What should the independent agent do for their clients who need a stand alone Prescription Drug Plan? Looking forward to 2010, I believe there will be a lot more Medicare Beneficiaries on Original Medicare which brings up the sticky question of how to handle the PDP. There are two schools of thought:
- Refer your client to the plan finder at www.medicare.gov or have them call 1-800-MEDICARE or
- Run your client’s prescription drugs through the plan finder yourself.
Neither of these approaches is terribly satisfying and there are problems with each approach. Let’s look at Option #1:
Refer Client to Medicare.gov or 800-MEDICARE:
- I’ve tested the 800-MEDICARE solution and found that often times I got different answers.
- The answers you get are based solely on the Prescription drugs you client is taking at the time of the call. There are a number of ways the Medicare Beneficiary could lower their total cost other than trying to pick an “optimal” plan. For example, brand for brand substitution and generic for brand subsitituion will often result in far greater savings than static plan optimization.
- There are other factors to consider like use of Mail Order or use of “Preferred Pharmacy”.
- Quality of Member Service is, frankly, not a consideration that the plan finder tool considers.
- Once your client gets placed in a PDP plan, that client becomes a “house” account of the Prescription Drug Plan and if that plan offers MA products, they may be solicited to “upgrade” plans.
- Many agents prefer giving their clients, “full service” and don’t like “passing the buck”.
- The agent will get zero commission with this option and may still end up “servicing” a plan they didn’t sell.
Now, let’s look at Option #2:
Run your Client’s Prescription Drugs through Plan Finder Yourself:
- In using the Medicare.gov tool, you are limited by the quality of the tool. For example, how do you know how well your client will be serviced by that plan?
- Unless you have background in Pharmaceuticals, you may not know where brand for brand or generic for brand substitution may be appropriate.
- You will have to run the tool multiple times to account for mail order and “preferred Pharmacy” considerations.
- This process can take from one hour to several hours to do properly.
- Once you find an “optimal” plan, you may not even be appointed and certified to sell it, so you could either refer the client (and get no commission) or sell a less than “optimal” plan.
What’s worse, by trying to optimize plan choice at a point in time, you are setting yourself up to run these plans over again the following year. Due to the structure of the bid process, there is a VERY HIGH probability that the “hot” plan in any given year will be required to take large increases the following year (in fact, this is almost a CERTAINTY, due to how the bids are done each year).
This means you are setting yourself up for annual plan changes where you receive no additional commissions for your time and energy. One year, “low ball” pricing is simply not sustainable. Most Medicare Beneficiaries DO NOT WANTO TO CHANGE PLANS from one year to the next, so as their plan changes (premium increases, benefit cuts and formulary changes), they end up spending more over a period of years.
HOWEVER, THERE IS A BETTER STRATEGY!
There are four SUSTAINABLE LONG TERM competitive advantages a PDP can use:
- Strong “client facing” Pharmaceutical Benefit Management (PBM). This involves actively working with the member and the member’s physician to find cost-effective solutions which don’t compromise the effectiveness of the client’s drug regimine.
- Stong formulary management. By negotiating with the Pharmaceutical companies, a PDP can build a comprehensive formulary to maximize discounts and still offer alternatives to cover all conditions. Effectively, NOT having ALL drugs on the formulary is more cost effective (long term) than simply covering all drugs.
- “Preferred” Retail and/or Mail Order discounts. By driving store traffic to a “Preferred” Retail pharmacy, a PDP can offer sustainable discounts on drug pricing by capturing dispensing fees and other Retail “walk in” sales activity.
- Other “Preferred” Retail Discounts. The store can leverage the walk in traffic to it’s stores by offering steep discounts on “over the counter” sales. The member can save money on the “over the counter” items they are buying anyway which can be used to justify paying a little more for a PDP.
Ritter Insurance Marketing is pleased to announce that we will soon be offering to our insurance agents a PDP plan which offers ALL FOUR sustainable competitive advantages!
Look for more details coming soon!
I was thinking of referring out pdp prospects or running a Medicare.gov PDP comparison for prospects on a laptop while in home as a free service ( no materials will be left with client ) because if i make an appointment with a med supp prospect and make it clear i will not be selling them a MA or PDP then that appointment doesn’t come under MIPPA marketing rules as far as scope letter, cross selling etc. right ?
I really don’t want to sell stand alone PDP anymore because the risk ,restrictions and 20.00 commission is not worth it. I really wish Medicare would just standardize stand alone PDP plans and make it available only through Medicare.That would at least clean up some of the clutter since the line between original Medicare and the private Medicare option wouldn’t be as blurred .
I have spent a great deal of time finding my clients the best plan based upon their medication needs. I use the plan finder on Medicare.gov.
However, either the plan finder is inaccurate (can’t be, it’s a government site) or the plans change their formularies as fast as I change my socks.
Either way, my clients have difficulty getting their medication and I look like an idiot.
In addition, that $25 commission might put me over the top and have to pay higher Obama taxes.
Rick
Craig,
Personally I don’t worry about the PDP too much. My experiences, and please correct me if I am wrong, is other than the $295 deductible that applies to some plans, there is not much of a difference in plans. They all have the “donut hole” when you get to $2,700 anyhow and almost all plans cover generics through the “donut hole”. Its impossible when you are meeting with 15 to 20 prospects weekly to sort out everyone’s medications and compare each companies formulary. If a prior authorization is required that can usually be obtained by the patients physician with a little effort from the insured and the providers office. The only real copay difference is the different tiers and related copay for each tier, i.e., Highmark may have lipitor at tier 2 and Coventry may have lipitor at tier 3.
In Pennsylvania, if you are 65 or older I encourage all agents to try and get their clients qualified for PACE or PACE net if possible. PACE only considers income when determining eligibility and not assets so even well off people qualify if their combined income is under $31,200 for a married couple and Governor Rendell is considering upping that threshold to $40K in annual income. Also, see if your client is eligible for low income subsidy through the social security administration and that will help them also.