Strategies to Avoid Medicare

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Strategies to Avoid Medicares Big Hole

• By STEPHANIE SAUL
• Published November 24, 2007

http//www.nytimes.com/2007/11/24/health/policy/24
donut.html
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Medicare Doughnut Hole

• The Medicare doughnut hole is the federal
  provision that older Americans love to hate.
• And that is not expected to change next year,
  when the doughnut hole the nickname for a big
  financial gap in each persons Medicare
  prescription drug coverage gets slightly
  larger. If the past is a guide, many people will
  struggle to secure a full years supply of the
  drugs they need.
• But despite the arrangements unpopularity with
  older consumers, some experts see a positive
  public policy trend when they peer into the
  doughnut hole. Because it potentially forces a
  Medicare enrollee to pay more than 3,000 from
  his or her own pocket during the gap period, the
  hole is helping curb growth in the nations drug
  spending by pushing people toward low-cost
  generic drugs.
• And because the cheaper generics generally work
  just as well, patients are incorporating them
  into their permanent drug regimen, according to
  Dr. Tim Anderson, a pharmaceuticals analyst for
  Sanford C. Bernstein Company, who is also a
  physician.

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How it Works
Initial Coverage Limit - Coverage Gap (Donut
Hole) begins at this point. (The Beneficiary
pays 100 of their prescription costs up to the
Out-of-Pocket Threshold)
Deductible - (after the Deductible is met,
Beneficiary pays 25 of covered costs up to
total prescription costs meeting the Initial
Coverage Limit.
Doughnut Hole
2008 Parameters
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Generics?

• It may not be a message that brand-name drug
  makers want to hear. But with the Medicare Part D
  drug program enrollment period now under way,
  through Dec. 31, analysts predict millions of
  older Americans will study generic drug prices
  and options as they select an insurance plan.
  Some economists say that many Medicare enrollees,
  through carefully planned use of generics, can
  avoid reaching the doughnut hole altogether.
• When the Medicare Part D program began in January
  2006, makers of name-brand drugs considered it a
  welcome stimulus to overall use of prescription
  drugs. The industry knew the doughnut hole might
  steer some patients toward generic drugs, but not
  necessarily so soon.
• I dont think they anticipated how quickly this
  kind of event could shift patients toward
  utilizing generics, said Peter C. Demogenes, a
  senior director of the research firm Wolters
  Kluwer.

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How it got this way

• Congress carved the doughnut hole into the
  Medicare prescription drug plan as a way to limit
  the federal outlay. But architects of the plan
  made sure some costs were covered for all
  Medicare beneficiaries upfront, while also seeing
  to it that the sickest would get help with
  catastrophic drug costs on the far side of the
  doughnut hole. Once a beneficiary has made it
  through the coverage gap in any given year in
  2008, after the total cost of drugs has reached
  5,726 prescriptions are generally covered at
  95 percent.
• About 4.2 million people reached the gap last
  year, according to a Wolters Kluwer study, and
  many of them switched to generics as a way to
  keep their out-of-pocket costs low. Others
  started using generic drugs even before they
  reached the doughnut hole to avoid the higher
  co-payments their policies charged for brand-name
  drugs.
• In 2006, an estimated 59.6 percent of the Part D
  prescriptions were filled by generic drugs. By
  the first quarter of 2007, the most recent period
  for which data are available, the generic rate in
  Medicare had edged higher, to 61.5 percent,
  according to Medicare figures.

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The Economics
Switch to Generics