Medicare Surprise: Drug Plan Prices Touted During Open Enrollment Can Rise Within a Month

Something strange happened between the time Linda Griffith signed up for a new Medicare prescription drug plan during last fall’s enrollment period and when she tried to fill her first prescription in January.

She picked a Humana drug plan for its low prices, with help from her longtime insurance agent and Medicare’s Plan Finder, an online pricing tool for comparing a dizzying array of options. But instead of the $70.09 she expected to pay for her dextroamphetamine, used to treat attention-deficit/hyperactivity disorder, her pharmacist told her she owed $275.90.

“I didn’t pick it up because I thought something was wrong,” said Griffith, 73, a retired construction company accountant who lives in the Northern California town of Weaverville.

“To me, when you purchase a plan, you have an implied contract,” she said. “I say I will pay the premium on time for this plan. And they’re going to make sure I get the drug for a certain amount.”

But it often doesn’t work that way. As early as three weeks after Medicare’s drug plan enrollment period ends on Dec. 7, insurance plans can change what they charge members for drugs — and they can do it repeatedly. Griffith’s prescription out-of-pocket cost has varied each month, and through March, she has already paid $433 more than she expected to.

A recent analysis by AARP, which is lobbying Congress to pass legislation to control drug prices, compared drugmakers’ list prices between the end of December 2021 — shortly after the Dec. 7 sign-up deadline — and the end of January 2022, just a month after new Medicare drug plans began. Researchers found that the list prices for the 75 brand-name drugs most frequently prescribed to Medicare beneficiaries had risen as much as 8%.

Medicare officials acknowledge that manufacturers’ prices and the out-of-pocket costs charged by an insurer can fluctuate. “Your plan may raise the copayment or coinsurance you pay for a particular drug when the manufacturer raises their price, or when a plan starts to offer a generic form of a drug,” the Medicare website warns.

But no matter how high the prices go, most plan members can’t switch to cheaper plans after Jan. 1, said Fred Riccardi, president of the Medicare Rights Center, which helps seniors access Medicare benefits.

Drug manufacturers usually change the list price for drugs in January and occasionally again in July, “but they can increase prices more often,” said Stacie Dusetzina, an associate professor of health policy at Vanderbilt University and a member of the Medicare Payment Advisory Commission. That’s true for any health insurance policy, not just Medicare drug plans.

Like a car’s sticker price, a drug’s list price is the starting point for negotiating discounts — in this case, between insurers or their pharmacy benefit managers and drug manufacturers. If the list price goes up, the amount the plan member pays may go up, too, she said.

The discounts that insurers or their pharmacy benefit managers receive “don’t typically translate into lower prices at the pharmacy counter,” she said. “Instead, these savings are used to reduce premiums or slow premium growth for all beneficiaries.”

Medicare’s prescription drug benefit, which began in 2006, was supposed to take the surprise out of filling a prescription. But even when seniors have insurance coverage for drugs, advocates said, many still can’t afford them.

“We hear consistently from people who just have absolute sticker shock when they see not only the full cost of the drug, but their cost sharing,” said Riccardi.

The potential for surprises is growing. More insurers have eliminated copayments — a set dollar amount for a prescription — and instead charge members a percentage of the drug price, or coinsurance, Chiquita Brooks-LaSure, the top official at the Centers for Medicare & Medicaid Services, said in a recent interview with KHN. The drug benefit is designed to give insurers the “flexibility” to make such changes. “And that is one of the reasons why we’re asking Congress to give us authority to negotiate drug prices,” she said.

CMS also is looking at ways to make drugs more affordable without waiting for Congress to act. “We are always trying to consider where it makes sense to be able to allow people to change plans,” said Dr. Meena Seshamani, CMS deputy administrator and director of the Center for Medicare, who joined Brooks-LaSure during the interview.

On April 22, CMS unveiled a proposal to streamline access to the Medicare Savings Program, which helps 10 million low-income enrollees pay Medicare premiums and reduce cost sharing. Enrollees also receive drug coverage with reduced premiums and out-of-pocket costs.

The subsidies make a difference. Low-income beneficiaries who have separate drug coverage plans and receive subsidies are nearly twice as likely to take their medications as those without financial assistance, according to a study Dusetzina co-authored for Health Affairs in April.

When CMS approves plans to be sold to beneficiaries, the only part of drug pricing it approves is the cost-sharing amount — or tier — applied to each drug. Some plans have as many as six drug tiers.

