Choosing a Medicare Prescription Drug (Part D) plan is a tricky business.

Most beneficiaries go for the cheapest monthly premium, but this can be a big mistake, especially for those with unusual or expensive medications.  

Over the years, the marketers of Part D plans have made them increasingly complex, adding tiers of varying prices and using "utilization management techniques," which can make patients and doctors jump through veritable hoops to get a prescription filled.

The federal government says that the average premium for a Part D plan is a modest $30 per month. But the charges for many of the most popular plans for 2013 “will be considerably higher,” according to a detailed study by AARP’s Public Policy Institute. People enrolled in these plans “will face a wide range of out-of-pocket costs,” the study sateys.

Take the five biggest plans: the monthly premiums range from a low of $18.50 for Humana-Wal-Mart to a high of $54.20 for Express Scripts-Medicare Value.

And among the specific drugs that these plans cover, there are huge price variations. For example, Advair-Diskus, used to treat chronic obstructive pulmonary disease and asthma, carries a monthly out-of-pocket cost ranging from $28 at Cigna Medicare RX Plan One to $103.18 at Silver Script Basic, AARP reported. Enbrel, for treating rheumatoid arthritis, has a monthly cost ranging from $260.12 at Cigna Medicare RX Plan One to $355.05 at First Health Part D-Value Plus. AARP reviewed the prices at the plans with the largest enrollments.

Although there are dozens of competitors offering hundreds of variations in plans, in reality the market is highly concentrated. Plans move aggressively to get market share, often by offering low prices. Once they achieve big numbers, they can continue as major competitors because customers aren’t likely to switch.

There are a total of 35.7 million people enrolled in Part D plans, but there has been a recent consolidation as companies have been combining their various plans as a result of the government urging simplification of the many regional variations that often confuse consumers. A study by consultancy Avalere Health shows how heavily the market is concentrated: the leaders are AARP Medicare RX Preferred, with 4, 011,357 enrollees; Silver Script Basic, 3,452,439; and Humana, with two entries, Humana-Walmart Preferred, 1,511,850, and Humana Enhanced, 1,374,479.

“While the consolidation seen in recent years has certainly strengthened select plans' market share, there are other important factors, such as low-priced plans,” according to Corey Ford, a manager at Avalere Health. “Humana–Walmart is a prime example. The plan entered the market in 2011 with the nation's lowest premium of $14.80, and the plan has attracted numerous lives (beneficiaries) since its launch. Humana was also very savvy in marketing that plan through its television campaign. 

UnitedHealth has also been very successful in marketing their Part D plans, and with the AARP Saver Plus plan (the lowest premium in 2013), the sponsor stands to bolster its already strong position,” Ford added.  United handles the AARP plans.

The message from the data is that it pays to shop around. Seven of the top 10 plans studied by Avalere have price increases of 10 percent or more for 2013.

But comparison shopping can be daunting for consumers, especially older Medicare beneficiaries who may not have the computer skills or the patience to work through Medicare’s online plan finder.

“You need to have patience, stamina and educated helpers to drill down to the finer points of this benefit,” said N. Lee Rucker, a senior strategic policy advisor at AARP and co-author, with Leigh Purvis, of the study of Part D plans. Because there are so many confusing variables, and the mechanism of choosing a plan is so complex, “it is not a healthy marketplace,” Purvis said.  Once people have selected a plan, she said, “very few will leave.”

This assertion is supported by a recent study in Health Affairs, titled, “The Vast Majority Of Medicare Part D Beneficiaries Still Don’t Choose The Cheapest Plans That Meet Their Medication Needs.”

Only 5 percent of people selected the plan that was the cheapest for the assortment of medicines they were taking.

Compounding the issues is that there seems to be no financial relief in sight. Brand-name medications are increasing in price significantly faster than the general rate of inflation.

“The latest Rx Price Watch report finds that the cumulative change in retail prices for a combined set of prescription drugs widely used by Medicare beneficiaries was almost double the rate of inflation between 2005 and 2009,” according to another AARP report.” For a consumer who takes a prescription drug on a chronic basis, this translates into an increase in the annual cost of therapy of more than $1,000 over the same time period. These findings are attributable entirely to drug-price growth among brand and specialty drugs, which more than offset substantial price decreases among generic drugs.”

The Affordable Care Act is taking steps to ease the burden on consumers by gradually closing the donut hole, the gap in coverage for beneficiaries with expensive drug bills.

People “with Medicare who reach the coverage gap will pay 86 percent of the cost in 2012,” according to the Center for Medicare & Medicaid Services. “Part D coverage will increase each year and the amount people pay will decrease each year until 2020, when the amount eligible people pay for these drugs will be 25 percent of the cost.”

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