Guest Column12/11/08

The Grocery Store (and Medicare Part D)

Dec. 11, 2008

By Harry P. Thal, CSA

The Medicare Part D Prescription Plan Annual Enrollment Period runs Nov. 15 to Dec. 31 for a Jan. 1 effective date. During this time, Medicare beneficiaries may review the plans available in their area, compare these plans to their existing plan (with any changes the 2008 plan may be making) and make a decision for the next calendar year.

To put this process in perspective, let’s use a shopping analogy. All Medicare recipients will soon be receiving mailings from their current plan, Medicare (CMS) and other plans seeking their business. To help them navigate, let’s assume it has been a year since your client has been to the grocery store. He drives up to the front of the store and gets out of the car (like opening the envelope from the current Medicare Part D prescription plan). Looking around, he sees the building (brochure or booklet) and name of the market — Shaw’s, Hannaford (insurance company name).

Walking in the door (opening the booklet), the store looks similar to the last time it was visited. Up front, there is a directory (table of contents) to help customers navigate. For starters, let’s go to the grocery section. Oh, but where the customer’s favorite green beans used to be, there is now a can of the store brand (generic). Looking around, he discovers that his higher priced brand (brand name drug) is now on the top shelf (tiered drug pricing) Checking the ingredients, he finds that they are the same, so he decides to give the lower priced store brand (generic) a try (his physician may have to re-write the prescription for this substitution).

Moving to the deli, he asks to buy a pound of crab for an appetizer, as he has done several times in the past. The clerk informs him that this year, people are not allowed to buy this expensive crab until they have tried a less expensive substitute. They will need to have their cook (their physician) explain why they shouldn’t use Krab substitute instead. (Plans use this “Step therapy” as a cost containment tool to save money. In many cases, there may be a less costly medication available providing the same therapeutic outcome. Even though your medication may previously have been allowed, plans change each year, and what may have been allowed in 2008 may have a restriction or not covered at all in 2009.)

To complete the shopping list, he asks the clerk for 90 shrimp. Entering this information into his computer, the grocer informs him that, for 2009, only 60 shrimp are allowed at a time (quantity limit) since that is the quantity used by most people with your client’s build (condition). So again, he will need to make a special request to the grocer (insurance company). (Medicare will allow the quantity of drugs medically necessary, but as these medications are expensive, a physician will need to justify why he is prescribing more than the established norm.)

This illustration points out a very important concept regarding Medicare Part D prescription plans — what was true last year may not be true for next year. Medicare prescription plans are contracts between the Center for Medicare and Medicaid Services (CMS) and the various insurance companies who have contracted with, and met the qualifications to be, an approved carrier. All contracts are based on a calendar year, and even though the plan names may be the same, their content may be very different from year to year. Changes may include:

•    Monthly premium – On a national basis, this is estimated to average $3 more per month in 2009 for the CMS “standard plan” design. The other designs may also vary.

•    Formulary – A formulary is the list of Medicare approved medications allowed by the company. Lists differ between companies, and may differ even within the same company if they offer several plans. Within the drug list there may be restrictions requiring your client’s physician to make a special request due to Quantity limits, Step Therapy and Prior Authorization. There is also a possibility that the client’s medication may no longer be on the list at all. While there is a procedure for their doctor to request an “exception,” there is a risk it will not be approved.

•    Co-Payment or co-pay is the money spent out of pocket for the medication. Most plans have a tiered system for pricing with the lowest level typically being generic drugs. The next level is the moderately priced brand name drugs. More expensive generic and brand name drugs might be located on a higher “shelf” while many injectable and specialty drugs are “kept behind the counter” and typically require a higher percentage co-pay.

With dozens of different plans to choose from, there is usually one plan that will be better for a client than another. To determine which plan is best, the consumer can try to “do-it-yourself” by either phoning 1-800-Medicare, or going online to For the broker who is uncomfortable in the complexities of Medicare, she can receive help from a local professional by contacting the National Association of Health Underwriters online at or by phoning 703-276-0220.

Harry P. Thal is a Certified Senior Advisor. He is president of the Kern Association of Health Underwriters (KAHU), and serves on the California AHU board. He may be reached at