Medicare Drug Plans Often Not the Bargain Some Expect

[Guest guest]

(Typical Bush. New drug plans call for people paying, in many cases,

more for their drugs than before when they had no insurance, plus the cost of

their new insurance. Well the new laws helped the ones they were intended to

help. Big Pharma and the insurance companies. We though may not be able to

afford much more help from this guy.)

 

 

http://www.latimes.com/news/local/la-me-medicare18apr18,1,6808921.story

 

 

Medicare Drug Plans Often Not the Bargain Some Expect

Reasonably healthy middle-class seniors find they can do better by

getting many of their prescriptions filled at low-margin pharmacies.

 

By Valerie Reitman, Times Staff Writer

April 18, 2006

 

Martin Brower was skeptical about the new Medicare prescription drug

program and almost didn't bother buying in.

 

But he couldn't be sure he wouldn't need it someday, and didn't want

to pay the financial penalties for missing the May 15 deadline for

sign-ups. So he enrolled in a plan with a $278 annual premium and no

deductible, hoping for immediate discounts.

 

When Brower, 77, plunked his official card on the counter at Costco to

pick up his regular prescription, however, he got some disturbing

news: His monthly supply of blood pressure medication would cost less

if he didn't use his Medicare plan.

 

The plan allowed him a maximum of 30 pills for $1.32 each. Without it,

he could get 100 pills for $1.13 apiece.

 

Medicare Part D " doesn't save anything, " grumbled Brower, who is no

longer using the Medicare plan.

 

Some other seniors — generally reasonably healthy, middle-class people

who do not take a lot of costly drugs — are coming to a similar

realization: When premiums, co-payments, coverage gaps and other costs

are figured in, the Medicare plans' drug prices are sometimes little

better, and sometimes worse, than those offered at low-margin pharmacies.

 

The finding has been borne out in a handful of surveys around the

nation by program critics. For instance, a review by the Senior Action

Network, a grass-roots advocacy group in San Francisco, found that

Costco's prices on the top 100 drugs used by Medicare beat prices of

all 48 plans in California in more than half the cases.

 

" Seniors still ask, 'How come the drugs cost more with insurance than

if I just go to Costco and buy them?' " said David Grant, the

network's health policy director. " 'Why is it better to pay more and

get less?' "

 

Some seniors are irked by other restrictions surfacing in the plans,

including higher-than-expected co-payments, sudden price hikes,

quantity limitations and requirements to try generic drugs before

moving on to the higher-priced brands.

 

Officials at the U.S. Centers for Medicare and Medicaid Services,

which runs the federal Medicare health program for the elderly and

disabled, say that millions of new enrollees are saving money. In

addition, they say, the plans' value can't be measured strictly by

toting up individual prescription prices, but also must factor in the

insurance coverage against future illness or injury.

 

A Washington Post-ABC poll, released last week, found that nearly

two-thirds of seniors enrolled in the program said they were saving at

least some money. But less than a third said they were saving a lot,

and 26% said they had seen no savings, according to the findings,

which were based on a subsample of 147 enrollees nationally.

 

As the May 15 deadline looms, about a third of Medicare's estimated 23

million non-indigent beneficiaries who lack employer-funded

prescription drug coverage have enrolled in Medicare plans, the Kaiser

Family Foundation estimates.

 

On first blush, the possible savings appear enticing. The 2003 law

that created the new program mandates that enrollees, after paying a

$250 deductible, receive minimum annual benefits equivalent to 75% off

total drug purchases up to $2,250. Enrollees also would save 95% off

purchases of $5,100 or above.

 

For this coverage, the government agreed to pay the for-profit

insurers running the plans an annual subsidy that now is at least

$1,124 for each Medicare beneficiary who enrolls. The insurers also

collect annual premiums from seniors averaging about $324 nationally

plus whatever co-payments they charge.

 

Medicare is making a huge investment in the program — nearly $700

billion over the next 10 years, according to the Kaiser Family Foundation.

 

Experts say the program clearly can benefit chronically or

catastrophically ill people who take many costly medications, provided

they carefully choose a plan that covers the drugs they need.

Low-income people stand to benefit as well; a key provision of the

Part D plan waives most premiums and co-payments for low-income people

who earn up to 150% of federal poverty levels.

 

The plans offer " meaningful and affordable " coverage and catastrophic

insurance protection for as little as $2 per month in some states,

said Leslie Norwalk, deputy director of the Centers for Medicare and

Medicaid Services. The plan covers two drugs in every class, including

some expensive drugs such as Gleevec, a cancer drug that sells for

$2,800 per month at Costco.

 

" Not all plans will be cheaper all the time, but we're looking at the

overall mix and the value of the insurance, " said Steve Hahn, a

spokesman for the American Assn. of Retired Persons, which endorses

the AARP MedicareRx Plan, operated by UnitedHealthcare, and obtains

undisclosed royalties for enrollments. " It's very difficult to come up

with a program for 44 million that would provide the corporate

coverage you or I are used to for $5 to $10 " co-payments.

