Author: Lance

The current Medicare Part D Prescription Plans or PDPs were an outgrowth of the 2003 Medicare Prescription Drug, Improvement, and Modernization Act (also called the Medicare Modernization Act or MMA) passed by Congress in 2003.

In the original model for PDPs, Medicare beneficiaries were to pay approximately a $35 per month premium, a $250 deductible, and 25% of the total drug costs between $250 and $2,250. All PDPs were to be offered through private insurance companies. There were no Part D plans offered or run by Medicare or the government itself.

Medicare allowed the insurance companies to come up with other models for PDPs. For example, some plans do not have a deductible. Instead, they have set up tiers, or various copay levels for generics and brand name prescriptions. This is still the case today.

For additional details of the original set up, please refer to a 2005 government agency publication titled THE MEDICARE PRESCRIPTION DRUG BENEFIT (PART D) Fact Sheet . Please keep in mind that the numbers shown on this sheet are NOT current.

 

For current information about Part D plans, please refer to pages 87-102 of the 2014 Medicare and You booklet published by the Centers for Medicare and Medicaid Services (CMS).

Beginning in 2011, some of the insurance companies offering part D plans initiated a new trend. Formerly, we had network and non-network pharmacies only. Your copays were what they were at a network pharmacy. Your plan was not accepted at a non-network one.

Now, a few of the insurance companies have aligned themselves with a national pharmacy chain(s). These are known as “preferred” pharmacies. How do you know if the plan uses preferred pharmacies? When you do a drug search on Medicare.gov, you will see one of two designations under of the listing for each plan. They are as follows:

Pharmacy Status:
Preferred-Network

OR…

Pharmacy Status:
Network

If you see the words “Preferred-Network”, that tells you the plan uses preferred and non-preferred network pharmacies. In general, your copays are lower at a preferredpharmacy.

Medicare.gov now requires you to choose a pharmacy when running your prescriptions on their site. If you select a pharmacy that is not a “Preferred” pharmacy with any Part D plans, then your search may not show you the plans that are the best buy if you douse a preferred pharmacy. The work-around is to select Walmart (even if you do not shop there), Walgreens, or even CVS. Doing so will pull up the plans using that particular pharmacy as a preferred pharmacy.

A good strategy is to run your prescriptions using different pharmacy scenarios. Let’s say you live in Missoula, Montana and buy your prescriptions from Albertsons. Select Albertsons pharmacy and run your results. Go to “edit” and run your prescriptions again. This time, choose Walmart or Walgreens. See if one of the plans using a preferred pharmacy shows up as being more competitive.

For more details concerning PDPs, please call 1-800-MEDICARE (1-800-633-4227), visit Medicare.gov or consult with the 2014 Medicare and You booklet.

For assistance in running you meds on Medicare.gov, please consult with your insurance professional or another knowledgeable person.

Medicare Part C or Medicare advantage plans (MA) are privatized Medicare plans. To better understand this concept, here is an analogy: Many people living in rural areas have privatized mail delivery. The Post Office contracts with private mail carriers for so much per mile to deliver the mail. Once the private carrier picks up the mail from the Post Office, the delivery service from there on out is performed by a private party.

In a similar fashion, MA is privatized in that Medicare contracts with the insurance companies that offer MA plans. Medicare pays the insurance company a monthly capitation rate, meaning so much per head per month. It might start in the $720-$750 per month range. This amount can go higher for people with chronic illnesses or in higher cost regions of the United States. From that point onward, Medicare no longer pays any provider when an MA plan member has a claim. Instead, the MA plan pays the doctors and hospitals.

There are some people that erroneously believe that the premium the MA plan charges, let’s say from $0 to $150 per month, plus a person’s Medicare Part B premium ($104.90 per month for most people in 2013), plus the medical copays is what finances MA plans. That would be nice if that were the case, but it’s not. It’s the $720+ monthly capitation rate that makes MA plans work. Your Medicare Part B premium simply goes into Medicare’s or the government’s pot.

 

History

Depending on what source you start with, the concept of MA began with the 1982 Tax Equity and Fiscal Responsibility Act (TEFRA). This act allowed privatized HMO plans to contract with Medicare to deliver a form of privatized Medicare. The Balanced Budget Act of 1997 established the Medicare+Choice program. The latter was renamed Medicare Advantage by one of the provisions of the 2003 Medicare Modernization Act (MMA). It was this act that also stepped up the controversial capitation rate to the MA plans.

 

For more details, please refer to this three-page document produced by SHIP, Overview of the Medicare Advantage Program.

