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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.”

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Black-Owned Hospice Seeks to Bring Greater Ease in Dying to Black Families

This time, it didn’t take much persuading for Mary Murphy to embrace home hospice. When her mother was dying from Alzheimer’s disease in 2020, she had been reluctant until she saw what a help it was. So when her husband, Willie, neared the end of his life, she embraced hospice again.

The Murphys’ house in a leafy Nashville neighborhood is their happy place — full of their treasures.

“He’s good to me — buys me anything I want,” she said, as she pulled a milky glass vase out of a floor-to-ceiling cabinet with mirrored shelves.

Willie bought Mary the display case to help her to show off the trinkets she picks up at estate sales.

Down the hall, Willie was lying in their bed, now unable to speak. His heart was giving out.

“You gonna wake up for a minute?” she asked, cradling his head. She patted his back while he cleared his throat. “Cough it out.”

Mary had been the primary caregiver for her husband, but she gets help from a new hospice agency in Nashville focused on increasing the use of end-of-life comfort care by Black families. Heart and Soul Hospice is owned and operated by people who share the same cultural background as the patients they aim to serve.

In their application to obtain a certificate of need in Tennessee, the hospice owners made it clear they are Black and intend to serve everyone but will focus on African Americans, who are currently underserved. Tennessee data shows that in Nashville just 19% of hospice patients are Black although they make up 27% of the capital city’s population.

Though the area already had numerous hospice agencies, regulators granted Heart and Soul permission to operate, based primarily on the value of educating an underserved group.

In Murphy’s first hospice experience, her mother had been living with dementia for decades. Still, Murphy had concerns about transitioning her mother to hospice. She felt as if she was giving up on her mom.

“My first thought was death,” she said.

National data shows that Black Medicare patients and their families are not making the move to comfort care as often as white patients are. Roughly 41% of Black Medicare beneficiaries who died in 2019 were enrolled in hospice, compared with 54% of white patients, according to data compiled annually by the National Hospice and Palliative Care Organization.

Murphy’s mother survived nearly three years on hospice. The benefit is meant for those in the final six months of life, but predicting when the end will come is difficult, especially in cases of dementia. Hospice provides palliative care for the dying and support for caregivers for a long as the process lasts.

Murphy did most of the caregiving — which can be overwhelming — but hospice helped with a few baths a week, medication in the mail and any medical equipment they needed.

And most important to Murphy was the emotional support, which came mostly from her hospice nurse.

“Wasn’t no doctor going to come here, hold my hand, stay here until the funeral home came for her,” she said about the day her mother died.

Last year, on the day after Thanksgiving, Willie Murphy died. And the same hospice nurse was at the Murphy home within minutes. She’d already stopped by that morning to check on him and returned as soon as Mary called and told her he wasn’t breathing.

“If you don’t feel like, ‘Oh my God, thank God I have hospice,’ if you can’t say that, then we’re doing something wrong,” said Keisha Mason, Heart and Soul’s director of nursing.

Mason, like Murphy, is Black and said that in her view there’s nothing fundamental keeping Black patients from using hospice except learning what the service can offer and that it’s basically free to patients — paid for by Medicare, Medicaid and most private health plans.

“I say to them, ‘If you see a bill, then call us, because you should not,’” she said.

Keisha Mason, nursing director for Heart and Soul Hospice, says the perceived cost of hospice care can be a barrier for Black families, as some find it hard to believe such in-home help is free to patients on Medicare and most private health insurance. (Blake Farmer / WPLN News)

As Mason helped launch this new hospice agency, she began using new language, calling hospice more than a Medicare benefit. She describes it as an entitlement.

“Just as you are entitled to unemployment, as you are entitled to Social Security, you are entitled to a hospice benefit,” she said.

The investors in Heart and Soul include David Turner, owner of CNS Hospice in Detroit; Nashville pastor the Rev. Sandy McClain; and André Lee, a former hospital administrator on the campus of Meharry Medical College, a historically Black institution in Nashville.

Lee and Turner also started a Black-focused hospice agency in Michigan and have plans to replicate the model in other states.

More families need to consider home hospice as an alternative for end-of-life care, Lee said. Nursing homes are pricey. And even with Medicare, a hospital bill can be hefty.

“You’ll go in there and they’ll eat you alive,” he said. “I hate to say [something] bad about hospitals, but it’s true.”

Hospice research hasn’t come up with clear reasons to explain the gap between white and Black families’ use of the benefit. Some experts speculate it’s related to spiritual beliefs and widespread mistrust in the medical system due to decades of discrimination.

Heart and Soul Hospice in Nashville, Tennessee, was established in 2020 with the express purpose of educating Black families about the benefits of hospice. The owners started a similar agency outside Detroit and plan to start others. Medicare data finds that roughly 41% of Black patients died under hospice care in 2019, compared with a majority of white patients. (Blake Farmer / WPLN News)

The hospice industry’s national trade group, the NHCPO, released a diversity and inclusion toolkit and a guide to reaching more Black patients. It recommends connecting with influential DJs, partnering with Black pastors and simply hiring more Black nurses.

Bridging the gap is not overly complicated, Lee said.

“A lot of hospices don’t employ enough Black people,” he said. “We all feel comfortable when you see someone over there that looks like you.”

Well-established hospice agencies have attempted to minimize barriers with their own diversity initiatives. Michelle Drayton of Visiting Nurse Service of New York said her large agency has met with ministers who counsel families dealing with failing health.

“Many of them did not fully understand what hospice was,” she said. “They had many of the same sort of misperceptions.”

Every hospice company, whether it’s an upstart or one of the nation’s oldest, can promote end-of-life education and ease care disparities, Drayton said. “We’re not just handing out a brochure,” she added.

This story is part of a partnership that includes Nashville Public RadioNPR and KHN.

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Few Acute Care Hospitals Escaped Readmissions Penalties

Preventable rehospitalization of the nation’s older adults has proved a persistent health and financial challenge for the U.S., costing Medicare hundreds of millions of dollars each year.

Various analyses have found many readmissions within a month of discharge might have been avoided through better care and more attention paid to the patients after they left the hospital. The federal government’s campaign to reduce the frequency of so-called boomerang patients by applying financial disincentives has entered its 10th year with Medicare’s decision to lower payments to 2,499 hospitals throughout the current fiscal year, which began last month and runs through September 2022.

The Hospital Readmissions Reductions Program (HRRP), created as part of the Affordable Care Act, punishes general acute-care hospitals when more Medicare patients return for a new admission within 30 days of discharge than the government decides is appropriate. The average penalty this fiscal year is 0.64%, with 39 hospitals losing the maximum of 3% of reimbursements.

Over the lifetime of the program, 2,920 hospitals have been penalized at least once. That’s 93% of the 3,139 general acute hospitals subject to HRRP evaluation, and 55% of all hospitals. Moreover, 1,288 have been punished in all 10 years. Only 219 eligible hospitals have avoided any payment reductions since the program’s start in 2013, though more than 2,000 hospitals are automatically exempt from penalties because they have specialized functions: those that focus on children, psychiatric patients, veterans, rehabilitation and long-term care or those that serve as the only hospital in an area.

Hospital readmissions have become less frequent since before the ACA was enacted, and most experts attribute that partly to the financial threat of the penalties, though other factors likely contributed to the improvements. Less debatable is that the penalties have saved the government billions of dollars since their inception. The Centers for Medicare & Medicaid Services estimates that because of the HRRP, Medicare will keep an extra $521 million this fiscal year. You can look up individual hospital penalties using KHN’s interactive tool.

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