🎧 · Panoptikum

Every year, between October 15 and December 7 is really big in the world of Medicare. That’s when folks who are Medicare eligible can change their prescription drug coverage, Part D, if they want or enroll or change what’s called their Medicare Advantage which is a type of Medicare health plan offered by a private company that contracts with Medicare to provide you with Medicare part A and B benefits….in two words it’s complicated. Diane Omdahl who has kept her finger on the pulse of the healthcare industry’s evolution for more than 30 years helps us clarify a few things.

Here is the transcript to that interview:

Andy Asher: So today, I asked a pioneer in the World Health Agency Management Training Industry, Diane Amdahl, who has kept her finger on the pulse of the healthcare industry evolution for more than 30 years and she is now co-founder of 65 Incorporated. Before that she built Beacon Health Corporation and when we spoke the other day, I asked her how she got started in what she’s doing now.

Diane Omdahl: And after I retired, we sold our company and I retired for about 6 months, I decided to get into the consumer side. Initially, I wanted to help people prevent Medicare from “going bad” as I called it, but then, reflection we decided with 10 to 12 or thousand or more boomers a day 2065. If they got started the right away, then maybe they would be able to stay out of trouble or at least know what to do when things started to go in the wrong direction.

Andy: So that’s what you mean when you say Medicare “going bad”?

Diane: Yes, yes. There were several situations in the past both with my family and with friends who know that I was connected to healthcare when I would hear different stories about people being forced into the situation, not knowing their rights, not getting the right kind of care, mistakes in billing – all different kinds of things.

Andy: While I do want to definitely get your advice on what people should do during this open enrolment period, but I also just want to pick up on what you are saying about Medicare? What is it that’s so difficult about? Is it just that it’s a “complex animal”?

Diane: I think “complex animal” is a good description. I often use the example of my parents. When my father turned 65, he retired, he signed up for social security, and he got Medicare. He got a Medicare – Red, White, Blue card – that went to his wallet, he would go to the doctor and the clinic, show that card, and everything was taken care of. Then, over the years, Medicare started to take some different turns. The government decided it might be to get private insurance companies into Medicare because they believe the efficiencies of the private industry would make Medicare more effective, more efficient. And that’s when we ended coming into the two different paths that people have: original Medicare and Medicare Advantage, of course, that’s the third iteration of the private side. And then we threw in the drug plan, the Part D Prescription Drug Coverage, and now it’s very complex. There’s different options with regards to coverage, in-network, out-of-network, doctors who accept Medicare (and) who doesn’t accept Medicare, and so you put all of that together with the fact you are dealing with older people, and you have the perfect recipe for confusion.

Andy: And also it becomes a new experience after, you know, some 65 years of life to jump into a new system.

Diane: That is very, very true and people think they can just do what they used to do and they have to pay more attention now. They have to realize that the decisions when they’re turning 65 could affect their entire life and they may not be able to make a change and that’s what I’ve been trying to do is to inform people. I’ve been debating with my daughter every now and then that she said, “well, people aren’t going to want to read this or people aren’t going to want to learn that”. Well the thing is that they need to know what they’re getting into. You wouldn’t buy a house without reading the fine print, and this can have the same impact.

Andy: Yeah, and not to get too far off-track, I guess I just have to ask you, of these changes and the privatization and so on, is that a good thing or how do you feel about that?

Diane: I think it depends on if we’re talking about people. I think it depends on the individual situation. The private insurance side has very strong points if it is paired with the right type of individual. I think that the private insurance and Medicare advantage plans aren’t for everybody just as the original Medicare side may not be for everybody and that’s the thing people have to realize.

Andy: Well, great. Let’s get into what’s going on and what will be going on till December 7th and that’s the open enrolment or AP or different ways of that is identified. And so that’s going on as we speak, what is important for people to know?

Diane: I think the first thing that people need to know with regard to this year is the government shutdown, which now is concluded thankfully, have had a little bit of an impact on the Medicare.gov side and the Medicare Plan Finder. You go to Medicare.gov and there is this banner that said because of the shutdown, the information may not be up to date. I advocate that people look at the Plan Finder to compare the coverage they have with what they might have and I noticed that there were some discrepancies, the information was not complete, and I expect that within the next week or two that will all be remedied. So the first thing I would suggest is that people not jump right in with both feet until maybe November and that would be fine because if they make a change in November or right until December 7, it would take effect January 1. So doing it now doesn’t make the coverage come into being sooner than if you wait until November or early December.

Andy: So the other part is that the people need to be aware that this not only affects their Medicare Advantage Plan, if that’s what they want, but also their Prescription Drug Plan, and also it probably that some point would be worth pointing out that the impact, or lack of an impact, on medical care supplement or Medigap Plan. So I guess I asked you three different questions there.

