Aging Options

LIMITED TIME OFFER: First Academy Lesson is Free

Medicare Surprise: Drug Plan Prices Touted During Open Enrollment Can Rise Within a Month

Save as PDF

How would you feel if you signed up for a monthly service – say, your cell phone plan or streaming service – only to have the fees jump less than a month after you signed the contract? And on top of that, what if you were stuck with that contract for a full year? That’s how many subscribers to Medicare Part D prescription are feeling, according to this recent expose from Kaiser Health News.

In the article, reporter Susan Jaffe reveals how many insurance companies are hiking the costs of covered drugs – sometimes more than tripling them – often within weeks of the close of open enrollment in December. Adding insult to injury, beneficiaries are stuck with those policies for a full year. The outcry has AARP and other groups lobbying Congress for legislation to prohibit price manipulation. It’s truly another case of “buyer beware.”

Price Hike More Than Triples Drug Cost

Jaffe begins her article with the story of Linda Griffith, a longtime Medicare enrollee who recently had a bit of a shock. Jaffe writes, “[Griffith] picked a Humana drug plan for its low prices, with help from her longtime insurance agent and Medicare’s Plan Finder, an online pricing tool for comparing a dizzying array of options. But instead of the $70.09 she expected to pay for her dextroamphetamine, used to treat attention-deficit/hyperactivity disorder, her pharmacist told her she owed $275.90.”

Griffith was confused, since the jump had seemingly happened in the short period between the fall enrollment window and her first prescription refill in January. She says, “I didn’t pick it up because I thought something was wrong. To me, when you purchase a plan, you have an implied contract. I say I will pay the premium on time for this plan. And they’re going to make sure I get the drug for a certain amount.”

Price Hikes Allowed After Just Three Weeks

But as Jaffe states, “it often doesn’t work that way. As early as three weeks after Medicare’s drug plan enrollment period ends on December 7, insurance plans can change what they charge members for drugs — and they can do it repeatedly.” Griffith knows this all too well: through March, she has already paid $433 more than she planned to. 

Jaffe explains, “A recent analysis by AARP, which is lobbying Congress to pass legislation to control drug prices, compared drugmakers’ list prices between the end of December 2021 — shortly after the December 7 sign-up deadline — and the end of January 2022, just a month after new Medicare drug plans began. Researchers found that the list prices for the 75 brand-name drugs most frequently prescribed to Medicare beneficiaries had risen as much as 8 percent.” That’s in a single month!

Prices Rise but Policy-Holders are Stuck

Granted, the fine print reveals that Medicare officials are well aware of the potential cost fluctuations: “Your plan may raise the copayment or coinsurance you pay for a particular drug when the manufacturer raises their price, or when a plan starts to offer a generic form of a drug,” is the statement on the Medicare website. But the sudden timing of the price hikes seems suspicious to us.

Moreover, Jaffe points out that by the time prices change, most plan members are locked in and forced to pay the difference they didn’t expect. In any health insurance policy, not just Medicare drug plans, it’s typical for drug manufacturers to change their prices for drugs in January and sometimes in July, but it can happen more frequently. Jaffe explains, “Like a car’s sticker price, a drug’s list price is the starting point for negotiating discounts — in this case, between insurers or their pharmacy benefit managers and drug manufacturers. If the list price goes up, the amount the plan member pays may go up, too.”

In Spite of Part D, Sticker Shock is Common, Growing

“Medicare’s prescription drug benefit, which began in 2006, was supposed to take the surprise out of filling a prescription,” Jaffe writes. “But even when seniors have insurance coverage for drugs, advocates said, many still can’t afford them.”

And the surprises are increasingly more common. According to Chiquita Brooks-LaSure, the top official at the Centers for Medicare and Medicaid Services, “More insurers have eliminated copayments — a set dollar amount for a prescription — and instead charge members a percentage of the drug price, or coinsurance. The drug benefit is designed to give insurers the ‘flexibility’ to make such changes. And that is one of the reasons why we’re asking Congress to give us authority to negotiate drug prices.”

