The New Medicare Prescription Drug Discount Cards-Part I of a II Part Article

Editor's Note- This article has become part of a two-part article on this subject. To view "The New Medicare Prescription Drug Discount Cards"-Part II

(11/8/08)- In 2009, the doughnut hole will start when the beneficiary who belongs to Part D has spent a total of $2,700 up form $2,510 this year. The beneficiary must than pay the full cost (unless he/she has purchased insurance to cover the hole) until his or her own out-of-pocket cost reaches $4,350. After that, Part D will pay 95% of the cost.

(10/30/07)- November 15, 2007 is the first day that you can change your Medicare health or prescription drug coverage for 2008. December 31, 2007, with certain exceptions, is the last day that you can change our Medicare prescription drug coverage.

You can join, switch, or drop a Medicare Advantage Plan:

(10/11/07)- Part D Medicare beneficiaries will see, on average a 21% increase in 2008 in their monthly premiums, according to a new analysis of government data. Avalere Health LLC, a Washington consulting firm, conducted the research. The government heavily subsidizes part D Medicare plans.

The nationwide average premium for Humana Inc.'s basic plan will increase to $18.20 in 2008 from about $10 in 2007. UnitedHealth Group will increase it AARP Savers plan by 87% to $27. The company has an agreement with AARP to co-market its plan in conjunction with AARP.

Interestingly enough Caremark Rx, a unit of CVS Caremark Corp., the large retail pharmacy firm is lowering its average premium by 25%, to $20.50. For a related article on the topic of the large retail pharmacies selling of generic drugs please see our article " Drug Stores Low Cost Prescription Drug Plans ".

Because of this increase the government may have to reassign 1.6 million low-income beneficiaries to less-expensive plans. That group would include 650,00 enrolled in UnitedHealth plans in 2007, because the company's offerings next year priced it out of 18 regions.

The enrollment period for Plan D Medicare beneficiaries begins November 15th and lasts for 6-weeks. Anyone wishing to switch out of their present plan to a new one will have to use this period of time to do so.

(8/26/07)- The House Oversight and Government Reform Committee reports that the prices for the 10 most prescribed brand-name medications has risen nearly 7% since December under Medicare part D insurance plans, while wholesale prices for the same drugs has risen just 3%. They also report that Part D premiums have risen 13% over the past year.

There are 1875 stand-alone prescription drug plans in 2007, about a 30% increase over 2006. (JAMA 2007; 297:2596-2602.

For those of our readers who are interested in figures, the breakdown of drug use by Medicare enrollees in 2006 is as follows: Antihypertensives 31.7%; Lipid-lowering agents 10.8%; Diabetes 6.8%; Ulcer and heart burn drugs 4.6%; Thyroid medications 4.5%; Antidepressants 4.2%; Anticoagulation and antiplatlet drugs 3.8%. (Chart in Family Practice News June 15, 2007)

According to an article in JAMA, June 20, 2007, Vol. 297 (23):2596-2602, "[N]early 23 million of the 43.9 million eligible Medicare beneficiaries have enrolled in the Medicare Part D prescription drug benefit...The program provides coverage for many of the 1 in 3 individuals who previously lacked drug benefits.  

(4/19/07)- The Democrats in the Senate were not able to muster the required 60 votes to force foreclosure of the debate to pass S.3, the bill that would have allowed Medicare to do centralized purchasing of all drugs under the Medicare Part D program. The motion to close the debate and proceed to a final vote failed by 5 votes in a 55-42 vote.

The House of Representatives had passed the bill within the first 100 days of its session as promised by House Speaker Nancy Pelosi (D-Cal.) in March, even though President Bush had promised to veto the bill, even if the Senate did pass it.

Thus we are going to continue to be in the situation where each Medicare Part D plan negotiates its drug purchases with each pharmaceutical company and the consumer will have to pay the higher price for this folly.

(1/1/07)- Because of the fact that some of the prescription drug plans did not inform Medicare beneficiaries of impending changes in their costs and benefits, Congress may extend the enrollment deadline for up to 6 weeks past the December 31, 2006 deadline. People who are enrolled in a plan this year need do nothing to re-enroll in that same plan next year, but it is critically important to know what drugs and the price for same before joining the plan.

Medicare officials told insurers that they must notify beneficiaries of any changes in drug costs by October 31, 2006, but some insurers did not send out the "annual notice of change" documents until well past that date.

"There could be penalties for plans that did not send out the annual notice of change on time," said Jeff Nelligan, a spokesman for the CMS. Peter L. Ashkenaz, a spokesman for UnitedHealth, said that perhaps 200.000 of its members had not received the required notice by the October 31 deadline.

A problem has also arisen in connection with the 1% per month penalty for every month past eligibility that a Medicare beneficiary did not enroll in a drug plan. Should the amount be computed by the individual drug plan or is it the responsibility of Medicare to assess how much the penalty should be?

(12/21/06)- A new tool on the Medicare site, that is called a cost estimator will allow you to get a rough estimate of your monthly and annual drug expenditures. This in turn will mean that you will have a good idea as to if and when you will reach the "doughnut hole" level.

The tool enables you to see the cost to both you and your plan for the drugs that you know you will be using. The caveats to usage of the tool, is the fact that the plan may change the cost of a particular drug during the year, and you may be using additional drugs during the year..

The doughnut hole begins in 2007 when a plan member and the stand-alone drug plan have spent a total of $2,400. The member than must bear the full cost for her or his drugs until the out-of-pocket cost reaches $3,850. Once you have exceeded this amount, you pay only 5% of additional drug expenses.

To use the tool go to the site and then click on to the link that says, "compare drug plans". Once at that site go to the link to "find and compare plans". The estimates are at the very end of the page with the plan's details.

The site is updated every two weeks based on updated information from the plans, and the costs reflect discounted prices each plan has negotiated with the drug manufacturers, not including rebates that the plan may receive.

(12/7/06)- Part D of the Medicare drug plan will cost about $13 billion less than had been expected according to officials from the Centers for Medicare and Medicaid Services. It is now estimated that the cost for the plan in 2006 came in at $30 billion, which was 30% less than the original estimate of $43 billion.

The key factors in this surprising development were that there were less enrollees than expected, and that drug prices went up less than expected before the benefit kicked in.

According to the CMS figures the program saved money in the following manner:

Offsetting the savings somewhat were higher costs in some areas including:

Medicare officials originally projected that more than 39 million people would enroll or get their coverage through employers who receive a tax credit for providing the benefit. About 22.5 million seniors and disabled people did enroll in the Part D program. An additional 6.9 million stayed in the plans operated by their former employers.

Medicare actuaries had projected that drug prices would rise 11% in 2004 and 2005, but they increased by only 7% in those two-years.

The government's projected cost of the Medicare drug benefit over the decade through 2015 is now $729 billion, almost $200 billion less than the original estimate of $926 billion.

(10/11/06)- Enrollment begins November 15th and runs to the end of the year for the Medicare Part D prescription drug plan enrollees, that becomes effective January 1, 2007. The number of companies offering nationwide plans will increase to 17 in 2007 from 9 this year. Advertising for the new plan enrollment has already begun.

If the plan member is satisfied with the present plan coverage nothing need be done, according to officials of the Centers for Medicare and Medicaid Services.

Co-payments, premiums and the list of covered drugs may change, so please check your plan before re-enrolling. Please also keep in mind, that if you drop out of a Part D prescription drug plan, you become subject to being assessed the penalty when, as and if you enroll in a plan at a later date.

According to Dan Mendelson, president of Avelere Health LLC, a health-care-consulting firm in Washington, the 10 largest insurance companies have 80% of the market. Avalere estimates that beneficiaries in most states will have about 15 or 16 choices of plans that cover drugs in the "doughnut hole", with most of the plans covering only generic drugs in that hole.

To compare the 2007 plan offerings, seniors have several online tools available to help them in making their choices. Medicare Plan Finder at or at will let beneficiaries compare out-of-pocket-costs and benefits for plans in their areas.

A new Web site, is run by Destination Rx, which provided software for Medicare's comparison tools. It provides tips on avoiding the doughnut hole, and compares how much seniors could save by switching to alternative medicines within their current plan. The site currently has data for 2006 plans, but will be able to crunch 2007 information after the enrollment period has ended December 31, 2006.

The health insurance industry lobby just published a survey showing 70% of self-enrolled seniors, an increase of 14 percentage points from Dec '05, would recommend that others sign up for the new Medicare Part D plan. The survey also found that:

Only eight percent of self-enrolled seniors have reached the "coverage gap" or "donut hole" while nearly two-thirds say they don't expect to reach the coverage gap. Twenty percent of seniors have not reached the "coverage gap" but expect to at some point this year Eighty-six percent of seniors regularly take at least one prescription for an ongoing condition or illness.

Eighty-eight percent have had no problems using the new benefit; consistent with the March tracking poll. Sixty-nine percent of seniors say the time and effort they put into evaluating the many drug plans was worth it; an increase of 12 percentage points since the December poll. Eighty-eight percent of seniors say they did not experience any problems signing up for the new benefit; consistent with the March survey.

