Prescription Drugs Don’t Come Cheap

Drug companies are at it again… Not only do they ruthlessly compete for large percentages of the prescription drug market, but now that ‘top-selling’ drug patents are expiring, they are cleverly finding ways to keep some consumers coming back for more. Quick question, “How many of you out there are bargain shoppers?” I would hope all, why waste money when you can get it for cheaper, right? Ok, “How many of you out there use coupons?” I can see thousands of ladies raising their hands right now with coupon clippings in hand, like ” Ooooh, I do, and I’m really good too. Saved myself $34 and some change last time out!” God I love the savvy consumer. Now, try putting those two concepts together and this is what you get…

As current economies, both the US and worldwide, continue to struggle, and health care costs steadily increasing, the price of doing business for prescription drug companies like Pfizer and the like is becoming too much to handle. Research and development for future drugs has become a more scrutinized process by the FDA, costing drug companies billions of dollars before getting final approval. In order to recoup this initial investment, the government has allowed Drug Companies exclusive rights to the market for 10-15 years before a generic equivalent can even be offered as a cost-saving solution to patients. So, after billions in profit and the drug companies’ patent is about to expire, one would think the smaller companies putting out generics can now get a piece of the pie, right? Wrong. Large Rx drug companies aren’t going to just ‘hand over’ a large part of the market like that without kicking and screaming. So, what have they done to offset this? You guessed it! Coupons.

Drug companies are taking a strategic and tactical but simplistic approach to offsetting the loss of billions of dollars in revenue to generic drug makers by offering existing or prospective patients coupons for discounts on monthly brand name prescriptions. I mean think about it, what better way to maintain a small percentage of your clientele base than to offer them incentive to stick around? Times are tough man; we have to save wherever we can, but (and drug companies love this…) we are also creatures of habit. We trust who we trust, who we know, even if that means spending a few extra dollars. This is exactly what large Rx drug companies are banking on. When the patent expires on brand name drugs, generic equivalents flood the market and can be offered for as low as 90% below the cost of brand names. At this point, most consumers usually switch. A massive drop-off of consumer brand loyalty costs drug makers billions, unless they can ‘slow the bleeding.’ In this case, drug companies that offer coupons are effectively killing two birds with one stone. Here’s how…. By offering coupons, consumers are happy to maintain their brand loyalty without having to pay as much as before. And most importantly, they can continue to use a drug that they know works for them versus taking the chance with an unproven generic and its side effects. This is great news!… except for one thing…. “The coupons only work with private insurance, though. Patients with Medicare or other government health insurance are barred from using them.”

Hold on a sec. So, if I understand this correctly, Rx drug companies are only going to incentivize people with private insurance? Isn’t that discriminatory? Yes. And there’s nothing you can do about it. If you are a Medicare beneficiary or qualify for government health insurance, like Medicaid, you do not get to participate in the coupon party. That stinks!!! Medicare/Medicaid beneficiaries who live off of Social Security/Supplemental Security Income (SSI), respectively, are expected to continue to pay the rising costs of Rx drugs or they are forced to switch to generics. Has anyone considered the ramifications of this?! What if seniors or these low-incomed individuals end up worsening their health condition due to the side effects of switching to generics? What happens then? Are we to just look the other way, and tell them to “stick with what works?” Oh, and by the way, in order to safely monitor your condition, you will need to continue to spend hundreds of dollars a year, even though we know you cannot afford it. So much for keeping the consumer’s best interests at heart. Where’s the compassion? Im sorry, I forgot that we were talking about Rx drug companies here. It’s a business and only that. As long as their bottom line doesn’t fall too far too fast that is all they are concerned with.

