As a Medicare beneficiary, you probably know that staying on top of the latest changes to Medicare can be overwhelming and frustrating. Packed with government jargon and complicated terms, the annual notice published by the Centers for Medicare & Medicaid Studies describes the key changes to the Medicare program each year. For 2015, the CMS also has to implement changes primarily to Medicare Part D in conjunction with the terms set forth by the new Affordable Care Act. You can read more about Obamacare’s impact on Medicare by checking out one of our articles on that subject. The following article gives you a better idea of the changes you can expect to see as a Medicare beneficiary in 2015.
Changes to Medicare in 2015
Aside from budget changes and a few select other updates, most of the changes to Medicare affect Part D prescription drug coverage and its premiums. The CMS also offered some proposed changes to Medicare in its annual notice, but many of these proposed changes were tabled for future discussions and will not be seen in 2015. The following section offers a breakdown of the significant changes affecting Medicare beneficiaries next year. As open enrollment for Part D approaches for 2015, you should note the prescription drug plan changes in particular. We’ll give you an overview of the proposed changes at the end of this article.
Updates to Medicare Part D
As we mentioned above, the bulk of the changes for 2015 centers on Medicare Part D. One of the biggest goals of the Affordable Care Act is to close the gap on Part D coverage, which is also called the “donut hole.” Below, we’ll discuss how the ACA plans to start closing this gap in 2015 as well as the other important updates to Part D coverage for next year.
Standard Benefit Plan
All Medicare Part D drug plans must adhere to what the CMS calls a “Standard Benefit Plan” each year. These plans outline the minimum coverage requirements for all plans sold under the Part D designation. Providers can deviate from the plan only if they first meet the minimum requirements by covering a standard set of benefits. In 2015, costs will increase. The following provisions are included in the 2015 plan:
- Initial deductibles of $320
- Initial coverage limits of $2,960
- Out-of-pocket spending thresholds of $4,700
- A change in the coverage gap policy as described below
- Cost-sharing cap increases for the Catastrophic Portion of plans
- Increases in the limits on maximum co-pays for low-income beneficiaries with subsidies
You may already be familiar with the concept of the Part D coverage gap or “donut hole.” The coverage limit for 2015 is $2,960 while the out-of-pocket spending threshold is $4,700. Between these two amounts exists a gap into which many beneficiaries fall because they need more medication than their Part D drug plans cover. If you max out on the coverage limit but haven’t reached the spending threshold, then you fall into the gap. Once you’re in the gap, you have to pay full retail price for your prescriptions. Keep in mind that premium costs do not count toward the spending limits.
One of the biggest changes to Medicare for 2015 comes from the Affordable Care Act. The new law wants to close this gap over the next decade, and one of the ways it can achieve its goal is by offering discounts to people who fall into the gap. In 2015, Part D enrollees will get a 55 percent discount on brand name prescriptions while in the gap. For generic drugs, you may still be eligible for discounted premiums.
The coverage gap ends eventually, and once you get out of the hole by reaching the $4,700 out-of-pocket spending limit you receive a discount on the cost of retail drugs. For 2015, the amounts are as follows:
- For generics, you pay $2.65 or five percent of the cost of the covered drug, whichever is greater.
- For brand name drugs, you pay $6.60 or five percent of the cost of the covered drug, whichever is greater.
- Low-income enrollees who qualify for subsidies will pay $2.65 for multi-source generics and preferred drugs as well as $6.60 for all other drugs.
Deductibles and coverage limits refer to the amount that you have to reach before Medicare Part D will pay its portion of drug coverage for your plan. Currently, the standard for co-insurance for Medicare is 25 percent. If you have to pay co-insurance until you reach the initial coverage limit, then you’ll pay 25 percent of the cost of the drugs. Co-payments work differently and depend on your specific plan.
Notification for Medicare Advantage
In the Advance Notice released by the government early in 2014, the CMS outlined its plan to take better control of Medicare Advantage at least in terms of notification and plan implementation. As you know, Medicare Advantage plans are not offered through the government, and this makes it difficult to control when changes take place. Under this new rule, Medicare Advantage Organizations or MAOs would have to notify the CMS when they significantly change their plans. The CMS will leave it up to MAOs to determine what “significant” changes means, but the government also encourages MAOs to use a “conservative approach” in determining their notification strategies.
The new rule should help Medicare Advantage beneficiaries enjoy better overall communication from their MAOs. Additionally, the CMS will gain some ability to establish guidelines for implementing changes. The government wants to make sure that it can regulate the implementation of changes so as to minimize confusion program-wide.
Proposed Updates to Medicare
There are several reasons why some proposed changes don’t get implemented. They may require too much additional research and discussion or may not be finalized on time for enrollment. In any case, you should make note of the changes that didn’t take place for 2015 because the CMS may implement these updates in the future if they get enough funding or support. Read on for more information about some of the proposed changes to Medicare in 2015.
- Prescriber rights: Under this measure, the CMS would gain the right to revoke Medicare enrollment from prescribers and physicians who act unprofessionally, lose their licenses or frequently abuse the Medicare system. Also, this measure would require prescribers to enroll in Medicare as a prerequisite for prescribing Part D covered drugs.
- Protected drug classes: Medicare Part D covers six types of drug under its formularies: anticonvulsants, antidepressants, antineoplastics, antipsychotics, antiretrovirals and immunosuppressants. Under the protected drug class measure, the CMS wants to alter coverage for certain types of drugs. Three types would remain unchanged: anticonvulsants, antineoplastics and antiretrovirals. The other three types would no longer be required. The CMS has not finalized this measure because it needs to work through the complexities of drug classification.
- Negotiated prices: The CMS planned to include all price concessions from participating pharmacies in its definition of “negotiated prices.” The measure would save beneficiaries money by preventing them from enrolling in a Part D plan that offered unrealistic cost-sharing. In an effort to regulate the fairness of cost-sharing plans, the CMS also will continue to monitor these programs to make sure that plans grant access to cost-sharing throughout a beneficiary’s network.
Several additional changes may come up in the next few years. For example, the government may start requiring proof of citizenship or legal residence for enrollment in Medicare Advantage and Medicare Part D. The Advance Notice also outlines other minor changes, so be aware that additional updates may be considered in the future.
Further Reading and Resources
With the passage of the Affordable Care Act, the Medicare program was subject to substantial changes over the next decade. By 2019, experts estimate that the aforementioned policy updates may reduce Medicare spending by a billion dollars or more. The government wants to strengthen the Medicare program by offering better benefits to beneficiaries, enacting tighter regulations on providers, making plans clearer and less complex, and improving overall efficiency. You can find out about upcoming changes and other policy updates by visiting the Centers for Medicare & Medicaid Studies website at www.cms.gov.