(9/6/06)- According to figures from Verispan, a market research firm Bristol-Myers Squibb's drugs were the most used by Medicare Part D participants for the period January through July of this year. Bristol's drugs accounted for 13.6% of the prescription drugs sold during this period of time. Verispan's figures also showed that Johnson & Johnson's drugs were the least used, accounting for only 5.58% of the prescription drugs sold during this period of time.

(8/24/06)- Medicare officials announced that on average, seniors are expected to pay about $24 in monthly premiums for prescription-drug coverage in 2007. That is just about the same as the average monthly premium is this year.

No companies offering plans right now have dropped out entirely for 2007, but some have modified their coverage. Lower premiums save money for beneficiaries and the government, since Medicare pays insurers a subsidy, which is about three times as much as beneficiary premiums.

People can sign up for drug coverage or switch plans from November 15th to December 31st 2006 for the coming year.

(5/15/06)- The Medicare trustees fund report projected that the average monthly premium for the new prescription drug plan would be $35.86 in 2007-though that final number won't be known until this fall. This will be the dollar amount that is the basis for the computation in determining the monthly cost for those who do not sign up for the prescription drug plan by the cutoff date of May 15, plus one percent for every month of the delay in the enrollment.

Medicare officials announced that total enrollment of Medicare beneficiaries in the new prescription drug plan came to over 31 million as of May 6. That includes people getting a Medicare equivalent or better benefit through employer retiree plan. As of the latest figures, the number of beneficiaries who joined Medicare Advantage plans offering drug coverage reached over 1 million beneficiaries.

Government officials estimate that 13.2 million Medicare beneficiaries are eligible for low-income subsidies, down from an earlier estimate of 14.2 million. When including elderly with coverage from the Department of Veterans Affairs, with employers as a result of still being in the work force or from other sources, the Bush Administration estimates that 37 million of the 43 million Medicare beneficiaries have drug coverage that is equivalent to or better than the Medicare drug benefit.

(5/8/06)- Several of the drug companies that had offered free drugs to needy individuals claimed that the new prescription drug law made these programs illegal, forcing them to stop the programs. The Medicare Inspector General, Daniel R. Levinson has issued an advisory opinion that approved tow specific free drug programs that were structured to reduce the risk of fraud and abuse.

The opinion did not identify the sponsor of the programs, but Schering-Plough said it was the sponsor and had requested the opinion. Mr. Levinson said that the programs would operate entirely outside the new Medicare prescription drug benefit. No claim will be filed with the Medicare drug plan, and none of the drug's cost will count toward the $3,600 out-of-pocket threshold for catastrophic coverage.

Schering's programs are available to individuals with incomes up to about $25,000, and couples up to $33,000.

(4/30/06)- When an individual joins a drug plan under then new Medicare prescription drug plan, that individual is locked into that plan for one year. What happens if a drug that is listed on that plan's drug formulary is dropped from coverage under the plan? Under a recent ruling issued by Medicare, coverage for that drug must continue for any individual who joined the plan before the drug was dropped from the formulary. In effect the individual is "grandfathered" into the coverage for that particular drug.

The new policy says, "No beneficiaries will be subject to a discontinuation or reduction in coverage of the drugs they are currently using," with some exceptions.

There are about 12 million Americans who are eligible for the new Medicare drug plan coverage who still have not signed up to join any of the prescription drug plans that are available to them. Even though the administration says that 30 million people now have the new prescription drug coverage, only 8 million of them voluntarily enrolled in a plan. Most of the rest already had drug insurance or were automatically rolled over into a Medicare plan.

Medicare beneficiaries can have their monthly premiums that are due to the prescription drug plan that they sign on for to be automatically withheld from their Social Security checks.

All plans must cover "all or substantially all" drugs in six categories, including cancer medication, H.I.V. drugs, anti-psychotic drugs, for schizophrenia and severe bipolar disorder.

(4/26/06)- The Bush administration announced that more than 2 million additional drug plan beneficiaries had signed on to drug card plans by mid-March. This brings the total enrollment so far to more than 30 million people. This includes people who are covered through their employee retirement plans. An additional 101,000 Medicare beneficiaries enrolled in Medicare managed care plans with drug coverage.

Forty-eight senators have signed a letter urging Republican leaders and the Bush administration to allow Medicare beneficiaries more time to enroll in the new prescription drug benefit plan past the May 15 deadline. Senator Debbie Stabenow, Democrat of Michigan has written legislation to extend the deadline. A similar measure was defeated last year.

Under the law establishing the drug plan, the secretary of the Department of Health and Human Services can call for extending open enrollment into Medicare Part D by declaring a "special enrollment period" for exceptional circumstances.

In early April the HHS said people who qualify for the low-income subsidy meet the exceptional circumstance, and they will be allowed to enroll in plans after the May 15 deadline. To qualify as a low-income individual the income must be below 150% of the poverty line and have limited assets.

 (4/17/06)- Notices are being sent out to individuals who are enrolled in two or more prescription drug plans that they would be dropped from multiple memberships to single memberships. The notices are being sent on green paper, and are supposed to clear up the confusion created by the multiple memberships that some individuals find themselves involved with.

Many people were automatically enrolled in a plan, and then opted to join another plan. People who are listed on two plans or more could be charged multiple premiums. The notices are being sent by private insurance companies, on government letterhead.

Beneficiaries who take no action will be removed from the rolls of the plan to which they were originally assigned, but they still will have coverage under the second plan. People have the option of staying in their original plan, but must indicate that desire by calling that insurer.

(3/30/06)- Speaking before a group of pharmacists and retirees in Canandaigua, N.Y., President Bush tried to defend his administration's handling of the new prescription drug law. "Any time Washington passes a new law, sometimes the transition period can be interesting", the president said.

Pharmacists are complaining that they have had to lay out their own money for long periods of time, before the insurance carriers are reimbursing them for customers who belong to the new drug plans. The distributors are refusing to carry the charges of the pharmacists, and even though many states have tried to fill in the gap with emergency reimbursements, the delay is costly to the pharmacists.

Although the president has flatly stated that he does not favor delaying the cutoff date for Medicare beneficiaries to join in the plans by May 15th, many in Washington are now saying that from a political and practical point of view, the cutoff date will have to be delayed.

According to the latest figures nearly 7 million Medicare beneficiaries are now enrolled in Medicare managed care plans. In the past 5 weeks, more than 330,000 people have signed up for Medicare Advantage plans. Total enrollment in the new prescription drug plan now exceeds 27 million of the 43 million Medicare beneficiaries eligible to be enrolled in various drug plans.

(3/7/06)- In a memo sent to health insurers, Medicare officials are proposing a limitation of two different plans per insurer per region for plans that they will be offering under the new Medicare prescription drug law next year. The memo discussed the fact that Medicare might decide to limit health insurers to one 'basic" benefit plan, and one "enhanced" plan per region.

Presently the insurers are allowed to offer three plans per region, so the limitation of two plans per region hopes to make things less confusing for Medicare beneficiaries studying which options are available to them.

Under the present system some areas have more than 60 plans for potential enrollees to chose from. In the memo the Medicare officials asked for feedback from the health insurers on the proposal. Of course there are those of us, including the coeditors of therubins who feel that the best modification to the plan would be to allow the whole program to be administered by Medicare itself, rather than have all the different plans out there to confuse Medicare beneficiaries. This in turn would allow Medicare to buy the different prescription drugs at a much lower cost to all parties involved in this matter. We invite your feedback on this question.

The memo also stated that plans with 24- hour pharmacies in their networks would be required to have 24- hour phone lines for pharmacists to call. Effective dates of enrollment would also be changed, so that beneficiaries who sign up for a plan late in the month would not have to pay for the enrollment until 30-days after they join the plan, not on the first day of the month after they join the plan.

(2/28/06)- According to Health and Human Service Secretary Mike Leavitt about 5.4 million people have signed up for the new Medicare drug benefit over the last 3 months. An additional 20 million were automatically enrolled because they were covered previously by their employer, Medicaid or other government programs.

The federal government is hoping to have between 28 million to 30 million of the potential 43 million people who are eligible to enroll in one of the plans.

About 460,000 individuals have signed up for Medicare managed care since January 1, which means that this type of enrollee is enrolling in the plan to a greater extent than had been anticipated up to this point.

About 600,000 New York state residents have enrolled in the program with about one-half of that enrollment coming from individuals who live in New York City. In addition to Medicare assistance in figuring out the different plans, there are 40 walk-in centers run by thy city's Department of Aging that will help potential enrollees in the plans with their choices. Since November, those centers have counseled16,500 residents on the new benefit and given presentations for 7,000 others.

(2/2706)- A new major obstacle has come to light in connection with the prescription drug law that went into effect at the beginning of this year, in the form of the prior written authorization from the doctor for certain drugs on a drug plan formulary. The plans are being administered by over 40 different Medicare drug plans in each state, and many of them have different prior authorization forms for each drug in their plan.

