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1. FAST FACT

Only 25 percent of US retirees in 2009 say they are very confident that they will be able to cover the cost of medical expenses during their retirement, compared to 41 percent of retirees in 2007. (Employee Benefit Research Institute, The 2009 Retirement Confidence Survey: Economy Drives Confidence to Record Lows; Many Looking to Work Longer, April 2009)

2. CMS CUTS PAYMENTS TO MEDICARE ADVANTAGE PLANS

Private Medicare health plans will receive up to four or five percent cuts in Medicare subsidies under 2010 payment rates announced by the Centers for Medicare and Medicaid Services (CMS) on April 6, 2009.

The 2010 subsidy cuts are based on a legal formula linked to costs under Original Medicare and are designed to ensure that payments based on the health status of enrollees do not overpay private plans, which tend to have healthier, less costly enrollees than Original Medicare.

Currently, Medicare pays so-called Medicare Advantage plans 14 percent more on average then the program spends on people enrolled in Original Medicare. President Obama proposed changes to the payment formula in his administration’s budget which could save as much as $175 million over the next ten years.

Supporters of decreasing payments to Medicare Advantage plans believe these cuts will create significant government savings and force the plans to be more efficient in delivering care. Insurers argue cuts will force them to charge higher premiums to people with Medicare and offer fewer benefits.

3. INSURERS USE QUESTIONABLE TACTICS TO PRESERVE OVERPAYMENTS

America’s Health Insurance Plans (AHIP), the health insurer’s lobby, has ramped up efforts to advocate for preservation of overpayments to Medicare Advantage plans, according to Congressional Quarterly. AHIP is the group behind The Coalition for Medicare Choices, an organization that opposes the Obama Administration’s proposed cuts to Medicare Advantage plans.

AHIP is a national association representing nearly 1,300 health insurance companies. According to the Coalition for Medicare Choices website, the address for the Coalition is the same as AHIP.

The insurance industry-sponsored coalition hosts town forums around the country where it offers door prizes and free food for those who attend the events, according to The Eagle Tribune, a Lawrence, Massachusetts newspaper. At these events, attendees are asked to write letters to members of Congress and record videos in support of Medicare Advantage plans—plans run by AHIP’s members.

AHIP hired a consulting firm to generate “grassroots” support for Medicare Advantage plans. Recently, the firm tried to place letters to the editor of The Eagle Tribune, supposedly from older Americans, arguing against cutting overpayments to Medicare Advantage plans. However, when the paper contacted the individuals who allegedly authored the letters, those individuals stated they did not write them. The Eagle Tribune also received a phone call from a man claiming to be the grandson of an author of a letter, who asked if the paper planned to publish the submission. Upon further investigation, the paper discovered that the inquiry was from an intern for the consulting group who was in no way related to the individual whose name was on the letter, nor did the individual recall writing or sending the letter.

4. NEW CMS PILOT PROJECT AIMS TO REDUCE HOSPITAL READMISSIONS

The Centers for Medicare and Medicaid Services (CMS) announced a pilot program April 14, 2009 intended to eliminate preventable hospital readmissions. According to CMS officials, data shows that nearly one in five patients that leave the hospital will be readmitted within the following month, and that more than three quarters of those readmissions are potentially preventable.

The Care Transitions Project will take place in 14 communities around the country, including those in New York, Florida, Texas, Colorado and Washington, and will run through the summer of 2011. The project will rely on Quality Improvement Organizations (QIOs), which are groups in each state contracted by CMS to improve the quality and efficiency of care received by people with Medicare. CMS will use QIOs in participating communities to implement a customized local plan that will examine and address issues related to medication management, post-discharge follow-up, and care plans for patients who move across health care settings, for example from a hospital to a skilled nursing facility.

The pilot represents a new approach to systematic problem solving for CMS because it focuses on a more localized examination and solution to the hospital readmissions issue rather than a one size fits all answer, Barry Straube, the agency’s chief medical officer told Congressional Quarterly.

5. CASE FLASH: GETTING COMPATIBLE DRUG COVERAGE FOR YOUR MEDICARE HEALTH PLAN

When Ms. S became eligible for Medicare she enrolled in a Medicare HMO. HMOs are a type of Medicare private health plan (also called a “Medicare Advantage” plan) paid a set amount by Medicare to provide Medicare benefits. Through the HMO, Ms. S received Medicare health coverage, but she did not have Medicare prescription drug coverage (Part D).

The next year, Ms. S started to take a prescription regularly for arthritis. During the Annual Coordinated Election Period (from November 15 to December 31, when people with Medicare can add, switch or drop health or drug coverage), she spoke to an insurance agent about a stand-alone Medicare prescription drug plan (PDP), a private plan that only offers drug coverage. Ms. S figured that, since she already had health coverage, all she needed was her prescriptions covered and she would be set.

The insurance agent told Ms. S if she joined the PDP, she could keep her HMO. Her drug coverage would begin January 1. So, with the agent’s help, Ms. S enrolled in the stand-alone drug plan. However, when Ms. S went to her doctor in February and her doctor billed the HMO, Ms. S received a denial of coverage. She called the HMO and was told that she had been disenrolled from the plan.

Ms. S called the Medicare Rights Center hotline for help. She was told by a counselor that the insurance agent had given her incorrect information; if you are in an HMO you cannot also have a PDP. You must get your drug coverage as part of your HMO’s benefits package. The counselor further explained that the insurance agent was at fault for giving her incorrect information and should not have enrolled her in the stand-alone Part D plan. PDPs are generally only for people with Original Medicare (the traditional Medicare health plan that is run directly through the federal government). There are a few private health plans types that let you have a PDP but an HMO is not one of them. When you choose Part D coverage, you need to choose drug coverage that works with your Medicare health coverage. If she wanted to keep an HMO—which Ms. S said was her preference—she would have had to switch to a different one that offered both Medicare health and drug coverage.

The counselor went on to explain that because the insurance agent misled Ms. S, her enrollment in the PDP was fraudulent. Therefore, Ms. S had the right to ask Medicare for a Special Enrollment Period to change plans. She could retroactively disenroll from her PDP, and enroll in a Medicare HMO with drug coverage. She should be sure to choose one that has her preferred doctors and hospitals in its network. Her coverage would be retroactive to January 1. She would then need to have her doctor submit the bill for her February visit to the new plan to have it covered.

By retroactively enrolling in a Medicare private health plan that offers drug coverage, Ms. S would be covered for her health and prescription costs back to January. However, she would need to pay her new plan’s monthly premium for the two months of retroactive coverage. Because Ms. S did not enroll in Part D when she was first eligible and she did not have any other creditable prescription insurance, she will have to pay a monthly premium penalty for her drug coverage that is equal to an extra one percent of the national average Part D premium for every month that she did not enroll after she was first eligible.

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Medicare Rights Center

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New York, NY 10018

Telephone: 212-869-3850

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Web site: www.medicarerights.org

Medicare Watch is the Medicare Rights Center’s fortnightly newsletter, established to strengthen communication with national and community-based organizations and professional agencies about current Medicare policy and consumer issues. Each edition contains news of recent policy developments affecting Medicare and health care generally and a case story from our hotline that illustrates steps professionals can take to get older adults and people with disabilities the health care they need.

The Medicare Rights Center is a national, nonprofit consumer service organization that works to ensure access to affordable health care for older adults and people with disabilities through counseling and advocacy, educational programs and public policy initiatives.

© 2008 by Medicare Rights Center. All rights reserved.

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