What on Earth is the Donut Hole? A Brief Explanation of Medicare Part D and the “Donut Hole”

Today, we are hoping to provide answers to some of your questions about the Donut Hole! Tell us about your experiences. We would love to hear from you.

 1.    What is the donut hole? To answer that question, we first need to understand Medicare and Part D.

According to Jonathan Blum, Deputy Administrator and Director for the Center of Medicare at the Centers for Medicare and Medicaid Services, Medicare is the federal health insurance program for people 65 or older, people under 65 with certain disabilities, and people with End-Stage Renal Disease (permanent kidney failure).  People with Medicare have the option of paying a monthly premium for outpatient prescription drug coverage. This prescription drug coverage is called Medicare Part D.

Basic Medicare Part D coverage works like this:

  • You pay out-of-pocket for monthly Part D premiums all year.
  • You pay 100% of your drug costs until you reach the $310.00 deductible amount.
  • After reaching the deductible, you pay 25% of the cost of your drugs, while the Part D plan pays the rest, until the total you and your plan spend on your drugs reaches $2970.00.
  • Once you reach this limit, you have hit the coverage gap referred to as the “donut hole,” and you are now responsible for the full cost of your drugs until the total you have spent for your drugs reaches the yearly out-of-pocket spending limit of $4,550.
  • After this yearly spending limit, you are only responsible for a small amount of the cost, usually 5% of the cost of your drugs.

2.    What is the structure, e.g., cut-offs, coverage amounts and patient payment percentages?

03.13The “donut hole” refers to a gap in prescription drug coverage under Medicare Part D. In, 2013, once you reach $2,970 in prescription drug costs (which include both your share of covered drugs and the amount paid by your insurance), you will be in the coverage gap. In 2013, you will get a 50% discount on brand-name drugs and a 14% discount on generic prescription drugs while you are in the coverage gap. When your total out-of-pocket costs reach $4,750, you qualify for “catastrophic” coverage. At that point, you are responsible for only 5% of your prescription drug costs for the remainder of the year.

If you receive “Extra Help,” a Medicare program to help people with limited income and resources pay Medicare prescription drug costs, you do not have a coverage gap; therefore, the discount does not apply.

Individuals identified as “dual eligible” by CMS are not subject to the donut hole, as their prescription coverage is fully subsidized.

 

3.    What will happen to the donut hole under the ACA?

  • With the passage of the Patient Protection and Affordable Care Act of 2010, people who fall within the donut hole will receive a $250 rebate within three months of reaching the coverage gap to help with payments. The United States Health and Human Services began mailing rebate checks in 2010.
  • Starting in 2013, you will pay less and less for your brand-name Part D prescription drugs in the donut hole.
  • By 2020, the coverage gap will be closed, meaning there will be no more “donut hole” and you will only pay 25% of the costs of your drugs until you reach the yearly out-of-pocket spending limit.
  • Throughout this time, you will get continuous Medicare Part D coverage for your prescription drugs as long as you are on a prescription drug plan.
  • The donut hole is somewhat of a moving target, with people moving in and out of it at different times. We could not find statistics on numbers of people.

 

4.    How do I get out of the donut hole?

  • In 2013, you get out of the coverage gap when you have paid $4,750 out-of-pocket for covered drugs since the start of the year. When you reach this out-of-pocket limit, you get catastrophic coverage. The costs that help you reach catastrophic coverage include what you spent on drugs while in the donut hole and most of the discount on brand-name drugs you received in the coverage gap. If someone else pays for your drugs on your behalf, this will also count toward getting you out of the coverage gap. This includes drug costs paid for you by family members, most charities, State Pharmaceutical Assistance Programs, AIDS Drug Assistance Programs and the Indian Health Service. You continue to pay your drug plan’s monthly premium during the gap, but the premium does not count toward the $4,750 out-of-pocket limit. The amount your drug plan paid for your drugs in your initial coverage period also does not count.
  • When you reach catastrophic coverage, you pay either a 5% coinsurance for covered drugs or a copay of $2.65 for covered generic drugs and $6.60 for covered brand-name drugs, whichever is greater.
  • Your Medicare drug plan should keep track of how much money you have spent out-of-pocket on your covered prescription drugs and which coverage period you are in. This information should be printed on your monthly statements. To make sure this information is correct, keep your receipts from the pharmacy.