Doctors are complaining that the diverse requirements are onerous and can delay or deny access to needed medications. Dr. Steven A. Levenson of Towson Md., president-elect of the American Medical Directors Ass'n, which represents doctors who care for nursing home residents said, "We have seen signs that Medicare drug plans are using management controls to deter access to medically appropriate drugs, including drugs on their own formularies."

Most of the Medicare drug plan insurers require prior written authorization for use of the 4 principal drugs for Alzheimer's disease including requiring doctors to report on patients' scores on a mental examination before covering the drug. Some of the companies have over 20 different forms for prior approval of the different drugs on their formularies.

Medicare officials approved all the different classes of illnesses that are required to be covered by a drug plan's formulary, and it also developed a model prior authorization form to be used by the drug companies, but usage of these forms is optional by the insurance companies.

(2/7/06)- The Bush administration announced that it would fully reimburse any state for the costs that it incurred in paying claims for prescription drugs that should have been covered by the new federal Medicare program.

Dr. Mark B. McClellan, administrator of the Centers for Medicare and Medicaid Services said that the Bush administration would use its influence to ensure that prescription drug plans reimbursed the states for the cost of claims and that the insurers would pay the claims. The reimbursement will continue for claims up to February 15th. Because of continuing problems that beneficiaries are having with the new drug plan, the administration is requiring insurers to provide 90 days of transitional coverage for all beneficiaries. Congress defeated a proposal by the Democrats to extend the enrollment period for the new drug coverage from May 15th to December 31, 2006.

Bush administration officials announced that spending on the new Medicare drug benefit will be 20 percent lower than expected this year because beneficiaries are choosing plans with lower premiums. Beneficiary premiums are now expected to average $25 a month, down from the $32 per month projected recently. The figures came from the office of the Medicare actuary, a career civil servant.

The net cost to the federal government for Medicare drug coverage in 2006 is expected to be $30.5 billion, down from a prior estimate of $38.1 billion. The estimated cost over 10 years is also lower: $678 billion, down 8 percent from the earlier estimate of $737 billion for the decade from 2006 to 2015

(1/24/06)-Michael O. Leavitt, the secretary of health and human resources announced that as of January 17 that more than 2.6 million people had voluntarily signed up for Medicare's prescription drug benefit in the last 30 days, bringing that total to 3.6 million.

In addition to those who voluntarily signed up, 10.7 million people have been automatically enrolled by the federal government or by health maintenance organizations (HMOs). Mr. Leavitt said that he continues to expect a total of 28 million to 30 million of the 42 million that are eligible to sign up by May 15.

(1/17/06)- Because of the confusion with the start-up of the new Medicare prescription drug plan, Bush administration officials sent a directive to all Medicare drug plans, that they "must take immediate steps" to ensure that low-income beneficiaries were not charged more than $2 for generic drugs and $5 for brand name drugs.

The directive further stated that all plan insurers must cover a 30-day emergency supply of drugs that beneficiaries were taking prior to the start of the new program.

At least 22 states have announced that they will take emergency measures to help low income Medicare beneficiaries pay for their prescription medications. The problem is acute especially with the dual eligible beneficiaries under the plan.

In many cases pharmacists say they cannot identify the plan in which a person has been enrolled. The federal government is supposed to compute the subsidy available to each low-income beneficiary, but in many cases that information was not shared with insurers or pharmacists. The pharmacists have been unable in many cases to get through to the sources to check which plan a beneficiary actually does belong to.

States taking this action include: NY, CA, PA, ILL, ARK., HAW, NJ, ND, SD, and all of New England.

Several of the pharmaceutical companies that offer deeply discounted, or even free doses of their medications under their own drug cards, or as part of a consortium offering cut rate prices for their drugs, are dropping these programs because they say of the new Medicare prescription drug law. The drug companies cite recent government guidance that says the plans violate laws that bar companies from providing inducements to patients to use their drugs while the government is helping pay for them.

On the other hand the government says it never ruled that the plans were illegal, and that the drug companies are acting on their own when they drop these plans.

Companies that will be ending their drug assistance programs include GlaxoSmithKline PLC, AstraZeneca PLC, Takeda Pharmaceutical Co. of Japan, Eli Lilly & Co., and TAP Pharmaceutical Products. Merck & Co. and Bristol-Myers Squibb Co. are giving patients the option of enrolling in Medicare plans or continuing in the drug-company assistance plans.

Under the new drug plan, the Social Security Administration will pick up all drug costs, except for a 42 to $5 co-pay, for those with annual income below $14,355.

(1/15/06)- The federal government is spending money very freely to try and convince Medicare beneficiaries to sign up for the new prescription drug coverage plan. The government estimates that it will spend over $300 million to try and convince individual beneficiaries to sign up for the new plan by the time the initial enrollment period comes to an end on May 15th of this year.

About $30 million will be spent on a national advertising campaign that has already been seen throughout the nation. In one of the ads entitled "Make You Look Good" friends and relatives of Medicare beneficiaries are asked to help their elders make their decisions in connection with which plan to enroll in. A voiceover says: "Talk to someone close to you about New Medicare Prescription Drug Coverage. It can save them money, give them peace of mind and make you look good."

(12/27/05)- The early enrollment figures are in from the Department of Health and Human Services, and they indicate that individuals are being very slow to join the new Medicare prescription drug option. Only slightly more than one million Medicare beneficiaries have signed up on their own for coverage under the program.

Another 10.6 million have been enrolled automatically by the federal government or by health maintenance organizations. Of the 10.6 million people automatically enrolled in the program, 6.2 million have been receiving drug coverage through Medicaid. Another 3.1 million have drug coverage from the Federal Employees Health Benefits Program, or from Tricare, the military health plan.

(12/23/05)- We have been made aware by one of our viewers of the confusion that has been caused by CVS Pharmacies' advertisement regarding enrolling in their drug plan for only $5, and thus be entitled to get discounts on drugs you purchase at their pharmacies. This program has nothing to do with the new prescription drug law Plan D for Medicare beneficiaries.

When a Medicare beneficiary enrolls in a drug plan, the insurer sends the individual's name on to the CMS for confirmation that the individual is eligible to be enrolled in the program. If eligible, the CMS sends back a electronic document known as a "transaction reply report" confirming the eligibility of the individual.

A snafu seems to have developed at the CMS in sending back the transaction reply report so that the insurers are unable to issue identification cards to the members. Pharmacists say that some beneficiaries might have difficulty in getting their medications without having the cards. Gary R. Karr, a spokesman for the CMS said pharmacists could use a computer terminal to verify the enrollment of beneficiaries who did not have the card.

(12/16/05)- According to a study done by the Kaiser Family Foundation, a Washington research group, along with the employees benefits firm of Hewitt Associates Inc., four out of five businesses plan to accept government subsidies and continue providing prescription drug coverage to their retirees next year.

The study involved 300 large private-sector companies representing 3.4 million retirees. This year, 33 % of large companies said they offer retirees health coverage, down from 66% in 1988. Companies that accept the subsidy stand to save an average of $626 per retiree, before taxes.

The Centers for Medicare and Medicaid Services estimates that there are 42.9 million people eligible for Medicare Part D. Of the 42.9million, the estimate is that there are 5.7 million who are enrolled in Medicare Advantage plans; 11.4 million seniors with retiree coverage; 5.6 million who are Medicaid dual eligible; 8.1 million other low income beneficiaries and 12.1 million of the general population.

There are 6 classes of drugs that must be covered; (1) Immunosuppressives, (2) Antidepressants, (3) Antipsychotics, (4) Anticonvulusants, (5) Antiretrovirals and (6) Antineoplasitics.

(12/06/05)- Many of us would rather talk to a voice for answers to our Medicare prescription drug coverage questions rather than to a computer. For those who are in this category there is a very good option available to get your answers to your questions. If you call the toll-free number for Medicare, 1-800-MEDICARE, and specify "new prescription drug coverage" option and then "enrollment" option an automated voice will lead you through the next steps. An automated voice is available in Spanish also.

You will need to have your Medicare card available to answer the questions from the automated voice. I tried the system and it worked well. You can then ask the automated voice for an agent, and a human voice came on the line after about a 1-minute wait. The agent was prompt and courteous. In New York, the Medicare Rights Center hotline, at 800-333-4114 is available 9 a.m. to 3 p.m., Monday through Friday.

The person who answers your call is one of 7,500 service representatives who will be manning the phone calls 24 hours a day, 7 days a week. The service representative will ask you where you live, and also what medications you are presently taking. The service representative will walk you through the choices available to you and also send you a printout of the options that are best suited for you.

The pricing for each plan's medication list is updated every Monday. From now until December 31 you can change the choice for which plan you enroll in as frequently as you desire. Starting January 1, 2006 you may change plan membership only once before May 15, 2006 without being penalized. Your enrollment in a plan is effective one month after you sign up for the plan.

After May 15, 2006 you can not change plans without a penalty until the next general enrollment period which will be from November 15, 2006 through December 31, 2006. If the cost for your medication is raised after May 15, 2006 you can not leave the plan and join another one that charges less for the medication without having to pay a penalty.

There is an exception to this procedure if you enter a nursing home or move to an area not served by your existing plan. If this happens to you, you can change plans without being penalized.

