Brand-Name Drugs – High Copays Soak Medicare Part D Patients

Brand-Name Drugs – High Copays Soak Medicare Part D Patients

A new study takes a fresh measure of generic drugs’ price advantages, revealing how much more Medicare Part D patients shelled out in copayments for two popular brand-name drugs in 2013. The result: 10.5 times more.

Copayments averaged $42 for both Crestor, a cholesterol medication, and Nexium, taken for acid reflux, according to researchers whose study was published Wednesday in Health Affairs. The consumers’ cost for generic therapeutic equivalents was $4, they said.

The findings point to opportunities to save money for Medicare Part D’s elderly and disabled beneficiaries, who fill three or more prescriptions a month on average, according to previous research cited in the study. Half of enrollees received less than $22,500 in income in 2012.

High copays for brand-name drugs might lead patients to choose between food or medications based on their monthly budget,” the researchers said. Generics represented 76 percent of the drugs dispensed in Medicare Part D in 2013, but brand names still retained preferential selection in some cases. One contributor is pharmaceutical companies’ practice of negotiating rebates with private insurance companies that provide drug coverage plans to beneficiaries under Medicare Part D, researchers said. After getting a rebate, an insurer might list the rebated brand-name drug as preferred, which encourages its selection over other brand medications.

Preferred drugs require lower copays than a rival branded drug, but they are still more expensive than a generic, according to Health Affairs. Physicians can prescribe generic medications if they choose to do so.

Inaccurate information about the amounts of drug rebates also works to Medicare patients’ disadvantage, researchers said. Insurers, at the start of each plan year, must report the rebates they expect to get to the government, which takes them into account in setting the premiums that beneficiaries will pay and how much it will pay insurers for providing the benefit. Previous government investigations have found many insurers tend to overestimate their rebates, leading to beneficiaries paying excessive premiums and Medicare overpaying insurers. The government eventually recovers overpayments later when insurers report what they actually received in rebates. But Medicare beneficiaries are left to absorb the cost of brand prescribing, copays and elevated premiums, researchers said.

To do their study, researchers analyzed cost data for all medications in 2013 under Medicare Part D, a dataset released for the first time last year by the Centers for Medicare and Medicaid Services. In 2013, the top 10 drugs in Part D, ranked by claims, were all generics, accounting for $4.1 billion in expenses. But ranked by total spending, the top 10 most expensive drugs were all brand names, representing $19.8 billion in spending, CMS said. Nexium was No. 1 at $2.5 billion and Crestor was No. 3 at $2.3 billion.

Had generic equivalents been prescribed in 2013 instead, the government, patients and insurance companies could have saved a combined $870 million for omeprazole in place of Nexium and $1.2 billion for atorvastatin instead of Crestor, researchers estimated. Dr. Nicole Gastala, the study’s lead author, said certain aspects of medical culture steer patients toward brand-name drugs.

Patients are frequently biased toward brand names by the power of advertising, and doctors’ interactions with pharmaceutical representatives have the same effect on them, said Gastala, who practices family medicine in Iowa and was a former visiting scholar at the Robert Graham Center for Policy Studies in Washington, D.C.

The cost of a drug is often unknown to both patients and doctors and physicians may have no idea how expensive a copay is. When doctors prescribe a brand-name, patients rarely second-guess the choice, Gastala said. Doctors sometimes try to find workarounds to save their patients money.

Dr. Robert Wergin, the chair of the American Academy of Family Physicians, said when generic medications are unavailable in the same strengths as brand-name drugs, he sometimes adjusts the generic version’s dosage to make it equivalent. He may tell patients to cut some generic pills in half to make them equivalent in strength to a brand-name medication, for example.

I went to medical school, and I can’t remember a class where we talked about business models and rebates and [the pharmaceutical industry], Wergin said. My focus is on the individual patient.

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Senior Surprise: Getting Switched With Little Warning Into Medicare Advantage

Senior Surprise: Getting Switched With Little Warning Into Medicare Advantage

Only days after Judy Hanttula came home from the hospital after surgery last November, her doctor’s office called with bad news: Records showed that instead of traditional Medicare, she had a private Medicare Advantage plan, and her doctor and hospital were not in its network. Neither the plan nor Medicare now would cover her medical costs. She owed $16,622.

“I was panicking”, said Hanttula, who lived in Carlsbad, N.M., at the time. After more than five hours making phone calls, she learned that because she’d had individual coverage through Blue Cross Blue Shield when she became eligible for Medicare, the company automatically signed her up for its own Medicare Advantage plan after notifying her in a letter. Hanttula said she ignored all mail from insurers because she had chosen traditional Medicare. “I felt like I had insured myself properly with Medicare, she said. So I quit paying attention to the mail.”

With Medicare’s specific approval, a health insurance company can enroll a member of its marketplace or other commercial plan into its Medicare Advantage coverage when that individual becomes eligible for Medicare. Called a seamless conversion, the process requires the insurer to send a letter explaining the new coverage, which takes effect unless the member opts out within 60 days.

