Introduction to Medicare Part D
Before 2006, Medicare covered some medicines given during a hospital stay (Medicare Part A) or a doctor’s office visit (Medicare Part B) (under Medicare Part B). Outpatient prescription medications were not covered by Medicare until January 1, 2006, when the Medicare Part D prescription drug benefit was enacted, as authorized by Congress under the “Medicare Prescription Drug, Improvement, and Modernization Act of 2003.” The “MMA” is the common name for this law.
The Part D prescription medication benefit (commonly known as “Medicare Rx”) assists Medicare beneficiaries with the cost of outpatient prescription drugs.
Retail, mail-order, home infusion, and long-term care pharmacies all sell medications.
Part D is “privatized,” as opposed to Parts A and B, which are handled by Medicare.
In other words, Medicare makes deals with private companies that are allowed to market Part D insurance. Medicare regulates and subsidizes these businesses through one-year, yearly renewed contracts. Beneficiaries must purchase a policy (i.e., enroll in a plan) from one of these firms to receive Part D coverage.
A monthly premium, an annual deductible (often waived by the plans), co-payments and co-insurance for certain prescriptions, a coverage gap known as the “Donut Hole,” and catastrophic coverage if a threshold amount has been met are all charges related to Medicare Part D.Individuals with incomes up to 150 percent of the federal poverty level can receive assistance with Part D premiums, deductibles, and co-pays through the Social Security Administration’s Part D Low Income Subsidy (also known as “LIS” or “Extra Help”).
Plans are permitted to create their formularies within the confines of the law.
Members who require pharmaceuticals that are not on their plan’s formularies can file an appeal.
Every year, plans update their formularies, adding new prescriptions, removing others, and generally increasing drug co-pays and co-insurance. Every year, beneficiaries should review their plan options to ensure that their chosen plan continues to satisfy their financial and medical needs.
Many Part D plan sponsors offer a variety of plans, which may be compared to commercial “good, better, and best” options. Buyers should carefully consider these options, as the “best” (and most expensive) plans may provide little or no additional value for their higher prices.
Medicare laws from 2010 mandated that low-enrollment plans are phased out and duplicative programs are consolidated.
Although the number of plans accessible to beneficiaries has decreased, there are still many to select from, and the differences between them are now more clear to customers.
PART D COVERAGE SOURCES
Part D is not administered by Medicare. It works with private companies that have been approved to sell Medicare Part D insurance. There are two major factors to consider.
Part D coverage comes from the following sources:
• Prescription Drug Plans (PDPs) – these are stand-alone businesses that only sell prescription drug coverage. They don’t cover hospitalization or medical expenses.
Sponsors of PDP plans have a four-digit number that starts with the letter “S.” The sponsor’s many plan options each have their own three-digit suffix identity.  For instance, United HealthCare sponsored the AARP Preferred Plan in 2015. (S5820-002).
• MA-PDs (Medicare Advantage Prescription Drug Plans) – these plans combine hospital, medical, and prescription drug coverage into one package.
Medicare Advantage plans are often known as “Part C” plans. MA-PDs come in a variety of forms, such as HMOs, PPOs, PFFS plans, and SNPs. Plans must include a description of their plan type in their names. Those that want unless they are enrolled in a PFFS that does not offer prescription drug coverage, people who enroll in a Medicare Advantage plan must get their prescription drug coverage from the same plan.
Sponsors of MA-PD plans have a four-digit ID that starts with the letter “H.”
The plan sponsor’s numerous plan options each have a three-digit suffix. Anthem, for example, sponsored the MediBlue HMO Standard Plan in 2015. (H5854-008).
Health Maintenance Organization (HMO)
These plans follow a “gatekeeper” model. Members must choose a primary care physician (PCP) from the plan’s network of providers. Members may not disenroll from the plan if their PCP leaves the network. Members may not see a specialist without a referral from their PCP. Members must use network providers, or the plan will not cover the service. Individuals who belong to an HMO type MA-PD must take their prescription drug coverage through their HMO plan, not a separate PDP
Preferred Provider Organizations (PPO)
Members must choose a primary care physician (PCP) but do not need a referral to see a specialist. They may seek treatment outside the plan’s network of providers but will pay more if they go out of network. Individuals who belong to a PPO type MA-PD must take their prescription drug coverage through their PPO plan, not a separate PDP
Private Fee for Service Plan (PFFS)
Members can go to any provider in the U.S. whose state is licensed, is authorized to provide services under Medicare Part A and Part B, accepts the plan’s terms and conditions of payment, and agrees to treat the member. If the plan has a network of contracted providers, members will usually pay less if they see a contracted provider. Some PFFS plans offer drug coverage, and some do not. Members in PFFS plans that do not offer drug coverage may get their prescription drug coverage through a PDP
Special Needs Plan (SNP)
These plans are only available to the following populations with special needs:
- Dual eligibles (people with Medicare and Medicaid);
- Institutionalized individuals (those living in some form of a medical institution for 90 days or more);
- People with chronic conditions (e.g., diabetes, cardiovascular disease). SNPs are required to offer case management services targeted to their populations’ unique needs. Individuals who belong to an SNP must take their prescription drug coverage through their SNP plan, not a separate PDP.
NOTE: Prescription drug coverage is not available in all Medicare Advantage plans. Some just cover hospital and medical expenses, but not prescription drugs. These are “MA” plans (rather than “MA-PD”), as opposed to “MA-PD” plans. MA plans are only for persons who receive prescription medication coverage from another source, like the VA (VA). These plan members are not eligible to enroll in a PDP for prescription medication coverage. There is another source of Part D coverage besides PDPs, MA-PDs, and SNPs.
Part D Retiree Plans Sponsored by an Employer or a Union – Employers and unions can use their MA-PD plans to provide Part D coverage to their Medicare-eligible employees and retirees. These programs are not open to the general public and are only available to qualifying employees and retirees. A four-digit identifier beginning with the letter “E” or a three-digit suffix “800 – series” number may be used for these programs. All of the same requirements apply to employer-sponsored Part D plans as they do to commercial Part D plans. Members of these plans, like members of commercial plans, enjoy the same rights.
ELIGIBILITY FOR PART D
A Part D plan is available to everyone who has Medicare. A person must have either Part A or Part B to enroll in a PDP. An individual must have both Part A and Part B to enroll in an MA-PD.
Enrollees must live in the service region of their plan (have a permanent home there).
A Post Office box, the location of a shelter or clinic, or the address where the individual receives mail such as Social Security payments may be used as a permanent residence for homeless people.
MA-PDs have specified regions, sometimes by state, sometimes by counties within states (42 U.S.C. 1395w-111(a)). PDPs are usually nationwide plans. As a result, MA-PDs may not be suitable for persons who travel frequently a large number of people who have summer and winter homes in different parts of the country. NOTE: Some MA-PDs have “passport” plans that allow members to receive benefits outside of their regular service zones.
Individuals who live outside the United States* are not eligible to enlist, but they may do so whenever they return.
Part D is not available to those who are incarcerated, but it is available to those who are released from prison. People with end-stage renal disease (ESRD) could not participate in an MA-PD before 2021. (However, if they develop ESRD while enrolled in the plan, they will not be dropped.) People with ESRD will be able to enroll in Medicare Advantage plans (including MA-PDs) during the yearly Open Enrollment Period starting in 2021.
There are no further limits or qualifications for Part D eligibility.