Ask the Advisor: We Are Held Hostage By Our Drug Plans

Ask the Advisor: We Are Held Hostage By Our Drug Plans

Q. I'm concerned that the insurance companies providing Medicare Part D are allowed to drop coverage on various drugs at any time during the year.  There is little or no notice to the consumer.  Yet as a Medicare consumer, I am only allowed to change drug coverage once a year.  We are held hostage by our drug plans.  Is Congress considering doing anything about this?

A: Under current rules, insurers are allowed to drop coverage of a drug at any time, yet most beneficiaries are locked into their plan choice for an entire year, even though they may have carefully selected it based on data provided by Medicare's own Drug Plan Finder.  This policy is proving particularly problematic for seniors who require costly brand name drugs for which there are no generic equivalents, and who hit the "doughnut hole" coverage gap during the year.

In 2006 the first year of Part D, Humana Inc., was the only major insurer to cover both generic and brand name drugs in the doughnut hole.  Prior to last fall's Open Enrollment Period, Humana made national headlines by announcing it would cut back gap coverage to just generic drugs, and raised the premium of their Humana Complete Plan for 2007.

Sierra Health Services, however, announced it would offer comprehensive coverage for brand-name drugs during the coverage gap in 2007, making it the only insurer to do so.  Sierra also charged a high premium for doing so.  Out of the 53 plans available here in Virginia for example, SierraRx Plus has the highest monthly premium in 2007 of any plan, at $92.20 compared to $76.30 for Humana Complete.

Sierra Rx Plus Plan, however, lost $3 million in just the first month of 2007.  With a hemorrhage of red ink, by February Sierra announced that next year it would no longer cover brand name drugs in the doughnut hole.  According to an article appearing in the Los Angeles Times, about the same time hundreds of enrollees started getting notices that their Sierra coverage was being discontinued for nonpayment Ч although some seniors said they had already sent in their checks.  Medicare officials had to intervene ordering about 2,000 Medicare customers reinstated which Sierra has done.

Brand name coverage through the doughnut hole gap was available in only 37 states this year and Sierra is the only provider of most of them.  Because Sierra is the only major plan to cover brand name drugs in the gap in 2007, Medicare consumers may not have any comparable options for 2008.

In our 2007 Social Security and Medicare Advisor Senior Survey, we asked readers, "What is the most important way Congress could make Part D a better program?"  The top answer we received was, "Require all drug plans to cover every medically necessary prescribed drug." Some 54% ranked this "most" or "very" important.  Right behind it in importance is "getting rid of the doughnut hole gap in coverage ranked "most" or "very" important by 48% of all respondents.

While Congress has recently taken some small steps to allow the federal government leeway to negotiate the price of prescription drugs, the outcome of the legislation is still uncertain.  Congress has yet to move to close the Part D doughnut hole or to require drug plans to cover brand name drugs in the coverage gap.  There has been no hint at all that the Congress would provide an alternative "fall back" Part D plan which would provide comprehensive coverage.

Some 57% of our respondents who said they enrolled in Part D say they spent just as much or even more under Part D than they did without Medicare Part D.  That's a pretty lack-luster first report card for the program.  TSCL supports better coverage of brand name drugs and closing the doughnut hole.  TSCL is also fighting for legislation to allow seniors to legally import less costly FDA-approved prescription drugs from Canada and other nations where they are sold for much less.

TSCL supports "The Pharmaceutical Market Access and Drug Safety Act," (S.242 and H.R. 380) introduced in the Senate by Senator Byron Dorgan (ND) and Olympia Snow (ME) and in the House by Representative Rahm Emanuel (IL).

Sources;  "Brand-name Medicare Drug Needs Are Going Unmet," Ricardo Alonso-Zaldivar, The Los Angeles Times, April 2, 2007.  "Insurer: Covering Drugs During Medicare Gap Too Costly," Bob Moos, The Dallas Morning News, April 8, 2007.

July 2007