Medicare officials refused recently to name the companies that have sought or received such approval or even to say how long the Centers for Medicare and Medicaid Services has allowed the practice. Numerous insurers, including Cigna, Anthem and other Blue Cross Blue Shield subsidiaries, also declined to discuss whether they are automatically enrolling beneficiaries as they turn 65.

But others say they’re moving ahead. Aetna will begin the process soon for its marketplace members in 17 Florida counties. The effort will kick off with individuals who qualify for Medicare in November, Aetna spokesman Matthew Clyburn said. They’ll receive 90 days advance notice instead of the required 60 and a postcard they can mail back, he said, and the company will follow up by phone to make sure they understand the change.

In November, UnitedHealthcare will start to automatically enroll members of its Medicaid plans in Tennessee and Arizona into its Medicare Advantage plans, a spokeswoman said. And Humana, the nation’s second largest Medicare Advantage provider, has asked for federal permission to also do auto-enrollment. The process will benefit people who want to stay with the same insurance company, said Mark Mathis, director of Humana’s corporate communications. It would simplify administration, eliminating a step in the process and help maintain continuity with the same company.

Medicare officials are developing a procedure for reviewing seamless conversion requests as well as a system to monitor implementation, agency spokesman Raymond Thorn said. A company given approval must automatically enroll all Medicare-eligible beneficiaries. But because federal law prohibits marketplace insurers from dropping a member who qualifies for Medicare, both marketplace and Medicare Advantage coverage continue until the person cancels the marketplace plan, Thorn said.

Sally Thomphsen, who lives outside Chicago and had an individual health policy from Blue Cross Blue Shield last year, was more than surprised when she received her member card for a Medicare Advantage plan shortly before turning 65. Printed on the card was the name of her new primary care physician, someone she didn’t know.

“I almost hit the ceiling”, said Thomphsen, who had already enrolled in traditional Medicare. She demanded that Blue Cross cancel her enrollment and reported the situation to Erin Weir, health-care access manager at the local advocacy group AgeOptions. Weir heard a similar story from another local woman, who had received a letter from her insurer saying a Medicare Advantage plan was selected for you because it is similar to your current plan. Unless you contact us, you will be automatically enrolled.



After learning about the problem both from constituents and health-care advocates, Rep. Jan Schakowsky (D-Ill.) wants stronger consumer protections. “I am exploring the option of requiring an opt-in so that Medicare beneficiaries are adequately informed and able to make the choices that work best for them”, said Schakowsky, whose district includes the Chicago area.

The Lovelace Medicare Advantage plan in which Hanttula found herself is run by Health Care Service Corporation, which administers Blue Cross Blue Shield plans covering 15 million beneficiaries in Illinois, Montana, New Mexico, Oklahoma and Texas. An HCSC spokeswoman said it offers seamless conversion enrollment on a limited basis. She would not provide details.

Hanttula finally solved her problem with help from a Medicare counselor at New Mexico’s Aging and Disability Resource Center, who contacted David Lipschutz, a policy lawyer at the Center for Medicare Advocacy in Washington. He advised the counselor to tell Medicare officials that the retiree was enrolled in Medicare Advantage without her knowledge even though enrollment must be voluntary.

Eventually, officials un-enrolled Hanttula from her unwanted plan, restored her traditional Medicare coverage and agreed to cover her medical bills. Lipschutz said giving beneficiaries the chance to opt out doesn’t adequately safeguard consumers. An insurer’s notification letter can easily be mistaken or overlooked in the deluge of marketing materials seniors receive.

“The right to opt out doesn’t exist if they didn’t get the notice or if they did get the notice but didn’t understand it”, he said.

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Why High Earners Are Likely to See Higher Medicare Premiums in 2017

Why High Earners Are Likely to See Higher Medicare Premiums in 2017

Low inflation, generally good for purchasing power, is likely to leave some high earners facing higher Medicare premiums next year.

When the Social Security Administration on Tuesday releases its annual cost-of-living adjustment for retirement benefits, Americans whose health-care costs are covered by Medicare will be watching to gain insight into how their premiums will rise in 2017. This is because the so-called COLA figure plays a big role in determining premiums for Medicare Part B, which covers doctor visits and other types of outpatient care.

While the final figure on the premium increase won’t be announced immediately, the Centers for Medicare and Medicaid Services last year released it in November, a high figure would spread the rising health-care costs over a greater number of people. A low figure would concentrate costs among the highest-earning Medicare beneficiaries.

Because inflation has been low, the cost-of-living adjustment is widely expected to be small. The American Institute for Economic Research this week predicted an increase in the 0.2% to 0.5% range. In a June report, the Medicare trustees forecast a 0.2% increase. This would mean that most beneficiaries have little to worry about. Under the so-called hold-harmless provision of the Social Security Act, Medicare can’t pass along a Part B premium increase that’s greater than what most participants would receive through Social Security’s annual cost-of-living adjustment.

