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May 14, 2006:
:: Update: Prescription Niacin and Medicare Part D Coverage
:: Formulary Changes in 2006 - How will you be affected?
:: I am now paying full price! How does this Donut Hole really work?
:: Will there be an extension for the Initial Open Enrollment period? - Can I just sign up in June 2006 and take the 1% penalty?
:: What can we expect as we look toward 2007?
:: Closing Notes
:: Repeat from April - Having trouble receiving the proper "Extra Help" or "Duel- Eligible" co-payments?
:: Repeat from April - Please give us your opinion on the Medicare Part D program.
:: Where can I find more answers? Browse our Frequently Asked Questions (FAQs).
Update: Prescription Niacin and Medicare Part D Coverage
Good news for prescription Niacin users! As we noted in our last Newsletter, CMS found in February that prescription Niacin was excluded from Medicare Part D coverage because of its classification as a prescription vitamin. However, in April CMS changed its position and concluded that prescription Niacin was not "universally excluded" form Medicare Part D coverage. The April 11, 2006 clarification issued from CMS notes:
"On February 3, 2006, we sent a letter to Part D plans explaining our view that prescription Niacin products (Niaspan(r), Niacor(r)) are prescription vitamins and therefore excluded from the definition of a Part D drug under the statute. We have reviewed this issue more closely. The prescription niacin products Niaspan(r) and Niacor(r) are approved by the Food and Drug Administration as safe and effective drugs, are used therapeutically for the treatment of dyslipidemia, and do not serve as nutritional supplements or address a vitamin deficiency. These products are used at dosages much higher than appropriate for nutritional supplementation. For these reasons, we have concluded that these products should not be considered prescription vitamins for purposes of Part D coverage, and therefore, are not universally excluded from coverage under the Medicare prescription drug program. Because prescription was Niacin previously excluded from the Medicare Part D program, Part D plans are not required to include Niacin within their formularies. Plans may however, opt to include Niacin in the formularies for the remainder of 2006. In 2007, prescription Niacin (in dosages higher than normal nutritional supplements) may be added to plan formularies."
What does this mean if you are a Niacin user? Some Part D plans may expand their 2006 formulary to include Niacin, but plans are not required to do so. For plans that do not include prescription Niacin as a formulary drug, plan Members may use their plans "exception" process to obtain coverage as a non-formulary drug.
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:: For more on the prescription Niacin determination, please click on:
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Formulary Changes in 2006 - How will you be affected?
In the last 6 months, many people asked us about the possibility of their selected Part D plan dropping or changing the status of one of their covered medications. Such concerns over the potential stability of a plan's formulary were easily understood. Many people were not sure they wanted to commit to a plan that could change at any time.
Luckily, Medicare stepped in and provided some much needed clarification to this issue. In a memo dated April 27, 2006, CMS stated that any changes in current formularies would not affect the current members of a Medicare Part D plan. Instead, the formulary changes would only be effective starting after the next Annual Coordinated Election Period (when you can once again choose your Part D plan).
CMS noted: "Part D plans may only remove Part D drugs from their formulary, move covered Part D drugs to a less preferred tier status, or add utilization management requirements [such as Prior Authorization or Step Therapy] . . . For these additional types of formulary changes approved by CMS for 2006, Part D plans should make such formulary changes only if enrollees currently taking the affected drug are exempt from the formulary change for the remainder of the plan year."
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:: To read the more about the exemptions from formulary changes during the current plan year, please click on:
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I am now paying full price! How does this Donut Hole really work?
The Coverage Gap or Donut Hole has caused a considerable amount of confusion for many people and has even surprised seniors when they suddenly are required to pay the full price of their medications.
Here is a quick overview of the Donut Hole or Coverage Gap. According to the CMS Model Plan, the Donut Hole phase begins when the covered medication costs reach $2,250. Please note, this $2,250 is the total retail cost of the covered medications, not what you spend personally. As a Part D beneficiary, you will pay only a portion of the $2,250. In the CMS model plan, a beneficiary; like yourself, pays the first $250 dollars as a deductible and then 25% of the next $2,000, for a total out of pocket medication costs of $750 (excluding monthly plan premiums). The Medicare Part D plan pays the difference or $1500.
Plans that have tiered Co-Payment instead of the 25% Co-Insurance and no initial $250 deductible offer only a slight variation of this calculation - the Coverage Gap still begins when total retail cost of covered medications reach $2,250.
How do you keep track of the retail costs? You do not need to keep track of retail costs. Your Part D plan provider will keep track of the retail costs and where you are with respect to the Donut Hole. Your monthly statement should provide you with an overview as you approach the $2,250 mark.