 

Brower and his wife, Tamar, knew they couldn't get corporate-style

coverage, but they avidly sought the best deal. The Corona del Mar

couple are reasonably healthy and active, with a combined prescription

drug bill of $3,100 last year.

 

They called various plans to inquire about charges for the specific

drugs they needed, but no one would tell them, they said. So they

settled on the AARP-endorsed plan, partly because it carried the name

of an organization they knew.

 

So far, they say, it hasn't proved such a great bargain. Martin Brower

is back to buying his medications the old way, at Costco, sans Medicare.

 

His wife fared better — at least in the short term.

In March, for instance, she saved $58 on four prescriptions ($35, if

the monthly premium is subtracted ) using the AARP-endorsed plan,

paying $117 compared with $175 she would have paid at Costco without

using her Medicare plan.

 

But her savings were hardly as dramatic as she had hoped — nowhere

close to 75% off the Costco price. And should her prescription costs

rise somewhat, her savings could be wiped out. If she spends more than

$2,250 a year, she lands in the so-called " doughnut hole, " wherein she

would be fully responsible for the plan's list price for the drugs

(more than $200 a month). Under most plans, the gap in coverage lasts

until a senior has spent up to $5,100.

 

A study last year sponsored by the Commonwealth Fund, a nonprofit,

nonpartisan foundation, predicted about 38% of enrollees would fall

into this gap in any given year.

 

After expenditures of $5,100 or more, enrollees must pay just 5% of

the costs of covered drugs. But the Commonwealth Fund-sponsored study

found that just 14% of enrollees are expected to need catastrophic

coverage in any year.

 

A variety of surveys, though small, have suggested that better

discounts overall are available outside of Medicare, at outlets such

as Costco, Drugstore.com, and particularly in government programs

operated by the Department of Veterans Affairs and Medicaid, which

negotiate volume discounts.

 

A comparison by the Democratic staff of the House Committee on

Government Reform found that in January, 10 leading Medicare drug

plans were charging prices for 10 top brand-name drugs that averaged

2% more than at Costco in Los Feliz, 4% more than at Drugstore.com,

61% more than in Canada (which caps prescription prices) and 78% more

than the other federal programs.

 

And a survey by Stephen W. Schondelmeyer, a professor of

pharmaceutical management and economics at the University of

Minnesota, found in the first two weeks of the plans' rollout that

Medicare plans' prices did not differ much from those of typical

retailers, at least in one Minnesota ZIP Code.

 

Costco executives say the warehouse keeps its prices low because

storewide policy prohibits markups of more than about 15% above

acquisition costs, possible because of lean overhead with few frills.

 

Charles Burnett, Costco's senior vice president of pharmacy, said many

Costco customers are choosing not to enroll in Medicare. " They buy

two-thirds of their drugs [the generics] from us, and the rest from

Canada, " where brand-name drugs typically are cheaper because of

government price caps, he said.

 

Other pharmacies have an incentive to charge higher cash prices

because it helps them to receive higher reimbursements from insurers,

he said. But because 60% of Costco patients are uninsured, " we're not

going to do that to penalize the person who pays cash, " Burnett said.

 

Joining Costco costs $45 per year, although membership isn't required

to buy from the pharmacy.

 

In general, seniors who opt to join Medicare's plans may find that the

best buy is not easily discernible.

 

Even pharmacists can't tell what a plan's so called " negotiated price "

is until the order is run through the computer. Prices differ

substantially according to a host of variables — such as which plan it

is, whether a drug is on a plan's preferred list, whether it's

obtained via mail order and whether it is generic.

 

Some plans' co-pays alone are more than Costco's price — and

occasionally the retail price — of the drug.

 

Ralph Saroyan of Stockton, a former president of the California

Pharmacists Assn., thought he had selected a Cadillac plan for his

mother, who needed some expensive name-brand drugs. But the plan's

affiliated pharmacy claimed its reimbursement under the plan wasn't

sufficient to cover name brands, so he had to accept generic versions.

 

Then Saroyan discovered he would have to shell out co-pays of $18 for

each monthly maximum of 30 pills. The cost for 100 pills outside the

plan was $25.

 

He took the best deal.

 

The writer can be reached at Valerie.Reitman.

 

*

 

(INFOBOX BELOW)

 

About Medicare sign-ups

 

The deadline for purchasing a Medicare Part D prescription drug plan

is May 15. Those who enroll later face a small, permanent penalty for

each month of delay, calculated at 1% of the average national premium

(now $32) atop regular monthly premiums. Those opting to buy at the

start of the next open enrollment in November, for example, would face

a permanent surcharge of about $2 monthly.

 

• To enroll or get more information on available plans, call (800)

MEDICARE (633-4227) or go to http://www.medicare.gov where an online

tool is available to help sort out the available plans offered by

private insurers under Medicare's auspices.

 

• Free individual counseling about the Medicare Part D prescription

benefit is available in every county in California through the state

Department of Aging's Health Insurance Counseling and Advocacy

Program. For appointments, call (800) 434-0222 or go to

http://www.calmedicare.org/counseling/counseling.html . Los Angeles Times