of the original act, Medicare beneficiaries were allowed to choose to get their insurance coverage through private insurers, rather than through traditional forms of Medicare.
The main advantage of Medicare C, called Medicare+Choice, plans back in the late 90s for patients was that many of them provided coverage for medications. This was in the true heyday of HMOs and managed care organizations, and much of this care was capitated care. In order to entice insurers to provide programs, initially the premium paid to the insurers was greater than the costs of the average beneficiary, so that in some ways the insurers viewed this as a potential boon.
The problem, however, was that most of these programs were under managed care, a restricted provider list, and a restricted formulary. For people who either didn't have high medical costs, especially pharmaceutical costs, or those who had established relationships with providers who were not 'par' with these programs and didn't want to switch, or who could not negotiate the world of HMO medicine (that was more common 10-15 years ago than now,) they largely elected to stay with traditional Medicare, despite some of the 'advantages.'
In the end, what happened was that the insurers participating in Medicare+Choice wound up, overall, with the sicker, more expensive patients, while those who were considered a 'better' insurance risk remained in the general Medicare pool. There was already a narrow margin when Congress cut the payments to insurers to the average level, and insurers left the program in droves.
People who had signed up with Medicare Advantage programs were often left in the lurch, still with high pharmaceutical costs and no way to cover them.
After the passage of the Medicare Modernization Act in 2003 (which also created Part D, to which we'll turn in a minute) the reimbursement changed again for insurers, making it far more palatable for private insurers to enter the Medicare privatization world once again. Medicare Advantage provides many of the benefits of Part B and Part D, sometimes without a 'donut hole' for medication coverage, and may provide other benefits as well. For example, my father gets his membership in the local YMCA covered at least in part by his Medicare Advantage program. Now, getting older people to be more active is indeed a major factor in health and longevity, and I'm sure my dad isn't the only one who would be much less likely to pay the fees on his own; nevertheless, clearly there is some creative bookkeeping going on here.
You may remember in the SCHIP debate earlier this year that the expansion of that program was to have been paid, in part, by a reduction in payments to providers of Medicare Advantage plans. Think about the power of these players when you wonder why the expansion of the popular children's program was fought so vigorously.
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So, are you confused yet? Well, if you're not, hang on. It gets much rougher from here.
Medicare D
Medicare part D was created by the Medicare Prescription Drug, Improvement, and Modernization Act, passed in 2003 and implemented fully as of 1/1/2006. It is an optional program; it is available to anyone who qualifies for Medicare. For most people it requires payment of a premium; however, for people who meet certain low income eligibility requirements, the premium is waived, as is the donut hole. Copays for medications may also be waived.
To say this program is byzantine is to be kind; to try to describe it within the scope of a diary is frankly impossible. In fact, as I was researching, I found that the official Medicare site had 24 pages dedicated to FAQs about Medicare, much of it about the prescription drug program.
Please bear with me, then, as I try to make some sense of this; and it is in no way intended to be comprehensive.
One of the key points of the Medicare Prescription program is that, like Part C, the government pays private insurers to administer the program. However, there are some differences in that the Centers for Medicare and Medicaid Services have a set formulary that excludes specific drugs and makes the criteria for appeal much more difficult than those for private insurers. Medicare itself is specifically prohibited from negotiating with drug companies; however, the insurers and their PBMs (pharmacy benefit managers) are not prohibited from negotiating themselves. Contrast this with the pharmacy benefit through the Veteran's Administration: they have a closed formulary (you can't appeal; certain drugs are only available under very specific criteria) but the Veteran's Administration representatives themselves negotiate and negotiate hard for the lowest drug costs from the drug companies, often favoring generic drugs.
The choice of Medicare part D 'products' available to eligible beneficiaries varies widely from state to state and based on any of a number of criteria. There is a program through Medicare to assist eligible people in negotiating the variety of programs, but these people are prohibited from making specific recommendations about which program might be most appropriate for a given beneficiary. They are, essentially, left to fend for themselves; this is supposed to maximize "choice." And while there is a specific formulary set by Medicare, this is more of a general inclusion/exclusion guidelines with a few exceptions; specifics of coverage may vary from program to program.