People who are not yet eligible for Medicare will have a seven-month window, starting 90 days before they turn 65, to sign up for Part D, without a penalty.

Medigap policies with drug coverage will not be sold to new customers after January 1, 2006, but you can keep an existing plan at least temporarily or switch to a Medigap policy without drug coverage. Medigap drug coverage in generally not considered equivalent to the Part D minimum, so if you wait until May 15, 2006 to switch to Part D, you could be penalized.

Please keep in mind that you can continue to have the federal Medicare coverage for your doctors' and hospital coverage, and have a separate stand alone Part D drug coverage plan for which you will pay a separate monthly premium. Medicare Advantage plans combine the doctor, hospital and drug coverage under one umbrella.

If your health takes a turn for the worse after you enroll, and you need a high-cost medication or one that is not on the plan's preferred list, your doctor can ask your plan to make an exception. Under the law, the plan has to determine if it will grant the exception within 72 hours. If your request is denied, you may appeal this denial.

Once you have enrolled in a plan it can increase the co-payment or even end the coverage of the drug upon 60-days notice. If this does occur it leaves you with very little recourse until the next enrollment period with would begin November 15-December 31.

(11/23/05)-Preliminary figures from the first few days of Medicare prescription drug eligibility enrollment shows that the numbers will fall far short of what the government had been expecting. It seems as if uncertainty is causing the majority of those eligible to postpone enrollment until at least the May 15, 2006 date.

The question arises about changing enrollment after having enrolled in a plan. You can change enrollment at any time from November 15 through December 31, 2005. After December 31, 2005 you will have one more opportunity to switch before May 15, 2006. If you did not enroll at all by January 1, 2006 you will have two opportunities to switch if you do so before May 15, 2006. Enrolling in another plan automatically cancels your enrollment in a previous one

You may have more chances to change plans if you are in a Medicare Advantage plan or qualify for Extra Help, where different rules apply.

If your 2005 income is no higher than $12,818 for singles or $17,320 for a married couple living together, and your assets are no more than $7,500 ($12,000 for a couple), you'll pay no premium or deductible. Your co-pays will be $2 for generics, $5 for brand-name drugs and nothing for catastrophic coverage

If your 2005 income is no higher than $14,355 for singles and $19,245 for a couple living together, you will pay a monthly premium of $0 to $35 depending on income. You will also pay an annual deductible of $50, 15% of the cost of each prescription, and $2 or $5 for each prescription at the catastrophic level of coverage.

(11/17/05)- For those of you who are enrolled in HMOs, and have received a letter from them advising you that their coverage is not as good as is the prescription drug coverage under the new Medicare prescription drug law that takes effect on January 1, 2006 be aware of the fact that you will be subject to the 1% per month premium penalty that applies if you subsequently do enroll in a prescription drug plan by May 15, 2006.

As of October 2005 where were 458 Medicare Advantage policies available nationwide compared with just 300 last December, according to Mathematica Policy Research, a research firm. Under traditional Medicare, beneficiaries starting in 2006 will pay a $110 annual deductible and 20% of the bill for each doctor visit. For a hospital stay there is a $952 deductible starting in January 2006 before coverage begins to pay for a beneficiary's stay. Buying one of the new prescription drug plans costs an average of about $32 per month.

With the government subsidizing the HMOs it may pay for many of the Medicare beneficiaries to join one of the new Medicare Advantage plans in your area. Many of the health-insurance companies are adding extras like vision benefits and gym memberships in an effort to sigh up new members. Included in this group are Humana Inc., PacifiCare Health Systems, UnitedHealth Group Inc. and Aetna Inc.

Please keep in mind that the HMOs are notorious for having dropped out of the Medicare program for beneficiaries in certain areas because they feel they are not profitable enough for them to continue being part of the system. For articles on this topic please see our articles about Medicare Droppage

The official Medicare Web site located at has gone operational with a feature called "prescription-drug plan finder". This database will help you find and compare the different programs that are available in your own particular area. The drug-price comparison feature will also suggest generic alternatives to brand-name drugs when they are available.

It lets people enter their Medicare number and birth date to get personalized information, such as whether a former employer is offering drug coverage or if a low-income person qualifies for extra federal help.

Individuals can choose how much they would be willing to spend on monthly premiums, and see what kind of plan would be offered to them. Medicare beneficiaries can see what they would pay if they sign up for a Medicare Advantage plan that would combine hospital and doctor services with the prescription drug coverage.

In the item below dated 11/7/05 we explain how many corporations are telling their retirees that they will be dropped from coverage if they opt to participate in the new Medicare prescription drug law that takes effect on January 1, 2006. Now many of the brand name drug companies are also telling individuals who receive charitable donations of their drugs that they will no longer be eligible to receive the free or extra low cost drugs if they enter into the new program.

These drug companies are asserting that they must adhere to the letter of the law, and that the law states that they can not participate in the charitable programs while receiving free or subsidized drugs.

Bristol-Myers and Merck have already sent these notices of "being dropped" from their charitable programs if the individual enrolls in a drug plan under the new law. Eli Lilly is notifying 235,000 older people that its charitable program for the elderly, Lilly Answers will end next May. This program distributed $140 million in subsidized medications last year, charging a $12 co-payment.

Johnson & Johnson is notifying doctors that their patients must first be turned down for extra help under provisions of the new Medicare plan before they can apply to their program.

Under the new law, low-income people pay a sliding scale premium for coverage. A single person with a monthly income between $1,076 and $1,197 pays a sliding scale premium for coverage, a $50 deductible and 15% coinsurance until drug expenses reach $3,600 a year. At that point, the individual is eligible to receive generic drugs for a $2 co-payment and brand-name drugs for a $5 co-payment. Low-income is defined as 135 to 150 % of the poverty level.

(11/7/05)-Under the new Medicare prescription drug law all employers who offer drug coverage to retirees and employees 65 and older are required to tell those beneficiaries how the company's drug plan compares with Part D by November 15. Employers must also inform their employees and retirees of any changes in their existing health benefits.

Along with the notice of comparison of plans many retirees are also getting notification that if they drop their prescription drug coverage under the company plan, it will result in their being dropped from coverage under the company's health plan also. The reason why this is occurring is directly related to the 28% subsidy that a company gets from the federal government for maintaining coverage for their retirees under the new law.

The drug coverage in many companies' health plans is part of the comprehensive coverage under the plan. The company typically does not charge a separate premium for the drug coverage and do not administer it as a separate benefit. Thus if the company will not receive the 28% subsidy it is not as advantageous to them to maintain that retiree who opts out of the drug coverage in their plan.

According to a survey of 458 large employers, done by the benefits consulting firm of Watson Wyatt earlier this year, 82% said they planned to continue drug coverage for retirees under their plans. A Kaiser Family Foundation study found that only about one-third of the employers with 200 or more employees currently provide health benefits, down from 66% that offered these benefits in the late 1980's

The subsidy will equal 28% of a retiree's drug costs, from $250 to $5,000 in 2006, whether the employer or the retiree pays those costs. Notice that the company thus can benefit by getting the 28% subsidy on the amount that is paid by the retiree for his/her drug costs.

(10/10/05)- Medicare officials announced that more than 50 options will be available in most states for Medicare beneficiaries who want to enroll in one of the new drug coverage plans being offered under the law that will start in January 2006. In Oregon for example, 20 companies will offer 45 stand-alone plans, with monthly premiums ranging from $6.93 to $64.99.

Lists of the plans, premiums and some other features are available on the Medicare Web site, .

In New York, the monthly premiums range from $4.10 under the Humana low-cost plan, to $85.02 under a plan offered by HealthNow NewYork, based in Buffalo. Under the Humana standard $4.10 premium plan the enrollee must pay the $250 deductible and is not covered for the "doughnut gap".

The reason for the fluctuation in prices deals with the several variables that are offered under the different plans. Some plans may cover you from dollar one of your drug costs, instead of your having to pay the $250 under the government recommended plan level. Other plans with higher premiums may cover you for your drug costs in the "doughnut" area.

Remember the general rule is that you pay for what you get. The old saying that there is "no free lunch is applicable" whenever you see a plan with a very low premium. Be especially careful of the plan's formulary to be sure that your particular drugs are covered by the plan you are looking at, and also the cost of the drugs that you use under the plan that you are looking at.

Lobbyists for the drugstores secured a provision in the new law that requires the plans to let its members fill 90-day prescriptions for chronic illnesses at pharmacy counters, in direct competition with mail-order companies.

The American Medical News, Sept. 19, 2005, indicated that the ranks of the uninsured continued to grow, reaching 45.8 million in 2004. These figures are from the U.S. Census Bureau released August 30, 2005. This was not a significant percentage change of uninsured Americans (15.7% in 2004, 15.6% in 2003).

