Gettysburg Medical News
 The Clinical View
 by P.E. Hoffsten, M.D.
 31 August 2005

DRUG BENEFITS FROM MEDICARE PART D

            In 1965, the United States Government launched Medicare to cover the cost of hospital care for those on Social Security.  Over the years this has been a very successful program although very costly.  This initial hospital care portion of Medicare was called Part A.

            Part B Medicare dealt with office based non-hospital care for illness.  Initially misunderstood and misused was the idea that “checkups” could be paid for by Medicare.  It was never the intent of the law and in fact Medicare Part B covers the cost of illness treated in a doctors office but does not cover the cost of preventive care.  Thus, your annual checkup cannot be covered on Medicare except for one time when a person reaches age 65.

            Medicare Part C has never been useful in South Dakota because it covers individuals over age 65 who choose to enroll in a “health maintenance organization.”  The organization would then receive a unit amount of money per patient per month.  The reimbursement for Part C Medicare in South Dakota has rarely been economically feasible for a private insurance company with a health maintenance policy to utilize this plan.

            But now comes Medicare Part D.  It will take effect on January 01, 2006 and will provide relief for the cost for prescription drug service which has not been covered at all by Medicare up to this time.  As many of our seniors already know, the monthly cost of medications can be staggering.  By the time an individual is using a pill for cholesterol, a pill for osteoporosis, a pill for high blood pressure, a pill for diabetes, a pill for Parkinson’s disease, pills for heart failure, etc. etc., the costs of medications exceeds a thousand dollars per month on many occasions.  This is a cost that many of our seniors are unable to manage.  Thus, degenerative conditions and conditions that can be dangerous and painful often go untreated because patients simply can’t afford the medications.  Now Medicare will begin to cover some of the cost of drugs.

            Unfortunately, like much of Medicare, the Part D plan is very complicated.  Whether you will benefit and save money with this plan is depends upon a number of considerations.  The first thing to consider is what Medicare D will cost you.  Listed below is an example of an individual who had no drug coverage from their insurance or from Medicaid.  Imagine the cost of this person’s drugs is $500.00 per month or $6,000.00 per year.  How much money would this person save by enrolling in Medicare Part D?

            First, Medicare Part D is not free.  It will cost on the average $37.00 a month added to your Social Security payment.  That is $444.00 a year expense that would be new.  The first $250.00 of her annual drug cost is a deductible which is totally her expense. Thus to this point, she would spend $694.00 annually.

            Between $250.00 and $2,250.00 of this ladies drug expense, she will pay 25% of the cost of her prescriptions out of pocket.  Thus, this next $2,000.00 of expense will cost her $500.00 more or now $1,194.00.   Note that the amount of money she has spent on prescriptions is recorded into a national data bank every time she buys a medicine no matter where the pharmacy is located.  Thus, after she has spent the first $250 of prescription expense, 75% of the charge is paid for by Medicare.  If she were to purchase a $100 prescription at her pharmacy she would pay only $25 for that prescription.  The national data bank would be updated to show she now had $350 of prescription expense.

            The next portion of the Medicare bill is relatively strange.  When her expenses for drugs reached $2,250.00, Medicare then requires that she pay 100% of the out-of-pocket expense until her expense reaches $5,100.00.  For a person whose drug expense exceeds $5,100.00 per year, Medicare will pay 95% of all the expense after that.  Thus for this hypothetical individual who is spending $6,000.00 a year for drugs, the additional expense from $5,100.00 to $6,000.00 would be covered 95% by Medicare.  This patient would pay an additional $45.00 for this portion of the expense.  The grand total would mean that this lady would spend $4,089.00 a year for her drugs as opposed to $6,000.00 as she would have without Medicare Part D coverage.

            How Medicare is going to document expenses and appropriately discount the medications a person buys is going to be a huge bookkeeping operation.  Be that as it may, saving almost $1,900.00 a year on medications for this hypothetical patient is probably worthwhile.

If her prescriptions instead cost only $3000 per year, a calculation as above would show an expense to her of $1944 or a saving of $1056.  Savings will be different for different individuals.

            There is an additional consideration making the Medicare Part D Drug Plan less than ideal.  Specifically, the group of medications called benzodiazepines will not be covered at all.  Thus, individuals taking Xanax, Ativan, Valium, or Restoril used to help with sleep or relieve anxiety, will not be covered at all.  This is an attempt on the part of our government to regulate how medications are used by our society.  By paying part of our prescription bill Medicare Part D can be a potent force to institute governmental drug recommendations and guidelines whether the individual person wants to choose this guideline or not.  At this time, I am only aware of the benzodiazepine family of drugs being excluded from Medicare Part D but undoubtedly, this tool will be used in the future to shape government policy.  It is always a shaky business when bureaucrats decide to start dabbling in the practice of medicine.

            For those who are computer literate or want to use a telephone to obtain more information, the following sources are available:

            1.  www.medicare.gov (telephone #1-800-medicare)

            2.  www.medicarerights.org   (telephone #212-869-3850)

            3.  http://www.helpassistancepartnership.org (telephone #202-737-6340)

            4.  www.ssa.gov (telephone #1-800-772-1213)

            On or about October 15, 2005, Medicare beneficiaries will receive a 100-page booklet entitled “Medicare and You”.  I have tried to read this annually updated booklet in the past and although I am a healthcare professional, I had trouble getting through it all.  Good Luck!

            Enrollment in the Medicare Part D Plan begins November 15, 2005 and continues through May 15, 2006.  After that, there will be an additional charge if one decides to enroll in the Medicare Part D Plan.

            Try as we will, nothing ever seems to be easy or simple and Medicare Part D certainly will not be.  The healthcare providers as your local clinics and your pharmacist can be a significant help in aligning Indigent Programs, insurance plans, and helping advise whether Medicare Part D will be a benefit for you.