Wednesday, January 04, 2006

Medicare Part D - view from a frontline worker

A couple of years ago the U.S. government finally realized that helping seniors with their prescription drugs might be a "good thing". They came up with Medicare Part D. The federal government, through its Medicare service (this is health coverage for seniors and people with disabilities), will help those enrolled in Medicare with the cost of prescription medicines.

For various reasons (including the fact that the federal authorities in Louisiana are swamped), Medicaid departments (Medicaid is the federally subsidized state government program that helps lower income people with their medical costs) in Louisiana have been helping seniors apply for Medicare Part D. As a result, Alana had to learn how Medicare Part D works. She is now an expert in Medicare Part D, or as close as one can come without going insane. More on this in a little bit, but the following information comes courtesy of her (which is a heck of a lot easier to read than navigating federal web sites and telephone lines).

This is what the richest country in the world came up with:
  • Seniors over 65, or people under 65 with a disability who received Social Security benefits due to their disability (for at least two years), qualify for Medicare.
  • Anyone with Medicare qualifies for Medicare Part D. This allows them to choose an prescription drug plan from a raft of plans offered by private insurers. These plans all have to be approved by Medicare. Each plan has different premiums, different co-pays (where the insured person pays a fee for each prescription) and different types of drugs covered. One plan, for instance, might cover a certain heart medication at a particular dosage, but not the same medicine at a higher dosage. Another plan may cover that drug at the higher dosage but charge a higher premium.
  • All of these Medicare Part D plans come with a $250 deductible, meaning the senior is out of pocket for the first $250 of their drug cost before any coverage kicks in.
  • After the deductible, the senior has a 25% co-insurance up to $2250 total drug cost per year (meaning they add up how much the senior's prescriptions cost at the pharmacy, and the senior is covered until their total hits $2250). The co-insurance means that they pay 25% of the drug's cost, so if the drug cost $100, the senior pays $25. The senior also has to pay the plan's monthly premiums, of course. If the plan has a co-pay (I think most do), they have to pay that, too (usually $5 to $30 per prescription).
  • After the $2250 the senior hits what is called "the big donut hole". The senior pays the entire cost of their medicine from the $2250 total drug cost to $5100 total drug cost. None of this gap amount is covered.
  • After the $5100 total cost, the seniors generally have a 5% co-pay (the best part of the plan, but you can go bankrupt getting there... oh, wait, no you can't, because they changed the bankruptcy laws, too. Damn!).
That's the standard Medicare Part D coverage for average seniors. For low income seniors they have what they call Extra Help. Based on the senior's income and resources, some of the above is covered. They may have their premium covered, they might not have a deductible or they may have a reduced deductible, and instead of paying the 25% co-insurance they might have a maximum $5 co-pay. Usually a low income senior doesn't have to worry about the "big donut hole" either.

Now, here's the really confusing bit. If a senior (or someone with a disability) is enrolled in Medicare they will have automatically "joined" Medicare Part D by May 15 unless they opt out or join before then. The senior has to choose a private insurance plan. They had to choose a plan by January 1 in order to be covered in January. If they did not, they have until the end of January to pick a plan that would start in February. They then have until the end of February to pick a plan that started in March, etc.

By May 15 if the senior still has not picked a plan, and the senior has not opted out of Medicare Part D, they will be "auto enrolled". Medicare will pick a plan for them. Randomly.

I read an article online that suggested that some seniors, if they wait for auto enrollment, could end up paying a couple of hundred dollars more than they could be paying by choosing a plan themselves. *snicker* If only a couple of hundred dollars was all they'd be out...

You see, due to Hurricane Katrina the state of Louisiana was allowed to auto enroll all of its seniors by the end of December. If a senior in Louisiana had not opted out of coverage and had not picked a plan by December 31, 2005, Medicare auto enrolled them in a plan. For once Louisiana is ahead of the curve. This state has already seen what happens with auto enrollment.

Alana spent much of last month (after a one month delay by the feds) helping seniors enroll in a plan. Alana is the regional representative for MPP (the Medicaid Purchase Plan). MPP allows people with disabilities to buy into Medicaid. They don't have to quit working and lose resources to get Medicaid, but at the same time they are paying into the system, so it's not just a "hand out". This is how she learned so much about this plan.

As I said, the Medicaid offices in Louisiana were helping seniors decide what plan was best for them. They didn't have to go to Medicaid for help. There was a telephone number they could call and a web site they could visit (forget the fact that to many seniors a "web site" was a corner of the living room ceiling they couldn't reach to dust). If you call the federal 800 number, you are often told to call a local office. Few in the local offices were properly trained for the complexity of the program, and few local offices could handle the call volume. This is a big reason that Louisiana used state Medicaid employees to aid seniors with a federal program.

Available plans and details were constantly changing. It was only a couple of weeks ago, for instance, that it was decided that Louisiana would auto enroll people by the end of December. Alana learned all she knows about this "on the fly", as did the other state employees. I admit I'm biased being married to a state employee, but from what I saw state agencies and employees went above and beyond the call of duty on this one.

Auto enrollment is a joke. As you may have realized from the above, the various plans offered by insurers have different costs based on the senior's needs (i.e. how much the insurance company will have to pay out). A plan may offer lower co-pays and lower premiums but cover fewer drugs. One plan may be better at covering cancer meds than another plan. The only way to figure out what plan was best for a given senior was to know the senior's income and resources and — most importantly — the prescriptions the senior took. Without this information, auto enrollment is almost meaningless. The feds figure it's "better than nothing" but only just.

Note that at no time did Alana divulge confidential information. What is written below is almost verbatim what I was told. Also note that state employees are prevented from recommending plans. All they can do is explain how much each plan will cost under different scenarios. They simply help the senior make an informed choice. State employees had access to a web application that helped them do this.