Diane: And three different valid points to be made, that is correct. You see, and I’ll start with the third one first – the lack of impact on Medicare supplement plan. That is because, in probably the majority of the States, once you have picked your Medicare supplement plan, you basically can think about having that plan for the rest of your life because if you tried to switch, you run into some difficulties. The insurance companies that you’re looking at to change into might apply medical underwriting in those kinds of things. So the Medicare supplement plan, you need to get into it very carefully because there isn’t a true open enrolment for those except in a handful of states where you are able to make those changes either on your birthday or once a year. With regard to medical advantage and the drug plan, the Affordable Care Act is having some impact on the benefits and the costs and anybody who has started to dig in to that will see that premiums are creeping up. But more importantly I think is in the details when you look at the co-payments that you may have to pay for hospitalization or transition visits, they are also increasing. So I encourage people to look at the plan that they have now and actually, you know, turn the pages and dig into the details to look at how much are you going to pay next year for the services that you use and if you are concerned, that’s when you go to the Plan Finder and you start to look at other plans and make that comparison. Drug plans, I think, even more significantly. Just on the first flash look at the Plan Finder, when you look at the annual cost this year for a particular schedule of medication versus last year, the numbers are all up. For instance, a popular plan in our area, tier 1 medication, which is the preferred generic that the chief of the drug that people can take, the co-payment is 0 this year, next year it will be $3. So you see that kind of changes coming into the drug plan. Also, and I find this a bit disturbing – this trend, on your hierarchy on medications with tier being a payment classification, they group the drugs into how much you are going to pay. Some of the plans are going from a flat co-payment such as $45 for a particular brand name medication to 33% of the cost. And when you go from a flat co-payment to a percentage of the cost, it’s difficult to predict how much you’re going to spend unless you know the cost of the medication. That’s, again, where the Plan Finder can help you when it’s up-to-date.

Andy: Just for clarification now, the Plan Finder, is that part of Medicare.gov or is that a separate entity?

Diane: It is part of Medicare.gov. When you go to Medicare.gov and you look at the top-left and side, you will see a box that says “Find Health and Drug Plan”. And you click on that and the first screen that you’ll have is your Zip Code, the second screen ask a couple of questions about if you are enrolled in Medicare now, the third screen is where you would put in your medication, and when you put those medications in, unlike some many sites, you will get an identification number for your drug list and your password date so you can go back and pull that up and keep it up to date, and that from there, you pick your pharmacies and then you get to the plan. You know, I heard so many people that Plan Finder is so tough to use or difficult or confusing. Well, it’s pretty straightforward if you take the time to follow the instructions and put your medications in and then you have the list in there and next year, come open enrolment, you can update your drug list, you don’t have to start over, and you’ll get to see what’s happening.

Andy: Does this enrolment period mean you have to make a change or can you just let it roll over the next year?

Diane: If you’re compelled to make a change, I encourage them to compare and check things out so they know what they’re getting into. But if they are satisfied, they don’t have to do anything because the plan that they’re in now will automatically renew that for next year.

Andy: And then as far as the Part D that’s in the same situation, they should probably look and see what changes are looking or taking place and decide whether they want to keep it or not.

Diane: Yes, and to see how much their costs will be going up, and I do believe everybody’s costs will be going up a little bit or a lot depending. And I would suggest that people who take 3 or 4 or more brand name drugs, those are the people that need to pay attention because it is possible to, you know, depending on how your particular drugs are classified, you could change plans and save a couple of hundreds or more dollars a year just depending on how the drug plans have put the drugs in and I think that’s the point. People need to understand that not every drug plan treats the medication in the same way; they may not carry your medication, they may carry it only a generic or, you know, all different kinds of things can happen and so by looking in the plan finder, you can identify what is the best option.

Andy: You know that’s what makes this whole process so complicated because it’s almost beyond the scope of a lot of people’s understanding really.

Diane: Yes, and particularly when you consider some of these people who, you know, the drug plan came into being or is it about 7 years ago now, you know, is there 75 or 80 years old, you know, it’s tough, and, you know, maybe they have a grandson that can help them but it is difficult to look at all that and they just want to have somebody else to do it or they just want to leave it the way it is and that may not be the best thing.

Andy: Now the other one that is always an important part of all this time of year is that having to do with the catastrophic care and the donut hole and so on and so the catastrophic coverage I guess it is called but maybe you can straighten that up, but that always seems to be changing a little bit. What is going on with that?

