2010 Medicare Drug Plans Need Careful Study

Premiums will rise but consumers also need to research pricing tiers and coverage for their drugs.

By SHARE

Four weeks remain to enroll in Medicare for 2010. For 26 million participants in Medicare's Part D prescription drug program, it's especially important to pay attention to the details of the insurance plans you're considering, especially the ways various insurers handle co-pays for specific drugs.

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Private insurers offer plans that may either be part of basic Medicare or be included in other Medicare coverage plans. About 50 different Part D plans are offered in most states. According to the Kaiser Family Foundation, the baseline elements of stand-alone Part D coverage in 2010 will include up to a $310 initial deductible (up from $295 in 2009) and then a 25 percent copay up to $2,830 in total drug costs (up from $2,700 in 2009). People then encounter what's called the "doughnut hole" in Part D coverage and must pay all of their drug costs until their out-of-pocket spending reaches $4,550 (up from $4,350 in 2009). This spending total excludes Part D premiums.

Average monthly premiums for Part D coverage will rise 11 percent to $38.94, according to Kaiser. But that average includes rates as low as $8.80 and as high as $120.20, Kaiser says, reflecting wide variations in coverage and geographic cost differences.

But the premium is just the starting point for evaluating the most appropriate Part D plan. Consumers should make sure their Part D insurance plan covers the specific drugs they require. There are 2,363 drugs covered by various Part D plans, according to Avalere Health, a Washington consulting firm. Only one of the top 10 plans covers all of these drugs—AARP's MedicareRx Preferred. Other best-selling plans may cover as few as half that number, Avalere says.

The official Medicare site has a prescription-plan finder tool that locates various insurance plans by ZIP code. It includes a feature enabling you to determine whether your prescription drugs are covered by various Medicare insurance plans, and under what payment terms.

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Since Part D plans were begun in 2006, private insurers have expanded their use of tiers, which they use to assign drugs into categories grouped by expense and co-pay terms. For 2010, 51 percent of plans will have four tiers and 33 percent five tiers, according to Avalere. Most tiers feature co-pays but the highest tier often provides a percentage co-insurance payment, Avalere says. Here is what it says to look for in 2010 plans with four tiers:

  • Tier One: Generics, $6.72 co-pay in 2010, up from $5.77 in 2009.
  • Tier Two: Preferred brands, $36.25 co-pay, up from $34.83.
  • Tier Three: Non-preferred brands; $78.95 co-pay, up from $74.31.
  • Tier Four: Specialty and injectable drugs, 30.4 percent co-insurance in 2010, down from 31.2 percent in 2009.
  • Here are Avalere's averages for those five-tier plans with a single co-insurance tier (about 40 percent of five-tier plans) :

    • Tier One: Preferred generics, $2.72 co-pay in 2010, up from $0.54 in 2009.
    • Tier Two: Non-preferred generics, $21.52 co-pay, up from $11.86.
    • Tier Three: Preferred brands, $32.53 co-pay, up from $30.02.
    • Tier Four: Non-preferred brands, $73.81 co-pay, up from $71.01.
    • Tier Five: Specialty and injectable drugs, 28 percent co-insurance in 2010, down from 28.2 percent in 2009.
    • Here are Avalere's averages for the five-tier plans with two co-insurance tiers (about 33 percent of five-tier plans):

      • Tier One: Generics, $5.40 co-pay in 2010, down from $6.58 in 2009.
      • Tier Two: Preferred brands, $37.75 co-pay, down from $39.07.
      • Tier Three: Non-preferred brands, $87.71 co-pay, up from $82.46.
      • Tiers Four and Five: Specialty and injectable drugs, 28.7 percent co-insurance in 2010, nearly identical to 2009.
      • [See 2010 Medicare Changes Demand Careful Review.]