Medicare Part B vs. Part D Prescription Drugs – Are You in the Right Medicare Plan?

If you’re in the wrong type of Medicare coverage, you may be paying a whole lot of money for prescription drugs billed under Medicare Part B, not Medicare Part D.  This is especially true if you get cancer.  How can this be?  Read on.

Medicare Part D covers Prescription Drugs, right?  Not always… Medicare Part B can play a big role.  In fact, there are many instances when Medicare Part D actually doesn’t cover all drugs you may need during the course of your healthcare.  When medical conditions get serious, many medications aren’t covered by Part D.  Instead, they’re covered by Part B.  Knowing the difference between the two could save you hundreds if not thousands of dollars when choosing your Medicare coverage.  This is especially true if you have cancer as chemotherapy drugs and all the associated medications that come into play during cancer treatment are extremely expensive.  

Medicare Part D Covers Prescriptions at Retail Pharmacy Locations or Mail Order

Generally, Part D covers prescription drugs at a retail or mail-order pharmacy.  Let’s say you get bronchitis; you make an appointment with your primary care physician, he/she sends your prescription into your local pharmacy.  When you pick it up, you pull out your PDP or your MAPD card, swipe it and pay the associated copay or coinsurance.  Simple, right?  Right.  

But what if you need a prescription drug that’s administered by a doctor? Let’s say you have macular degeneration, and you’re seeing an ophthalmologist for treatment.  Many folks with this condition get very expensive shots in the eye to slow the degeneration.  Clearly (no pun intended) you can’t do this yourself.  When this happens, the doctor actually bills the prescription under Medicare Part B, not Medicare Part D. 

Same goes for prescription drugs that are administered in an outpatient setting.  If you’re having your knee scoped or drained, and the doctor shoots localized anesthesia into your knee before the procedure, that will hit Medicare Part B, not D.    

So, generally, Part B covers drugs that usually aren’t self-administered, which is a fancy way of you’re not taking them by yourself.  The doctor, nurse practitioner, surgeon, anesthesiologist, etc. are giving them TO you.

Here’s a short list of medical conditions that, when prescription drugs are used in your treatment, are covered under Medicare Part B, and not covered under Medicare Part D.  

Cancer
  • Oral cancer drugs: Medicare helps pay for some cancer drugs you take by mouth if the same drug is available in injectable form or is a prodrug of the injectable drug. As new oral anti-cancer drugs become available, Part B may cover them.
  • Oral anti-nausea drugs: Medicare helps pay for oral anti-nausea drugs used as part of an anti-cancer chemotherapeutic regimen. The drugs must be administered immediately before, at, or within 48 hours after chemotherapy, and must be used as a full therapeutic replacement for an intravenous anti-nausea drug
Hepatitis

Hepatitis B shots: Usually a series of 3 shots covered only for people at high or medium risk for Hepatitis B.

Osteoporosis
  • Injectable osteoporosis drugs: Medicare covers an injectable drug for women with osteoporosis who meet the coverage criteria for the Medicare.
Transplants
  • Immunosuppressive drugs: Medicare covers immunosuppressive drug therapy for people who received an organ or tissue transplant for which Medicare made payment.

Other Prescriptions Covered Under Medicare Part B, not Medicare Part D

  • Some other vaccines when they’re directly related to the treatment of an injury or illness (like a tetanus shot after stepping on a nail).
  • Durable Medical Equipment (DME) supply drugs: Medicare covers drugs infused through an item of DME, like an infusion pump or a nebulizer.
  • Injectable and infused drugs: Medicare covers most injectable and infused drugs given by a licensed medical provider if the drug is considered reasonable and necessary for treatment and usually isn’t self-administered.
  • Antigens: Medicare helps pay for antigens if they’re prepared by a doctor and given by a properly instructed person (who could be the patient) under appropriate
  • Blood clotting factors: If a person with Medicare has hemophilia, Medicare helps pay for clotting factors they give themselves by injection.
  • Parenteral and enteral nutrition (intravenous and tube feeding): Medicare helps pay for certain nutrients for people who can’t absorb nutrition through their intestinal tracts or can’t take food by mouth.

Are You In The Right Medicare Plan?  

Here’s where it gets interesting.  If you have a Medicare Supplement Plan (Medigap), these drugs are usually covered at 100%, especially for the two most popular plans, Medigap C and Medigap F.  That’s because these plans cover 100% of the Medicare Part B costs, which includes the deductible and any associated coinsurance.  The third most popular Medigap plan is Plan N, and if you have this one you’d be covered at 100% after paying the Part B deductible.