 

5.    Are there health implications to having been in the hole?

  • Today’s Seniors Network reports that “ this (donut hole) directly punishes middle class retirees and disabled people who have worked their entire lives and don’t qualify for special poverty assistance, yet still need to live on meager fixed incomes. The median per capita income for retirees is $14,664. Many individuals who hit the donut hole are forced to choose between food and medications.
  • It as been argued that the donut hole actually costs taxpayers more money, as those without coverage report worsening health and an increase in emergency hospital visits, which are covered by traditional Medicare.
  • Tragically, mortality rates have increased by nearly 25% where prescription drug coverage has been capped, such as with the donut hole.

 

6.    What is true out-of-pocket expense?

  • Money that you paid for covered drugs. This includes your copays and drugs you paid for to meet your deductible. It also includes most of the amount (the 50% discount) that the drug manufacturer pays for brand name drugs while you are in the coverage gap.
  • The premium for your drug plans (Medicare Prescription Drug Plan or Medicare Advantage Prescription Drug plan).
  • Drugs you bought that are not on your plan’s drug list (formulary).  Note that if you and your doctor get your plan to approve a drug not on the plan’s drug list, then the costs for that drug do count toward your share of the costs and catastrophic coverage.
  • The discounts during the coverage gap that are paid by the plan, meaning the 21% discount on generics and the 2.5% discount on brand-name drugs.
  • Costs that third parties — such as employers and union insurance plans – paid for you.
  • Drugs you bought that Medicare does not cover (See Drugs Excluded by Law for list)
  • Drugs you bought from a pharmacy that was not in your plan’s network.
  • Over-the-counter drugs.

 

7.    What happens if a participant goes outside their program? What happens if a person decides against buying Part D coverage?

 

Why do kids have unfilled prescriptions?

You take your sick child to the doctor. An exam is done, a diagnosis made, a prescription written, and instructions given to the parent. The next step: a trip to the pharmacy to have the prescription filled so the child can start the medicine as soon as possible. Right? Why, then, did a recent study reveal that up to 25% of children’s prescriptions remain unfilled?

02.27Investigators are currently examining whether electronic prescriptions are filled more often (because the patient does not have the opportunity to lose or misplace it), or if, in fact a written prescription serves as a tangible reminder to go to the pharmacy to get the prescription filled.

Other researchers are looking at the rate of prescriptions being filled as a result of a well-child visit versus that of a sick-child visit. Some early findings are showing that prescriptions given at sick-child visits are filled more often than those given at well-child visits.

For the uninsured and underinsured, the costs of prescription medications can be daunting. Even for those who have health insurance, co-pays and deductibles mean that many still struggle to afford the costs of their medications. Yet not taking medication as prescribed can also lead to emergency room visits, hospitalizations and other medical interventions that are even more costly.

Safety net resources may be available for those who are unable to afford the costs of their medications. In a future blog entry, we will introduce those to our readers.

To Vaccinate, Or Not?

The development of vaccines to protect against potentially killer diseases likes polio, measles and pertussis (whooping cough) has been widely hailed as one of the crowning achievements of medicine in the 20th century.  As the table below shows, the incidence of these, and other diseases, decreased by between 95-100% once vaccines were given. Many of us can likely remember hearing stories of family members who died from these diseases, or who were otherwise seriously and permanently affected from having suffered from these diseases. But are we taking this standard of care for granted?

According to a recent study reported by Reuters, “Nearly half of babies and toddlers in the United States aren’t getting recommended vaccines on time – and if enough skip vaccines, whole schools or communities could be vulnerable to diseases such as whooping cough and measles.”vaccine

We are seeing the effects of “under-vaccination” already as outbreaks of pertussis (whooping cough) are becoming increasingly common. Medical researchers have discovered that boosters are necessary to keep immunity at proper levels for adults, especially pregnant women. The Centers for Disease Control and Prevention website is an excellent resource that provides guidelines for infants, children and adults. Evidence-based, scientific studies have proven the efficacy and safety of these vaccines, and there have been no studies to date that reveal vaccines to cause any harm. Still, some parents appear to believe that their children are better off without them, and one study revealed that “one in eight children went under-vaccinated due to parents choices,” (Reuters).

