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September 2008 Medicare Part D Newsletter
:: 1. Crossing into or Out of the Coverage Gap
:: Clarification #1 - TrOOP and Annual Drug Cost
:: Correction and Clarification #2 - Crossing into the Coverage Gap
:: 2. Out-Running the Donut Hole
:: 3. Using Discounts in the Donut Hole
:: 4. When will the 2009 Medicare Part D Plans be available?
:: 5. 2009 Low Income Subsidy (LIS) Benchmark Premiums Now Online
:: 6. Do You Qualifying for the Low-Income Subsidy?
:: 7. New Medicare Part D Marketing Guidelines
:: 8. A Few Closing Notes
1. Crossing into or Out of the Coverage Gap
What happens when a prescription drug purchase finally pushes me into or out of my coverage gap or donut hole?
You (1) enter into the coverage gap or donut hole portion of your Medicare Part D prescription drug plan coverage based on your total retail prescription costs or purchases and (2) leave the donut hole based on your true out of pocket costs (or TrOOP). In 2008 Part D plans, you enter the donut hole when your total annual prescription drug costs total the initial coverage phase limit of $2,510 and you leave the donut hole when your total out of pocket (TrOOP) expenses on formulary drug purchases reach $4,050. The estimated retail cost of medications when you leave the donut hole should total around $5,726.25.
With Corrections!
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Clarification #1 - TrOOP and Annual Drug Cost
Again, there are two important and related numbers that surround your donut hole calculations. (1) The total annual retail drug costs and (2) your true out of pocket costs for prescription drugs. The fist value, your annual retail prescription drug costs (what you pay - plus what your Part D plan pays) is used to determine when you enter the Coverage Gap or Donut Hole. The second number, your True Out of Pocket Costs or TrOOP (what you actually pay yourself on prescription drugs - your initial deductible, your co-payments, your co-insurance, your coverage gap costs, but not your monthly premiums), is used to calculate your exit out of the donut hole.
You enter into the 2008 Donut Hole or Coverage Gap when your total annual retail prescription costs equal $2,510 (and your TrOOP is somewhere around $833.75 - depending on your Part D plan) . You exit the donut hole when your TrOOP equals $4,050 (and your total annual retail costs are around $5,726.25 - depending on your Part D plan). Both of these figures (your annual retail prescription costs and your True Out of Pocket costs) may be found on your regular monthly Medicare Part D plan statements ("Explanation of Benefits" that you receive in the mail or online). You can also find out how close you are to the donut hole by contacting the Member Services department of your Medicare Part D plan.
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Usually, a person does not go exactly into or out of the donut hole with a single purchase, but rather “straddles" two Medicare Part D phases at one time, for instance, the Initial Coverage Phase and the Coverage Gap. Accordingly, such an occurrence, where a single prescription purchase is partially in more than one phase of a Part D plan is what Medicare describes as a “straddle claim".
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If you are moving into the donut hole, typically you will pay only the co-payment of the initial coverage phase – even when the drug purchase pushes you from the initial coverage phase into the donut hole. Plus, you will pay a balance in the coverage gap with the total not to exceed the total retail cost of the medication. If you are leaving the coverage gap and entering the catastrophic portion of your Part D coverage, you should pay 100% of the cost of your medication up to the 2008 total out of pocket threshold of $4,050 and the remainder of the costs should be paid at the very-much-reduced catastrophic coverage levels.
With Corrections!
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Correction and Clarification #2 - Crossing into the Coverage Gap
Again, if you are moving into the donut hole or coverage gap, typically you will pay only the co-payment of the initial coverage phase – even when the drug purchase pushes you from the initial coverage phase into the donut hole, plus 100% of the remaining retail drug cost balance.
For example, if you were to purchase a medication that has a retail price of $120 with a $40 co-payment and your total annual retail medication costs are already $2,410, then you only need $100 more to reach the 2008 initial coverage limit of $2,510. So $100 of the $120 retail cost falls into your Initial Coverage Phase and the remaining $20 falls into your coverage gap where you are 100% responsible for the costs. So you will pay the $40 co-payment on the medication plus the $20 that falls into your donut hole for a total cost of $60. Medicare always checks to make sure you pay the less than the premium using what they call the “lesser of" logic. Since you pay $60 and that is less than $120, then no change is made. (Thanks to Eileen L. from Massachusetts for catching our error).
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2. Out-Running the Donut Hole
Is it possible to move to another Medicare Part D plan and get out of the Donut Hole? For instance, what if a person moves to another Medicare Part D region, uses their Special Enrollment Period and enrolls into a new Medicare Part D plan, does that person’s annual prescription spending information move with them or do they start all over aging?
