At this time of year, people enrolled in a Medicare Advantage plan cannot change their plan, or dis-enroll from their plan – unless they meet certain requirements such as: they are moving to a new state; they qualify for a chronic illness plan; they get help with their prescription costs through the Low Income Subsidy (LIS). These people get a “special election period” to enroll in a new Medicare Advantage plan at this time of year.

So how did a client of mine get changed from one Medicare Advantage plan to another when she did not qualify for a “special election period”? The answer is that her husband made a mistake by using an on-line application for a product he did not understand.

Bill was trying to help his wife, who is disabled and under 65. She has been enrolled in a Medicare Advantage plan since she got her Medicare last summer. But because Medicare Advantage plans pay 80% of the cost for durable medical equipment, Bill went on-line to see if he could get some kind of supplement to cover 20% of the cost of the expensive wheelchair his wife will need soon.

Bill is a smart guy, but he made a mistake by filling out an enrollment form on the Humana website. Bill thought he was signing his wife up for some sort of supplement that would fill the gaps in his wife’s Medicare Advantage plan. He put in his wife’s Medicare information and hit the submit button. Then he realized he had made a mistake, so he called Humana and asked them to cancel the application he had just submitted electronically.

The Humana representative told him she would cancel his on-line application, so he thought he was okay. That was near the end of February. Last week, Bill got a $177 bill for the Humana Gold Choice Private-Fee-For-Service (PFFS) Medicare Advantage plan. Uh, oh.

Bill called Humana and they said his wife is enrolled in their Advantage plan. He called Health Net, the plan his wife had been in, and was told she had been dis-enrolled from their plan.

Bill called me and I couldn’t understand how his wife got enrolled in the Humana plan because she is not allowed to change her plan at this time of year. Even though Bill made a mistake by submitting an on-line application, it should have been rejected because his wife does not have a “special election period” (SEP) to change her plan. Humana should have realized this and rejected the application. Additionally, Medicare should have rejected the application.

So what SEP code did Humana use to get this application through Medicare’s enrollment period rules? And why did someone at Humana tell Bill she would cancel the application and then not do it?

Bill and I called Medicare and were told by a representative that there was nothing Medicare could do about the Medicare Advantage plan change because it was done on-line.   The Medicare rep said Bill’s wife is stuck in the Humana PFFS plan until next January.

After some discussion, the Medicare rep got a supervisor who gave us a different answer.  The supervisor said she would put in a “complaint” to Humana and Health Net and ask them to cancel the Humana enrollment and re-instate the Health Net enrollment for Bill’s wife.

All this happened a week ago, last Friday. On Monday of this week, Health Net called Bill.  On Wednesday, Bill got a call from Humana. They said they will try to fix the enrollment mistake. So we’ll wait and see if the Medicare Advantage companies can fix a problem Medicare said it could not fix.

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The lesson here is that even smart people like Bill can make mistakes when they fill out important applications on-line. Enrolling in Medicare Part D, or a Medicare Advantage plan is too important to do on-line. Bill did not understand what he read about the Humana Gold Choice PFFS plan, but he figured it couldn’t hurt to put in an application.

Yikes!  Bill had no idea about the consequences of that application. He did not realize it would cancel his wife’s Health Net Medicare Advantage plan and replace it with a very expensive Humana PFFS plan that requires higher co-pays than the Health Net plan and the same 20% co-pay for an expensive electric wheelchair.

But how did the application get through to Medicare and get approved by Medicare? It should have been rejected by both Humana and Medicare. Hopefully this all gets fixed, but we’ll have to wait and see.

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.

How does a person pick a Medicare Advantage plan?  Is the hospital network the most important factor?  Is having the biggest network of doctors important?  Is the plan with the lowest co-pays for doctor visits and hospital stays the top choice?  Are drug co-pays for expensive brand drugs the deciding factor?

The answer to all the questions above is “yes”….. depending on the person making the decision.

HOSPITALS:

Some people want to go to University Medical Center (UMC in Tucson) if they need complicated surgery – but only two Medicare Advantage plans in Tucson are contracted with UMC. So this would narrow down a person’s choices for a Medicare Advantage plan pretty quickly.

DOCTOR NETWORK:

Some people have four or five doctors and they want to keep seeing them when they get on Medicare. If they want an Advantage plan, their insurance agent will need to make sure all their doctors are contracted with the plan he recommends.  In Tucson there are two or three Advantage plans that have very large networks that might include all five of a person’s doctors.  So this will narrow down a persons Medicare Advantage plan options.

LOWER CO-PAYS:

If a person is turning 65 and hasn’t been to a doctor in a long time, she might be more open to a small-network Advantage plan. Small-network plans will have lower co-pays for doctor visits, hospital stays, outpatient surgery, and skilled nursing facility charges.

If cost is the most important factor for someone turning 65 and considering Medicare Advantage, they will choose an Advantage plan that has a small network.

DRUGS:

Drug co-pays can vary from Advantage plan to Advantage plan. One brand drug might have a $45 co-pay on one plan, and that same drug might have a $95 co-pay on another plan.  Even co-pays for generics can be very different from plan to plan. One Advantage plan charges $15 for Hydrocodone while another plan charges $40 for the same generic drug.

Insulin is another drug with very different co-pays from plan to plan. One plan has no charge for insulin, except for the new insulin pens that are easier for people to use. These insulin pens have a $35 co-pay, but the lancets have no co-pay.  Most Advantage plans charge a $45 co-pay for all insulin, and one plan charges $35 for the insulin pen lancets in addition to the $45 pen co-pay.

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I can’t name names here because I am an insurance broker and I cannot be seen as promoting one Advantage plan over another.  Actually, there isn’t one plan I would say is “the best” - which is something Medicare strictly forbids agents from saying.  Some plans have big networks. Some plans have a smaller network and lower co-pays.

I have talked to people who are diabetic and suggested they enroll in the plan that has no charge for insulin. But a number of people would not consider this plan even if they could save a lot of money on their medical and drug bills. Their decision came down to keeping their three or four doctors, or their concern about being in a Medicare Advantage plan with a small network of hospitals and doctors.

Picking a Medicare Advantage plan is easy for a healthy person. For folks with a long list of doctors and drugs, selecting a Medicare Advantage plan can be quite complicated.