75% of Medicare beneficiaries with stand-alone prescription drug plans could face premium increases in 2008

The open enrollment period for the Medicare Part D prescription drug benefit begins Thursday and continues through the end of the year, and beneficiaries should "look closely" at their plans because many of them are increasing premiums, copayments and deductibles, the Baltimore Sun reports.

According to consulting firm Avalere Health, monthly premiums for 2008 on average are increasing 21% (Salganik, Baltimore Sun, 11/11).

The Kaiser Family Foundation on Wednesday released data showing that three-quarters of Medicare beneficiaries enrolled in stand-alone drug plans could face premium increases in 2008 and monthly premiums will increase 17%, if enrollees do not switch plans. The Kaiser Family Foundation cites about a 5% increase in 2007, based on actual enrollment (Macias, Los Angeles Times, 11/10). A number of plans will "raise their premiums significantly in 2008," according to the Winston-Salem Journal.

UnitedHealth Group's AARP Plan-Saver, which has about 900,000 beneficiaries, will increase its premium by 87%, according to Avalere (Jackson, Winston-Salem Journal, 11/12). According to the Kaiser Family Foundation, Humana's PDP Standard plan has increased premiums almost threefold since its debut in 2006. That plan has some of the "heaviest enrollment," according to USA Today.

Tricia Neuman, a Kaiser Family Foundation vice president and director of the Foundation's Medicare Policy Project, said, "If seniors don't switch plans, they could well experience an increase in their premiums and, for some, it could be a fairly large increase" (Appleby, USA Today, 11/12).

Selecting a Plan
Although some plans are reducing their premiums, beneficiaries should note that the best choice might not be the "one with the lowest premium," but rather the "one that will mean the lowest total cost, over the year" for medications, according to the Sun. Seniors should consider the so-called "doughnut hole" coverage gap, under which beneficiaries are required to pay for drugs after $2,510 in costs have accrued for the year. The gap ends once total drug costs hit $5,726.35. Some plans cover generic drugs during the doughnut hole (Baltimore Sun, 11/11). According to USA Today, only one insurer, which serves beneficiaries in Florida, covers brand-name drugs during the gap (USA Today, 11/12). Once the gap ends, beneficiaries receive all future drugs for a copay of $5.60 or less, according to the Sun.

In addition to doughnut hole coverage, beneficiaries also should consider that plans have different copays, lists of covered drugs and pharmacy networks (Baltimore Sun, 11/11). Seniors will have plenty of choices, with most states having 50 or more plans, according to USA Today. CMS officials said that beneficiaries will be able to keep premium costs low in 2008. Herb Kuhn of CMS said, "In every state, people will be able to find a plan that costs less than $20 a month" (USA Today, 11/12).

Avalere President Dan Mendelson said, "The reality of the Medicare experience is that beneficiaries have been very loyal thus far to their initial plan selections. If consumers stick to their choices again, they are likely to see a dramatic increase in their monthly premiums" (Winston-Salem Journal, 11/12).

Medicare Advantage Plans
Beneficiaries also have the choice of enrolling in more comprehensive health insurance plans that include prescription drug coverage through Medicare Advantage. However, not all MA plans have drug coverage. An MA plan "might be a good deal," but beneficiaries should understand the terms before signing up, according to the Sun (Baltimore Sun, 11/11). Critics of MA have said that federal subsidies to the plans should be reduced, a move that is under consideration in Congress.

Kathy Batteer, vice president for Medicare of University of Pittsburgh Medical Center's UPMC for Life HMO Rx Enhanced health plan, said that if MA payments are cut, it will be "hard, if not impossible, for Medicare Advantage plans to offer the benefits they do today" (Fahy, Pittsburgh Post-Gazette, 11/12).

Low-Income Subsidies, Special Needs Plans
The open enrollment period also will bring changes to beneficiaries who receive the drug benefit's low-income and disabled subsidies, according to the Times. The changes are taking place because the plans in which many of these beneficiaries are enrolled no longer meet the subsidy program's requirements. Beneficiaries in the subsidy, who pay no premiums or reduced rates, automatically might be placed in a new plan for 2008 if they opted to not choose their own plan when enrolling in the program. About 2.1 million beneficiaries will be affected. Another 440,000 beneficiaries who elected to choose their own plan meeting the subsidy's requirements will have to select another plan (Los Angeles Times, 11/10).

Meanwhile, the number of special needs plans, which target beneficiaries with chronic conditions such as diabetes or high cholesterol, is increasing next year, according to the Post-Gazette. Abby Block, director of the center for beneficiary choices at CMS, said that the number of special needs plans will rise by 58% in 2008. Block said the reason for the increase in these plans might be because the formula used to pay insurers changed and now takes a patient's health status into account. Block said that it is unclear if the special needs plans will offer improved benefits but that the effect is "something we're trying very hard to measure" (Pittsburgh Post-Gazette, 11/12).