(9/28/05)- The marketing of prescription drug coverage by health insurers and pharmacy-benefit managers who have been approved by Medicare under the new law will begin on October 1, either as a standalone benefit or as part of a larger comprehensive plan. The new coverage will go into effect on January 1, 2006. Beneficiaries can start joining a particular plan on November 1, and they will have until May 15th 2006 to join or be subject to a penalty of 1% additional premium cost for every month of the delay

Medicare beneficiaries in most areas will have between 11 to 20 plan sponsors vying for their business. New Yorkers will have 20 sponsors vying for their business. Medicare officials announced that $32.20 would be the average monthly premium, but that it could be as low as $20 in some places.

There are 10 companies that will offer the prescription drug coverage on a nationwide basis. They are: Aetna; Cigna; Coventry Health Care; Medco Health Solutions; Members Health; PacifiCare; SilverScript, a unit of Caremark; UniCare, a subsidiary of WellPoint; UnitedHealth Group; and WellCare Health Plans.

Here is a breakdown of the cost to the beneficiary under the new Medicare prescription drug plan law:

A person with an income of less than $1,197 a month, or a married couple with an income of less than $1,604 a month would qualify for federal subsidies. They also must have limited assets of less than $11,500 for individuals and $23,000 for married couples. If you think you may qualify for this subsidy contact the Social Security Administration at 1 800 772 1213 to get an application, or contact your state Medicaid office.

The Social Security Administration said that about three million people had applied for extra federal help with premiums and cost sharing available to those with low incomes. The government mailed applications to about 19 million people in May to individuals who it thought might be eligible for dual enrollment as both Medicaid and Medicare under the new law.

There are roughly 6 million Medicare beneficiaries who are so low income that they also qualify for Medcaid also. To ensure that they get drug coverage, the government is providing them a fully subsidized benefit and automatically allocating them among health plans that have bid for that business.

(9/17/05)- Let the deluge begin. Starting October 1 insurers who have been approved by Medicare will be allowed to start advertising their prescription drug card plans that were created to conform to the requirements set under the new Medicare prescription drug plan. Enrollment for the benefit is set to start November 1, 2005 and beneficiaries will have until May 15, 2006 to join a plan.

Eligible beneficiaries who do not enroll by May 15 will face a penalty of paying 1% more in monthly premiums forever for each month that the beneficiary is late in enrolling. If for example, the beneficiary is 1 year late in enrolling, he/she will pay an additional premium of 12% for life.

While final contracts have not been signed yet, the latest government information shows that seniors will be offered stand alone drug policies from 11 to 23 different companies depending on where you live. Many companies will offer several different options that will vary considerably in their cost. Some of the monthly premiums for belonging to a company's drug plan may be as low as $25.

To help people choose a plan the Medicare site is expected to show, starting in mid-November, a comparison that will help you determine which plan may be best suited for the particular drugs that you are taking.

(8/17/05)- Federal officials now estimate that the average premium that the new prescription drug discount card member will pay would be $32.20, about $5 less than the previous estimate. There is no exact count on the number of private insurers who will be offering drug discount plans, but federal officials will be signing contracts with the insurers sometime in September.

The average drug benefit bid from the insurers who will participate in the program came in at $92.30 per patient, per month. The government thus will make a payment to the insurers that will be computed by subtracting the $32.20 patient payment from the cost of $92.30 to get a figure of $70.10 per patient, per month. The government will also make a separate reinsurance payment, know as catastrophic coverage, to cover 80% of annual drug costs in excess of $5,100. Federal officials now estimate that this cost will be $33.98 per patient, per month. Thus Medicare's total average monthly payment to prescription drug plans for benefit administration will be $126.28 per member, per month.

The government now estimates that the first-year cost to the government for each beneficiary who signs up will be about $1,129 per person instead of the prior estimate of $1,310. Insurers can begin marketing their plans in October, while beneficiaries can begin signing up for the plans from November 15, 2005 through May 15, 2006. Eligible beneficiaries who fail to sign up for a plan by May 15, 2006 will be faced with penalties for the late signings.

Actual premiums and the payment structure for Medicare drug-benefit recipients will vary by geographic area and among different plans. The government's overall payment is expected to be about $94.08 per beneficiary per month on average. Insurers submitted proposals, or "bids" to the government reflecting the expected cost of providing the drug benefit to Medicare beneficiaries and the disabled. The government will subsidize those costs for all beneficiaries.

The latest government estimate is that between 28 million to 30 million people will enroll during the initial period. The earlier estimate was that about 39 million eligible beneficiaries would sign up for the plan.

(7/1/05)- Medicare officials are requiring that the formularies that insurance companies use for their members who are going to enroll in the new Medicare drug coverage plan include even more than two drugs to treat each disease. These "expansive" drug formularies rather than the "restrictive" formularies will go a long way towards getting more people to enroll in them. On the short run it may be more expensive since these formularies will offer more choices, but the members must have more choices so that more of the drugs that they are using are to be included in the plans.

In a recent directive from the Medicare agency its stated its position that insurers must cover "all or substantially all" of the drugs in 6 classes that are often prescribed for Medicare beneficiaries. These categories are:


Please keep in mind that the first enrollments possible for the new plan is November 15, 2005 even though the plan will not go into effect until January 1, 2006.

So far there have been at least two major combinations between prescription benefit managers (PBM) and others to engage with each other for expansive membership in the plans. AARP has combined with UnitedHealthCare with the drug benefit to be managed by a unit of Walgreen Company, and PharmaCare, a PBM owned by CVS, has joined with Universal American Financial Corporation, to offer Medicare drug coverage.

(4/17/05)-Medicare beneficiaries will be hearing shortly from Medicare in connection with eligibility for low-income subsidies for the new prescription drug plan that will go into effect in January 2006. Notices and applications will be sent in late May to millions of people who may be eligible for these subsidies to help with the costs for the new drug benefit. Your application for the drug assistance because of low-income level is separate from your application to join a particular drug card plan.

The first annual enrollment period for the program runs from November 15, 2005 through May 15, 2006. Enrollment in the drug benefit plan is strictly voluntary, and Medicare beneficiaries do not have to sign up for the plan. The monthly enrollment premium for joining a drug discount card club is expected to cost about $37 per month. Premiums will increase about 1% each month that a person delays enrolling.

All the drug plans must be at least as generous as the "standard coverage" defined by Congress. The plans do not have to cover every drug, but must cover at least two drugs in each therapeutic category and class. You have to compare each drug plan for the cost of the drug that you would be using to see which of your drugs are covered under the plan that you intend to enroll in., and the amount of the co-payment that your plan requires that you pay.

According to Medicare officials about 14 million of the 41 million Medicare beneficiaries are eligible for extra financial assistance because they have low incomes. Early in August of this year employers can apply for the 28% federal tax credit that they would be eligible for if they maintain the drug coverage for their retirees who are eligible for Medicare. The deadline for the employers to apply for this credit is September 30, 2005.

In October 2005, the government will mail "Medicare & You 2006" handbooks to beneficiaries that will contain information about the different drug plans and managed care plans. The drug plans will cover only drugs.

(3/27/05)-Thanks to an email from Margo Harrison, a research assistant at the Medicare Payment Advisory Commission (MedPAC) we can relay on to our viewers that there are an estimated 5.8 million total enrollees in the drug discount card program. This is the program that is the stopgap measured that precedes the Medicare prescription drug coverage plan that will commence on January 1, 2006.

There are 1.5 million low-income beneficiaries getting a $600 yearly credit toward their drug costs. These beneficiaries also can get manufacturer-sponsored "wraparound" discounts on more than 200 brand name drugs, that enables them to pay as little as $5 for these drugs.

MedPAC is "The Medicare Payment Advisory Commission (MedPAC) is an independent federal body established by the Balanced Budget Act of 1997 (P.L. 105-33) to advise the U.S. Congress on issues affecting the Medicare program. The Commission's statutory mandate is quite broad: In addition to advising the Congress on payments to private health plans participating in Medicare and providers in Medicare's traditional fee-for-service program, MedPAC is also tasked with analyzing access to care, quality of care, and other issues affecting Medicare.

The Commission's 17 members bring diverse expertise in the financing and delivery of health care services. Commissioners are appointed to three-year terms (subject to renewal) by the Comptroller General and serve part time. Appointments are staggered; the terms of five or six Commissioners expire each year." " The Commission is supported by an executive director and a staff of analysts, who typically have backgrounds in economics, health policy, public health, or medicine. MedPAC meets publicly to discuss policy issues and formulate its recommendations to the Congress. "

To find out more about MedPAC please visit their site at,

(3/1/05)-The results of a study conducted by the Kaiser Family Foundation concluded that the average person who is covered under the new prescription drug plan that goes into effect on January 1, 2006 would see their drug costs decline by 37%. This cost figure will drop to $792 in 2006 from $1,257 in 2005. The study did not take account of the premiums that people pay now, and will pay in the future for that coverage. For one in four people this will not be true, since their drug costs will rise under the new program.

James W. Mays, vice-president of the Actuarial Research Corporation of Annandale, Va., which did the calculations for Kaiser, estimated that 29 million of the 41 million Medicare beneficiaries would sign up by the time the plan goes into effect in January. According to the figures from the study, 65%, or 19 million, are expected to spend less on their drugs, while 7 million or 25% will be required to spend more for their drugs. About 10% will spend just about the same amount under the new plan.

