Look out for Medicare drug plans’ bait-and-switch pricing tactics

Editor’s Note: Journalist Philip Moeller, who writes widely on health and retirement, is here to provide the Medicare answers you need in “Ask Phil, the Medicare Maven.” Send your questions to Phil.

Medicare rules and private insurance plans can affect people differently depending on where they live. To make sure the answers here are as accurate as possible, Phil is working with the State Health Insurance Assistance Program (SHIP). It is funded by the government but is otherwise independent and trains volunteers to provide consumer Medicare counseling in state and local offices around the country. The non-profit Medicare Rights Center is also providing on-going help.

Moeller is a research fellow at the Center on Aging & Work at Boston College and co-author of “How to Live to 100.” Follow him on Twitter @PhilMoeller or e-mail him at medicarephil@gmail.com.

Susan – N.Y.: I am 66, pretty healthy and take few medications. But those that I take are considered the highest tier in my drug plan and I now pay ridiculously more — hundreds of dollars each month — for my prescriptions than I did when I was on regular health insurance. Is there any help for me?

Phil Moeller: These drug-plan tiers are one of the sneaky ways that health insurers exercise what amounts to bait-and-switch pricing tactics with consumers. They will never call it that, and the Maven may need to don a disguise when picking up his own prescription drugs. But many Medicare drug plans – both Part D and plans that are part of Medicare Advantage policies – offer very low premiums to get you in the door. Then they sock you with large deductibles and unappealing co-pays. Adding high-cost tiers to their drug formularies is yet another way health insurers are shifting costs back to Medicare beneficiaries. There, I feel better, but I haven’t helped Susan, have I?

Assuming your claims are at least being approved by your insurer, one option is to ask your drug plan for what’s called a “tiering exception.” In this instance, you would request that one or more of your drugs be billed using lower cost-sharing ratios. Your doctor would need to be involved with the request, and show that other drugs on the plan’s formulary that are approved to treat the same condition didn’t work or had intolerable or unsafe side-effects for you, or are likely to because of your unique medical situation. Unfortunately, drugs characterized as “specialty tier” cannot qualify for the tiering exception.

If your income and assets are limited, let someone at the New York SHIP see if you will qualify for the Extra Help program for prescription drugs. And if you get no relief from that, you may be able to apply to the manufacturer for assistance. Two places that offer help here are the Partnership for Drug Assistance and NeedyMeds.

It may be only a small consolation but there is what amounts to a cap on your out-of-pocket drug expenses. Unfortunately, to get there you will first have to go through the dreaded Medicare coverage gap or, as it’s more commonly known, the donut hole. It kicks in this year after your total drug expenses have hit $2,960. This includes what your drug plan has spent plus your own spending. Once your total out-of-pocket spending has hit $4,700 you’ll be out of the gap and will face only small drug payments the rest of the year.

Within the coverage gap, however, you will be on the hook for 45 percent of branded drug costs and 35 percent of generics. Also, while you pay only 45 percent of the cost of brand drugs, 95 percent of the cost will be credited to you as an out-of-pocket expense in meeting donut-hole rules. For generic drugs, only what you pay will be credited toward your out-of-pocket spending. The donut hole is shrinking each year under provisions of the Affordable Care Act, but it’s still a most unpleasant surprise to Medicare beneficiaries with expensive drug needs.

This fall, make sure you aggressively shop all Medicare drug plans that will be available to you in 2016. Use Medicare’s Plan Finder to create a list of your prescription drugs. Then, see what these drugs will cost you in these plans. Hopefully, you will be able to find a better deal than you did this year.

Richard – Mich.: I am retired, receiving Social Security, and will be turning 65 in the spring. I am also a veteran, and enrolled in the VA Health Benefits program this past year. I keep hearing about all these penalties and higher premiums outside of Medicare if one doesn’t initially sign up. Should I enter into an additional plan initially just to avoid future additional costs (if I were to opt out of the VA program at some future point), or should I decline now and try to remain with the VA for as long as possible?

Phil Moeller: This is a great question and affects many veterans. Strong and responsive VA programs are the least we can do for our veterans. And there are some terrific VA benefits, such as over-the-counter drugs and hearing aids, that the VA covers and Medicare generally does not. Plus, the VA is unsurpassed in its experience in war-related injuries and traumas.

But as the recent scandal involving the widespread denial of care and even appointments illustrates, the VA is not at this time a single source of medical help that veterans should rely on. Until it has improved, I cannot recommend that you limit your care options only to VA facilities. Also, there may be situations where the VA doesn’t cover your needs but Medicare will.

For these reasons, I’d enroll in basic Medicare (here’s our primer) to preserve your rights to seek care outside the VA system should you need it. If you have problems affording Medicare premiums, check out Medicare Savings Programs to see if they can help. Medicare and VA benefits do not “work” together. This means that Medicare will not pay for any health care services, including drugs, provided by or through a VA facility. Likewise, VA will only pay for what it provides, which excludes what you’d get from non-VA providers.

However, if your VA facilities are convenient to you, you might consider holding off on signing up for a Medicare drug plan. VA’s drug plan is considered creditable coverage under Medicare rules, meaning that it is at least as good as a Medicare drug plan. Thus, it should meet your needs. If it turns out it does not, the fact that the VA plan is deemed creditable coverage means you would face no late-enrollment penalty for waiting to get a Medicare drug plan. You would face such a penalty if you did not sign up for Part B of Medicare and later changed your mind. The penalty would raise your Part B premiums by 10 percent for each year you delayed coverage, and these higher premiums would never go away.

Colleen – Mich.: Is it true that Medicare won’t cover medical care from a car accident?

Phil Moeller: That’s not true. Medicare is available to help, although the program may take steps to make sure it’s not paying for things that should be covered by your auto insurance policy or that of another driver if they were at fault in the accident.

In most cases, these auto insurance policies will be the primary payers. If there are medical bills that liability or auto insurance won’t cover, or won’t cover in a timely manner, Medicare might pay primary on those claims. You should talk with your health care provider about billing Medicare as the “conditional” primary payer. In this situation, Medicare will pay expenses so that you don’t have to pay them yourself, and will later work to recover its funds from other insurers. Medicare may send you a letter asking you to identify any other insurance that may have accepted liability for the accident. The Medicare Benefits Coordination and Recovery Center (BCRC) oversees these matters, and can be reached at 1-855-798-2627 (1-855-797-2627 for the hearing and speech impaired).