NEW ORLEANS (WVUE) - "I really like the blueberry cake donut the best," says Stephanie, showing us around the shop where she works, Blue Dot Donuts in New Orleans.
They fry enough donuts to satisfy everyone's sweet spot; about 450 a day line one display case.
"We also have the red velvet, which is delicious," Stephanie says. "Super cheap."
A single donut costs 95 cents, hole and all.
Why do most donuts have holes? "So they fry evenly, throughout the entire donut," Stephanie tells us. "You're not stuck with a doughy donut."
To many, that hole makes the perfect donut. But when it comes to Medicare, a donut hole can become quite sour for patients.
"They should call it, just, the hole, or the pit," says Doug Hoey, who heads the National Community Pharmacists Association.
The Medicare Part D program provides prescription medication for seniors, but It should matter to everyone - because it's partially funded with taxpayer money. It cost taxpayers $97 billion in 2016 alone.
"That's why I'm here," says a local pharmacist, who asked us to protect his identity. "It's ethically and morally wrong. I think it's gotten to the point now that a blind man can see, this is fraud on the grandest of scales."
This pharmacist calls what insurance companies and pharmacy benefit managers, or PBM's, are doing to patients and taxpayers is wrong.
"The greed at the PBM and insurance-company level is hard to imagine," he says.
Here's how the three stages of Medicare Part D work:
The initial stage covers the first $3,700 of the total drug retail cost. For this period, the insurance company pays 75 percent of the drug cost, the patient 25 percent. That breaks down to $2,775 for the insurance company and $925 for the consumer.
At this point the patient enters Medicare's coverage cap, also known as the donut hole. And here is where they feel a bigger pain in their pocketbook. The patients in the donut hole for the next $3,700 in drug costs. The insurance company's portion drops from 75 percent to 10 percent, while the patient's costs increases to 40 percent. The remaining 50 percent is actually a drug manufacturer's discount, given to the insurance company. The donut hole's expense breaks down like this: the insurance company pays $370 while a patient is on the hook for $1,480.
Once that $3,700 is spent, the patient moves out of the donut hole and into what Medicare calls "catastrophic coverage". Now, the insurance company pays just 15 percent of the costs while the patient pays just five percent - and the remaining 80 percent is where your tax dollars come into play, as the federal government picks up that tab.
To be clear, this cost breakdown is for brand drugs; it's different for generics.
But that donut hole remains the critical section of Medicare Part D for many seniors. It costs them the most money while the insurance companies pay less.
"They want you into the donut hole," Hoey says. "The more expensive your drugs are, the faster you're getting pushed into the donut hole."
Our local pharmacist recently received a document from CVS Caremark. It lists 12 brand name drugs that recently became available in generic.
Typically, generic drugs cost less. But CVS Caremark instructed the pharmacist in the Part D plan to reject generics, and to only cover brand name drugs.
The brand name drug Aggrenox, for example, reduces the risk of stroke. Caremark requires the brand Aggrenox and won't allow the cheaper generic version. At one local pharmacy, Aggrenox costs about twice as the generic.
The same is true for Nasonex and Invega - more drugs where Caremark requires the brand name instead of the generic.
"As a consumer, why do you think an insurance company would pay for brand when the generics are cheaper?" the pharmacist wonders. "The reason why is because they aren't paying the brand price. You're paying the brand name price and they're keeping the difference… The insurance company is getting a big rebate from the brand name company."
Consider: You hit the donut hole when the total drug retail price reaches $3,700. When the insurers make you buy the brand name drug, you reach the hole faster. But while you pay more, the insurance companies may not because, experts say, they get a rebate on that brand name drug. And that allows them to pay less than the full price.
A spokesperson from CVS Caremark told us, "There are some situations where a Medicare Part D beneficiary's out-of-pocket cost is less for the brand drug than for the single source generic version of that drug. This generally occurs when a generic is first introduced to the marketplace and is available from only one generic manufacturer."
"This has nothing to do with consumer health or anything else," our pharmacist says. "This has everything to do about money."
The faster someone gets pushed into the donut hole, the faster they may get out of it, again moving patients into that last stage they call "catastrophic coverage". That means all taxpayers in the country fund most the bill.
The head of the NCPA says it's hard to believe the federal government allows this.
"The government is paying for it and we all know who funds the government," Hoey tells us, "me, you and all of your viewers."
Priscilla Pendzimaz is a retiree who has felt the impact of this practice. Pendzimaz is a Jefferson Parish election worker – she runs Precinct 34 right out of her garage.
"We have a lot of people who voted for the presidential election," she tells us. "It's a wonderful feeling to know that our neighbors, the people in my neighborhood, can come here. A lot of them walk on the levee and come down and vote."
Pendzimaz is serious about her civic work. "If something happens, the finger points to you," she says.
But she wonders whether insurers and drug companies are serious about taxpayers' best interests.
"I don't think my drug company is following the rules," she tells us.
She takes Crestor, and last year she noticed the price shot up from $30 to $40. It jumped yet again, to $114.
"Where am I going to find the extra money?" she thought to herself.
Pendzimaz is a retired school teacher, and lives on a fixed income. And the higher drug costs meant "less money in this pocket because I've got to take it out of this pocket to pay," she says.
She tried to get the generic; the pharmacist told her the price wouldn't change. But last December, her insurance company, Aetna, sent her a check - nearly $500 - for overcharging her about $67, each time she got her prescription filled.
Aetna had overcharged her under the Part D program for prescription drugs.
"That way they don't have to pay quite as much," she says. "If I'm paying $114 instead of $60, that's going to throw me up high in the budget, you know? That will get me in that donut hole much faster than I should have."
She thinks our Medical Waste investigation helped land her a big refund check. But she still doesn't see any rhyme or reason to what happened in her case.
"They know; I don't," she says.
It's a sweet ending for this Jefferson Parish retiree. But for millions of other Americans, the actions of some insurance companies leave a bad taste.
"I like to say it tastes like a donut hole, which is air, but it actually hurts more than that," Hoey says.