As a result, Medicare can’t pass along any premium increase greater than the dollar increase in Social Security payments to the estimated 70% of beneficiaries who will qualify for hold-harmless treatment in 2017. (A 0.2% increase would translate into a $2 increase in the average Social Security payment, which would effectively cap the average Medicare Part B increase at $2, according to the American Institute for Economic Research.)

The problem for high earners is that Medicare must then spread much of the projected increase in its costs across the remaining 30% of beneficiaries who aren’t covered under the hold-harmless provision.
That 30% includes those who already pay higher premiums because of their higher incomes. It also includes those who receive Medicare but have deferred or aren’t eligible for Social Security benefits. And it applies to those who are new to Medicare in 2017 and to lower-income Medicare beneficiaries whose premiums are paid by state Medicaid programs.

In June, the Medicare trustees projected that premiums for this group could rise by as much as 22%.
Of course, this could all be moot in an election year where Congress is up for grabs and incumbents may be looking to win over older constituents.

Last year, Congress staved off a 52% premium increase for Medicare beneficiaries not covered by the hold-harmless provision via a deal in the budget agreement that raised premiums by 16% for them instead.

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Why Your 2017 Medicare Premiums Could Jump 20%

Why Your 2017 Medicare Premiums Could Jump 20%

Some Medicare recipients may see their charges for Part B doctor coverage jump more than 20% in January. The majority of Medicare beneficiaries have nothing to worry about. Most people who have their premiums deducted from their Social Security checks are protected by what’s called the “hold harmless” rule: Their Medicare charges can’t increase by any more than their Social Security income goes up.

But there’s no such protection for people whose income subjects them to higher charges for Part B, which covers doctor visits and other outpatient care. Ditto for Medicare beneficiaries who haven’t yet claimed Social Security and people who will be new to Medicare in 2017. For instance, people who aren’t receiving Social Security and who pay $121.80 a month for Medicare now may have to pay $149 a month, up 22%, according to estimates in the 2016 annual report issued by Medicare trustees in June. The percentage increase would be the same for people who pay higher premiums because of their income. That could mean a charge of $208.01 a month, up from $170.50, for someone with modified adjusted gross income between $85,000 and $107,000 (or between $170,000 and $214,000 on a joint tax return).

The culprit here is continued low inflation, which also played havoc with Medicare premiums this year. For 2016, there was no Social Security cost of living adjustment (COLA). The Medicare trustees projected a 0.2% COLA for 2017.

By law, Medicare Part B premiums must be deducted from Social Security payments for those receiving benefits from both programs. Normally, the Part B increase would be paid out of the increase in Social Security payments due to the COLA. But this can’t happen when the COLA is zero or too small to cover higher Part B premiums. When this happens, the hold harmless rule prevents Medicare from raising Part B premiums on about 70% of all beneficiaries. However, Medicare must still collect about 25% of overall Part B expenses from the beneficiaries (with the government paying the rest). With most beneficiaries held harmless, it has no choice but to dun the other 30% for the entire beneficiary piece of increased Part B expenses.

A year ago, the absence of a 2016 COLA froze Part B premiums at $104.90 a month for those who were held harmless. The other group, including low-income beneficiaries whose premiums are paid by state Medicaid programs, faced a premium increase of roughly 50%.

In response to alarm from seniors and advocacy groups, Congress softened that blow by approving a one-time loan of $7.5 billion to Medicare to help defray Part B expenses. Even with this help, Part B premiums still jumped 16% for the group that was not held harmless. For higher-income beneficiaries, the Part B charge can approach $390 a month.

The Part B drama is likely to be repeated this fall, with Medicare expenses for 2017 forecast to rise much more than the projected Social Security COLA. The actual 2017 Social Security COLA will be known in mid-October. If the COLA were to be zero again, most people paying $104.90 and people new to Medicare paying $121.80 this year would be held harmless and pay exactly these amounts again in 2017.

But if the COLA does turn out to be 0.2%, things would get very confusing. People held harmless would wind up paying all of that COLA, 0.2% of their total Social Security benefits in higher Medicare Part B premiums. This means that Part B premiums would differ based on a person’s Social Security payment. For example, a person getting $1,500 a month from Social Security would pay $3 more a month for Part B, while a person getting $2,500 a month would pay $5 more.

Senior advocacy groups already are complaining about the situation for people who are not held harmless. And Congress might well come to the rescue again as it did last year. But Congress is out of session and is not scheduled to return until after the November elections. By then, time will be short to fashion a fix, even assuming there is post-election sentiment to do so. My opinion: Collecting Part B premiums from Social Security payments is an efficient system. Likewise, Social Security’s hold harmless rule is a valuable safeguard to protect seniors from cuts to what often is their only source of retirement income.

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