You cannot “out run" or out-maneuver your annual prescription drug spending or TrOOP. If you move to another one of the 34 Medicare Part D regions, you will be granted a Special Enrollment Period so that you can join a Part D plan offered in the new region, but your total drug spending for the year will be transferred to the new Part D plan. Your drug spending or TrOOP will determine when you enter into and exit out of the coverage gap. So if you are in the Donut Hole or Coverage Gap in one Medicare Region, you will be in the Donut Hole in your new Medicare Part D region. As Medicare notes, “[t]he TrOOP threshold is calculated on an annual basis and must be transferred between Part D plans if a beneficiary disenrolls and re-enrolls at any time before the end of a coverage year." Click here for more on TrOOP.
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3. Using Discounts in the Donut Hole
A few weeks ago we released our RxSavings-Center designed to help you search through drug discount programs provided by some of the larger retail stores. Since then, thousands of Medicare-PartD.com users have taken advantage of this free tool to find lower prices on their prescription medications. One question that we frequently receive from our online community is how the retail drug discount programs work with Medicare Part D prescription drug plans.
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Coordinating Retail Drug Discount Programs with your Medicare Part D plan
For most people, the important features of a retail drug discount program are that the drug prices are obviously lower than their Part D plan’s negotiated price and the purchases of these discounted medications are counted toward the Medicare beneficiary’s total drug spending or total out of pocket costs (TrOOP). As mentioned above, TrOOP determines when you go into, and come out of, the donut hole. In general, if your monthly “retail" drug costs (before Part D coverage) are over $478, you should exit the donut hole before the end of 2008 and, therefore you should ensure your TrOOP is accurately reported to your Part D plan.
The type of drug discount program determines whether you should use your Part D plan and whether you need to report the purchase to your Part D plan. The Centers for Medicare and Medicaid Services (CMS) distinguish between two different types of drug discounts: (1) “special drug discounts" that are offered periodically or as one-time “lower-cash" prices through retailers and (2) ongoing drug discounts offered throughout a benefit year. CMS notes that ongoing discount drug programs are those offered by companies like Wal-Mart and beneficiaries should be able to use their Part D plan, receive the “usual and customary" low price, and have this information added to their TrOOP. Our RxSavings-Center search tools are focused on the ongoing drug discount programs.
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However, as we mentioned back in our May 2008 Newsletter, when Medicare Part D beneficiaries are in the coverage gap or donut hole phase of their Part D plan and 100% responsible for the costs of their medications, CMS has a lower cash price policy that allows these people to receive credit toward their total out of pocket spending when they buy “one-time" or periodically discounted drugs from a network pharmacy - outside of their Part D plan. In other words, if the discounted price at the retailer is lower than the negotiated price of the Medicare Part D plan, the person can buy the medications without showing their Medicare Part D card. The Medicare Part D beneficiary can then submit these purchases to their Medicare Part D plan so the costs can count toward their total out of pocket spending (TrOOP) – which again, is used to measure when the person is able to exit the coverage gap. Still not sure where to begin or you have a question? Click here to let us know.
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If we are in the Donut Hole and purchase drugs from outside of the United States, can we submit the receipts to our Medicare Part D plan and have the purchases count toward our 2008 Out-of-Pocket threshold or TrOOP?
No, only prescriptions purchased within the United States or its territories are counted toward your Out of Pocket threshold. Medicare (CMS) specifically notes that: “Payments for the following don’t count toward a person’s TrOOP costs: Monthly premiums, Drugs purchased outside the United States and its territories, Drugs not covered by the plan, Drugs covered by the plan that are excluded by Medicare law (such as benzodiazepines), and Over-the-counter drugs or vitamins (even if they are required by the plan as part of step therapy)". Any question or comments? Click here to let us know.
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4. When will the 2009 Medicare Part D Plans be available?
The Centers for Medicare and Medicaid Services (CMS) should releases the 2009 Medicare Part D prescription drug plan designs later this month.
As soon as we receive the new Part D plans we will update our Medicare-PartD.com website 2009 prescription drug plan information page (http://www.PDP-Finder.com/2009). We expect to have an overview of Medicare Part D plans online at the end of this month or early October and we will send a special Newsletter to summarize the 2009 plans.
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Reminder:
You have no need to rush in making a 2009 Medicare Part D plan decision. You will have plenty of time to review the plan information before November 15, 2008 when the Annual Enrollment Period (or Annual Coordinated Election Period) begins and you will have through December 31, 2008 to decide whether to enroll or switch plans for a January 1, 2009 starting date. However, CMS usually recommends that you try to enroll by December 8 so you can receive your new Member ID card by January 1.
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5. 2009 Low Income Subsidy (LIS) Benchmark Premiums Now Online
In our August Newsletter, we noted that the Centers for Medicare and Medicaid Services (CMS) released the average premium figure for 2009 - estimating that the average monthly premium for 2009 Medicare Part D plans should be about $28. To add another piece to the development of the 2009 Medicare Part D plans, we now have the 2009 Low Income Subsidy (or LIS) benchmark premiums online. The premiums are organized by CMS region (state) and figures are also posted from 2008. Of the 34 CMS Regions, six regions will slightly reduce their LIS benchmark premiums in 2009. The remaining 28 CMS regions will raise their monthly benchmark premiums, with the largest increases seen in Wisconsin and Colorado.
