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Navigating the murky waters of Medicare drug plans

Patrick Sison/Associated Press

An older friend of mine suffers from severe itching. Only one prescription ointment works for him. A two-ounce tube costs $408 at the pharmacy, but his Medicare drug plan doesn’t cover it. Other Medicare drug plans, though, would leave him with a copay as low as $10.

Another Medicare beneficiary I know has Parkinson’s disease. Under his Medicare plan, he would have a $291 copay for a month’s supply of a vital drug. Under another plan, his copay would be as low as $9.

Is your head spinning? Mine is. Fortunately, there is some method to this madness. And for Medicare recipients, now is the time to understand it.

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Until Dec. 7, Medicare beneficiaries can change supplement and drug plans, with the new ones effective Jan. 1.

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While Medicare subsidizes prescription drug plans, it cannot negotiate prices with the pharmaceutical companies’ manufacturers, as does the US Department of Veterans Affairs. But the private insurers that administer the Medicare plans can negotiate with the drug companies.

More than 20 stand-alone drug plans are offered in Massachusetts under what is known as Medicare Part D. Each has its own premium, deductible, and copay structure. They also each have their own formulary — the list of covered drugs. About two dozen other plans are offered to members of Medicare Advantage, private health plans that contract with Medicare to provide all medical services.

The retail price of a drug can vary widely among plans and within plans if they have preferred pharmacies (such as Walgreens or CVS). Federal law requires that each formulary include at least two drugs in every drug class covered by Medicare. But everyone responds differently to medication, so the drugs offered in a given formulary may not work for you. A doctor can write an appeal on your behalf, although it could be rejected, or result in only a modest savings.

By now, I imagine your eyes are glazing over.

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But if you don’t review your coverage over the next month, your eyes might be popping when you fill that first prescription in January.

You may find, for example, that a drug previously classified Tier 1, the cheapest classification, has been raised to a higher tier and thus carries a higher copay. A drug for which you once paid a set copay, say $10, may now be based on a percentage of the insurer’s negotiated retail price of the drug. Should the manufacturer raise the price of the drug in midyear, your copay would go up.

You can obtain free help navigating the murky waters of Medicare and related health programs at your local senior center by making an appointment with a counselor for SHINE, an acronym for Serving the Health Insurance Needs of Everyone (on Medicare). The counselors, who are largely volunteers, are available year-round, but staffing is ramped up for the fall enrollment period. Bring your drug list (complete with dosages and strengths) and your Medicare card; all your information will be kept confidential.

I completed the six-week SHINE training program last May and can attest that even the lawyers and benefits managers in our training group were baffled by the complications of Medicare, such as varying enrollment dates, penalties for late sign-ups, and a vast array of subsidy programs.

If you’re a do-it-yourselfer, Medicare offers an online tool for comparing drug plans on Medicare.gov. You can create it with your Medicare number or by simply plugging in your zip code, pharmacy choices, and list of medications. Then you’ll be assigned a number, so you can retrieve the list later to make modifications.

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The Medicare plan finder calculates how much you would pay under each plan for a given basket of drugs at a given pharmacy — or by mail order — over the course of a year. The calculation accounts not just for premiums, but also drug copays, which change as you progress through the deductible phase (if any); the initial coverage period; the coverage gap (nicknamed the “doughnut hole”); and — if you have extremely high drug expenditures — the catastrophic phase, when copays drop significantly.

The doughnut hole, which will shrink annually until it disappears in 2020, occurs when the combined amount that you and your insurer have paid for drugs has exceeded a specified amount — this year, it’s $3,700. Beyond that level, drug prices may temporarily spike. Since drug plans negotiate different prices, you may hit the doughnut hole under one plan but never come close under another. The spending meter restarts with the new calendar year.

Back to my friend with the skin problem. He’d have to pay the full negotiated retail price of $408 for his skin ointment, Clobetasol Propionate, under his Blue MedicareRx Value Plus plan. Under the Cigna-HealthSpring Rx Secure-Extra plan, the retail price is $41.34; and after a $50 deductible is reached, the copay is just $10. This year’s monthly premium for his plan is $43 compared with $37 for the Cigna plan. A word of caution: Don’t compare plans by premium alone, unless you don’t regularly take prescriptions.

My friend’s income and assets are too high to qualify for one of a dozen or so special exemptions that would allow him to switch plans in midyear. But another way to switch is to join what the government deems a 5-star plan as determined by a formula based on quality measures. Unfortunately, he’s already on a 5-star plan, and the only other top-rated plan doesn’t have the drug on its formulary, either, so that option is a nonstarter.

He can switch to a cheaper plan during the current open enrollment period for his 2018 coverage. Meanwhile, for this year, he can search a drug-price comparison site, such as goodrx.com, and buy the ointment for as little as $96 at Walgreens with a coupon.

A 5-star plan, however, would benefit the Parkinson’s patient. If he had switched from SilverScript Choice to Blue MedicareRx Premier for the last three months of the year, his total savings would have been $573. His premium would increase by $95 a month, but that would have been offset and more by a $286 savings on copays. These calculations take into account minor changes in the costs of his other medications and are based on 2018 rates.

Even if you do your due diligence during the open enrollment period, you can’t anticipate all the medications you may need the following year.

Depending on your financial status, you could qualify for a program that allows you to switch plans one time outside of the open enrollment period. If you are married with a joint income less than $48,720, you can sign up for the state-run Prescription Advantage program for free. If your combined income is no more than $81,200, you can join for a $200 annual fee. There is no asset test. Sometimes, switching plans can save you thousands. Prescription Advantage also caps out-of-pocket expenses and, depending on your income level, may save you from the perils of the doughnut hole.

Medicare itself offers substantial savings for those with limited means through its Extra Help programs. A married couple’s income must be below $24,600 and their assets (excluding a house, car, and a few other items) must be below $27,600. If you qualify for Full Extra Help, you’re eligible for zero premium plans with copays that range from $3.30 to $8.25.

SHINE counselors can help you evaluate Medigap and Medicare Advantage plans. In Massachusetts, all Medigap plans have to meet the same basic criteria. They are either basic policies that pick up the 20 percent of costs that Medicare doesn’t pay, or more comprehensive policies that also cover deductibles. But the monthly premiums for virtually identical policies vary by as much as $70.

Last year, according to state figures, SHINE saved 62,000 Massachusetts residents an estimated $105 million by helping them find drug savings programs and less expensive insurance plans.

Steve Maas can be reached at stevenmaas@comcast.net.
For more on SHINE, visit mass.gov/health-insurance-counseling.