Not surprisingly, commercial insurers don’t like the coupons, because their share of the cost for a brand-name drug is much higher than for a generic pill. Virtually all prescription plans automatically switch patients to a new generic drug [once available] the next time they refill their prescription. The [Rx] plans also move the drug from the copayment level [usually Tier 2] for most brand-name drugs, usually around $25, to their highest copayment level [usually Tier 3], often $50 to $75 per prescription. [This is to force patients to accept the move to generic drugs because Tier 3 drug cost-sharing for insurance company is more expensive than the cost-sharing for a generic; this method is preferred by the insurance company, regardless of the effect, whether financial or physical, on the beneficiary.] The coupons throw a wrench into insurers’ strategy of getting as many patients as possible to take generic drugs, which account for about 80 percent of all prescriptions filled in the U.S. [To combat this, drug makers are] also signing unprecedented deals with dozens of insurers that lower their (the insurer’s) portion of the cost of [a brand drug] to what a generic would cost them — [as long as] they covered only brand [name ‘X’] for [x amount of time]. That meant both patients and insurers had a big financial incentive to stick with [the brand name drug] for a while.

Drug makers use coupons to fight generics, by Associated Press Aug, 20,2012

So, where do we go from here? I don’t know, it’s tough to say. For right now, it is what it is. Medicare/Medicaid beneficiaries are excluded from the rewards of brand loyalty. I apologize that I unfortunately could not give you any definitive answers as to how to approach or circumnavigate this issue. I hope by asking questions about these incentive ‘kick-backs’ I might be able to raise eyebrows for someone, somewhere, who in a place of power or authority can say ” What are we doing, are we really allowing this to happen?” By generating discussion we can bring to light our concerns. Until then, only time will tell.

EOBs can be SOBs…

Trudy Lieberman, a journalist for more than 40 years, is an adjunct associate professor of public health at Hunter College in New York City. She had a long career at Consumer Reports specializing in insurance, health care, health care financing and long-term care. She is a longtime contributor to the Columbia Journalism Review and blogs for its website, CJR.org, about media coverage of health care, Social Security and retirement. As a William Ziff Fellow at the Center for Advancing Health, she contributes regularly to the Prepared Patient Forum blog…more.

Prepared Patient Forum

Most importantly however, Trudy Lieberman is a senior, frustrated with Medicare, insurance companies and their efforts to simplify the understanding of coordinating care. In her article, More Confusion about those Insurance EOBs– This Time from Medicare it is quite clear that she has a hard time understanding how Medicare and insurance companies coordinate benefits…..and look what she did for a living! That should be a very powerful statement about how difficult it must be for seniors. Truth be told it seems ridiculous! If Ms. Lieberman is having difficulty than what chance does the average senior have? Why is it so difficult for Medicare and insurance providers to make the explanation of benefits,or EOBs comprehendible?

In case you’re new to Managed Care Consultants, here is a little information about us. We are a group of qualified health care professionals that take a lot of pride in educating seniors about Medicare and how they coordinate benefits with their current health plan. We host seminars, consultations, public speaking events and the like at retirement communities, senior centers and pretty much wherever seniors congregate. During my time working as a quality development specialist at a health insurance consulting firm I came up with the idea of starting my own educational resource guide for seniors when I began to notice a disturbing trend – More seniors, than I realized, were knowingly enrolling into health care plans due to lower premiums without understanding how benefits were coordinated with Medicare or what they would be financially responsible for. Health insurance agents didn’t take enough time to carefully explain what seniors were signing up for and why, they would simply send out the EOBs and wipe their hands clean. Insurance companies and agents are more concerned with enrolling a new member than they are in making sure the plan selected is in the best interests of the individual. This is a very big problem, not to mention extremely careless. Here’s a thought for you though….what other choice do seniors have? Many rely on income from Social Security which can be very limited and often puts them between a rock and a hard place when deciding between paying bills and buying food or continuing to pay rising health care premiums. This doesn’t leave them with much of an option. So they mull over countless pages of information regarding available health care plans in their area, and they try and compare them to the plans they currently have. They struggle to understand how they are similar, but more importantly how they’re different. Now, of course, if the premium is lower it looks more attractive, but why? Is there something that they are missing? Truth be told, yes. Well then what is it? This is what Managed Care Consultants strives to offer to the senior community. Knowledge and understanding.