The Kaiser study estimates that nearly one-fourth of the people who sign up for the benefit will reach the "doughnut hole", where they will have to pay the entire cost of the drugs. On the other hand about one-tenth of those who sign up will reach the $3,600 drug cost level at which point the Medicare enrollee pays only 5% of the cost with the government picking up the remaining 95% of the cost.

(2/17/05)-Even though employers who continue the drug coverage for their retirees will be getting a 28% deduction from their taxes for the drug costs from $250 to $2,500 for each retiree, many will not continue the coverage once the new Medicare Modernization Act takes effect in January 2006. Eight percent of the employers surveyed by Hewitt Associates, a benefits firm, and the nonprofit Kaiser Family Foundation of Menlo Park, said that they plan to drop coverage for their retirees once the law goes into effect. Some 13% of the employers said they do not know what they would do at this point in time. Four percent are developing their own plans according to the survey.

From 1988 to 2004, the share of employers with at least 200 employees offering such coverage fell to 36% from 66%, according to a separate Kaiser study done earlier this year. Fifty eight percent of the employers said they intended to maintain the retiree drug coverage for their former employees, but a majority (53%) of these companies said that they would increase the premiums and the co-payments for the coverage for the retirees.

Fifty four percent of large employers said that they have established caps, or ceilings on what they would expend for the drug coverage benefit. Once the cap is reached the employee pays for the overage.

(1/21/05)- If you are not confused enough by the number of drug discount cards now available, the drug companies are now coming out with another drug discount card that may confuse you even more. Starting in mid-February, ten of the major brand drug companies will be coming out with a new drug discount card that will be called Together Rx Access. Seven of the companies involved in the new card are also involved in the Together Rx program that was launched in 2002.

People can qualify for the new cards if they are younger than 65 and not eligible for Medicare and have no public or private insurance coverage for their prescription drugs. There are qualifying income limits in the program. The limit is $30,000 for a single individual, $40,000 for a couple, $50,000 for a family of three and $60,000 for a family of four.

Roba J. Whiteley, executive director for Together Rx Access, said that each of the 10 companies involved in the program decided which of its drugs would be offered, and what discount would be for its drugs. If drugstores want to participate they must agree to limits on what they will be paid for various drugs. These limits set a cap on the combined payment from the drug manufacturer and the amount the consumer pays for the drug. Ms. Whiteley also said that the new program was expected to save the card holders anywhere from 25% to 40% for the cost of the drugs involved in the program.

The federal government has no role in this program at all. Sponsors of the new cards expect that up to 36 million of the uninsured people in this country would be eligible for the new cards. It is estimated that there are about 45 million uninsured people in this country as of 2004.

The drug companies that will be involved in this new program are as follows: Abbott Labs, AstraZeneca, Bristol-Myers Squibb, GlaxoSMithKline, Johnosn & Johnson, Novartis, Pfizer, Sanofi-Aventis, Takeda and TAP Pharmaceutical Products. There are expected to be about a total of 275 prescription drugs involved in the program.

(12/18/04)- According to a survey done by AARP, of 510 Medicare beneficiaries who had signed up for, received and used their prescription drug discount card, it had resulted in a savings of about $154 a person on prescriptions that they had ordered from June to October of this year. The CMS also has increased its call-center staff, to 3,000 from 500 to reduce the delay in calls made to its toll free number of 800-Medicare.

As of June, about 2.3 million Medicare beneficiaries were automatically enrolled in a discount care through their Medicare Advantage Plans, according to America's Health Insurance Plans, a trade group of major insurers. In the case of those who are enrolled in the discount card program through their Medicare Advantage Plan can not change their discount card membership, unless they change their Medicare Advantage Plan. If however a Medicare Advantage Plan member switches back to the regular Medicare Plan, the beneficiary can then switch the discount card plan to which he/she belongs.

For information about Medicare's program as well as other options that may be available, you can use the site which is run by a coalition of about 80 organizations that deal with issues related to health and the elderly.

(9/25/04)-Administration officials announced that they would send out drug discount cards immediately to 1.8 million low-income people who are eligible for the cards but have not applied for it. So far only 4.4 million people have signed up for the cards, even though the administration originally predicted that 7.3 million would do so.

Of the 4.4 million who have enrolled, HMOs automatically enrolled half of them. Seventeen companies have agreed to work with the government in issuing discount cards to these low-income people. Beneficiaries will be assigned at random to one of them. To get a $1,200 credit available to these cardholders who have no other source of drug coverage will have to call a toll-free number and answer two questions to confirm their eligibility.

They will have to say whether or not their income is more or less than $12,569 a year for an individual or $16,862 for a couple to be eligible. They will also have to state whether or not they have any health insurance covering their drug costs. Medicare beneficiaries must sign up by December 31 to obtain the full $1,200 credit. Those who delay signing up until 2005 will lose half of the credit.

The cards can be used starting November 1, 2004. Of the 4.4 million who have applied for the cards so far this year, 1.1 million have low incomes and qualify for the credit.

When looking at the expenses that Medicare beneficiaries incur for both prescription drug coverage and health benefits in general careful consumers should look at all the possibilities available to them. According to a recent study done by Weiss Ratings Inc., Medicare beneficiaries are failing to compare the premiums for their Medigap policies.

The Weiss study found that the cost for Medigap premiums vary greatly for the same level of supplemental coverage. In some cases consumers are paying almost double for their premiums for the exact same kind of coverage. There are 10 types of Medigap plans-labeled Plans A through J-with each plan providing a different level of benefits at different rates. Plan H provides prescription drug coverage, but the premium charged varies greatly from one insurer to another. There is nothing illegal about the higher rates charged by one insurer over another's rate.

Medigap plans all provide a six-month, open enrollment period generally beginning when someone turns 65 years old and has enrolled in Medicare Part B. During this period of time beneficiaries are guaranteed coverage in any Medigap plan they choose. Each person with a particular plan is charged the same rate, regardless of pre-existing health condition, though smokers often pay more. If you go to the Medicare Web site at you will find a personal plan finder detailing providers within a specific ZIP Code. It shows a price range for each plan.

Each state also operates a state health-insurance assistance program. These programs are referred to by their acronym, which is SHIP. These SHIPs often offer a list of insurers as well as current rates.

Comparison shopping works best for people seeking coverage during the initial six-month open enrollment period, since you can not be denied coverage. If you already have a Medigap plan, you can change insurers but once the open-enrollment period has expired insurers are no longer required to accept all applicants.

The government unveiled a new feature on it Medicare Web site, that compares prices for similar brand-name drugs that can be used to treat conditions like high blood pressure, high cholesterol, arthritis and allergies. Federal health officials said that medical professionals and patients could use the site to choose less expensive drugs that could provide similar or identical results at a lower cost.

The first batch of data compares prices for eight categories of drugs, with a total of 52 products that account for about one-fourth of all spending for Medicare beneficiaries. The new Medicare law that was passed in December 2003 requires the government to perform research on the "comparative clinical effectiveness" of drugs used to treat the same disease. Please also keep in mind that the drug companies can change the prices for their drugs on a weekly basis.

The following is a copy of an e-mail that we received from Joe Jeffries, who is the Pharmacy Director at Barnesville Hospital Associates in Barnesville, Ohio. Some of you may remember Mr. Jeffries when he sent us another email in connection with the prescription drug cost issue. To see this -email go to "E-mail Interview with Joe Jeffries". Once again we would like to point out that Mr. Jeffries is not affiliated with therubins in any way at all, nor did he receive any remuneration for the emails he submitted to us. The emails were reprinted with the permission of Mr. Jeffries. We at therubins would like to express our thanks to Mr. Jeffries for his effort in these matters.

I while back I wrote you in regard to prescription drug coverage for seniors. Much has happened since then and I'd like to share my thoughts
on the Medicare Drug cards as well as an experience I recently had with a senior and her brown bag drug review.

I'm doing my best to try to remain positive about this Medicare Part D drug coverage. It is difficult not to become cynical about a program
that looks more and more like it was written by the manufactures' attorneys. I can imagine a bunch of these guys in a locked boardroom
with big charts and spreadsheets saying "how can we confuse these people the most".

Here's a good example of how the drug card can be a good and bad. Last week we had a lady who took advantage of our hospital's brown bag drug
review program. She takes Altace, Coreg, Lipitor, Antivert, Lanoxin and Lasix to the tune of $254.86 per month. She and her husband find it
difficult to afford $3000 per year for her medications with an income of $16,500. She charges her monthly drug bill at the pharmacy and pays for
it when she gets her check each month. She often goes without her pills instead of charging any more before the month is out. We were able to
offer some suggestions for significant savings.

The most expensive medication is the Coreg. Touted by Glaxo as the latest and greatest beta blocker for congestive heart failure, Coreg
costs $110 per month with her senior citizen discount. Many would say, "just buy it from a Canadian pharmacy". I don't agree with that. There
are other ways to lower a drug bill besides buying them from foreign countries.