A number of seniors Alana saw had decided on a plan based on insurance company literature, but wanted to see if the plan they picked was the best for them. When their full prescription information was entered they were sometimes shocked at the discrepancy between the plan they originally chose and the other plans available to them. One senior was looking at a difference of $1100 a month. Another senior saved $1500 a month. The biggest gap Alana saw was a difference of over $1800 a month. No, I did not add an extra zero there. The biggest gap she saw was more than one thousand, eight hundred dollars.

This is not the out of pocket expense for the drug plan. This is the difference in what the senior would have to pay if they got all of their medications under one plan versus another plan. In almost every case, the difference was due to medicines that were not covered by the plan the senior originally considered. The senior would then have to consider paying more than $1000 a month, or they would have to do without medicine prescribed by their doctor.

These differences are showing up during auto enrollment. Auto enrollment consists of the federal government looking at all the plans that are available in a given area, and then doling them out at random to seniors. It might as well be random because without medical information choosing a plan for someone is useless. Virtually all automatically enrolled seniors will end up having a plan that does not suit them, either because they will get more coverage than they need (and, as a result, pay higher premiums and co-pays) or not all of their medicines will be covered.

There's one last wrinkle. A senior is not forced to pick a drug plan when they turn 65, but if they don't they will be penalized when they eventually do choose a drug plan. The penalty is based on the amount of time they wait before picking a plan. The longer the time, the greater the penalty. You can't have people not paying premiums until they need the coverage, after all! Oh, no. So when someone turns 65 they can't just think, "Gee, what do I need for drug coverage today," they have to think about what they might need 5 or 10 years down the road. The best bet for a healthy senior is to pick a low priced plan (that they may or may not need at all) and hope that it covers them in the near term.

Now I understand why Canada's health care system costs 8% of GDP while the U.S. pays 12% of GDP on health care (these are figures I read back in 2000). I'd almost defy a politician to come up with a screwier system than this. This is the system the members of Congress have been patting themselves on the back about.

Canadians think that Ottawa produces too much red tape. They haven't seen anything like the U.S. bureaucracy. It would be funny if it wasn't so serious.

7 comments:

Blue Cross of California said...

Great blog I hope we can work to build a better health care system as we are in a major crisis and health insurance is a major aspect to many.

Winter said...

You're a wordly guy, explain why America doesn't have socialized
medicine...

Allan Goodall said...

The historical answer is because the U.S. has traditionally been in favour of less government. The U.S. was founded on a weak federal structure. Something like socialized medicine requires a stronger central government. Otherwise each state is left to fend for itself.

That's the historical answer. The political answer is that doctors, hospitals, insurance companies and pharmaceutical companies are against it. They give politicians a lot of money so that they don't form a system of socialized medicine. They would see their profits dwindle (particularly insurance companies, who would lose an entire market segment, and hospitals, who would be forced to accept the fee structure set up by the government.)

There's also a cultural reason. Rich Americans want to be able to pay for health care if they can afford it. They don't want to wait in line along with everyone else. Many middle class Americans fear socialized medicine. They make do with their insurance coverage, are scared of hospital closings and decreased services (not without justification; the Conservative Party in Ontario gutted Ontario's hospital system), and fear increased taxes to cover health care expenses. The only people who know they would benefit, the low income earners, typically vote in low numbers.

I've noticed that whenever the debate comes up in the U.S., they always trot out horror stories from Canada. Ontario did go down hill since I left, but that was due to a Conservative government cutting health care spending so that they could give tax cuts to the wealthy (sound familiar?). They don't mention that every senior in Canada is covered for their prescriptions. (I can't remember if there's a small co-pay, premium, or deductible -- I'll have to ask my mother -- but it's far, far better than Medicare Part D). They don't mention that being hit with cancer or heart failure doesn't bankrupt a family. They don't mention that the Canadian system is far more efficient. The debate down here is often full of mistruths, so Americans vote without knowing the facts.

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me said...

You are on the right track in explaining the Part D benefit but a lot of what you say only applies to a small part of the Medicare population (like auto enrollment) and there are many plans (in fact most) that offer insurance far enhanced over the base Part D plan approved my congress.

Allan Goodall said...

Yes, but not here. Not in Northeast Louisiana.

Asked Alana about this. There are plans called Medicare Advantage plans that cover more than the base requirements beyond what Congress requires, but an insurance company has to offer it in your area.

There are none offered in Northeast Louisiana.

So, you are correct, what I said was only part of the coverage offered. In some parts of the country -- like Louisiana, though -- it's the only coverage offered.

cla said...

Excellent blog. I will say that Alana is knowledgeable about lost of issues this state has to offer. I too have first hand knowledge of that. I work at a nursing facility in Northeast Louisiana and I have, to say the least, had my fill of Medicare Part D. Not only did some of our residents not make the auto enrollment but those that did are scarred to death that they are not going to get their meds timely. The doctors are a different story. We have one that basically told us yesterday that they didn't even know what we were talking about when we explained we couldn't get a prescribed drug. To make matters worse when we try to enroll residents at this point, they aren't covered for the rest of January and don't have the means to buy their meds. So who is to pay? When you look at the information provided by Medicare Part D it states clearly "family, friends, nursing home, or charitable organization". Now I want to know what is that individual to do if they don't have family or their family doesn't have the means to pay the co-pay, if there aren't any friends who are willing to pay, or if the charitable organizations say we have too much to do now with Hurricanes Katrina and Rita. As for the nursing homes, their budgets are cut enough as it is not to mention the burden of buying the medicines for those who are not on skilled care.

I am in contact with family members every day that say they didn't pay attention to the information they were sent or didn't know what to do with it.

It's a very frustrating time and worrisome time for the elderly who are the most needy with a fixed income.