As alluded to by Trudy in her article (which, if you haven’t please read) Medicare and insurance companies are a pain to deal with. When claims forms are delivered to the member, coordination between the insurance provider and Medicare is almost non-existant. There are separate forms for each which makes understanding who paid what more difficult. Whenever you as a consumer reach out to clarify this issue they either put you on hold, answer your question in a way that is still confusing, transfer you to another agent or refer you to your insurance company to answer your questions. This is time consuming and extremely annoying. All consumers want is clarification for a product they are paying for and they cannot even get that without jumping through hoops! Where is the customer service?!!! It’s no wonder seniors are fed up and angry. I don’t blame them, they have every right to be. They don’t have the time or the patience to deal with this….they are retired. They should be spending their time with grand children, their loved ones, traveling or enjoying life at this point in their lives. Instead, they are compounded with confusing claims statements about their health insurance plan and Medicare (which is a social insurance protection plan established for them!) Oh, by the way, did I mention that this was an EOB that was delivered after the ACA and Medicare made extensive efforts to simplify the wording? And yes, I did hold that piece of information on purpose. Here’s why….

Even after CMS and Medicare have made the effort to reach out to insurance companies in hopes of getting them to simplify the terminology used to explain benefit structure and financial responsibility in health care plans, their efforts have bore little fruit. It’s still a hassle to deal with. Most seniors wish they don’t have to, however, when living on Social Security seniors are pigeon-holed into forecasting their out of pocket expenses for the year regarding their health care. This requires an understanding of coordination of benefits: who pays what and how much. Seniors obviously aren’t getting this understanding from Medicare or their respective insurance company, which begs one to ask ” how do they find out, how do they educate themselves and where?”

I wish there were an easier way, and I will try my best to make it as simple as possible, but the only avenue I see as being effective is to educate yourself or those who manage your health care. As consumers nowadays, we are much more savvy than in the past. We do our homework….but to what degree, ever heard of buyers remorse? With regards to health care, key factors such as premiums, provider accessibility, and your provider’s relationship with the insurance company you are considering should be major determining factors when choosing a plan. This is extremely important because the ACA has allowed Medicare and CMS to monitor and regulate Medicare Fraud Waste and Abuse and in the short term they have saved Medicare beneficiaries billions of dollars. That could have been money out of your pocket. The more aware we as beneficiaries are about our financial responsibilities for senior health plans, the less likely the chance of being taken advantage of. This can only be achieved by educating yourselves about your entitlement rights and what you are responsible for financially. Managed Care Consultants has written a very informative piece titled, “Are You a Part of the Growing Trend?,” that does a fantastic job of highlighting different avenues for seniors to do just that: educate themselves about Medicare and take responsibility in simplifying their health care management.

The economy of this great nation has thrived off of a capitalistic approach to running business for decades, however, at a severe price (as our current economic status has clearly shown). America’s ‘business’ mantra, if you will, was to produce profit at any cost….even at the expense of those driving it. That approach has come back to bite us, you know where!… and unfortunately the ones suffering the most are the very ones who helped navigate this nation’s success and position it as a world power. Now, we can barely afford to care for their health. Pretty sad right? I know. Trying to find a solution to reduce health care costs is going to take time, something our current seniors don’t have too much of. So, in the meantime, to help contain costs and prevent unnecessary submission of claims, what is needed is the motivation to self educate. The more informed we are as consumers, the less likely the chances of being hoodwinked by insurance providers.

The “Benefit Period.”

Benefit Period. What is it exactly? Medicare beneficiaries are aware that it exists but do they actually understand how it works?  From my experience with seniors, most that are enrolled don’t.

