Why is Part D so complicated?

Yesterday I met with a client who is turning 65 in June. He is a doctor, and this doctor was amazed by how complicated Medicare Part D drug coverage is.

As I explained how Part D drug coverage works, the doctor asked, “Why is this so complicated?” I told him I usually find myself apologizing to clients about Part D, especially people who take no prescription drugs, or use just one or two low-cost generics.

Late Enrollment Penalty

The doctor takes one inexpensive statin drug, so he was thinking he might not even sign up for Part D. I explained the late-enrollment penalty, which is 1% for each month a person delays enrollment in Part D after he has Medicare. The calculation for the penalty is also a bit complicated, but it currently totals a bit less than $4 per year that a person has delayed enrollment. A person who goes five years without Part D would pay around $19 more per month for any Part D plan he enrolls in. So a $30 monthly premium would be$49 with the penalty. And this penalty will increase in the future as the average cost of Part D increases.

The doctor’s wife advised him that he might need a Part D plan in the future, if his health situation changes.  I said I usually suggest that people who want to be “in the system” enroll in the lowest-cost plan (which is $18.50 per month in Arizona).

Lower- cost plans have a deductible.

This $18.50 plan has a $325 deductible, so a person enrolled in this plan is paying a premium and still must pay for his drug costs until he meets the deductible. The doctor would pay $18.50 per month for drug coverage that would not pay for his generic drug cost- unless his prescriptions change drastically during the year. The doctor was not impressed with this option. I wrote last fall about plans with deductibles.

The “Donut Hole”

This “coverage gap” affects people who take several expensive drugs. Every Part D plan has a limit on what the plan will pay for a person’s prescriptions.  In 2013, when what the individual pays PLUS what the Part D plan pays adds up to $2,970, that person goes into the donut hole. This means the plan no longer pays for that person’s drug costs, and the person takes on the full cost. However... as part of Obamacare, pharmaceutical companies agreed to give seniors a  discount on their brand drugs (52.5% in 2013).  So if a person’s monthly brand drug costs were $600, they would only have to pay $285 (47.5% of 600).

Catastrophic Coverage

Next I explained to the doctor how Part D works for people with extremely high prescription costs. Most people who go into the donut hole do so near the end of the year and do not come out of it. But, people using very expensive drugs will go into the donut hole and then reach what is called “catastrophic coverage”.  To get to this point, a person must have spent out of his own pocket $4,750. (What the Part D plan paid out is not included in this figure.) At this point, a person would pay $2.65 for generics, or $6.60 for brand or specialty drugs – or 5% of the cost, whichever is greater.

Step Therapy

The doctor doesn’t take expensive drugs, but I told him Medicare requires me to tell him about “step therapy”.  Every Part D plan requires step therapy if a person is prescribed certain expensive drugs.  The Part D plan will reject the expensive prescription and tell the patient  to first try less expensive drugs. A person must first try drug A. If that doesn’t work, he must try drug B, and then drug C, and so on. If lower-cost drugs don’t work for the patient, his expensive prescription will be approved.

Why doctors hate Part D.

At this point, the doctor said, “This is why doctors hate Part D!”  He said Part D plan requirements have created extra work for doctors’ office staff – and this extra time and work costs money – but doctors are not compensated for this cost.

I told him I hate Part D too! Why are there 26 plans to choose from in Arizona? Why does one plan cost $18.50 per month and another $90?  And why is the co-pay for the same drug $45 on one plan and $$95 on another plan? I could go on and on.

I don’t really hate Part D.

I just hate that it is so complicated. And, by the way, Part D plans change every year, so people need to to review their plan details every Open Enrollment Period (October 15 – December 7).

Part D can be a good deal for people who take expensive brand drugs. If the retail cost for a drug is $200, and a person pays a $45 co-pay, that’s a good deal.  But as more and more brand drugs go generic, the value of Part D is declining for many people.  And yet, most people are spending, on average, $32 per month for their Part D plan when they take $4 to $10 generics.

I recently wrote about a study that showed most seniors are enrolled in the wrong Part D plan and are paying too high a premium based on the drugs they take. Why is this the case?  Because Part D is too darn complicated and there are too many plans!!


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6 Responses to "Why is Part D so complicated?"

  1. Dennis Byron says:

    How does Part D cost his office anything? He just writes the prescription. Does he mean he doesn’t like patients calling him back and asking if they can use a generic instead? Like he does?

    (Did you just really make this story up so you can do your usual anti-PartC/D article because the programs cost you insurance guys commissions?)

  2. Denise_Early says:

    Perhaps you should re-read the post.

    The doctor is turning 65 soon and is looking at Part D as a consumer. Being a doctor, he also sees how the complicated nature of the program adds cost to the healthcare system.

    The doctor is not complaining about getting calls from patients. It is insurance companies that require more and more paperwork and hoops to jump through – and this adds to the cost of running a medical practice.

    I revised my post to say I don’t hate Part D. I just hate that it is so complicated.

  3. Dennis Byron says:

    Let me try again. You and the doctor claim Part D adds costs to running HIS practice. You say it adds extra work for HIS staff. What does a doctor’s office care about prescription costs? Why or in what way does his staff have to work more because I get the prescription he wrote from CVS using the Humana Walmart plan or from Walmart using the CVS plan or… This is all irrelevant to the doctor’s office.

    (By the way, given that he is a doctor — and I’m now making the politically incorrect judgement that that means he is high income — I’m surprised you didn’t mention that he has to pay more for his Part D than you and I. Even if he doesn’t go into a penalty situation.)

  4. tiponeill says:

    Blame Shrub – Part D is Republican “free enterprise” at it’s worst. They don’t have these problems in Canada

  5. Denise_Early says:

    Read it again. With insurance companies requiring patients try one drug, then another, then another….. and they then have to go back and see the doctor several times….that certainly adds cost to the patient, Medicare, and the doctor’s office.

    This doctor is semi-retired and I didn’t ask him how much money he makes. The point of my post was to show how Part D works and to complain about how complicated it is.

  6. Dennis Byron says:

    Really. You can’t answer this simple question so you just keep saying “re-read the article.”

    Think about it. There could be no way that Medicare Part D plans could raise a doctor’s practice costs to a point where he would “hate Part D” other than

    — he hates those pesky patients calling back and asking for generics in place of brand-names to lower the patient’s costs or

    — he hates those pesky patients calling back and asking for brand-names instead of generics because the generic doesn’t work (which is the case maybe 25% or less of the time).

    Does your doctor also “hate” the non-Medicare drug plans for people under 65 or the non-Medicare-Part-D drug plans for retirees? They all work the same way. And if the patients “have to go back” for a follow-up visit to see if the swelling went down or the redness lessened, that does increase his practice’s costs but only to the extent that it also increases his practice’s revenue.

    Maybe he just hates insurance companies. Or he hates drugs. Or maybe — my guess — he’s make believe. Whatever, it seems to have nothing to do with Medicare in general or Medicare Part D in particular.

    (As an aside, maybe they don’t call it step therapy but this is the way all medical treatment works. Doctors don’t start with amputation if you have a splinter in your finger.)

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