Preview of Medicare Part C and Part D for 2014

The actuaries at the Centers for Medicare & Medicaid Services (CMS) must have been burning their midnight oil, because they have already laid the foundation for Medicare Advantage (managed care) plans and Part D prescription drug plans for 2014. The good news for beneficiaries is that it looks like they have taken action to control increases in premiums for Medicare Advantage plans, and beneficiaries in Part D will see a lower deductibles and co-payments for drugs.


Part of the reason for this is in 2014 Part C and Part D plans will have to adhere to the Affordable Care Act provision to maintain a medical loss ratio of 85%, that is, they must spend 85% of revenue on clinical services, prescription drugs, quality improvements, etc.

And Part D will also improve for those beneficiaries who fall into the donut hole, as not only will manufacturers have to discount brand name drugs by 52.5%, as they do in 2013, but the program will discount generic drugs by 28%, up from the 21% in effect this year.

As 2014 is a long way off, there is no use to going into great detail about this at this point in time, and we will know more particulars as the year progresses and plans submit their specific offerings to CMS. But one interesting trend is that there will be more emphasis on quality of care. For one, Medicare will be refining its Part D Medication Therapy Management (MTM) program and tying it into the Million Hearts initiative to improve access and adherence to anti-hypertensive medications. It will also encourage beneficiaries to tie their medication reviews into their annual wellness visits to their physicians. And, interestingly, the Part D program has been in place for a long enough time that it is producing data on how Medicare beneficiaries are medicated. For example, it now has data on the use of anti-psychotic medications in the long-term care setting, and will begin using this to deal with the longstanding quality of care issue of the overuse of these drugs in this setting.

So stay tuned, and as we approach the annual enrollment period in the Fall (it always starts October 15), I’ll blog more about what beneficiaries should be looking for and what action they should take to ensure they are in the best plans for their circumstances in 2014.

Reassignment of Low Income Subsidy (LIS) (Extra Help) Beneficiaries for 2013

Beginning in October the Centers for Medicare & Medicaid Services will begin their annual reassignment of Low Income Subsidy (LIS) (Extra Help) beneficiaries.

CMS will reassign those Low Income Subsidy beneficiaries who are in a stand-alone Part D drug plan (PDP) and (1) whose plan will be leaving the Medicare program in 2013, or (2) whose plan will begin charging a monthly premium which is higher than the benchmark premium for the beneficiary’s state. (A “benchmark premium” is the highest amount that Medicare will allow for a Part D premium for a Low Income Subsidy beneficiary. These are more fully explained in my previous posting, which also lists the benchmark premiums for each state for 2013.)

CMS will also begin reassigning Low Income Subsidy beneficiaries who are in a Medicare Advantage – Prescription Drug Plan (MA-PD) or a Medicare Advantage only Plan (MA-only) and whose Plan is either leaving the Medicare program altogether, or is reducing its service area so the beneficiary can no longer be enrolled. Very importantly, these beneficiaries will be NOT be reassigned to another Medicare Advantage Plan, but will be reassigned to a stand-alone Part D drug plan (PDP) and put into Original (fee-for-service) Medicare. Because many of these beneficiaries have no other health insurance, they may need to keep the protections of being in a Medicare Advantage Plan and to take action to enroll in one effective with January 2013.

And, of course, Medicare will not reassign any beneficiary who will be loosing their Low Income Subsidy in 2013. These beneficiaries must remember that they will no longer be able to switch their drug plans each month, which Low Income Subsidy beneficiaries are permitted to do, and need to make sure, during the annual open enrollment, that the plan they are in is the best one for them.

Some additional details about these reassignments will be helpful.

With regard to the reassignment of Low Income Subsidy beneficiaries who are in a stand-alone Part D drug plan (PDP), please note that in some instances Part D plans are allowed to voluntarily waive a difference between the benchmark premium and their premium, where this difference is small. ($2.00 or less; the so-called “de minimis” rule.) In these cases, CMS will not reassign the beneficiary. Therefore, you may see instances where a Low Income Subsidy beneficiary’s stand-alone Part D drug plan’s premium is slightly higher than the benchmark, but the beneficiary is NOT reassigned.

In addition, CMS will not reassign a beneficiary if the beneficiary chose to be in their stand-alone plan, even though its premium will be above benchmark in 2013. The thinking here is that the beneficiary took specific action to join the plan, and this decision should be respected. This, of course, applies only where their plan is continuing into 2013; if the plan is terminating, CMS will reassign the beneficiary.


And with regard to the reassignment of Low Income Subsidy beneficiaries who are in a Medicare Advantage Plan which is not renewing its Medicare contract or undergoing a service area reduction, CMS will reassign these beneficiaries into a stand-alone drug plan (PDP). There are two exceptions to this: (1) If the beneficiary is in a Private Fee for Service (PFFS) Medicare Advantage Plan that does not have drug coverage (MA-only), and is also in a stand-alone drug plan (PDP), the beneficiary will not be reassigned. (2) If the beneficiary is in an employer sponsored MA-only or MA-PD plan, the beneficiary will not be reassigned.

And just to be clear, these Medicare Advantage Plan reassignments are made only if the Plan not renewing its Medicare contract or undergoing a service area reduction, and NOT because the Plan’s premium for its drug benefit will exceed the Low Income Subsidy benchmark in 2013.

And, as indicated above, these Medicare Advantage Plan beneficiaries who are reassigned will be put into a stand-alone drug plan (PDP) and Original (fee-for-service) Medicare. If they wish, they may enroll in a Medicare Advantage Plan with drug coverage (MA-PD). (If they do this, of course, their reassignment to a stand-alone plan is voided.) Or they may they enroll in a Medicare Advantage only Plan (MA-only) without drug coverage; if they do so, they will remain in the stand-alone drug plan (PDP) they were reassigned to, unless they choose a different stand-alone plan.


Notices:  Both Plans and CMS have a role in notifying Low Income Subsidy beneficiaries affected by the reassignment process. But for right now, the end of September and the beginning of October, notices will go out from Plans that are not renewing their contracts with CMS or which (in the case of Medicare Advantage Plans) are reducing their service area. In addition, for those that are staying, they will be sending out the Annual Notice of Coverage, and, as appropriate, warning Low Income Subsidy beneficiaries that their premium will exceed the benchmark in 2013. And late in October CMS will begin sending out more specific notices to affected beneficiaries, but I will blog about that in a week or two.