Your Medicare Drug Plan Can Hike Its Prices Almost Anytime

The prices quoted during open enrollment can climb dramatically 

If you’re assuming that the prices on your drug plan’s list of medications won’t change over the course of the year, you may have an unpleasant surprise coming. They can and often do change. That’s allowed except during the first few weeks after the enrollment period ends. Journalist Susan Jaffe, a contributing writer for Kaiser Health News, explains the rules and their consequences here. KHN posted her story on May 3, 2022, and it also ran on NPR. Funding from the Silver Century Foundation helps KHN develop articles (like this one) on longevity and related health and social issues. 

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’s out-of-pocket cost has varied each month, and through March, she… paid $433 more than she expected to.

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 percent.

When insurers get discounts from drug companies, that doesn’t necessarily result in lower prices for consumers. 

Medicare officials acknowledge that manufacturers’ prices and the out-of-pocket costs charged by an insurer can fluctuate. “Your plan may raise the co-payment 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, PhD, 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.

Insurers are replacing co-pays—which are set amounts—with coinsurance, which charges you a percentage of the price of the drug.

“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 co-payments—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 [CMS], 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 Meena Seshamani, MD, 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.

I finally just had to give in and pay it because I need the meds …

—Linda Griffiths

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 co-payment 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.”

23 States Respond to COVID Deaths in Nursing Homes

They’ve drafted new laws to protect residents from isolation and neglect

The appalling number of COVID deaths in nursing homes laid bare long-standing problems in those institutions that needed to be addressed. States with diverse political leadership have passed new laws in response. Reporting for Kaiser Health News, (KHN), journalist Susan Jaffe describes these developments. Her article was posted on the KHN website on August 20, 2021. The story also ran on USA Today

When the coronavirus hit Martha Leland’s Connecticut nursing home last year, she and dozens of other residents contracted the disease while the facility was on lockdown. Twenty-eight residents died, including her roommate.

“The impact of not having friends and family come in and see us for a year was totally devastating,” she said. “And then, the staff all bound up with the masks and the shields on, that too was very difficult to accept.” She summed up the experience in one word: “scary.”

But under a law Connecticut enacted in June, nursing home residents will be able to designate an “essential support person” who can help take care of a loved one even during a public health emergency. Connecticut legislators also approved laws this year giving nursing home residents free internet access and digital devices for virtual visits and allowing video cameras in their rooms so family or friends can monitor their care.

Similar benefits are not required by the Centers for Medicare & Medicaid Services [CMS], the federal agency that oversees nursing homes and pays for most of the care they provide. But states can impose additional requirements when federal rules are insufficient or don’t exist.

And that’s exactly what many are doing, spurred by the virus that hit the frail elderly hardest. During the first 12 months of the pandemic, at least 34 percent of those killed by the virus were residents of nursing homes and other long term care facilities, even though they make up fewer than 1 percent of the American population. The vaccine has since reduced virus-related, nursing home deaths to about 1 in 4 COVID-related fatalities in the United States, which have risen to more than 624,000, according to the New York Times’ coronavirus case tracker.

One nursing home resident stopped dialysis and gave up on living because he couldn’t stand the isolation of a COVID lockdown.

“Part of what the pandemic did is to expose some of the underlying problems in nursing homes,” said Nina Kohn, a professor at Syracuse University School of Law and a distinguished scholar in elder law at Yale Law School. “This may present an opportunity to correct some of the long-standing problems and reduce some of the key risk factors for neglect and mistreatment.”

According to a review of state legislation, 23 geographically and politically diverse states have passed more than 70 pandemic-related provisions affecting nursing home operations. States have set minimum staffing levels for nursing homes, expanded visitation, mandated access for residents to virtual communications, required full-time nurses at all times and infection control specialists, limited owners’ profits, increased room size, restricted room occupancy to two people and improved emergency response plans.

The states’ patchwork of protection for nursing home residents is built into the nation’s nursing home care regulatory system, said a CMS spokesperson. “CMS sets the minimum requirements that providers need to meet to participate with the Medicare/Medicaid programs,” he said. “States may implement additional requirements to address specific needs in their state—which is a long-standing practice—as long as their requirements go above and beyond, and don’t conflict with, federal requirements.”