Medicare Officials Look for Cost-Cutting Options

Dr. Meena Seshamani, CMS deputy administrator, is hoping to make moves without having to wait for Congress. “We are always trying to consider where it makes sense to be able to allow people to change plans,” she said.

Jaffe explains, “On April 22, CMS unveiled a proposal to streamline access to the Medicare Savings Program, which helps 10 million low-income enrollees pay Medicare premiums and reduce cost sharing. Enrollees also receive drug coverage with reduced premiums and out-of-pocket costs.”

These subsidies appear to be effective. “Low-income beneficiaries who have separate drug coverage plans and receive subsidies are nearly twice as likely to take their medications as those without financial assistance,” Jaffe writes.  Still, it seems to us that this is putting a band-aid on the underlying problem of price manipulation.

In her article, Jaffe explains that CMS has its hands tied when it approves prescription plans. “The only part of drug pricing it approves is the cost-sharing amount — or tier — applied to each drug,” she explains. “Some plans have as many as six drug tiers. In addition to the drug tier, what patients pay can also depend on the pharmacy, their deductible, their copayment or coinsurance — and whether they opt to abandon their insurance and pay cash.” In other words, insurance companies have a lot of wiggle room under present Medicare policies and laws.

Giving In – but not Giving Up

Linda Griffith left the pharmacy without her medication that day in January and spent a week making phone calls to everyone she could think of: her drug plan, the pharmacy, Social Security, and Medicare. No one would give her a straight answer about why the price for her medication had jumped. “I finally just had to give in and pay it because I need the meds — I can’t function without them,” she said.

But that wasn’t the end of it. Jaffe writes, “She appealed to her insurance company for a tier reduction, which was denied. The plan denied two more requests for price adjustments, despite assistance from Pam Smith, program manager for five California counties served by the Health Insurance Counseling and Advocacy Program. They are now appealing directly to CMS.”

Making waves has had its effects. Griffith did finally get a call from an executive at Humana—after the company had received an inquiry from the media about her story. The executive told her that the Medicare Plan Finder was not a reliable source of information about plan prices, but said she would look into it. Jaffe quips: “She won’t have to look far: CMS requires insurers to update their prices every two weeks.”

In all this, Griffith’s mission is clear: “I want my money back, and I want to be charged the amount I agreed to pay for the drug. I think this needs to be fixed because other people are going to be cheated.”

My Life, My Plan, My Way: Get Started on the Path to Retirement Success

At AgingOptions we believe the key to a secure retirement is the right retirement plan – yet statistics show that 70 percent of retirement plans fail. That’s why for nearly two decades we’ve been dedicated to the proposition that a carefully-crafted, fully comprehensive retirement plan is the best answer to virtually any contingency life may throw your way as you age.  Our slogan says it all: My Life, My Plan, My Way.

When it comes to retirement planning, most people focus on one fairly narrow issue: money. Financial planning is an important component of retirement planning. However, people heading towards retirement often make the mistake of thinking that a little financial planning is all that’s required, when in fact most financial plans are woefully inadequate. What about your medical coverage? What if you have to make a change in your housing status – will that knock your financial plan off course? Are you adequately prepared legally for the realities of retirement and estate planning? And is your family equipped to support your plans for the future as you age?

The best way we know of to successfully blend all these elements together – finance, medical, housing, legal and family – is with a LifePlan from AgingOptions. Thousands of people have discovered the power of LifePlanning and we encourage you to the same. Simply visit our website and discover a world of retirement planning resources.  Make certain your retirement planning is truly comprehensive and complete with an AgingOptions LifePlan.  Age on!

(originally reported at www.khn.org)

Need assistance planning for your successful retirement? Give us a call! 1.877.762.4464

Learn how 70% of retirement plan fails and find out how you can avoid this

Find out more about LifePlanning

0
Your Cart is empty!

It looks like you haven't added any items to your cart yet.

Browse Products
Powered by Caddy
Skip to content