In addition to the drug tier, what patients pay can also depend on the pharmacy, their deductible, their copayment or coinsurance — and whether they opt to abandon their insurance and pay cash.

After Linda Griffith left the pharmacy without her medication, she spent a week making phone calls to her drug plan, pharmacy, Social Security, and Medicare but still couldn’t find out why the cost was so high. “I finally just had to give in and pay it because I need the meds — I can’t function without them,” she said.

But she didn’t give up. She appealed to her insurance company for a tier reduction, which was denied. The plan denied two more requests for price adjustments, despite assistance from Pam Smith, program manager for five California counties served by the Health Insurance Counseling and Advocacy Program. They are now appealing directly to CMS.

“It’s important to us to work with our members who have questions about any out-of-pocket costs that are higher than the member would expect,” said Lisa Dimond, a Humana spokesperson. She could not comment about Griffith’s situation because of privacy rules.

However, Griffith said she received a call from a Humana executive who said the company had received an inquiry from the media. After they discussed the problem, Griffith said, the woman told her, “The [Medicare] Plan Finder is an outside source and therefore not reliable information,” but assured Griffith that she would find out where the Plan Finder information had come from.

She won’t have to look far: CMS requires insurers to update their prices every two weeks.

“I want my money back, and I want to be charged the amount I agreed to pay for the drug,” said Griffith. “I think this needs to be fixed because other people are going to be cheated.”


It’s Your Choice: You Can Change Your Views of Aging and Improve Your Life

People’s beliefs about aging have a profound impact on their health, influencing everything from their memory and sensory perceptions to how well they walk, how fully they recover from disabling illness, and how long they live.

When aging is seen as a negative experience (characterized by terms such as decrepit, incompetent, dependent, and senile), individuals tend to experience more stress in later life and engage less often in healthy behaviors such as exercise. When views are positive (signaled by words such as wise, alert, accomplished, and creative), people are more likely to be active and resilient and to have a stronger will to live.

These internalized beliefs about aging are mostly unconscious, formed from early childhood on as we absorb messages about growing old from TV, movies, books, advertisements, and other forms of popular culture. They vary by individual, and they’re distinct from prejudice and discrimination against older adults in the social sphere.

More than 400 scientific studies have demonstrated the impact of individuals’ beliefs about aging. Now, the question is whether people can alter these largely unrecognized assumptions about growing older and assume more control over them.

In her new book, “Breaking the Age Code: How Your Beliefs About Aging Determine How Long and Well You Live,” Becca Levy of Yale University, a leading expert on this topic, argues we can. “With the right mindset and tools, we can change our age beliefs,” she asserts in the book’s introduction.

Levy, a professor of psychology and epidemiology, has demonstrated in multiple studies that exposing people to positive descriptions of aging can improve their memory, gait, balance, and will to live. All of us have an “extraordinary opportunity to rethink what it means to grow old,” she writes.

Recently, I asked Levy to describe what people can do to modify beliefs about aging. Our conversation, below, has been edited for length and clarity.

Becca Levy poses for a portrait with her arms crossed.
Becca Levy, a professor at Yale University, studies the way our beliefs about aging affect physical and mental health.(Julia Gerace)

Q: How important are age beliefs, compared with other factors that affect aging?

In an early study, we found that people with positive age beliefs lived longer — a median of 7.5 additional years — compared with those with negative beliefs. Compared with other factors that contribute to longevity, age beliefs had a greater impact than high cholesterol, high blood pressure, obesity, and smoking.

Q: You suggest that age beliefs can be changed. How?

That’s one of the hopeful messages of my research. Even in a culture like ours, where age beliefs tend to be predominantly negative, there is a whole range of responses to aging. What we’ve shown is it’s possible to activate and strengthen positive age beliefs that people have assimilated in different types of ways.

Q: What strategies do you suggest?

The first thing we can do is promote awareness of what our own age beliefs are.

A simple way is to ask yourself, “When you think of an older person, what are the first five words or phrases that come to mind?” Noticing which beliefs are generated quickly can be an important first step in awareness.

Q: What else can people do to increase awareness?

Another powerful technique is something I call “age belief journaling.” That involves writing down any portrayal of aging that comes up over a week. It could be a conversation you overhear in a coffee shop or something on social media or on your favorite show on Netflix. If there is an absence of older people, write that down, too.