Medicare defines the Benefit Period as “ The way thatOriginal Medicare measures your use of hospital and skilled nursing facility (SNF) services.  A benefit period begins the day you’re admitted as an inpatient in a hospital or skilled nursing facility.  The benefit period ends when you haven’t received any inpatient hospital care (or skilled care in a SNF) for 60 days in a row.  If you go into a hospital or skilled nursing facility after one benefit period has ended, a new benefit period begins.  You must pay the inpatient hospital deductible for each benefit period.  There is no limit to the number of benefit periods.”

Confusing?… I know, I agree.  Do not worry though, I will explain further so you understand what your rights and entitlements are.  This is one of the few problems I have with the insurance industry; the use of unclear terminology that is communicated and misunderstood by consumers for whom the product is meant to benefit.  If you do not work in the insurance industry, it becomes foreign language to you.  Unfortunately, that is the point.  The less you understand, the better chances an insurance company has of taking advantage of you.  It is quite heartbreaking and pathetic.  It still frustrates me that insurance companies, not all of them mind you (but most), prey off of the uninformed. Yes, they do provide members with what is called the Summary of Benefits (SOB) but it is comprised of nothing but insurance jargon.  If you don’t comprehend the lingo, then the explanation of benefits that you are paying for become confusing to understand.  (Because of this widespread issue, Medicare has called for the use of general terminology in explaining benefits of the SOB)   This misunderstanding can lead to a variety of problems down the line that can have devastating financial consequences for the beneficiary.

Now, let’s start from the beginning.  Medicare is comprised of two parts, A & B.  Part A covers your hospital (inpatient care), skilled nursing facility (SNF), hospice (a special way of caring for individuals who are terminally ill) and home health care (only covered by Medicare on a limited basis as ordered by your doctor).  Part B covers your Medical, like primary care physicians/specialists, outpatient services, etc. The benefit period only applies to Part A of Medicare.  This is how it works….

Say in January you are hospitalized for a couple of days overnight for a condition; your benefit period doesn’t begin until you are released from the hospital. Now, since you stayed overnight, you would be responsible for Medicare’s Part A deductible of $1152, and all other expenses regarding your stay are paid for by Medicare.  However, this is where things get confusing.  Medicare uses the terminology of ‘benefit period’ to explain hospital stay and what the beneficiary is responsible for financially.  Disregard that.  It only makes things more confusing and you won’t get a clear picture as to what the benefit period is and how it works.  So, that being said… Medicare Part A will cover all costs except for $1152 of your first 60 (consecutive) days in the hospital.  After that, days 61-90 you, the beneficiary are responsible for $289/day and Medicare covers the rest.  Days 91-150 you are responsible for $578/day and Medicare covers the rest. However, be aware that days 91-150 are your lifetime reserve days (60) WHICH YOU ONLY GET ONCE.  THESE DAYS CANNOT BE RESET, UNLIKE THE BENEFIT PERIOD.

So, again, what exactly is the benefit period?  Well, the benefit period is the time (60 days) in which a beneficiary can be released from an overnight stay in the hospital and be re-admitted without having to pay the Part A deductible.  What that means is simply this…. As I stated earlier, for example, you are hospitalized for a few days in January.  You pay your Part A deductible.  When you are released you have 60 days in which for any reason, whether it be the same or different cause for your first hospital stay, if you are admitted you will not be subjected to pay the Part A deductible.  If you go for more than 60 days consecutively (from your initial release) without being admitted overnight, the next hospital stay you have you will need to pay the Part A deductible again.

This unfortunately is where forecasting one’s own medical expenses for the year can be very difficult.  We cannot predict the future, and because of this uncertainty, we need to be fully knowledgeable of what expenses we could incur in an ‘off, or health-wise’ drastic year.   It is quite possible for a beneficiary to pay the Part A deductible 3 times in a year. That’s $3,456.  Have you planned for the worst-case scenario?  If you haven’t, I suggest you take a look at what type of plan you currently have because outside of the deductible, you may have other expenses you need to be aware of.  (There are a few Medicare plans out there that do take care of the deductible for you)  If you have to dip into those allocated funds, how are you going to supplement the other facets of your health care management, like prescription drugs or copayments, etc?