The Centers for Medicare & Medicaid Studies or CMS periodically enacts changes to the Medicare system in order to keep it relevant to today’s beneficiaries and to make sure that the system remains viable for future generations. This year, the CMS plans to change rates and other aspects of the program in accordance with the demands placed on it and other social programs by the Affordable Care Act. These changes can be confusing and impossible to decipher from the language used in government reports. If you currently take part in Medicare or know someone who does, then read on to learn more about the changes that Medicare beneficiaries can expect to see in 2015.
Medicare Updates for 2015
Many of the changes to Medicare in 2015 center on Medicare Part D, but there is at least one change to Medicare Advantage Plans that beneficiaries should note for the upcoming year. There are also several proposed changes that either haven’t been finalized or won’t be implemented yet for 2015. In this section, we’ll outline the updates so that you know what to look for when you enroll or change plans during open enrollment beginning October 15. Jump to the next section to learn about changes you may see in the future once the CMS finalizes its plans and makes these changes public.
Medicare Advantage Notification
Proposed by the CMS in its Advance Notice early in 2014, the Medicare Advantage notification stipulation requires Medicare Advantage Organizations or MAOs to notify the CMS when they make changes to their plans that significantly affect Medicare and its beneficiaries. What classifies as a significant change? According to the CMS, MAOs will have to take a “conservative approach” in assessing their plan changes. As a result of this 2015 update, Medicare Advantage beneficiaries should experience better communication and receive more accurate notification when provider networks change.
The CMS hopes that implementing a better notification strategy will enable it to set forth guidelines for implementing changes by MAOs. In other words, the government can better regulate when changes take place so that there’s not as much confusion throughout the year.
Medicare Part D
Medicare Part D beneficiaries will see the most significant changes to Medicare in 2015. The Affordable Care Act seeks to reduce the Part D coverage gap over time, and one of the changes implemented by the CMS for next year focuses on reducing this gap by giving senior citizens discounts on brand name prescription drugs while they’re in the gap.
Standard Benefit Plan
The CMS regulates a “Standard Benefit Plan” for Medicare Part D beneficiaries. The term “standard” refers to the idea that every Medicare Part D plan must offer a minimum set of benefits as defined each year. Individual providers are allowed some leeway to create their own plans, but all plans offered in conjunction with Medicare Part D must adhere to the standard at minimum. For 2015, the Standard Benefit Plan includes the following provisions:
- An initial deductibles of $320
- An initial coverage limit of $2,960
- A threshold for out-of-pocket spending of $4,700
- A coverage gap policy that includes a 55 percent discount for brand name prescription drugs and maximum 65 percent co-pay for generic drugs
- Minimum cost-sharing increases for the Catastrophic Portion of your plan
- Maximum co-pay limits for low-income enrollees who are eligible for subsidies
You may be familiar with the concept of initial deductibles and initial coverage limits, but if you’re new to Medicare Part D or will be for the fall, then you may not understand what these limits mean. Essentially, your plan only pays a portion of your prescription drug coverage. Some plans require initial deductibles, and people with these types of plans must meet the deductible before Part D will pay for coverage. Likewise, plans also include an initial coverage limit. Until you reach this limit, you will most likely pay co-insurance or co-payments to cover the cost of your medication. The current standard for co-insurance is 25 percent.
Understanding the coverage gap can be a little trickier. Also called the “donut hole,” the Medicare Part D coverage gap happens when you surpass your initial coverage limit but have not yet reached the threshold for out-of-pocket spending for the year. In 2015, you fall into the gap once you spend more than $2,960 but less than $4,700. These amounts do not include the cost of your monthly premium. While you’re in the gap, you will have to pay the retail cost of your prescriptions.
Fortunately, the Affordable Care Act wants to reduce and eventually eliminate this coverage crisis by giving Part D beneficiaries discounts while they’re stuck in the gap. For 2015, you can get a 55 percent discount on brand name drugs while you’re in the donut hole. Generics work differently, but you still may enjoy a discounted premium on generics while you’re in the gap.
After you get out of the gap by hitting the $4,700 “exit point,” your cost for prescription drugs decreases significantly. In 2015, you’ll pay the greatest of five percent of the retail cost for your covered prescriptions, $6.60 for brand name drugs or $2.65 for generic drugs. For low-income beneficiaries who qualify for subsidies, the cost of drugs increases in 2015 to $2.65 for multi-source generics or preferred drugs and $6.60 for all remaining prescriptions.
Proposed Changes to Medicare
When the CMS announces changes, it sends out an Advance Notice to the press and relevant parties letting them know what they intend to change for the upcoming year. These proposed changes don’t always get implemented due to various reasons. Some plans don’t become finalized on time while others receive enough significant contention that they’re tabled for future discussions. While the changes listed below will most likely not happen for 2015, you should still be aware of them in case they show up again in 2016 or future years. The following section outlines some of the CMS’s primary proposed changes that didn’t make the cut for 2015.
- Definition of “negotiated prices”: The CMS wants to change the definition of “negotiated prices” to include all price concessions from participating pharmacies. This change would help beneficiaries save money and prevent them from signing up for a plan that offers inflated promises of cost-sharing. The CMS has also stated that it will continue to monitor cost-sharing offered by retail plans to make sure that plans offer widespread access to cost-sharing in a beneficiary’s network.
- Prescriber rights: In an effort to prevent harm to Medicare beneficiaries, the CMS wants the power to revoke enrollment in Medicare from physicians and other professionals if they consistently abuse the system. Additionally, this rule would force providers who prescribe Part D prescriptions to enroll in Medicare in order to maintain coverage.
- Protected drug classes: There are six drug classes currently included in all Part D formularies: anticonvulsants, antidepressants, antineoplastics, antipsychotics, antiretrovirals and immunosuppressants. The CMS wants to change the way that these drugs are covered under Part D plans. Specifically, three categories would remain covered on all plans: anticonvulsants, antineoplastics and antiretrovirals. The remaining drug classes would not be required. Given the complexity of the drug classification issue, the CMS has postponed finalization of this proposal.
The CMS also wanted to implement a way to require that all Medicare Advantage and Part D enrollees be legal U.S. residents or citizens. There are several other minor proposals set forth by the CMS for consideration in 2015, but none of them were passed due to different reasons. These and other proposals may become issues in the future.
There are several reasons why the CMS proposes seemingly complex changes. Fiscally speaking, these updates may reduce overall Medicare spending by more than a billion dollars by 2019. By implementing new policies, the government hopes to strengthen benefits for recipients, make policies easier to understand for beneficiaries, tighten regulations and improve the efficiency of the program as a whole. To learn more about the changes taking place in Medicare for 2015, visit the Centers for Medicare & Medicaid Studies website at www.cms.gov or speak with a representative at your local Social Security Administration office.