Diane: The Medicare prescription drug has four payment stages, and when you refer to the donut hole, that’s the third stage, and when you refer the catastrophic coverage, that’s the fourth stage. So everybody starts off in the deductible and then they go into initial coverage. Then, there’s a smaller percentage both people have take 3-4 brand name drugs that will end up in the donut hole. Now the interesting thing that has gotten press is the fact that falling into the donut hole next year will happen at $140 less. In other words, this year, you fall into the donut hole when drug costs are $2970. Next year, you fall into $2830 and people are thinking, “holy cow, what is happening?” Well, basically all the costs are shifting downward. This year, the deductible is $325, next year it’s $310. Falling into the donut hole this year with $2970, next year $2830, and getting out of the donut hole into catastrophic coverage, this year $4750, next year $4550. So this is all based on the government formula depending on a bunch of factors, and so this year everything is shifting down. And the fourth thing about the catastrophic coverage for those who are familiar, if you actually make it to the donut hole, then we don’t pay very much for medication for the rest of the year. Next year, I believe, $2.55 for a generic and $6.35 for a brand name drug.

Andy: So this is, I take it as good news that the donut hole has gotten smaller you may say, is that right?

Diane: Well, the donut hole hasn’t gotten smaller, it’s the same as it’s been it just shifted a little bit. But, with regards to the donut hole closing, that has to deal with the government’s effort to provide discount. Donut hole is officially called the “coverage gap”, the reason it’s called that is because the insurance company doesn’t pay anything, there’s a gap in coverage when you get into the donut hole. And I think the reason that happened is I don’t know if Congress could have been passed it a drug benefit, it would have been covered through all the medications that might have been too costly, that’s my opinion, but anyway. There are discounts in the donut hole; in the brand name drug, 52 ½ percent so that the beneficiary will pay 47 ½ percent for every dollar in the donut hole. So that is something that didn’t exist a couple of years ago. And then the generic drug is a 28% discount, so the drug plan will pay 72 cents instead of a dollar. And so that kind of the shrinking of the donut hole, you end up with having both benefits and then you don’t pay as much prior to 2011. One other important point is the clarification. When this donut hole closes in several years, there are many people who think they won’t be paying anything for the medications in the donut hole, but that is not true. What they will be paying is 25% of the cost of the medication, which is basically what you pay in the first stages of the drug plan – 25%, that’s what you pay in the donut hole.

Andy: I see. Now for folks who are just becoming eligible for Medicare and they are wrestling with whether not to have a prescription drug plan or not, how do you view that?

Diane: I can understand that wrestling with having a prescription drug plan because if they go original Medicare and have a standalone drug plan, prescription started around $12-$15 a month and go up from there. If you don’t take medications, why are you paying for this? What they need to know that if they do not enroll at the time that they are first eligible for Medicare, there’s a late enrolment penalty. And that late enrolment penalty, this year it’s about 31 cents a month for every month that you delay enrolment. So if you delay enrolment for 10 months, you would have $3.10 added to your premium plan this year. So that is something people who are wrestling with whether or not to get a drug plan need to know that there is a late enrolment penalty and that the longer you procrastinate, the more the penalty will be. That will follow you for your life.

Andy: Thanks for the explanation. So Diane, tell us a little bit about your company, 65 Incorporated.

Diane: Our company is just one year old, and the first year, we’ve been putting up educational videos on our website and all kinds of information about enrolment, about the different parts of Medicare, and all the kinds of ins and outs that you run into so that you are informed when you make that choice. And we will be moving in to helping those who wish to provide assistance with the enrolment proper, and that’s something that we’re gearing up to start within the next few weeks.

Andy: Yeah, it’s really a great website, that’s 65Incorporated.com. I was navigating around the other day and lot of good videos and information. So finally, Diane, what would be a few tips that you could share with us during this enrolment period?

Diane: During the open enrolment period, tip # 1: pay attention to any name changes on the plan. Plans are changing their name, and in some cases, it’s more than just a name change, it’s a major change in the way that they will provide services. I’m seeing that they are going from plans that allow people out of network to get coverage. They’re eliminating that now but you have to stay in network, that would be one of the tips that I would say. Tip # 2: even if you are very satisfied with the plan, either your Medicare advantage or your drug plan, check it out so that you will not be surprised because if you find out something next year, you will have to wait an entire year to make a change. For those who are just getting into Medicare, one fallacy we often find is that people think they can put it off until they do social security but they can’t. They need to check even if they’re still working, they need to check whether or not they need to enroll Medicare. Some people who have coverage network may be able to delay Medicare, but they need to check, they need to pay attention to that. Fourth tip is what I kind of mentioned before and that is to take the time to learn about your options. Don’t do what your husband or wife did or what your best friend did because it may not fit. Husbands and wives can have different plans, that’s Medicare is structured to coverage one person. So take the time to study your options and don’t rush into anything. And by doing that then, number 5, you will avoid any late enrolment penalties that you might run into.

Andy: Well, Diane, you provided some great information and I thank you so much for your time.

Diane: Well thank you so much for having me, giving me the opportunity to talk to people because I’ve been an educator most of my life, and I think education is definitely a key to success.

Andy: Well thanks, Diane.

Diane: Well thank you, Andy.