One of the most controversial parts of Medicare D is the so-called "Donut Hole." The simple fact is that, unless you are indigent, Medicare D does not provide full coverage for medications; depending on the plan you choose, there are deductibles to meet and out of pocket costs to incur before you hit the level of "catastrophic coverage." Now, some Medicare D providers eliminate the donut hole, but in exchange charge higher premiums. For some patients who are on multiple medications, this may make sense.
The thing about the donut hole is that it is getting bigger every year. Here
is a link to the data for the years 2006 and 2007. It's very instructive to look at these numbers: the deductibles have gotten higher; the out of pocket costs have increased before hitting the point at which the beneficiary (heh) has to pay 100% of costs; and the donut hole itself has gotten wider; in addition the copays for medications are higher in 2007 than in 2006, by that table.
And it's only gotten worse in 2008. A few weeks ago, I saw a patient of mine who is on multiple medications; she has a Medicare D plan, and gets her meds on a 90 day basis through a mail in company. Shortly after her visit in April, she notified me that she has already hit the donut hole; last year it didn't happen until November. This is due not only to the wider donut hole but to the dramatically increased cost of prescription medications (again, beyond the scope of this diary.)
The actual numbers for 2008 are as follows:
- $275 deductible
- 25% of the next $2235
- which means a total expenditure of $833.75 on the first $2510 of total costs; and remember, this is in addition to the premiums;
- 100% of the next $3216.25, bringing total out of pocket costs to $4050 before "catastrophic" coverage kicks in;
- total cost of drug expenditures (plan coverage and out of pocket costs) will be $5726.25 prior to reaching catastrophic coverage, in 2008.
And this donut hole will get wider next year.
Now here's one of the other things that happened when Medicare D went into effect. Most pharmaceutical companies have charity programs to help patients get their medications if they do not have coverage. In Maryland, we actually have a central clearinghouse called Maryland Medbank which assists patients in accessing this program. Prior to the institution of Medicare D, this was used frequently in the programs where I work, particularly for patients with Medicare without secondary coverage. But Medicare D negated the eligibility for that, because all Medicare beneficiaries are eligible for part D coverage. With few exceptions, Medicare patients can no longer access these programs.
So, now, they have premiums, copays, and the donut hole, whereas previously the costs were all out of pocket but there was some access to safety nets for many that no longer apply.
I leave it to the reader to determine the degree of benefit of this program.
One other thing. Not all Medicare beneficiaries pay premiums or are affected by the donut hole; these are the indigent who frequently, prior to 2006, had Medicaid secondary coverage (or another form of governmental assistance; in MD, we had Pharmacy Assistance;) these folks are the so-called "dual eligibles," meaning eligible for coverage by both state and federal programs. As of January 1, 2006, all of these people were enrolled in a part D program. There was an enrollment period during 2005 (I don't remember the actual dates) but if patients were not enrolled as of the implementation date, they were effectively "dropped into" a program.
The problem herein is that not all programs cover the same drugs! So, it was not uncommon for people to come in and find that the medications they had been taking successfully for a long time (remember, these were folks who had prescription coverage) were no longer covered. Or any of a number of other problems, but I'll leave that for another time.
So, many patients found that they needed to change programs, but there's a very limited time window each year in which they can change, and trying to get up to date information to make the decision, especially for some of the frail elderly who actually have the greatest and most complex needs, ican be quite challenging.
And here's the final kicker for tonight: while there is this limited window to enroll, and beneficiaries try to make the best choice they can based on available data, the plan providers are free to change the coverage at any time. So you make a choice of plan because they cover most of your meds at the lowest cost? That might not be true in 3 months, but you are locked in to that plan until the next enrollment period.
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Believe it or not, I've only scratched the surface of this labyrinthine program. For further information:
The official Medicare site, with links to all sort of information about Medicare
Medicare Advocacy, a non-governmental source of information and advocacy for Medicare
Wikipedia on Medicare
CMS - The Centers for Medicare and Medicaid services
And finally, a disclaimer: as I mentioned above, this is in no way meant to be comprehensive; nor did I actually plan for it to be objective.