Our office phone rings…A LOT…during the month of January with folks who are in what I call pharmacy-induced sticker shock. The general idea of the calls is the same: “I only paid $44 for my prescriptions in December, and the pharmacy said my total for January is $360. The pharmacy said it’s because of my new insurance plan!”
Well, not exactly.
Medicare began covering outpatient prescription drugs on January 1, 2006. Medicare administers this prescription drug benefit through private insurance plans (Part D); however, those insurance companies have to follow the rules prescribed by Medicare. The rules that seem to have the greatest impact on our clients this year include:
1. The drug companies must follow Medicare’s prescription drug formulary.
2. The Medicare Part D annual drug deductible for 2016 is $360.
3. The insurance plans can/do make changes in premiums, copayments, and coinsurance every single year.
Medicare, not the insurance companies, makes decisions about the drugs that are covered. Medicare can deem certain drugs to be not covered, or to be covered with restrictions due to things like:
· A much cheaper generic alternative is available.
· The drug creates a high risk of danger in the Medicare population (danger of dependency, falls, accidents, etc).
· Research has shown the drug to be experimental in nature or not an effective treatment.
· The drug is prescribed for non-medically necessary reasons (often cosmetic).
Medicare also establishes the annual drug deductible ($360 in 2016; up from $320 in 2015). This is what leads to “sticker shock’ at the pharmacy in January. Unless your plan does not charge the deductible, the first $360 of drug costs is paid by the consumer. Once the deductible is met, the plan begins paying a portion of the costs.
However, whether the insurance plan charges the deductible or not is a little misleading, too.
Consumers should not look at premium and deductible when selecting a Part D plan; but instead, look at the estimated, total, annual costs. We are finding that the plans who don’t charge the $360 deductible will often have higher monthly premiums or higher copayments for the drugs. They are recouping that deductible; as it is paid to Medicare by the plan on your behalf.
Another trend: Prescription drug prices are on the rise. I’ve yet to hear anyone tell me that they are paying less for their prescriptions. My best advice: Find an insurance agent who will review your prescription costs with all of the available Part D plans each open enrollment (or use the Medicare Prescription Drug Plan Finder at Medicare.org), and work with your doctor and your Part D plan’s formulary to make sure that you are on the lowest cost alternatives for your condition(s).