Are big changes coming to Medicare Advantage? For an answer to that question we’ll have to wait until this fall when the details of 2014 Medicare Advantage plans are announced.  But a perfect storm of required payment cuts to Advantage plans and a new report of past overpayments to the insurance companies that run them is a little scary.

Over 12 million people are enrolled in Medicare Advantage plans around the country. In Arizona, around 45% of Medicare beneficiaries in Maricopa, Pinal, and Pima counties are enrolled in Advantage plans.  In Arizona, most Advantage plans have no monthly premium, making them very attractive to cost-conscious seniors.  Financial issues could put an end to these zero-premium Medicare Advantage plans.

According to an article at Bloomberg.com, Medicare Advantage plans were paid about $135 billion in 2012. For 2014, those payments are supposed to be cut by around $11 billion.  Executives at insurance companies running Medicare Advantage plans are warning that big changes will have to be made if these cuts go into effect.

And then there is a recent report by the Government Accounting Office (GAO) saying that Medicare Advantage plans were overpaid by as much as 5.1 billion dollars over the last three years. And, I suppose, Medicare will want that money back.

According to the Bloomberg.com article:

The overpayments happened because Medicare Advantage plans claimed that their patients were sicker on average than those in the traditional fee-for-service program, the GAO said in its report. Medicare didn’t adjust its payments to the plans to sufficiently account for what the GAO called “differences in diagnostic coding” by the insurers.

What all this means for the 12 million people enrolled in Medicare Advantage plans is unclear. But the answer will arrive in the mail later this year.  You see, at the end of September, Medicare Advantage companies must send their Annual Notice of Change (ANOC) to everyone enrolled in their plans. This ANOC will tell people how much or how little their plan will change for 2014.

Will some or all of the Medicare Advantage plans in Arizona have premiums for 2014? What if one company holds onto their $0 premium plan while others have premiums?  Will thousands of Arizonans change to the $0 premium plan? Will everybody be shopping for a new plan this fall?

Yikes! The next Medicare Open Enrollment Period (October 15 – December 7) could be a wild one. But we’ll just have to wait until September to know for sure.

What terrible things has “Obamacare” delivered since the Affordable Care Act was passed in 2010?  According to the Center for Medicare Advocacy, here is how the healthcare reform law has affected Medicare:

• Closing the Medicare Drug Coverage Gap. 2011 is the first year of a multi-year phase out of the “donut hole”.  For 2011, beneficiaries pay only 50% of the cost of brand name drugs in the donut hole and 93% of the cost of generic drugs.
• Medicare Preventive Services. This provision requires Medicare to eliminate cost-sharing for Medicare-covered preventive services rated as A or B by the U.S. Preventive Services Task Force. It also waives the Medicare deductible for colorectal screening and authorizes coverage for an individualized prevention plan.
• Changes to Increased Medicare Premiums for Higher-Income Beneficiaries. Since 2007, Medicare beneficiaries with incomes above a certain level have been required to pay higher Part B premiums. The ACA froze the income level at which such premium surcharges apply at $85,000/year through 2019 and expanded the surcharge to also apply to Part D premiums.

• Medicare Extra Payments. For the years 2011 through 2015, Medicare will pay a 10 percent bonus for primary care services; it will also pay a 10 percent bonus to general surgeons practicing in areas with a shortage of health professionals.
• Medicare Advantage (MA) Payment Changes. Beginning in 2011, Medicare Advantage payments are restructured at an increasingly smaller percentage of original Medicare rates. Prior to the restructuring, MA payments were, on average, 13% higher than those for traditional Medicare. Also beginning in 2011, MA plans are prohibited from charging higher cost-sharing than original Medicare for skilled nursing facility care, chemotherapy and kidney dialysis.  In 2012, MA plans with four or five stars on a five star quality rating system are entitled to bonuses. The Centers for Medicare & Medicaid Services has expanded the bonus payment program to include plans with three stars. NOTE: This is good news for MA plans in Arizona!

• Medicare Independence at Home Demonstration. This provision creates a demonstration program to provide high-need Medicare beneficiaries with primary care services in their home.
• Medicare Value-Based Purchasing. Beginning October 1, 2012, Medicare will pay hospitals based on their performance on certain quality measures and will move toward making such payments applicable to skilled nursing facilities, home health agencies and ambulatory surgical centers.
• Reduced Medicare Payments for Hospital Readmissions. Beginning October 1, 2012, Medicare will reduce payments to hospitals for preventable readmissions within 30 days.
• Data Collection to Reduce Health Care Disparities. Effective March 23, 2012, the ACA requires the collection and reporting of certain data on race, ethnicity, sex, primary language, and disability status.

The phone is ringing and there are lots of people to see. Many of them are current clients who think they might want to change their Part D plan or their Medicare Advantage plan. Some definitely need to make a change.

Comparing Plans

One client, Nancy, was thinking of changing to the Medicare Advantage plan in which her husband is enrolled, so we compared her plan and his plan benefit by benefit.

It turns out Nancy’s plan MOOP is going way up in 2012.  The MOOP is the Maximum-Out-Of-Pocket she would pay each year in co-pays for Medicare-covered services. The MOOP is particularly important when people are treated for cancer, because radiation and chemo therapy have a 20% co-pay in every Medicare Advantage plan. And that 20% quickly adds up to five thousand dollars or even ten thousand dollars.  So the lower the MOOP, the better the financial protection for people enrolled in Medicare Advantage plans. The plan Nancy was considering has a lower MOOP,  but otherwise looked pretty comparable to her plan.

But when we got to diagnostic tests, we saw that the two plans are very different. Nancy’s plan covers many diagnostic tests for $0 co-pay, while her husband’s plan charges 20% per test. Nancy is going to get a series of tests early next year, but she is generally very healthy.  After some thought, she decided she should stay with her current plan.

Doctors not in the network

I met with a man who, last spring, changed to a Medicare Advantage plan with low co-pays and a low MOOP. But after a few months in the plan, he was surprised to discover that most of his doctors are not contracted with the plan. His primary doctor is in the network, but not his urologist, his dermatologist, or his opthalmologist.  Just some minor details that were overlooked by the agent who signed him up!

Part D plan changes

I have previously written about a Part D plan in which I enrolled a few people two years ago, when the premium was just $25.00 per month. It had gone up to $36 for 2011, and it will go up to over $71.00 for 2012!!  The plan is under the Unicare name. I name this plan because only one of my clients actually read the Annual Notice of Change (which everybody receives). I’ve gotten hold of  my other clients who are enrolled in this plan, and they had no clue about the outrageous premium increase.

The problem with Part D is that plans can change drastically from year to year.  And I would say that a majority of seniors do not read the materials they receive from their Part D plan.  But if they miss the Open Enrollment Period (October 15 – December 7) when they can change to another plan, they will be stuck paying an outrageous amount of money in 2012, because Medicare will say, “Too bad you weren’t paying attention”, or “You snooze, you lose”.