Julie Mayberry, an Arkansas state representative, remembers a nursing home resident in her district who stopped dialysis last summer, she said, and just “gave up” because he couldn’t live “in such an isolated world.”

“I don’t think anybody would have ever dreamed that we would be telling people that they can’t have someone come in to check on them,” said Mayberry, a Republican and the lead sponsor of the No Patient Left Alone Act, an Arkansas law ensuring that residents have an advocate at their bedside. “This is not someone that’s just coming in to say hello or bring a get-well card,” she said.

Nursing homes with higher levels of staffing had fewer deaths from COVID. 

When the pandemic hit, CMS initially banned visitors to nursing homes but allowed the facilities to permit visits during the lockdown for “compassionate care,” initially, if a family member was dying and later for other emergency situations. Those rules were often misunderstood, Mayberry said.

“I was told by a lot of nursing homes that they were really scared to allow any visitor in there because they feared the state of Arkansas coming down on them and fining them for a violation” of the federal directive, she said.

Jacqueline Collins, a Democrat who represents sections of Chicago in the Illinois State Senate, was also concerned about the effects of social isolation on nursing home residents. “The pandemic exacerbated the matter and served to expose that vulnerability among our long term care facilities,” said Collins, who proposed legislation to make virtual visits a permanent part of nursing home life by creating a lending library of tablets and other devices residents can borrow. Gov. J.B. Pritzker is expected to sign the measure.

To reduce the cost of the equipment, the Illinois Department of Public Health will provide grants from funds the state receives when nursing homes settle health and safety violations. Last year, Connecticut’s governor tapped the same fund in his state to buy 800 iPads for nursing home residents.

Another issue states are tackling is staffing levels. An investigation by the New York attorney general found that COVID-related death rates from March to August 2020 were lower in nursing homes with higher staffing levels. Studies over the past two decades support the link between the quality of care and staffing levels, said Martha Deaver, president of Arkansas Advocates for Nursing Home Residents. “When you cut staff, you cut care,” she said.

The hodgepodge of state rules is a poor substitute for comprehensive, federal rules, rigorously enforced.

But under a 1987 federal law, CMS requires facilities only to “have sufficient nursing staff to attain or maintain the highest practicable … well-being of each resident.” Over the years, states began to tighten up that vague standard by setting their own staffing rules.

The pandemic accelerated the pace and created “a moment for us to call attention to state legislators and demand change,” said Milly Silva, executive vice president of 1199SEIU, the union that represents 45,000 nursing home workers in New York and New Jersey.

This year, states increasingly have established either a minimum number of hours of daily direct care for each resident, or a ratio of nursing staff to residents. For every eight residents, New Jersey nursing homes must now have at least one certified nursing aide during the day, with other minimums during afternoon and night work shifts. Rhode Island’s new law requires nursing homes to provide a minimum of 3.58 hours of daily care per resident, and at least one registered nurse must be on duty 24 hours a day every day. Next door in Connecticut, nursing homes must now provide at least three hours of daily direct care per resident next year, one full-time infection control specialist and one full-time social worker for every 60 residents.

To ensure that facilities are not squeezing excessive profits from the government payment they receive to care for residents, New Jersey lawmakers approved a requirement that nursing homes spend at least 90 percent of their revenue on direct care. New York facilities must spend 70 percent, including 40 percent to pay direct-care workers. In Massachusetts, the governor issued regulations that mandate nursing homes devote at least 75 percent on direct-care staffing costs and cannot have more than two people living in one room, among other requirements.

Despite the efforts to improve protections for nursing home residents, the hodgepodge of uneven state rules is “a poor substitute for comprehensive federal rules if they were rigorously enforced,” said Richard Mollot, executive director of the Long Term Care Community Coalition, an advocacy group. “The piecemeal approach leads to and exacerbates existing health care disparities,” he said. “And that puts people—no matter what their wealth, or their race or their gender—at an even greater risk of poor care and inhumane treatment.”