Benefit Gap Surprises Medicare Drug-Plan Participants

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There's a problem with the new Medicare drug-benefit plan: a gap in coverage. The gap occurs when the cost of prescriptions rises to a certain level. Critics of the plan have been issuing warnings about this gap since before the legislation was signed.

RENEE MONTAGNE, host:

Republican Senator Olympia Snowe and Democratic Senator Ron Wyden are the latest to introduce legislation that would alter something called the donut hole, that's a gap in the Medicare Prescription Drug Plan. Most plans help people pay for their prescriptions in the beginning but stop paying when costs get higher, and start again when costs reach the catastrophic range.

NPR's Joanne Silberner reports that some people are finding themselves stuck in the donut hole.

JOANNE SILBERNER reporting:

Democratic Congresswoman Jan Schakowsky explained at a press briefing recently how a hypothetical Mrs. Jones might get caught in the donut hole.

Representative JAN SCHAKOWSKY (Democrat, Illinois): She goes to fill her prescription and she's told, no, it's not $15, Mrs. Jones. It's going to be $150, Mrs. Jones. She says, wait a minute. I have my insurance. They say, oh, no. You have now reached the point where there's this gap in coverage.

SILBERNER: No one knows for sure how many people will wind up like Mrs. Jones. David Madison already has. He's steamed enough about it that he accepted an invitation from the Senate Democratic Policy Committee to travel from his home in Lakewood, Colorado, to testify at a hearing in Washington.

He signed up for a drug plan last spring when a representative of his Medicare HMO came to talk about it. Madison and his wife didn't hear anything about a gap in coverage.

Mr. DAVID MADISON: No, we didn't. There was nothing mentioned in any of the dialogue that we had, and there's no mention whatsoever about that gap in coverage.

SILBERNER: Madison found out the hard way.

Mr. MADISON: By contracting cancer.

(Soundbite of laughter)

Mr. MADISON: If I hadn't contracted cancer and been in a situation where I needed this very, very expensive medication, I doubt that it would have effected us.

SILBERNER: He knew he'd have to pay for the first $250 of his drugs. He knew after that, he'd be making co-payments. He didn't know that his insurer would stop paying anything at all once his total drug bill hit $2,250. And that happened as soon as his doctor prescribed the new cancer drug, Tarceva. By law, Madison's plan doesn't have to start paying again until he's paid a total of $3600. Then it starts all over again next January, and he's likely to hit the hole again.

There are those who weren't surprised. Take Bob Dennick(ph).

Mr. BOB DENNICK: I knew there was a donut hole. I didn't really understand it.

SILBERNER: Dennick is a former computer consultant. He read the fine print carefully. He thought he was okay.

Mr. DENNICK: Where I got in trouble was I did not understand that the calculations are different between the pre-gap and during the gap.

SILBERNER: It all has to do with where to start counting. The donut hole began when he and his insurer had paid a total $2,250. But Dennick only got credit for the $900 he'd spent himself. Coverage won't start again until he spent $2700 out of his own pocket. He thought he would only have to spend half that.

The head of Medicare, Mark McClellan, says there are ways to make the gap easier to take.

Dr. MARK MCCLELLAN (Administrator, Centers for Medicare and Medicaid Services): If you are concerned about approaching the donut hole, give us a call at 1-800-MEDICARE. We can tell you about lower cost-cut drug options that are available for you. If there is a generic drug, we can tell you how much you can save with that; they were work in exactly the same way as the brand name. We can also tell you about lower cost drugs that are very similar to medicines that you take now.

SILBERNER: And he points out there's always the possibility of switching to insurance plans that cover costs in the gap.

Dr. MCCLELLAN: Next year, we're expecting plans to continue to offer options with coverage in the gap. And any beneficiary can switch into these plans at the open enrollment period in the fall.

SILBERNER: David Madison is thinking of switching, but there is a cost. It's $9 a month for the Humana plan that wouldn't cover him in the gap and $55 a month for the Humana plan that would. Meanwhile, he's gotten some help with his drug cost from relatives and friends. He's considering selling his pickup truck to see him through. The various legislative proposals would let him switch to a plan that would cover the gap whenever he wanted.

Joanne Silberner, NPR News, Washington.

MONTAGNE: This is NPR News.

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