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Why is the Low Income Subsidy Important?
One Medicare Part D plan has already announced that they intend to raise their 2009 monthly premiums above the state benchmark levels and will probably loose many (if not all) of their 300,000+ Extra Help recipient members. In such a case, Extra Help recipients will be notified by CMS of any changes to their Part D plan and may be auto-enrolled into another Part D plan that provides for full coverage of their monthly premiums.
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More on the Low Income Subsidy and Auto-Enrollment
As noted by CMS , “[l]ow-income beneficiaries who are determined to be eligible to receive a full premium subsidy are randomly auto-enrolled in a Part D plan that has a premium at or below the premium subsidy amount if they do not choose a plan. As a result, these beneficiaries do not have to pay any Part D premium. In some cases, the premium for the plan in which an LIS beneficiary is enrolled during 2008 may increase above the premium subsidy amount in 2009. In such cases, if the beneficiary does not affirmatively choose to stay in that plan, or choose another plan, the beneficiary will be assigned by CMS to a new plan sponsor in their coverage area effective January 1, 2009, where the beneficiary can continue to receive prescription drug benefits at no cost." (CMS Press Release, August 14, 2008)
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6. Do You Qualifying for the Low-Income Subsidy?
Many Medicare beneficiaries are not aware that they are eligible for the Low-Income Subsidy (LIS) or Extra Help program and each year they miss out on potentially thousands of dollars in prescription drug savings. As stated by CMS: “[u]nder Part D, beneficiaries with low incomes can receive valuable extra assistance with their drug plan premiums and cost-sharing. Nearly 10 million beneficiaries are currently receiving drug coverage for little or no cost through the Low-Income Subsidy (LIS) benefit. The average value of the Part D benefit, premium subsidy, and cost-sharing subsidy for low-income enrollees is estimated to be about $3,900 in 2009." (CMS Press Release, August 14, 2008)
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As we noted in August, the Medicare law was amended with the passage of the Medicare Improvements for Patients and Providers Act of 2008 (or MIPPA), that eases some of the rules to be used to determine if a Medicare beneficiary can qualify for the low-income subsidy or Extra Help program. However, this provision is not effective until January 1, 2010. (Section 116). TEXT
Reminder: Watch for important LIS Mailings from the Centers for Medicare and Medicaid Services (CMS) and the Social Security Administration (SSA): Questions? Click here for our Customer Help Desk
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7. New Medicare Part D Marketing Guidelines
Today, the Centers for Medicare and Medicaid Services (CMS) released the new guidelines for marketing Medicare Part D prescription drug plans and Medicare Advantage plans. Many of the new marketing guidelines and regulations are effective September 18, 2008 and were developed in accordance to the new Medicare Improvements for Patients and Providers Act of 2008. In part, the new CMS regulations:
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- • Prohibit plans (and their representatives) from providing meals to prospective enrollees at promotional and sales events. However, “light snacks" including fruits, raw vegetables, and muffins are allowed.
- • Prohibit plans (and their representatives) from contacting potential enrollees directly without the potential enrollee first initiating contact. Unsolicited direct contact like door-to-door solicitation, outbound telemarketing, approaching beneficiaries in parking lots, or follow-up calls about mailings without prior consent are some examples of the activities that are prohibited.
- • Prohibit plans (and their representatives) from cross-selling non-health care related products during Medicare sales or marketing activities.
- • Prohibit plans (and their representatives) from conducting sales presentations or distributing and accepting plan applications in provider offices or other places where health care is delivered, except in the case where such activities are conducted in common areas in health care settings.
- • Prohibit plans (and their representatives) from conducting sales presentations or distributing and accepting plan applications at educational events.
(Source: Click here for the complete CMS fact sheet)
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In addition, CMS also established the “scope of client appointments" noting that: “[t]he new [CMS Marketing] rules limit any marketing appointment to the scope of healthcare-related products agreed upon by the beneficiary in advance. For an in-person appointment, the scope agreed upon must be documented in writing. If the appointment is made over the phone, the conversation must be recorded." (Source: Click here for the complete CMS fact sheet)
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Linking to our Online Content:
We have a new function to help you link to one of our pages on Medicare-PartD.com. You will notice that we have added a new text box in the upper right corner of each page on our website with the text “Click here to link to this page on your website". If you click on this text, you will be provided with the HTML code needed for the particular page. You can use the link just as listed, or customize the link to your needs. Link to our Online Content, But … Please No Unauthorized Reproduction.
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New Tools for You:
The newest addition to the Medicare-PartD.com website is an online drug search. Users of the tool can search alphabetically by medication name or browse through a list of the top 200 drugs.
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Get ready now for the 2009 Medicare Part D prescription drug plans
Our new 2009 PDP-Planner is available at no cost and users have the option to have a copy of their PDP-Planner results sent directly to them via eMail. The 2009 PDP-Planner can be found at www.PDP-Planner.com/2009.
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Last updated on: 11/14/2008
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