Reuters Money

The mailboxes of senior citizens fill up this time of year with an avalanche of direct mail pitches for Medicare D prescription drug plans and Advantage managed care networks.

With dozens of plans available in most parts of the country, the fall annual enrollment period can be a complex chore for Medicare beneficiaries — and sometimes for adult children helping out elderly parents with money matters. Annual enrollment runs from November 15 to December 31, which often leads to an end-of-year rush that collides with the holidays.

It’s not mandatory for seniors to buy either a Medicare D or Advantage plan. Only 25 percent of Medicare beneficiaries opt for Advantage; the rest use traditional Medicare’s fee-for-service system. But prescription drug coverage makes sense for anyone with significant expenses.

And this much is clear: enrollees in either Medicare D or Advantage need to shop the market every year. Insurance companies often change their offerings from year to year in ways that can boost premiums by thousands of dollars, or make it difficult to get certain drugs. And, the health needs of patients change from year to year.

Shopping around is even more important this year, as the new health care reform law and other policy changes begin to reshape certain parts of the Medicare marketplace. Here’s a run-down of the new and noteworthy trends for 2011, along with tips on how to shop smart.

Medicare D. Some prescription drug plans will be eliminated as new federal policy pushes insurers to offer only plans that are clearly differentiated from one another. “We’ve been saying for a while that there are too many plans, and that it’s too hard to choose, says Vicki Gottlich, senior policy attorney at the Center for Medicare Advocacy. “The consolidation this year will make it easier, since the plan choices really will have meaningful differences.”

Premiums are expected to rise an average of 10 percent among the top plans, according to Avalere Health, a research company specializing in health care. “Many people don’t shop around, and they should,” says Dan Mendelson, Avalere’s CEO. “Prices are rising because people are using more drugs, and the drugs are getting more expensive.

An example: more Medicare D plans this year are adding coverage in the doughnut hole, the coverage gap that starts when a drug plan beneficiary’s annual drug costs hit $2,830 and continues up to $4,550, when “catastrophic” coverage kicks in.

One-third of D plans are expected to offer some form of gap coverage in 2011, up from 20 percent in 2010. Gap coverage is worth paying for if you expect to enter the doughnut hole, but might not be worth the higher premiums for enrollees who don’t expect to have very high drug costs.

Separately, the new Affordable Care Act (ACA) gradually closes the doughnut hole entirely between now and 2020; next year, pharmaceutical companies will provide a discount of 50 percent on brand-name drugs to low- and middle-income beneficiaries who find themselves in the gap.

Medicare Advantage. Most Advantage plans are HMO or PPO managed care networks. Critics of the Affordable Care Act (ACA) have predicted that the new law’s provisions will send Advantage premiums through the roof and decimate plan offerings, but there’s no evidence of that yet. Premiums will dip an average of one percent next year, according to the Centers for Medicare & Medicaid Services (CMS), the federal agency that administers Medicare. Meanwhile, the plans exiting the market mainly are those that don’t want to meet a provision of the 2008 Medicare Improvements for Patients and Providers Act, which requires all Advantage plans to have provider care networks.

Enrollment windows. It’s more important than ever to make smart choices during the fall annual enrollment period, because the ACA shortens the following “open enrollment period,” which allows beneficiaries to change their minds. Open enrollment next year will run only from January 1 through February 15^th (six weeks less than in previous years). And the only change permitted during that window is opt out of Medicare Advantage in favor of traditional Medicare; a Medicare D plan also could be added.

“Previously you could go back and forth — starting this year, you can’t,” says Adrienne Muralidharan, senior Medicare specialist for Allsup, which provides fee-based Medicare shopping services.

Extra help. The ACA improves the Extra Help prescription drug program, which pays 100 percent of premiums for millions of low-income seniors. The number of Extra Help plan options will increase next year, and the number of beneficiaries who find themselves shuffled among various plans will plunge 57 percent, according to Avalere.

Shopping. When shopping for a Medicare D plan, don’t look only at premiums. It’s important to confirm that all your prescriptions will be covered in the correct quantity — and whether they require any prior approval from the insurance company. “Cheaper isn’t always better,” says Joe Baker, president of the Medicare Rights Center. “For example, prior approval can be a big hoop to jump through. It can be just like a denial, and you might need to get it approved more than once a year.”

And look closely at Advantage plan provider networks to see whether your preferred doctors and hospitals are covered. “Ask your doctors if they are in the network you’re considering, and what they think of the plan,” says Baker.

The best online shopping tool is the Medicare Plan Finder at the Medicare website. Plug in your Medicare number and drugs (you’ll need each drug’s name and dosage); the tool then displays a list of possible plans; their estimated cost, premiums, and deductibles; which drugs are covered; and customer-satisfaction ratings. The finder also will give you advice about drug utilization and restrictions.

For more personalized help, visit your local State Health Insurance Assistance Program (SHIP), a network of non-profit Medicare counseling services. Local SHIP contact information can be found on the back of the Medicare and You 2010 handbook.

The Medicare Rights Center also offers free counseling by phone.

Photo: A pharmacist counts pills in a pharmacy in Toronto in this January 31, 2008 file photo. REUTERS/Mark Blinch/Files