I use medications not covered by my plan or bought outside of the country. Are these expenses included in the $2,250 or any other Part D calculation? No, medications not included on your plan's formulary or purchased outside of the US fall outside of your Part D coverage and are not included in the $2,250 or any other Part D calculation.
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:: Read other examples of Donut Hole calculations here:
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How long do I remain in the Coverage Gap? Medicare Part D beneficiaries remain in the Donut Hole until their true out of pocket costs exceeds $3,600. The $3,600 does not include the portion of your prescription expenses paid by the insurance carrier or your monthly premiums.
What happens after I leave the Coverage Gap? After the Donut Hole, the Medicare Part D beneficiary enters into the last phase of the Medicare Part D program or Catastrophic Coverage. From this point on, the Medicare Part D beneficiary pays $2 per month for generics / $5 per month for name brand medications or 5% of the medication's retail cost, whichever cost is higher.
How about an example so I can estimate when I enter and leave the Donut Hole? Suppose an example beneficiary, Mr. Smith, takes an expensive medication such as Betaseron (with an estimated retail cost of $775 for eight 0.3 MG vials per month), he will never pay more than $3,600 out of pocket before the Catastrophic Coverage phase of his plan is reached. Assuming Betaseron is the only medication that Mr. Smith uses, he will enter into the Donut Hole in the third month of his plan ($2,250 / $775).
Mr. Smith will then emerge from the Donut Hole into the low cost Catastrophic Coverage around the seventh month of his plan ($5,100/$775). In this way, Mr. Smith will receive low cost Catastrophic Coverage for the remainder of the year (or approximately five+ months if Mr. Smith enrolled before January 2006).
During the Catastrophic Coverage phase, Mr Smith's monthly medication costs should be reduced to $38.75 or 5% of $775. Please note: if Mr. Smith enrolled in a Medicare Part D plan where his medications are also covered through the Donut Hole, Catastrophic Coverage may never be reached because Mr. Smith's true out of pocket medication costs would never exceed $3,600 (with a plan providing Donut Hole coverage, Mr. Smith would probably pay around 25% of the retail price or $194 (assuming this medication is listed as a Tier IV or "specialty" drug) - twelve months of coverage = $2,328 out of pocket cost).
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:: Read other examples of Donut Hole calculations here:
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Will there be an extension for the Initial Open Enrollment period? - Can I just sign up in June 2006 and take the 1% penalty?
Many people are still wondering whether the Initial Open Enrollment Period will be extended beyond Monday, May 15, 2006. Also a number of people are still wondering how or whether the 1% per month premium penalty will be enforced.
It appears that if you are eligible for Part D enrollment during this initial Open Enrollment Period (and not qualified for a Low Income Subsidy nor resident of Long-Term Care facility), the end of Open Enrollment will be Monday, May 15 and you will not be able to simply enroll in June or July of 2006 and pay a small 1 or 2% increased monthly premium penalty.
Instead, you probably will not be able to make an enrollment decision before the next Annual Coordinated Election Period (starting November 15, 2006) and your chosen Part D coverage would not begin before January 1, 2007. Therefore, you will be faced with a permanent increased Part D monthly premium penalty of 7% (for failing to have creditable coverage for the months of June through December 2006).
How is the 1% per month penalty calculated? The federal Medicare regulations set the calculation for the penalty and the penalty is partially based on the national average of monthly Medicare Part D plan premiums.
However: Yesterday's Washington Post (Saturday, May 13, 2006, A01) reported that there is still some uncertainty whether late enrollment penalties will be applied in 2006. As noted in the Washington Post article: "Still, motivated by Republicans' concerns about their prospects in the fall elections and by persistent confusion about the new drug benefit, several of Congress's architects of the program have concluded that it would be unwise to punish people who miss the deadline."
The Washington Post article also re-emphasized that: "The financial penalties are an attempt to motivate relatively healthy Medicare patients to sign up right away, rather than waiting until their health falters and they need more prescription drugs. The late fee, based on 1 percent of the national average price of the insurance premiums for the drug coverage, starts out relatively small. It starts at an extra $1.98 per month if they sign up later this year, but it mushrooms the longer people wait to get coverage."
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What can we expect as we look toward 2007?
Hard to imagine that we are just coming to the end of this historic initial 2006 Open Enrollment Period and already asking you to think about the 2007 enrollment period. However, here are a few facts to give you a preview into the 2007 program:
- October 1, 2006 - Medicare Part D Prescription Drug plan Marketing Activities can begin - At this time you will be able to once again gather information and evaluate the various Part D plan alternatives. Please note, no enrollments may be accepted before November 15, 2006.