If you’re on a Medicare Advantage (MAPD) plan, odds are you’ll be paying 20% of the cost for Part B drugs, all the way up to the annual Maximum Out Of Pocket (MOOP).  To make sure, you need to pull out your Annual Notice of Change or your Summary of Benefits right now.  Flip to the Section entitled, “Medicare Part B drugs.”  If I were a betting man, (and I’m not) I’d bet you right now your MAPD plan doesn’t cover Medicare Part B drugs any more than at an 80% level, leaving you 20% to pay.  You stand a very good chance of hitting your MOOP very quickly if you have cancer, or any other serious condition requiring hospitalization involving prescriptions administered by hospital staff.  

The Takeaway:

If you’re turning 65 or otherwise now eligible for Medicare, this is an often overlooked “gap” in traditional Medicare, as well as most Medicare Advantage plans.  Most agents breeze right by this section in their presentations, and it’s not prominently one of the topics in “educational” presentations or seminars.  But, you clearly need to pay attention to it since over 1.6 Million people in the United States will get cancer in a given year.  Chemotherapy drugs are not cheap by any stretch of the imagination if you happen to be stricken with cancer and neither are osteoporosis drugs.  

If you’re playing it safe and this gap is of concern to you, I’d seriously consider getting a Medicare Supplement plan, if you can afford the monthly premium.  9 out of 10 times, a MAPD plan is going to be cheaper (along with a whole other set of considerations, click here for more on those) but you’ll have to cough up 20% of the Part B drugs if you need to.  

 

The Affordable Care Act (ACA) and Medicare

The Affordable Care Act (ACA), also known as Obamacare, was enacted in March 2010 and heralded the biggest change in the US healthcare system since the creation of Medicare and Medicaid in 1965. Following the passage of the law, there was the creation of a Health Insurance Marketplace where anyone can get health insurance at an “affordable” price, since private health insurance plans have been subsidized by the government.

If you’ve been following the news at all, you’ve seen where major insurance companies have drastically shrunk the number of states they participate in, or dropped out altogether. For those who have stayed, premiums have skyrocketed. The recent presidential election has thrown a new spotlight on Obamacare, as Trump has indicated he’d support repealing ACA altogether. Politics and news coverage aside, I thought I’d spend a bit of time covering ACA as it relates to your Medicare coverage. The following are some salient facts that you need to know about the ACA, with some special emphasis on ACA and Medicare.

1. Medicare Coverage Is Protected

One important fact to recognize is that the Health Insurance marketplace does not include Medicare. This means that your Medicare coverage will not be interfered with in any way. It also means that once you have been covered under Medicare, you do not have to do anything with the marketplace during the open enrollment period.

However, people who only have Medicare Part B health insurance (which covers outpatient services) are not considered to be adequately covered and are required to supplement their insurance coverage. A failure to do this may lead to paying of a fee that is charged on those who do not have insurance. This is due to the fact that the ACA has an individual mandate included, which requires everyone eligible for health insurance cover to buy it. This is done so as to avoid healthy people from delaying getting health insurance cover until they fall sick, which something that will increase costs for everyone and lead to fewer people affording health insurance.

In 2016, the fee for not having minimum essential coverage is 2.5% of your household income or $695 per adult and $347.5 per child, whichever amount is higher.

2. Can You Choose Marketplace Coverage Instead of Medicare?

The simplest answer to this is yes, but you won’t want to do it in almost all cases.  If you’re currently on an ACA plan and turn 65 or are otherwise eligible for Medicare, you can technically keep your ACA plan. You won’t want to do that, as benefits under Original Medicare or a Medicare Advantage plan are far better and in almost all cases, cheaper than an ACA plan. However, the federal government won’t actually force you to drop your ACA plan, you must do it yourself. There are a few situations in which this scenario might be possible, for example:

If you happen to be paying monthly premiums for Part A, you can opt out of Medicare Part A and B and have a marketplace plan instead if this serves your situation better. This is highly unlikely, as most people do not pay monthly premiums for Part A because they paid for it through their taxes when they were working before turning 65.

3. Can You Get a Marketplace plan in Addition to Medicare?

It is actually illegal for anyone to offer you a marketplace plan if they know or if you already have Medicare coverage. This applies even to cases where you have either Part A or Part B. If you feel the need to plug a gap in your Medicare coverage, then the right thing to do is adding on supplemental Medicare insurance, also known as Medigap insurance. It is also not possible to purchase a standalone dental plan on the marketplace if you have Medicare coverage.

4. Cancelling Your ACA Plan When you Get Medicare

You can do this online. Click here and follow the directions.

