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Managing Medicare's Costs

Five ways to save money in Medicare prescription drug plans (2 of 2)

Crestor is a statin drug that lowers the risk of having a heart attack or stroke. It significantly reduces low-density lipoprotein (LDL), sometimes called the “bad cholesterol” because at high levels it can be a predictor of heart attacks and strokes. Crestor is also effective in lowering the blood’s triglyceride levels, another risk factor for heart disease. Not surprisingly, with its patent set to expire next year the manufacturer, AstraZeneca, is sharply hiking the price of Crestor.

To take a specific example, a senior citizen who lives in Des Moines and who takes only one drug — a 10 mg Crestor tablet daily — will see her costs jump by 23% next year if she uses mail-order refills, going from $532 in 2015 to $658 in 2016. Those costs include her monthly premiums and co-payments. If she gets her refills at a retail pharmacy, her costs will increase by 27%, from $576 this year to $732 next year. Those costs are for the Silverscript Choice plan, which in the Des Moines area is the least expensive Medicare prescription drug plan for Crestor in 2015 and will be again in 2016.

There is nothing the woman can do to lower her drug costs except possibly to switch from Crestor to a generic, which her physician might say is a potentially risky move. She justifiably believes that she is managing her prescription drug costs wisely. In both 2015 and 2016, she will be in the most economical plan for the one drug she takes.

Moreover, next year her $24 monthly premium will be lower than the $26.10 premium she pays this year. Yet even though she takes only one drug and it is the same one she took last year, her prescription drug costs will rise either 23% or 27%, depending on the refill schedule she chooses.

Crestor is not an isolated example of how quickly costs are rising for certain drugs. Last year the AARP Public Policy Institute reported that in 2013 the retail prices for more than 200 popular brand-name drugs increased by 12.9% in one year, which was more than eight times faster than consumer inflation grew in the same period.

And while much less expensive than brand-name drugs, generic drugs have also seen their costs jump. Earlier this year an article in Forbes magazine described a study that found that 222 generic drug groups (out of 4421 groups in the research sample) had price increases of 100% or more in a 12-month period. For all drugs, brand-name and generic, the average increase in costs was in 2014 was 12.6%, according to study by Medicare actuaries published in Health Affairs.

If you are one of the 26 million people enrolled in a Medicare prescription drug plan, also called a Part D stand-alone plan, your best strategy is to re-examine your drug coverage every year during annual open enrollment. Plan prices can vary greatly from one year to the next, and the risk of doing nothing is that over a several-year period you may pay thousands of dollars more than you need do. If you are computer savvy and want to do your own drug plan search, you can follow the step-by-step instructions here. Or you can contact one of the Medicare counseling agencies listed in last month’s post.

Whether you do your own search for the lowest-cost plan using Medicare’s web site or ask an agency to do it for you, there are five ways you may be able to save money even after you’ve identified the least expensive plan for the drugs that you take.

1) Compare mail-order and retail costs. In most stand-alone plans there is a cost difference between getting your refills at a retail pharmacy or by mail-order. Although mail-order refills are usually less costly because drugs are dispensed quarterly instead of monthly, there are cases where retail refills are substantially less expensive. If the difference is only a few dollars, you may not want to go through the hassle of changing your refill schedule and getting new prescriptions from your physician. But if you can save a sizable amount, you may decide to switch.

2) Consider substitute drugs that are less costly. If you take an expensive drug, is there a similar but less costly drug might be just as good? According to surveys, approximately 20% of seniors ask their doctors that question

Besides asking your doctor, another way to look for less expensive but similar drugs is, if you do your own drug plan search, to click on the Lower Your Cost link on a plan’s coverage details page. There you will see if the plan has suggestions for drugs that are similar to the ones you take but less expensive.

Still another way to look for cheaper substitutes is to go to the Consumer Reports Best Buy Drugs website, which reviews the effectiveness of drugs used to treat more than 20 common medical conditions. Based on its analysis of drug studies, Consumer Reports sometimes recommends less expensive drugs that have been shown to be as effective as higher priced ones.

3) If you get retail refills, use one of your plan’s preferred pharmacies. Three out of four Part D plans have pharmacy tiers, and if you are enrolled in plan that has pricing tiers you will save money by using one of its preferred pharmacies. If you are in the Humana-Walmart Rx plan, for instance, you can often reduce your costs by about 20% if you get your refills at a Walmart Pharmacy instead of another pharmacy (in this plan, though, you can save the most by getting mail-order refills).

4) Before enrolling in a Part D plan, be aware of any restrictions it may have on one or more of your drugs. All plans have restrictions on certain drugs, and depending on the drug and type of restriction, a plan may delay your getting a drug or even require you to pay its full cost. If a plan has restrictions on any of the drugs you take, they will be shown in the plan’s coverage information on the Medicare web site.

The two restrictions most likely to affect costs are prior authorization and step therapy. The prior authorization restriction means that your physician may need to justify your use of a specific drug. That could be because the plan wants you to take a less expensive drug. If a plan will not cover one or more of your drugs, you may have to go through an appeals process to have the drug covered. And if you decide to take the more expensive drug even though it’s not covered, you may pay the drug’s full price or the cost difference between what you would pay for the less expensive and the more expensive drug.

The step-therapy restriction has a similar intent. The plan wants you to try a less costly drug as a “first step” before using a more expensive drug. Again, in a few instances you may have to appeal to get the drug you want, and you may also wind up paying more to get the drug you want.

On a positive note, plans usually lift restrictions when your physician goes to bat for you. But if you are considering enrolling in one of two plans that have similar costs for your drugs, you might lean toward the one with fewer restrictions, particularly if the restrictions apply to expensive drugs.

5) Consider a plan’s quality ratings. Medicare rates each Part D plan’s overall quality on a scale from one star (lowest) to five stars (highest). The scores are based partly on customer feedback, so that a high score indicates that people enrolled in that plan are satisfied. You might use the ratings as a tie-breaker between two plans whose costs are roughly the same. Also, avoid plans with scores lower than three stars. Medicare suspends plans that have scores lower than three stars for three successive years. ◊◊

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