What do you think? Do you vaccinate your children? We would love to hear your views on this important subject.

Your Good Health: Medication Adherence

Last month, many of us made New Year’s resolutions and we were being deluged with advice about how to eat sensibly, how to exercise our way to fitness, and how to develop and keep healthy habits. But let’s get down to basics: how well do you follow your doctor’s advice?

Doctors will be increasingly held accountable for your overall health and wellness, and your progress towards sustained good health, under the Affordable Care Act (ACA). The ACA aims to increase the quality of care given and reduce the costs, thereby ensuring that the right care is given in the right place at the right time. More care has not proven to be better care, and reducing unnecessary and expensive screens and tests will go a long way to reducing health care costs.

But patients have a responsibility too – and that is to listen to your physician and follow their recommendations regarding nutrition, exercise and taking your medications as prescribed. “Medication adherence” or “medication compliance” are terms used to describe what patients do once they receive a prescription from their provider, including filling, and then re-filling when indicated, taking the prescribed dose in the prescribed manner for the prescribed duration, and promptly reporting any symptoms or side effects to their provider.

02.20Adult Meducation is a good resource on medication adherence. It maintains “Medications are arguably the single most important healthcare technology to prevent illness, disability, and death in the older population. Of all age groups, older persons with chronic diseases and conditions benefit the most from taking medications, and risk the most from failing to taken them properly.” Consequences of nonadherence could be serious and lead to hospital admissions, falls, and preventable deaths.

Why don’t some people comply with their prescribed medications? Some cannot afford them. Some may be too confused to remember to take them. Some may feel they are not working and discontinue them. Fierce Healthcare reports that medication adherence improves with better doctor-patient communication.  The patient-physician relationship is the single best predictor for medication compliance. Case management, education, decision aids, and reminder systems are also important factors.

One step many patients don’t take is discussing their medication regime with their physician. Not just the drugs taken, but how and when they are taken. For example, if one medicine is to be taken four times a days and another three times a day, is there a way to take two pills three times a day and the fourth pill once. Or perhaps a dosage change in the four-times-a-day pill would result in taking it only three times a day?

Another issue is that certain pills must be taken on an empty stomach while others should be taken with food. If a morning pill must be taken one hour before eating, then breakfast has to be delayed. Add in a pill that has to be taken one hour after eating and the schedule gets very complicated.

Patients should make their doctors aware of all the medicines they are taking and when they take them. Let the doctors know of issues encountered and ask if the schedule can be simplified.  As always clarity and communication with your doctor is key.

What Does “Off-Label” Mean?

We often hear about drugs being prescribed “off-label.” Many patients have questions about what this means. Is it safe? Is it legal? How can we know that off-label use will help us get better?

Off-label use is the practice of prescribing pharmaceuticals for an unapproved indication, age group, dose or form of administration. We will explain more about this shortly.

But first, let’s look at how drugs are approved for use in our country.

In the U.S., the Food and Drug Administration Center for Drug Evaluation and Research review’s a company’s New Drug Application for data from clinical trials to see if the results support the drug for a specific use or indication.

pillbottleIf the drug is found to be safe and effective, it can be marketed for the specific condition for which it was approved by the FDA.  Until recently, however, it was against FDA regulations for pharmaceutical companies or their representatives to market a drug for any conditions for which the FDA hadn’t approved.  A recent federal appeals court decision now allows physicians and other healthcare providers to prescribe the medication for uses other than the specific FDA-approved indication.

That difference is important because it begs the question: Is there science behind off-label use? That is, why would a provider prescribe a medication for a different use? Often, there is anecdotal evidence that a medication turns out to be useful for a different condition.  Over time, physicians, and providers, through their own experiences, and those of their colleagues, may feel an off label use would be beneficial to their patients in certain circumstances.

Some examples of off-label use include:

  • The use of tricyclic antidepressants to treat neuropathic pain;
  • The use of bupropion, brand name Wellbutrin, as a smoking cessation drug.

The recent court ruling may change this landscape and allow off label promotion under the Freedom of Speech provision.  Will we now see drugs marketed for their off-label use?  What about Patient Assistance Programs – will patients be able to apply for an off-label diagnosis?  We will keep you posted!