The structure defined below (MEDICARE PRESCRIPTION DRUG PLAN – PART D) is the benefit structure defined by Medicare. From a Health Plan perspective it defines the amount of money that CMS (Centers for Medicare and Medicaid Services) will reimburse to health plans for covering one's prescription drugs.
MEDICARE PART D, and its “gap” (DOUGHNUT OR DONUT HOLE) in particular, is a political compromise arrived at by the Republicans and the Democrats! The argument that they made for it was that it was designed so that everyone who bought drugs would get some benefit.
Medicare Part D is, in fact, an oddly shaped drug prescription program that has drawn many complaints about its seemingly irrational structure, complexity and various drawbacks. However, the program is an important benefit - the largest expansion of Medicare in decades and a vital step in bringing Medicare into the modern era. All beneficiaries have their initial drug purchases covered (except for deductibles and co-payments) up to a specified limit (2006: $2,250; 2007 $2,400). The shallow initial coverage was introduced to maximize political support. (The first $750 of True Out Of Pocket costs came from a $250 deductible phase, and $500 initial coverage limit, after which CMC covers 75% of the next $2000.) Under the defined standard benefit package there is a gap in coverage between the initial coverage limit and the catastrophic coverage threshold. The term doughnut hole (or donut hole) refers to this ‘coverage gap’ within the defined standard benefit under the Medicare Part D prescription drug program. The donut hole was introduced to keep costs from balloning . Within the gap (2006: $2250 - $3,600; 2007: $2,400 - $3,850), the beneficiary pays 100% of the cost of prescription drugs before the catastrophic coverage kicks in (2008) at $4450. (Individuals defined as "dual eligible" by CMS are not subject to the donut hole, as their prescription coverage is fully subsidized. Retirees and elderly workers currently covered by employer or union drug plans may say put if they become convinced that their existing plan is good as or better than the one offered uder a Plan D arrangement. Anyone in Plan D with higher bills MAY EVENTUALLY fall into the ’doughnut hole,’ (a place where he or she must continue to pay the premiums due but also 100% cos/t of the drugs they use).
Every Part D plan sponsor was expected to offer at least one basic Plan D plan. Today, far more insurance companies are participating than any one dreamed likely. Many offer a variety of plans. Plans differ in the drugs they offer. Choices for comnsumers can be bewildering. Sponsors are allowed to offer enhanced plans that provide additional coverage generally with higher premiums, that either reduce or eliminates the donut hole. Indeed, both stand-alone Part D(PDP) plans and Medicare Advantage/Part D (MA_PD) plans continue to offer some kind of coverage in the coverage gap. Premiums for plans offering gap coverage are roughly double those of defined standard plans. The average monthly premium for stand alone Part D plans (PDPs) with basic benefits that do not offer gap coverage are $30.14 while the average monthly premiums for plans that do offer some gap coverage are $63.29.
Elderly Americans can use software on the Medicare Web (http://www.medicare.gov or call 1-800-MEDICARE) to help pick the best plan for themselves. Beneficiaries can type in such data as the drugs and dosages they use, the pharmacies they patronize, and the premiums and deductables they prefer. Presto, they get a list of plans that meet their criteria, the estimated annual cost of those plans and suggestions on how to cut costs further by picking cheaper drugs. Beneficiaries can change plans twice a year, but only at certain times of the year(See the manual, "Medicare & You 2008" pg. 48, for directions).
Catastrophic coverage, in all plans, provides that after one has spent (2008) $4050 out of pocket (not including premiums or the cost of drugs not on sonsor's list of covered drugs or ones bought in a pharmacy outside the plan's network), one will pay no more than 5% of the cost of each drug with Plan D paying 95%.
CRITIQUE: Medicare PART D (1) Is, in fact, an oddly shaped drug prescription program with an irrational structure. (2) It benefits the insurance companies that sell Part D plans and (3) the pharmaceutical manufacturers that make the drugs. (4) Drug makers and insurance companies are 100% satisfied witrh Part D because it adds millions to their bottom line. (5) Since its initiation in 2006, it has failed to keep drug prices in line. (6) It instigates yearly dollar limit increases in its catastrophic threshold, i.e. (2007: $2250 became $2400; $3600 became $3850;2008: $3850 became $4050. (7) It dumps a disproportionate financial burden onto patients with chronic illnesses and the poor. (8) As the first step in meeting a vital drug, Medicare PART D, has made a promising beginning but needs serious revision.