At the end of the week, tally up the number of positive and negative portrayals and the number of times that old people are absent from conversations. With the negative descriptions, take a moment and think, “Could there be a different way of portraying that person?”

Q: What comes next?

Becoming aware of how ageism and age beliefs are operating in society. Shift the blame to where it is due.

In the book, I suggest thinking about something that’s happened to an older person that’s blamed on aging — and then taking a step back and asking whether something else could be going on.

For example, when an older adult is forgetful, it’s often blamed on aging. But there are many reasons people might not remember something. They might have been stressed when they heard the information. Or they might have been distracted. Not remembering something can happen at any age.

Unfortunately, there’s a tendency to blame older people rather than looking at other potential causes for their behaviors or circumstances.

Q: You encourage people to challenge negative age beliefs in public.

Yes. In the book, I present 14 negative age beliefs and the science that dispels them. And I recommend becoming knowledgeable about that research.

For example, a common belief is that older people don’t contribute to society. But we know from research that older adults are most likely to recycle and make philanthropic gifts. Altruistic motivations become stronger with age. Older adults often work or volunteer in positions that make meaningful contributions. And they tend to engage in what’s called legacy thinking, wanting to create a better world for future generations.

In my own case, if I hear something concerning, I often need to take time to think about a good response. And that’s fine. You can go back to somebody and say, “I was thinking about what you said the other day. And I don’t know if you know this, but research shows that’s not actually the case.”

Q: Another thing you talk about is creating a portfolio of positive role models. What do you mean by that?

Focus on positive images of aging. These can be people you know, a character in a book, someone you’ve learned about in a documentary, a historical figure — they can come from many different sources.

I recommend starting out with, say, five positive images. With each one, think about qualities you admire and you might want to strengthen in yourself. One person might have a great sense of humor. Another might have a great perspective on how to solve conflicts and bring people together. Another might have a great work ethic or a great approach to social justice. There can be different strengths in different people that can inspire us.

Q: You also recommend cultivating intergenerational contacts.

We know from research that meaningful intergenerational contact can be a way to improve age beliefs. A starting point is to think about your five closest friends and what age they are. In my case, I realized that most of my friends were within a couple of years of my age. If that’s the case with you, think about ways to get to know people of other ages through a dance class, a book club, or a political group. Seeing older people in action often allows us to dispel negative age beliefs.


Medicare Advantage Plans Send Pals to Seniors’ Homes for Companionship — And Profits

Widowed and usually living alone, Gloria Bailey walks with a cane after two knee replacement surgeries and needs help with housekeeping.

So she was thrilled last summer when her Medicare Advantage plan, SummaCare, began sending a worker to her house in Akron, Ohio, to mop floors, clean dishes, and help with computer problems. Some days, they would spend the two-hour weekly visit just chatting at her kitchen table. “I love it,” she said of the free benefit.

Bailey, 72, is one of thousands of seniors around the country being visited each week by employees of Papa Inc. Known as “Papa pals,” their primary aim is to provide companionship to seniors along with helping with errands and light housework duties. Since 2020, more than 65 Medicare Advantage plans nationwide have signed up with Papa, a Miami-based company, to address members’ loneliness — a problem exacerbated by the pandemic.

“It’s the best thing ever” to counteract social isolation, said Anne Armao, a vice president at SummaCare. More than 12% of the company’s 23,000 Ohio Medicare members used the Papa benefit last year.

But SummaCare and other health plans also stand to benefit by sending Papa pals into members’ homes. The workers can help the plans collect more money from Medicare by persuading members to get annual wellness exams, fill out personal health risk assessments, and undergo covered health screenings.

Accomplishing these steps helps plans in two ways:

  • By gleaning more information, plans may discover members have health issues that may earn higher reimbursement rates from Medicare.
  • Plans can boost their star ratings, which are based on more than 40 performance measures, including cancer, diabetes, and blood pressure screenings; outcome measures such as controlling hypertension; and overall satisfaction with the plan. Plans that score at least four stars on a five-star scale receive bonuses from Medicare.

Bonus payments from the star ratings make up an increasing share of federal payments to these private Medicare Advantage plans, which are an alternative to traditional Medicare. In 2021, Medicare paid plans $11.6 billion in bonus pay, double the amount in 2017.

The federal government’s base pay for the plans is a monthly fee for each member, but it increases that amount based on the members’ health risks. So plans also get billions of dollars a year in extra payments by pinpointing members’ health problems through a variety of measures, including the health risk assessments.