The Takeaway:

Once you turn 65, or are otherwise eligible for Medicare, you don’t need your ACA plan any longer. If you have a Marketplace plan, you can keep it until your Medicare coverage starts. Then you can end your Marketplace plan without penalty. However, you’ll have to take action to cancel your ACA policy as soon as your Medicare coverage begins. The government won’t cancel it for you, you have to do it. If you don’t, you’ll essentially be left paying your applicable Medicare premiums as well as your ACA plan premium, even though you can’t use the ACA plan any longer to pay for your healthcare.

2017 Medicare Star Ratings Released

Medicare Advantage Star Ratings have been released for 2017 and for some large insurers, the news isn’t pretty. The news is substantially better for smaller, regional plans which follows a historic trend. However, whether or not a 5 star plan is available to you largely depends on where you live. What does this mean for you and your wallet? Read on.

Medicare Star Ratings – Why They’re Important to You

The Centers for Medicare & Medicaid Services’ (CMS) five-star ratings of private Medicare plans are a big deal for insurance companies, as higher ratings are tied to considerable bonus payments from CMS to them. Check out my post on Star Ratings for additional background by clicking here.

Some of these payments can be kept by the insurer as pure profit, however a percentage of these must be invested back into the Medicare Advantage plan as increased (better) benefits or lower monthly premiums. That’s good for you, the consumer as this essentially makes these products more attractive. Makes sense, right? Higher star ratings generally means better benefits and lower premiums which attracts more customers.

If a MAPD or Prescription Drug Plan (PDP) achieves 5-star status in any given year, the real “win” for that company is that they can enroll members year-round, while other insurance companies can only do so during the Annual Election Period (AEP) which runs from October 15 through December 7. Essentially, achieving five stars gives the plan a huge sales and marketing advantage over their competitors.

The Medicare Advantage (MAPD) landscape across the county is largely occupied by big insurance companies like United Healthcare (AARP brand) Blue Cross and Blue Shield, Humana, Cigna and Aetna. However, there are many smaller companies who also offer MAPD plans for sale that are regional in nature. Historically, it’s the smaller companies that have been awarded high star ratings, and that trend continues for 2017.

The Large Insurers – Star Ratings Performance

#1. Let’s start with Aetna, which also operates as Coventry in many states. Looks like they were the big winner this year among the large insurance companies. For 2017, 91 percent of the insurer’s MA members will be in four-star or higher Medicare Advantage and prescription drug (MA-PD) plans. Aetna recently noted it has the highest percentage of Medicare members enrolled in four-star plans among publicly traded companies. No Aetna plans achieved a 5 star rating for 2017.

#2. Anthem, the parent company of many Blue Cross and Blue Shield plans said nearly 51 percent of their Medicare Advantage members will be enrolled in plans that achieved four stars or higher and approximately 22 percent of members enrolled in plans that achieved four stars or higher in 2016. So while the overall number of members in a highly-rated plan is high, no Anthem plans achieved a 5 star rating for 2017.

#3. United Healthcare/AARP hasn’t sent out a press release, and didn’t address their Star Ratings in their latest earnings call. However a quick review of their plans shows they achieved one 5 star rating in an HMO that serves several Texas markets.

4. Cigna and Humana (which are in the middle of merger discussions) saw a reduction in its ratings, as next year only 20 percent of its MA customers will be in plans with four stars or higher. To throw gas onto the fire, Cigna is still on a government-imposed sales and marketing ban and isn’t expected to be allowed to enroll new members into their Medicare Advantage and PDP plans until early 2017.

Smaller Insurance Companies Perform Better…Again

CMS announcement of the 2017 Medicare star quality ratings, Kaiser Permanente’s Northern and Southern California, Colorado, Northwest and Mid-Atlantic States regions received 5 out of 5 stars each, the highest overall rating. Kaiser Permanente’s Georgia and Hawaii regions earned 4.5 out of 5 stars.

In fact, you won’t find any “household name” companies other than Kaiser and the one United Healthcare plan achieved 5 stars this year.

Overall MAPD and PDP Quality Improving

According to CMS, approximately 49 percent of MAPDs in 2017 earned four stars or higher, which is up slightly from 2015.

Overall, CMS said nearly 70 percent of Medicare Advantage enrollees will still be in plans that receive at least four stars for quality in 2017.
Just over half of private Medicare customers signed up for plans that received at least four stars in 2014. But the new figure is down slightly from this year, when just over 70 percent of the 17 million-plus Medicare Advantage customers enrolled in the high-quality plans.

There has been similar improvement in quality ratings for prescription drug plans. Just over 40 percent of Medicare beneficiaries who enroll in stand-alone prescription drug plans are expected to be in plans with at least four stars next year. That’s up from just 9 percent who were enrolled in such high-performing plans in 2014.

