Yesterday, Mitt Romney did his white board presentation comparing President Obama’s plans for Medicare to his own. Romney painted a bleak picture of Medicare under Obama, and offered his own vision for the program that provides health insurance to 48 million Americans. Romney said his plan for Medicare would be “very much like what we have today with Medicare Advantage”.

Currently, nearly 30% of Medicare beneficiaries are enrolled in Medicare Advantage plans across the country. Medicare Advantage enrollment is around 50%  in cities such as Phoenix, Tucson, Philadelphia, Buffalo, and Miami (and many more).

Medicare Advantage plans receive a base payment of around $800 per month from Medicare for each person enrolled with them. In Florida, plans get $1,100 per person per month. With this “premium” paid by Medicare, Advantage plans pay the medical bills for their members.

People enrolled in Medicare Advantage plans have co-pays for every medical service they receive, and this is very similar to the kind of health insurance they had through their employers (if they worked for a large employer and had good coverage).  If people are healthy, they will have very low out-of-pocket costs in a given year. If they get sick, their out-of-pocket costs are currently capped at $6,700 per year (or lower depending on their plan).

I think Medicare Advantage could be a good business model for Medicare except for a few things:

Capping Medicare costs: Payments to Advantage plans are risk adjusted, so Medicare pays more for people who are sicker and more costly for the plans. Medicare’s payout is not capped under the current system.  Ryan and Romney would cap what Medicare pays for each person’s coverage, so the risk would shift from Medicare to insurance companies.  Why would insurance companies take on this risk?  I suppose they would raise their premiums each year to make sure they make a profit. But if Medicare “vouchers” do not increase enough, will seniors have to pay the difference? What if they can’t pay the higher premium each year?

Competition is costly: Ryan and Romney say competition among Advantage plans will keep costs down, but competition requires advertising and big salaries for management. Today’s Advantage plans have administrative costs (including profit) of around 15% of their total revenue.  Original Medicare, which doesn’t do much advertising and doesn’t pay million dollar salaries, has administrative costs of around 4-5% of its budget.

Profits: Advantage plans get to make a profit from doing business with Medicare. If Advantage plans have a 5% profit margin, let’s do the math. Medicare spent $486 billion in 2011.  $486 billion x .05% =  over $24 billion. That’s profit going to insurance companies rather than staying in the Medicare Trust Fund.

Questions for Mitt:

I’d like to ask Mitt Romney how he can justify $24 billion every year going to insurance company profits under his version of Medicare.

Mitt also pointed out in his whiteboard presentation that Obamacare payment cuts to Medicare Advantage plans will cause insurance companies to cancel plans around the country. He said four million people will lose their Advantage plan under Obama.

I’d like to ask Mitt Romney if he thinks it’s okay for Medicare to spend more money on seniors in Medicare Advantage plans than those on Original Medicare. If Advantage plans are not saving Medicare money, is that a good deal for Medicare? And if it’s not a cost-saving model now, how will it be under his version of the program?

Here is an article by David Sayen, Medicare’s regional administrator for Arizona, California, Hawaii, and Nevada.

As a person with Medicare, you have certain rights and protections. And it’s worth knowing what they are.

You have rights whether you’re enrolled in Original Medicare – in which you can choose any doctor or hospital that accepts Medicare – or Medicare Advantage, in which you get care within a network of health care providers. Such networks are run by private companies approved by Medicare.

Your rights guarantee that you get the health services the law says you can get, protect you against unethical practices, and ensure the privacy of your personal and medical information. You have the right to be treated with dignity and respect at all times, and to be protected from discrimination.

You also have the right to get information in a way you understand from Medicare, your health care providers, and, under certain circumstances, Medicare contractors. This includes information about what Medicare covers, what it pays, how much you have to pay, and how to file a complaint or appeal. Moreover, you’re entitled to learn about your treatment choices in clear language that you can understand, and to participate in treatment decisions.

One very important right is to get emergency care when and where you need it — anywhere in the United States.

If you have Medicare Advantage, your plan materials describe how to get emergency care. You don’t need permission from your primary-care doctor (the doctor you see first for health problems) before you get emergency care. If you’re admitted to the hospital, you, a family member, or your primary-care doctor should contact your plan as soon as possible. If you get emergency care, you’ll have to pay your regular share of the cost, or co-payment. Then your plan will pay its share.

If your plan doesn’t pay its share, you have the right to appeal.

In fact, whenever a claim is filed for your care, you’ll get a notice from Medicare or your Medicare Advantage plan letting you know what will and won’t be covered. If you disagree with the decision, you have the right to appeal.

For more information on appeals, you can read our booklet “Medicare Appeals,” available at www.medicare.gov/Publications. Or call us, toll free, at 1-800-MEDICARE.

You can also file a complaint about services you got from a hospital or other provider. If you’re concerned about the quality of the care you’re getting, call the Quality Improvement Organization (QIO) in your state to file a complaint. A QIO is a group of doctors and other health care experts who check on and improve the care given to people with Medicare. You can get your QIO’s phone number at
www.medicare.gov/contacts or by calling 1-800-MEDICARE.

Many people with Original Medicare also enroll in Medicare prescription drug plans. Here, too, you have certain rights.

For example, if your pharmacist tells you that your drug plan won’t cover a drug you think should be covered, or it will cover the drug at a higher cost than you think you’re required to pay, you can request a coverage determination.

If the decision isn’t in your favor, you can appeal.

You can ask for an exception if you, your doctor, or your pharmacist believe you need a drug that isn’t on your drug plan’s list of covered medications, also known as a formulary.

You don’t need a lawyer to appeal in most cases, and filing an appeal is free. You won’t be penalized in any way for challenging a decision by Medicare or your health or drug plan. And many people who file appeals wind up with a favorable outcome.

This is a brief overview of your Medicare rights. For more details, read our booklet, “Medicare Rights and Protections,” at http://www.medicare.gov/Publications/Pubs/pdf/11534.pdf.

David Sayen is Medicare’s regional administrator for Arizona, California, Hawaii, and Nevada. You can always get answers to your Medicare questions by calling 1-800-MEDICARE (1-800-633-4227).

In Tucson and Pima County, competition is fierce among the four major players in the Medicare Advantage market. Medicare Advantage is popular among Pima County seniors, with 45% being enrolled in these private plans.

CMS (Centers for Medicare & Medicaid Services) released the latest numbers on Medicare Advantage enrollment, and here’s what it looks like in Pima County. I have not listed every plan, just the ones with the biggest enrollment.  I have not listed PPO plans, which have fairly small enrollment numbers. All of the plans below are HMO plans with a network of providers, though two of these plans have some local out-of-network options.

CareMore is only in its third year in Tucson, but its enrollment is growing fast, mostly by getting people to change from other Advantage plans. I can’t go into details here, lest someone think I’m promoting these plans.  I’m just reporting the numbers.

Health Net had over 19,000 member three years ago.  Then they became the first Tucson HMO to charge a premium, which led thousands of their members to move to other plans with $0 premium.

SCAN was supposed to be a new competitor in the Tucson market in 2012, but they seem to have put the brakes on building their provider network here. They say they made a decision to concentrate on their operations in Phoenix where they have 12,688 members and a large network of providers.

AARP Medicare Complete plans are actually UnitedHealthcare plans.  The AARP Medicare Complete is the old Pacificare plan and has been  around for a long time.  The AARP Medicare Complete Plus plan is known to providers as the “United plan” and has a different contract.

The enrollment numbers come from CMS and can be found at https://www.cms.gov/MCRAdvPartDEnrolData/MCESR/list.asp#TopOfPage.