Our first suggestion for the Coreg was to switch to metoprolol. It is a generic beta blocker and may cost less than $15.00 per month. Studies
still don't completely prove that Coreg is a better beta blocker than metoprolol. The bigger issue is that many heart failure patients don't
get any beta blocker. Our second suggestion if the doctor would not switch the Coreg, was to sign up for the TogetherRx card which would
provide a larger discount at her pharmacy.

The easier switch was the Altace. Another long acting ACE inhibitor, lisinopril, is now available as a generic. This will save her over $20
per month. Her doctor has already agreed to this.

It got more complicated with the Lipitor. The obvious solution is the Pfizer Share card. But as you know Pfizer has now hidden their Share
card within the U Share Medicare discount card. This patient did fall within the income limits for the U Share card so we helped her apply for
it. If the doctor switches everything as we suggested, her pharmacy bill would now be about $60 per month. In addition, she will have a
$600 credit/ year with the Medicare discount card.

Now, all that sounds great but fast forward 2 months and think about her next call to the pharmacy to have her prescriptions refilled. "Fill
my lisinopril, Coreg, Lipitor, Antivert, Lasix and Lanoxin and use my U Share Medicare card, but if my $600 has run out then fill my Lipitor
with the $15.00 Pfizer card and the Coreg with the Together Rx card." "And if the doctor calls in a new prescription make sure you put my
lisinopril on the right card and my Lipitor on the other card, etc. etc." Maybe it would be easier to get her drugs from Canada.

Joe Jeffries, R.Ph.
Pharmacy Director
Barnesville Hospital Assoc.
639 W Main St
Barnesville, OH 43713
A member of the Ohio State Health Network

Pfizer Inc. became the first of the pharmaceutical drug companies offering drug card to discontinue its card program. Eli Lilly and Merck still intend to continue their drug discount care programs. The Pfizer discount card, called Living Share Card was terminated on August 31. This can create a serious problem for some of the 4.1 million Medicare beneficiaries who signed up for their drug cards since the law does not allow them to change card membership until January 2005. There are about 41 million Medicare beneficiaries who were eligible to join the Medicare approved drug card program.

Please keep in mind that Pfizer makes Lipitor which is the most widely sold drug in the world with over $9 billion in sales expected in 2004. There were over 536,000 people enrolled in the Pfizer drug card plan.

In one of the most interesting developments in the drug discount card field area, the county of Nassau, in the state of New York, is offering an entirely free discount card to all residents of the county. No application form is necessary and there are no restrictions as to age, income or even if the resident already belongs to a health insurance plan.

The NassauRx card was mailed to about 500,000 residents of the county in June 2004, and county officials have reported that the card has been used over 5,000 times in the first three weeks of its operation. County officials also reported that in those three weeks residents saved on average$17.86 per order, or about 24%. The CVS drug discount chain announced that all their stores would accept the card.

The card can be used anywhere in the U.S. that the pharmacy accepts the card, or at branches of participating chain drug stores. The company that the county hired to administer the program is AdvancePCS does not charge the county anything. Advance makes its money by collecting rebates from the drug manufacturers and fees from the drugstores.

Those in the county who lost their cards, or who need more cards can get them by calling 877 321 2652 or by logging onto

Pfizer Inc. announced that it would have a new discount drug card program that would replace its old program that had enrolled over 600,000 in the two years that it was in existence. The new card program from the company is called Pfizer Pfriends and will start enrolling new members sometime in August of this year. Once enrolled members will be able to use the card at local pharmacies to get Pfizer drugs at discounts that the company claims will average about 37% from the customary cost of the Pfizer drugs.

The program will be available to uninsured families earning less than $45,000 annually or individuals earning less than $30,000. Uninsured people earning over these amounts would be eligible for a 15% discount. The program would also apply to people whose health insurance does not include prescription drug coverage. The program will enroll members through an 800 phone number that the company will make public shortly.

Applications will be accepted starting July 6, 2004 for the new pilot program created under the Medicare bill of December 8, 2003 that will extend drug benefits to about 50,000 to 60,000 Medicare beneficiaries before the program begins in January 2006. Coverage will begin in September for those who are chosen from the approximately 500,000 whom are expected to apply for the lottery.

The program will be run by TrailBlazer Health Enterprises, a subsidiary of Blue Cross and Blue Shield in South Carolina, under a federal contract for $8.7 million. Caremark, the 2nd largest PBM, will administer the drug benefit in the country. Under the program oral treatment for cancer and injections for multiple sclerosis will be paid for by Medicare, unlike the present system where these treatments have to be administered in a doctor's office in order to be covered by Medicare.

This pilot program arose out of the Medicare law of 2003 that allocated $500 million for its creation. Of the $500 million 40%, or $200 million must be used for cancer treatments. So far there will be 26 drugs included in the program. 11 cancer drugs, including AstraZeneca's Iressa and Novartis' Gleevac will be covered for particular types of cancer. AstraZeneca's Tamoxifen, which is sold as a generic drug will be available to some breast cancer patients.

Three arthritis drugs-Abbott Labs Humira and Amgen's Kinert and Enbrel-will be covered. Tracier, a pulmonary hypertension drug by Actellon Pharmaceuticals also will be included. Avonex and Betaseron will be covered for multiple sclerosis. Thalidomide will be covered for multiple myeloma. There will also be coverage of Fosamax for those who have Paget's disease.

The coverage will be the same as called for under the law creating the drug benefit, so that there will be a large "doughnut hole" that the recipient will have to pay for themselves. Co-payments will be reduced or eliminated for low-income people. People are ineligible for the project if they have comprehensive drug coverage from another source like Medicaid or an employer-sponsored health plan or Tricare, the military health care program.

The drug discount card offered by the independent pharmacies has enrolled between 80,000 to 100,000 members according to John Rector, a senior vice-president for government affairs at their trade group, the National Community Pharmacists Association (NCPA0. The card being offered by the independent pharmacies, called Community CareRx differs from how the PBMs handle their cards in several significant ways. The yearly enrollment fee for the card is $30. The card has a network of about 50,000 pharmacies around the country.

Their discount card program is called Community CareRx, which is a nonprofit venture run by the trade group NCPA. The pharmacists have hired Computer Sciences Corporation of El Segundo, Ca., a computer service firm rather than a PBM to manage the card, enroll beneficiaries and interact with the federal government. MemberHealth Inc., a PBM, is handling negotiations with the drug companies in connection with the cost of the individual drugs.

MemberHealth is making full disclosure to Computer Sciences about the rate it is getting for the various drugs available in the plan. The Community CareRx card does not have a mail-order option.

The CBO's estimate that about 7 million Medicare eligible beneficiaries would sign up for the new drug discount card looks like it will be far off the mark. So far only 500,000 beneficiaries have taken the trouble to sign up for the cards. About 2.8 million people in the federal program for the elderly and disabled now have the cards, but this was done automatically by the private health plans that they were enrolled in to begin with. Many HMO's have also automatically enrolled their members in their drug discount card clubs.

The Bush administrations' promotion of the new Medicare law is a violation of the law that prohibits the usage of public funds for propaganda purposes according to a report by the General Accounting Office (GAO). The videos appeared as if they were news releases, when in fact they were actually ads to accentuate the positives of the new law.

The materials were in English and Spanish and were produced by the Health and Human Services, the agency that oversees Medicare. The GAO report said that the videos did not identify inform the viewers that the source was the government. The viewing audience does not know that the actors were also being paid by the government and were not independent news reporters.

Senator Frank Lautenber (D.-N.J.), who requested the GAO inquiry, said that President Bush's re-election campaign should repay the government for the cost of the videos which was about $43,000. He said that he would introduce legislation in Congress to force the repayment.

The government's database for the new Medicare drug discount cards went online Thursday, April 29th 2004. The site has a database that enables the viewer to compare the discounted price for at least one drug in 209 therapautic classes of drugs. The database also includes the yearly enrollment fee to join each of the approved Medicare discount prescription drug card plans. You can visit the site at or by calling 1-800-MEDICARE. Please remember that enrollment begins May 1 and that the discount cards become operational on June 1. You can join only one discount card prescription drug plan, and unless you move, you can not switch clubs until January 2005. The new Medicare prescription drug plan will go into effect on January 1, 2006.

The major complaint that Medicare officials say that they have received is that the price listed for the drugs keeps on shifting from one week to the next. Thus a plan that contains a certain price for a drug that you are using may contain a different price for the same drug the following week. Please keep in mind that once you join a specific discount drug card plan, you can not change your enrollment into another plan until next year, unless you move.

Medicare officials announced that prices on the site declined about 12% last week from the prior week. There were over 7 million hits on the price-comparison site last week. In addition, Medicare received 1.6 million calls on its 1-800 MEDICARE hot line last week which was more than 10 times its usual volume. In response to the complaint that callers have been unable to get through the number of operators taking the calls is being increased to 1,800, which is up from the 400 people performing that service last summer. Medicare is urging people to call late at night or on the weekends to avoid a long wait.

After using this site, we at therubins recommend that you try either of these sites that will compare prescription drug prices for you: or For further comparison purposes we recommend that you check these prices against those of some of the Canadian online pharmacies. The state of Minnesota has selected the Vancouver based and the Calgary based site of Total Care Pharmacy as its approved sites for prescription drug purchases. Please see our article Crossing the Border to Obtain Cheaper Prescription Drugs-Part IV for the procedure involved in buying drugs from Canadian online pharmacies.