2017 MAPD 5-Star Rated Plans

KelseyCare Plan Administrators
Enrollment: 30,769
State: Texas

Kaiser Foundation Health Plan
Enrollment: 1,086,961
State: California

Kaiser Foundation Health Plan of Colorado
Enrollment: 104,117
State: Colorado

Kaiser Foundation of the Mid-Atlantic States
Enrollment: 68,575
States: District of Columbia, 11 counties in Maryland, 9 counties in Virginia

Tufts Associated Health Maintenance Organization
Enrollment: 107,311
State: Massachusetts

Blue Cross Blue Shield of Massachusetts HMO Blue
Enrollment: 10,302
State: Massachusetts

Group Health Plan
Enrollment: 53,633
States: Minnesota, Wisconsin

United Healthcare AARP Medicare Complete Plan 1
Enrollment: 31,035
State: Texas

Physicians Health Choice of Texas
Enrollment: 31,035
State: Texas

Capital District Physicians’ Health Plan Universal Benefits
Enrollment: 3,827
State: New York

Gundersen Health Plan
Enrollment: 14,462
States: Iowa, Wisconsin

Optimum HealthCare
Enrollment: 45,153
State: Florida

Kaiser Foundation Health Plan of the Northwest
Enrollment: 84,567
States: Oregon, Washington

The Takeaway:

Almost 18.5 million individuals will be enrolled in private Medicare Advantage plans next year, representing about one-third of all beneficiaries. The higher the Star Rating, the more money the insurance company receives from CMS. A portion of that bonus money must be spent on better benefits and lower premiums, which is good for you and your wallet. If you are lucky enough to live in an area boasting a 5-star plan in 2017, you may enroll in those plans anytime during the year; you don’t have to wait until the next AEP.

Medicare Premiums Going up, Benefits Going down in 2017

Today, the Centers for Medicare & Medicaid Services (CMS) announced the 2017 premiums for the Medicare inpatient hospital (Part A) and physician and outpatient hospital services (Part B) programs.

And guess what?  They’re going up.  Especially if you’re rich. Not even rich, really.  Just better off than most.  Funny how the timing of this happens right after the Presidential election, hmm?

The “average” Medicare Part B premium will be about $109.00, compared to $104.90 for the past four years.  That’s for about 65% of the Medicare population.  The standard monthly premium for Medicare Part B will be $134.00 for the other 30% in 2017, which is a 10 percent increase from the 2016 premium of $121.80.

The above changes do not affect your Medicare Advantage monthly premiums but they may impact you if you’re on a Medicare Supplement plan that covers either the Part A and/or the Part B deductibles.  More about deductible increases later in the post.

Higher Income?  Higher Premiums for You!

If you did the quick math above, you’ll notice we have 5% of the population left to talk about.  These 5% pay much higher costs for the exact same Medicare coverage.

Since 2007, people with higher incomes have to pay higher Medicare Part B monthly premiums. I covered this pretty extensively in a post you can read by clicking here.  These income-related monthly premium rates affect roughly 5% of people with Medicare.

Individuals earning between $85,001 and $107,000 and couples earning between $170,001 and $214,000 will see their monthly premiums rise from $170.50 a person this year to about $187.50 in 2017. For those earning more than $214,000, or $428,000 for couples, the increase is to $428.60 a month, from $389.80 in 2016.

Medicare Deductibles Increase in 2017

The Medicare Part A inpatient hospital deductible that beneficiaries pay when admitted to the hospital will be $1,316 per benefit period in 2017, an increase of $28 from $1,288 in 2016.

If that wasn’t enough, CMS also announced that the annual deductible for all Medicare Part B beneficiaries will be increasing to $183 in 2017 (compared to $166 in 2016).

 More Bad News – Your Social Security Check

In 2017, Social Security benefits will rise a lousy 0.3%. Social Security says the cost-of-living adjustment will add $5 to the average monthly payment for all retired workers. This means that whopping $5 won’t cover the increase in your Medicare Part B premium, so your checks will actually be getting a bit smaller this year.

The Takeaway:

Not much you can do about this, really.  If you’re on a Medicare Advantage plan, these increases will not affect your plans, at least in 2017.  However if you’re on a Medicare Supplement plan (Medigap), your insurance company has been waiting on this announcement for some time.  That’s because they have to set their 2017 Medicare Supplement pricing, and increasing Part A and/or Part B deductibles means they’ll have to pay more out in claims.  More paid claims equals higher policy premiums.  Keep an eye on your Medicare Supplement renewal premiums when you get them in the mail… most carriers send them out in the first three months of the year.  An annual increase larger than 5-9% may mean it’s time to shop for a Medicare Advantage plan.  You can check out my post on those types of plans by clicking here.