Types of Medicare Avantage Plans:

HMOs or Health Maintenance Organization Plans: In most HMOs you can only go to network doctors, hospitals, or other health care providers that are contracted with the plan. In an emergency, all hospitals must accept your plan. You may also need to get a referral from your primary care doctor to see a specialist.

HMO-POS: The “POS” stands for point-of service: This means that you can go to non-network providers. In many cases, you may have higher, out-of-network copays. Please check with your specific plan.

PPO or Preferred Provider Plan: Again, this is a networked plan. You pay lower copays for network providers and usually higher copays for non-network ones. PPOs are more suitable, in general, for going out-of-network.

PFFS or Private Fee for Service: This model is similar to original fee-for-service (FFS) Medicare. You can go to any provider that agrees to accept the terms and conditions of the plan.

 

For more details about the types of MA plans, please refer to the following documents: The first is the Kaiser Foundation’s Medicare Advantage Fact Sheet. Additionally, this document provides another historical perspective and other details about MA plans.

 

 

Centers for Medicare & Medicaid Services (CMS) publishes Medicare and You. For more details about MA plans, please consult pages 15, and 70-81. This publication, though daunting for some, is very thorough and does a good job of explaining the subject it is covering. Note: The version that CMS mails to you lists the MA plans available in your county of residence. This generic version does not.

 

Many MA plans have Part D prescription drugs included with the plan. These are MA-PDs for short. If you enroll in an MA-PD, you do NOT sign up for a stand-alone Part D prescription plan. Doing so will disenroll you from your existing MA-PD plan.

There is another important wrinkle to understand. Some HMO or PPO MA plans are medical only. They do NOT have a prescription plan imbedded in them. If you have one of these MA plans only, you cannot sign up for a stand-alone Part D plan. Doing so will disenroll you from your HMO or PPO MA plan.

For more details and information, please consult with Medicare and You, call 1-800-MEDICARE (1-800-633-4227) or call any particular MA plan. Lastly, a good agent will be able to answer many of your questions. If you desire to dig into all sorts of statistical minutia about MA plans, go to CMS.gov.

Controversy
Here is the controversy concerning MA plans. It is beyond the scope of this document to do an in depth study, but I will bring up the basic issue. MA plans receive an extra subsidy from Medicare of around 13-14%. In other words, Medicare budgets so much money per month for every American on Medicare. The MA plans, subsequent to the 2003 MMA, receive about 13-14% extra subsidy above and beyond the funds that Medicare budgets.

Please refer to page 2 of the Medicare Advantage Fact Sheet, first column under the heading, “Payments to Medicare Private Plans”. This is what has allowed the plans to offer extras beyond what original Medicare offers, extras such as routine vision exams and eyewear, preventative dental, over-the-counter items, and health club memberships.

Introduction

This section, Medicare supplements, is designed to assist you, the Medicare supplement shopper, to better understand the basics of a Medicare supplemental insurance policy. The first section, Benefits of a Medicare Supplement Plan, lists all of the possible benefits in a Medicare supplement plan. The next document is the standardized Outline of Coverage that almost all Medicare supplement companies use in their literature.

 

Q: What does this standardization mean?

A: Taken from my Ten Mistakes: Congress passed the Medicare Improvement Act in 2008, which streamlined the 20 year-old 1990 plans, dropped redundant plans, and added the new plans M and N. The new plans are called the Modernized Plans and are in effect for all Medicare supplement plans sold after June 1, 2010. Now we have plans A, B, C, D, F, G, K, L, M, and N.

If a shopper is looking at Plan F, for example, then he or she would understand that the Plan F from any particular insurance company pays claims according to the benefits as outlined by the legislation. So, if you are looking at Plan F that is offered by Company X, then you will know that the Plan F offered by Company Y, Z, and so forth has the same benefits. The same is true for any other lettered plan.

 

The Lettered Plans

The next eleven pages show the benefits for each lettered plan. The benefits that are not in the plan being discussed are faded out.

 

When you can change your Medicare supplement plan

There is much confusion concerning when you can and can’t change your Medicare supplement plan. This document presents the technical details of the rules for your various options.

 

Are you Eligible for a Refund?

This account presents a case history of a party that initially thought that they could not change the husband’s Medicare supplement outside of the October 15-December 7th Annual Election Period (AEP). It also explains how you, the consumer, can get a refund for an advance paid premium.

 

What to do with that stack of stuff delivered to your mail box

Learn about a smart and clever move, you the Medicare supplement shopper can make. This document explores the BIG mistake the majority shoppers unwittingly make and how to avoid making this mistake in the first place. In discussing the process for avoiding this mistake, this section offers you some strategies of how to manage the barrage of company literature that slams and jams your mailbox during the months preceding your 65th birthday. This information may also be useful for those past 65.