Yet federal investigators have found these diagnoses do not always result in additional treatment or follow-up care to beneficiaries. As a result, the federal government is probably overpaying the Medicare health plans and wasting billions in taxpayer dollars, according to the Medicare Payment Advisory Commission that advises Congress.

In a report last September, the Health and Human Services inspector general found 20 Medicare Advantage companies generated $5 billion in extra payments from the federal government for diagnoses identified through health risk assessments and chart reviews without documentation that the patients were treated for these issues.

Nearly half of Medicare enrollees get their coverage through Medicare Advantage.

David Lipschutz, associate director of the Center for Medicare Advocacy, said Papa pals provide an important benefit to seniors by helping them with chores, reducing their loneliness, and getting them to medical appointments. But the benefit can also help the insurers’ bottom lines.

“If there is one thing these plans are good at it’s maximizing their profit,” he said.

Medicare Advantage plans often give doctors financial incentives to get patients to undergo health assessments. Plan workers repeatedly call patients with offers to send nurses or doctors to their homes to complete them. Lipschutz said health risk assessments are useful only if the health plans act on the information by making sure patients are getting treatment for those issues.

Armao said the health risk assessment and annual wellness exam reminders are on the list of things Papa employees are told to ask about on visits.

“They are our eyes and ears who can learn so much from members in their homes,” she explained. Pals look in refrigerators to see if members have enough to eat, check on how members are feeling, and remind them to take prescriptions. SummaCare even directs pals to ask whether members have urinary incontinence or are up to date on cancer screenings.

Andrew Parker, who founded Papa in 2017 after finding a couple of college students to visit with his grandfather, take him to doctor appointments, and do other errands, said he estimates his company will provide more than a million hours of companionship in 2022. The Medicare plans pay Papa, a for-profit company, a per-member fee monthly.

“Papas [pals] are very proactive and will call you to see how you are feeling and, maybe not on the first day but over the course of the program, can ask, ‘Did you know your health plan would prefer if you had a wellness exam and it could help you with your health?’” he said. “A pal is a trusted adviser who can get them to think about benefits they do not know about.”

He said insurers often don’t know a member is facing a health issue until they see a medical claim. “We can identify things they don’t know about,” he said.

Until recently, Medicare rarely paid for non-health services. But Papa began working with Medicare Advantage plans in 2020, just one year after the program began allowing the private insurers to have more flexibility addressing members’ so-called social needs, such as transportation, housing, and food, which are not typically covered by Medicare but could influence health. Papa’s goal of addressing members’ loneliness took on even more significance during the pandemic when many seniors became socially isolated as they sought to reduce their risk of getting infected.

Papa has more than 25,000 pals whose average age is mid-30s. Before being hired, pals must undergo a criminal background check and a driving record review as part of the vetting process. After being hired, pals are trained on empathy, cultural competency, and humility.

Michael Walling, 22, who works as a Papa pal near his home in Port Huron, Michigan, said most seniors are receptive to getting help or a chance to talk to someone for a couple of hours.

One of his clients has trouble walking so Walling helps vacuum and mop her trailer and take her to the grocery store. On Christmas Eve, he even took her out to lunch. “It was to be my day off, but I didn’t want her to be alone on the holiday,” he said.

Tim Barrage, a former parole officer, who visits Bailey and about a dozen other seniors in the Akron area each week, turned to Papa because he was looking for a flexible part-time job to supplement income from his firearms safety training businesses.

“I’ve done work in the garden, hanging up and taking down Christmas decorations, cleaning ovens or stovetops,” he said.

Each time he arrives at a member’s home, Papa directs him to check to see how the member is feeling overall and then periodically ask about issues that can include the wellness exam and health risk assessment. At the end of the visit, he reports to Papa about what services he provided and how the member interacted with him. He alerts his supervisors at Papa to a member’s potential health issues, and Papa connects with the health plan to address them.

Jennifer Kivi, manager of Medicare product development for Priority Health, a Michigan health plan, said members who have used the Papa service said it makes them feel less lonely. “If we can reduce their loneliness, it helps members feel better and their physical health will improve,” she said.

The insurer doesn’t want its Papa pals to ask members a long list of health questions, but they can ask about cancer or diabetes screenings, which also can bolster a plan’s ratings. “What we have seen is you can have a doctor tell them and their insurance company tell them they need it, but a Papa pal can start to build that relationship with them, and it means a lot more coming from them,” she said.