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Premium Hike Projected for Medicare Stand-Alone Part D Plan

December 10, 2007 -- People who use Medicare's stand-alone prescription drug program to help pay for medicines will see an average 17 percent increase in the cost of their coverage next year, a new analysis by the Kaiser Family Foundation says.

In its study of changes slated for Medicare Part D for 2008, the Kaiser foundation—a nonprofit health care advocacy group—finds that the average premium for a stand-alone plan, or PDP, will jump from about $27 to $32 a month next year. The best way to avoid that cost increase is to switch plans, the study says.

The finding underscores one of the criticisms of the Medicare Part D program, which the federal government launched in 2006 to defray rising U.S. drug costs.

The program allows people to enroll in a host of different plans depending on what drugs they need on a regular basis. People can choose stand-alone drug coverage or a privately run Medicare Advantage program that provides broader health benefits as well as a drug benefit.

The Part D current six-week open enrollment period, during which people can switch plans, ends Dec. 31, and critics say choosing a plan has been confusing for the program's mostly elderly users. Of the 24 million people enrolled in the Medicare Part D coverage, 17 million are spread among 1,800 different stand-alone plans nation-wide, the Kaiser study says.

Only 7 percent of users switched their plan last year, said Jeff Nelligan, spokesman for the Center for Medicare and Medicaid Services.

"That shows people are satisfied with their plans," he said.

The Kaiser foundation's study found that since 2006, average cost for a 30-day supply of "non-preferred" name-brand drugs—the most expensive type—has increased by 29 percent, from $55.36 to $71.31. The average cost of "preferred" name-brand drugs has increased by 11 percent, from $26.87 to $29.86. Cost for generic drugs has been stable.

The study also found that more Medicare Part D providers are using "specialty tiers" to designate the most expensive drugs—those that cost $600 or more. Unlike "non-preferred" drugs, patients cannot request exemptions from the specialty tier drug costs. The study found that 41 of 47 national stand-alone Medicare Part D plans include specialty tiers, double the number of plans that used the designation when the program began in 2006.

As a result of those increases, one in four stand-alone Medicare Part D users who stick with the same plan in 2008 they have used since 2006 will see their costs go up 50 percent over the price they paid three years ago, the study says. One in five people will see their costs go up $120 annually next year if they do not switch plans.

Nelligan said his office has been encouraging people to look into new plans since October.

He pointed to polls that show the program is popular with most of its users and said that more than 90 percent of stand-alone Part D users will be able to choose a 2008 plan that would actually cost less than what they pay now.

All beneficiaries will have access to at least one plan that costs less than $20 a month, Nelligan said.

"The fact is, Part D is working well and helping seniors live better, healthier lives," he said.

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