- November 15 to December 31, 2006 - Annual Coordinated Election Period - Here is your chance to join a Medicare Part D plan for 2007. If you already have a Medicare Part D plan, this is your time to look back over 2006 and make another decision for your 2007 coverage. Should you stay with your existing coverage or make a change? Here is your opportunity to decide. If you make no decision, you will remain in the same plan as you elected in 2006. There is no enrollment required to renew your present coverage. Don't forget 2006! People who waited until the end of December also waited into January for the arrival of their Welcome Information. Bottom Line: Don't wait until the end of December to make your enrollment decision. (If you do not enroll during this period, your next chance for coverage is January 2008.)
- January 1, 2007 - Your 2007 Medicare Part D plan becomes effective and you will be able to begin using your Part D benefits.
- January 1 to March 31, 2007 - Coordinating Special Enrollment Period (or SEP) - This special period is available for those people who enrolled into a Medicare Advantage Plan with Prescription Drug coverage (MA-PDs) and now wish to disenroll back to original Medicare coverage and a Prescription Drug Plan. As noted by CMS: "PDPs must accept enrollments for individuals enrolled in a MA-PD plan and who choose to elect Original Medicare during the MA OEP that occurs from January 1, 2007 through March 31, 2007. Since MA rules require these individuals to maintain prescription drug coverage, they MUST enroll in a PDP to accompany Original Medicare. This SEP allows MA-PD enrollees to enroll in a PDP and is limited to 1 enrollment."
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:: Frequently Asked Questions, (including brief instructions of how to use several of the internet-based online systems):
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Changes in the Standard or Model Medicare Plan:
- Initial Deductible: from $250 in 2006 to $265 in 2007
- Initial Coverage Limit: from $2,250 in 2006 to $ 2,400 in 2007
- Out-of-Pocket Threshold: from $3,600 in 2006 to $3,850 in 2007
- Minimum Cost-sharing in the Catastrophic Coverage Portion of the Benefit: from $2 for generic or preferred drug that is a multi-source drug and $5 for all other drugs in 2006 to $2.15 for generics and $5.35 for other drugs in 2007
- Maximum Co-payments below the Out-of-Pocket Threshold for certain Low Income Full Subsidy Eligible Enrollees: from $2 for generic or preferred drug that is a multi-source drug and $5 for all other drugs in 2006 to $2.15 for generics and $5.35 for other drugs in 2007
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Closing Notes
- Warning: Sending your Social Security Number in an eMail. Please be careful when sending your Social Security Number in an eMail. Many people trying to check their enrollment status are emailing their Social Security Numbers with the hopes of expediting a response. If you are trying to check your enrollment status, please call your insurance carrier directly (try your carrier's Customer Service, New Member Services, or Enrollment Services). But sending your SSN in an eMail is unnecessary and could potentially lead to identity theft.
- Medicare-PartD.com in the News
In the May online addition of the American College of Physicians Observer, Susan Johnson, MBA, MS-MIS, PhD, director of our Online Services commented on the high volume of traffic and number of eMails we have responded to since the beginning of the Medicare Part D program. Dr. Johnson also noted that the wide range of questions even came from physicians trying to help their patients (and themselves) navigate the new Part D program.
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:: Link to Medicare Part D in the News:
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Repeat from April - Having trouble receiving the proper "Extra Help" or "Duel- Eligible" co-payments?
As noted, the Medicare Part D system requires the verification of a great deal of information before enrollment is complete. The coordination of data may cause additional difficulties for those people who are Duel-Eligible (that is, eligible for both Medicare and Medicaid) or involved with the "Extra-Help" programs. As noted by Medicare, when first using the new prescription coverage it may be wise to bring proof of Medicare/Medicaid eligibility or "Extra-Help" status. If there is a problem and the status of the plan member is not recognized, Pharmacists can contact the particular Medicare Part D plan in order to charge the appropriate co-payments.
Specifically, Medicare instructs:
"If the person has both Medicare and Medicaid or has been approved for the low-income subsidy (extra help paying for prescriptions), they should bring a copy of the yellow automatic enrollment letter from Medicare, a Medicaid card, an approval letter from the Social Security Administration, or other proof that they qualify for extra help."
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Repeat from April - Please give us your opinion on the Medicare Part D program.
Satisfied with your Medicare Part D plan? -- Would you recommend your plan to another person?
What do you think others would say? Take a look at the online survey.
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:: To cast your vote:
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Last updated on: 07/18/2008
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