The Truth about Medicare Part D Plan Consolidation

August 27, 2010

To eliminate confusion and simplify Medicare Part D plan coverage, the Centers for Medicare & Medicaid Services (CMS) has mandated that there must be a “meaningful difference” between plans, defined as an actuarial estimate of a member’s out-of-pocket cost share between each plan offered.  Most carriers today offer a “low,” “medium,” and a “high” Part D plan within each market. As a result of this new rule, in most cases the number of plans in a specific geography will be reduced to two.

Contrary to some reporting, which claims that more than 3 million people will experience upheaval at the termination of their plan, the transition may not even be noticed by many. Most seniors who are in a plan that is terminating will be “crosswalked” (automatically enrolled) into one of their carrier’s other Part D prescription drug plans.

In a smaller number of cases, individuals will be dropped from their existing plan when it terminates, and will not be automatically enrolled in a new plan. These beneficiaries will have what Medicare calls a special enrollment period, in which they will have the opportunity to find and enroll in new plan.

When Part D was introduced, a commonly heard complaint was that the number of plans was bewildering – and since each plan’s formulary, co-pays, and pharmacy network were different, it was difficult to compare and understand which plan provided the best coverage at the lowest cost. This reduction in the number of Part D plans will have benefits for both consumers and carriers; it will reduce confusion, take redundancy out of the market and should reduce carriers’ costs since they’ll be designing and administering fewer plans.

This change does represent an opportunity for Medicare recipients to evaluate their drug plan and make sure it still fits, which is something we here at Extend Health recommend they should do every year anyway. Seniors whose carrier is automatically switching them into a new plan, or who are losing their plan, should get answers to three questions about any new plan before they enroll:

  • First, will the new plan cover the prescription drugs I use?
  • Second, are co-pays changing for my drugs, and if so, what are they new co-pays?
  • Third, will the new plan let me purchase medications from my preferred pharmacy?

 If the new plan will increase out-of-pocket expense, or prevent them from being able to purchase their prescribed drugs, they should evaluate Part D plans from other carriers to see if another plan better meets their needs. All Medicare beneficiaries can change their Part D plans during the annual Medicare enrollment period, which runs from November 15 through December 31, 2010. Beneficiaries who are losing their plan have a longer SEP that runs from October 1st through December 31st.

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