For those using this site there will be only two pieces of information that you will have to enter into the data-base, namely the ZIP code where you live, and the names of the medications that you are taking. The data-base will calculate the card or cards available in your area that gives you the greatest savings on your prescription drugs. If you take multiple medications, that does not mean that you will get the lowest price for each drug but rather the lowest aggregate price for all of the medications.

Cardholders will be allowed to switch if they move; otherwise, the only change allowed is for next year, during a one-time enrollment period from November 15 through December 31, 2004. The government estimates that about 7.3 million of the 41 million Medicare beneficiaries will sign up for the new cards. You can begin to sign up with the card plan of your choice starting May 3, 2004, and you can only sign up with one discount card plan.

Medicare officials have approved 28 discount-card programs to begin offering drug-discount cards under the new Medicare prescription drug-law enacted on December 13, 2003. Fifteen of these cards will be available nationally, from insurance companies and pharmacy benefits managers. The rest will be offered statewide or regionally. An additional 43 cards will be available from the private managed-care plans that beneficiaries can join in the program called Medicare Advantage. Senate Democrats have introduced legislation that would require card sponsors to pass on to the members of the discount-cards at least 90% of the discounts they get from the drug manufacturers.

AARP will be offering a drug-discount card through United Healthcare Insurance Co. According to Medicare officials the discount-card program is expected to be operational by June 1. Advertising to enroll members in the various discount-card "clubs", will begin in April, and it is expected that the enrollment fee will be about $30 per month for members. Please keep in mind that the discount-card program will last for two years, and then the insurance program for prescription drugs will kick in beginning in January 2006.

Administration officials said that 106 health industry companies had applied by the deadline to Medicare as sponsors of drug discount cards under the new law. The cards will be available to about 10 million Medicare beneficiaries who do not have drug coverage. Applicants include retail pharmacy groups, health insurers, pharmacy benefit manages and other companies. Many health experts are worried that because of the large number or companies that will be enrolling members into their "discount drug card" club, Medicare beneficiaries will be inundated with an excess of confusing advertisements.

Sponsors will begin marketing their discount cards in April, enrollment will start in May and officials have promised that pharmacies will start accepting the cards in June. The cards are expected to provide anywhere from 10% to 25% drug discounts for the cardholders.

Pfizer and Eli Lilly, which offer discounts to low-income individuals for their own drugs announced that they would accept the cards for all low-income Medicare beneficiaries for all drugs they sell. GlaxoSmithKline which is a member of the TogetherRx group of 8 brand name drug companies said that it would accept the Medicare discount card for any holder irrespective of income.

The Medicare web site will have comparative prices for 209 classes of drugs offered through the cards available in ZIP codes. But only 6.5 million Americans who are 65 or older have access to the Web through their jobs or home computers. In December fewer than one-half of 1 per cent looked at the site according to Media Metrix, an internet research firm.

"The government expects to spend $1.8 trillion on drugs over the next 10 years, said Alan Spielman, general manager of Medco Health Solutions, which is the largest of the pharmacy benefits managers. The fee for the cards will be waived for about 4.5 million low-income Medicare enrollees, and they will be eligible for a $600 credit to use towards discounted drugs.

Eli Lilly & Co. became the first major pharmaceutical company to extend its drug discount card to low-income seniors under the recently passed Medicare prescription drug law. Lilly plans to offer its discounted, $12 monthly to any individual whose income falls below $18,000, or any household below $24,000. These amounts are 200% of the national poverty level. Lilly currently offers a discount card program on its own used by about 240,000 Americans. It is estimated that there are about 7 million Americans who qualify for the Lilly discount card. The card will be made available through prescription benefit managers and insurers.

Among the drugs most commonly used by Americans 65 and older that are made by Lilly include Zyprexia (for dementia and bipolar disorder-costs about $324 for a 30 day, 10-mg supply), Evista (for osteoporosis-costs about $100 for a 30-day supply), while one vial of Humalog for diabetes is $69.99.

The discount card program will begin May 3, 2004, and the program itself will take effect June 1, 2004 and run through December 31, 2005.

The National Association of Drug Stores and Express Scripts of St. Louis, a prescription benefits manager, announced an alliance to form a drug discount card that will be offered to eligible Medicare beneficiaries under the new prescription drug law. Under the new legislation a Medicare beneficiary can join in a "drug club" for a fee in return for which the beneficiary would receive a drug discount card good for discounts that are expected to range from 15% to 25% for their prescription drugs.

Under the new legislation the drug discount cards will be available from mid 2004 through 2006, when the prescription drug insurance part of the law will become effective. This alliance is the first one that is being formed since the legislation was enacted. The National Association once sued to block a Medicare discount drug card for seniors when it was proposed by the Bush administration. Details of the program have yet to be announced.

Medicare officials estimate that about 7.3 million Medicare beneficiaries will sign up for the new drug discount cards that will become effective about June 2004, and continue in force until 2006. Under the rules that have just been proposed a beneficiary who joins a Medicare approved discount drug card plan will be allowed to change cards only once at the end of 2004. The sponsors of the cards will be allowed to change their prices for the drugs on their formulary on a weekly basis.

Medicare officials will not be able to control which drugs are on the formulary for any of the plans, but they will monitor the drug prices that are charged by any of the "clubs". Medicare will specifically be on the lookout for any of the "clubs" that use a "bait and switch" tactic to induce members to sign up and then increase their prices sharply. In general, price increases for members using the discount card can't exceed the amount that would be expected, based on changes in wholesale prices.

Sponsors of the new drug cards will have to report their prices to the government and post the prices on their Web sites. Medicare will have the power to revoke the authorization to sell the approved cards for violations of its policies and to impose fines for these violations. The "clubs" will have to offer discounts on at least one drug in each of more than 200 categories of drugs commonly needed by Medicare beneficiaries.

The preliminary plan from the Department of Health and Human Services calls for having all eligible Medicare beneficiaries who apply for the new drug discount card is to have them in their hands by May of 2004. It is hoped that the discount card plan will start up by June of 2004. For most of the elderly it will be a matter of choices, and so we will try to explain the options that will be available to those interested in getting the cards. The discount for the drugs is expected to be in the 10% to 25% range.

A Medicare beneficiary will be entitled to only one "Medicare approved" discount card. These cards will be effective till 2006, when the rest of the Medicare drug coverage plan will start up. The cards will carry the Medicare logo, which means that the plan has met certain requirements.

The government will accept applications from health insurers, chain drugstores, wholesalers, drug companies or prescription benefit managers (PBMs) who wish to start a discount prescription drug benefit plan for Medicare beneficiaries. Since PBMs are already in this business, they have a leg up on the other organizations in the operations involved in the system.

The requirements for an organization wanting to set up a Medicare discount "drug club" will be made public shortly. Preliminary indications are that the new cards will cost the members about $30 per month to belong to the club. The new law mandates that there will be at least two organizations offering the card in each state.

Each "drug club" will set up the medications that it will cover under its plan. This can be the formulary approach wherein the provider sets up a list of drugs that it will cover for each type of ailment. The list of approved medications may be restrictive and also may require the usage of generic drugs in some cases.On the other hand there may be very few restrictions as to what medications will be covered by the plan. It therefore is important for each potential member to check which drugs will be covered under the plan you are considering.

Each "drug club" will negotiate separately with the individual drug company as to the price and any possible rebate it may get from the drug company for selling a greater amount of any particular drug. This was one of the areas of contention when the bill was being negotiated, because some felt that by banding together under the general Medicare umbrella, greater discounts and rebates could have been obtained through the massive buying power of such an organization. Others felt that this in effect would be creating a price control system over drugs, so eventually it was decided that each club would have to bargain on its own.

The PBMs are the companies that administer the drug plans for many large companies and municipalities and their retirees right now, so they probably have a leg up on the other organizations that will be starting up this business. Under the present system the PBMs usually try to get the members to use one or two medications for each type of illness so that they can get bigger discounts for their members.

It is expected that the government will require the "drug club" to have a wide choice of pharmacies from which its members can pick up the medication at a nearby site. Most of the PBMs mail the drug that you have ordered to wherever you would like it to be sent to. They have several different options available for its members to pay their bills.

The "drug clubs" will also try to cut the pharmacies' dispensing fees to help achieve further savings for its members. If a potential member decides to join the club at a later date, it will mean that he/she will have to pay a higher premium than the members who joined in the first year of the plan. It is expected that if you leave one club to join another one, you will not have to pay the increased premium. You may be restricted however in the number of times that you want to change the club to which you belong.

For a related article on this matter please see:
Medicare and the Cost of Prescription Drugs-Part III-HMOs and Prescription Benefit Managers (PBM)

The following are some places that you can go to or call to get some assistance in making your decision as to which drug card plan to join"


By Allan Rubin and Harold Rubin, MS, ABD, CRC, Guest Lecturer
updated November 8, 2008

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