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News November 2014

Washington Watch

Critical Questions to Consider During Medicare Open Enrollment Right Now

By Alan M. Schlein

You could be making a big mistake by not taking a fresh look because in many cases, plans have changed, doctors you count on have been dropped from specific plans and some plans have disappeared altogether.

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Medicare Advantage plans are offered by private insurance companies like United Healthcare, Cigna, Aetna and Humana, among others. Due to the Affordable Care Act (ACA) their costs are subsidized by the Medicare program. Because of those subsidies, more than half of Medicare Advantage beneficiaries last year paid $0 per month over Part B premiums. The Centers for Medicare and Medicaid Services projects the average MA premium for 2015 will be $33.90.

It could cost you money if you don’t reassess your Medicare plan during the open enrollment season that began October 15 and goes through December 7.

Most of the 54 million Medicare recipients will not switch their Medicare plans because, as focus groups have found, the process is very confusing and overwhelming. But you could be making a big mistake by not taking a fresh look because in many cases, plans have changed, doctors you count on have been dropped from specific plans and some plans have disappeared altogether.

The big news this year, although not a surprise, is that many companies are consolidating their Part D drug policy offerings, so the number of plans for 2015 will decline by about 14%, according to Avalere Health, a Washington DC-based consulting firm that studies and analyzes the health care industry. Your insurer should have notified you if your plan has been discontinued but not necessarily about changes.

While there will be many choices, some parts of the country appear to be harder hit by plan reductions than others, including the Southeast and mid‑Atlantic regions, according to Avalere.

You must choose one of two paths: traditional Medicare, which is the original fee‑for‑service program, or a federally subsidized Medicare Advantage (MA) plan, which typically operates like a health‑maintenance or preferred‑provider organization.

For most Medicare patients, Parts A (hospital coverage) and B (physician coverage) are not sufficient, since neither covers the costs of prescription drugs and they usually have extremely high co‑pays and deductibles. As a result, almost 90 percent of Medicare recipients have either a supplemental medigap plan or an MA plan to patch holes in their coverage.

Recently, Medicare Advantage plans have gained popularity, because when compared with a medigap policy, they usually cover a wider range of benefits, including prescription drugs and dental or vision care. Many MA plans also charge lower premiums, but you have to use the plan’s network of providers, instead of possibly having a much wider choice of doctors and medical professionals depending on what’s available in your area.

 

What’s Best for You?

The key to successfully picking your Medicare plan is to find out what has happened to the plan you already have. What’s most important, experts suggest, is that you not only look at the premiums, but also closely examine what your maximum out‑of‑pocket costs could be, what physicians and hospitals are in the network of providers you can use without incurring additional costs, what drugs are included in the list of covered prescriptions known as the plan’s formulary, the deductible you must first pay before the plan covers all your drugs, and what your co‑payments will be.

While experts agree about the need to shop around, there is no clear and simple way to do that. It’s complicated enough that Medicare’s guidebook, Medicare and You is 152 pages long.

You can compare both Medicare Advantage and medigap plans at www.Medicare.gov; get local assistance from a real person via your state’s health insurance assistance programs (https://shipnpr.shiptalk.org/); or hire a broker, who for a fee, will help you evaluate your Medicare supplemental plan options.

There are several other good websites that will help you do some comparison shopping. In addition to Medicare.gov, you can try Health Pocket (www.healthpocket.com), Einsurance (www.einsurance.com) and Go Health (www.gohealth.com).

Medicare has done some of the work for you, as far as determining the quality of plans, by rating all Medicare plans and Part D prescription drug offerings. These ratings, which can be found at www.Medicare.gov, are based on consumer reviews and include many factors such as management of chronic conditions. However, this system has come under heavy criticism from health care experts, who suggest you use it as for guidance but not as your only guide. For people with specific health conditions, check if specific doctors or health providers you like are included. Call them if you can’t find the answers or to ask what plans they are included in. This is especially important because some online listings for Medicare Advantage often are out of date and not updated quickly.

 

Unlike the Good Old Days

The Medicare you are dealing with now is quite unlike the Medicare you may have enrolled in 10 or 20 years ago, when most everyone was enrolled in traditional Medicare.

Traditional Medicare, doesn’t have a monthly premium for hospitalization insurance, known as Part A. But almost everyone pays at least a $104.90 monthly premium for Part B benefits, the ones that cover medical services like going to the doctor. You also have to sign up, and pay for, a Part D prescription drug plan.

Traditional Medicare usually covers about 80 percent of your health costs, but sometimes, there are out‑of‑pocket costs that can be especially difficult on a fixed income. Also, under traditional Medicare, there is no annual or lifetime cap on such out‑of‑pocket spending. These costs include a $1,216 a year deductible for hospitalizations. But be aware that if you are hospitalized and then are admitted again more than 60 days after having been released, you can be charged that fee a second time.

Some medigap plans cover all out‑of‑pocket costs, but others don’t. The average premium for medigap plans was under $200 per month in 2010 (the latest year data available) and that comes on top of monthly Part B and Part D premiums.

 

Medicare Advantage and the Affordable Care Act

Medicare Advantage plans are offered by private insurance companies like United Healthcare, Cigna, Aetna and Humana, among others. Due to the Affordable Care Act (ACA) their costs are subsidized by the Medicare program. Because of those subsidies, more than half of Medicare Advantage beneficiaries last year paid $0 per month over Part B premiums. The Centers for Medicare and Medicaid Services projects the average MA premium for 2015 will be $33.90.

Where Medicare Advantage can be a big benefit is that most of these plans also cover prescription drug benefits. Many also include dental and vision benefits not included in traditional Medicare. They also have a cap on the out‑of‑pocket spending that can happen when you remain within your network, $6,700, with many plans offering a cap lower than that, according to HealthPocket. That cost ceiling can be a big benefit, especially for those in poor health, who are more frequent visitors to doctors and have more prescriptions.

What is still an unknown factor is how the Affordable Care Act is going to change the landscape for Medicare Advantage plans. The ACA law will reduce payments to MA plans by some $156 billion by 2022, to bring per‑person payments in line with those of traditional Medicare. So far, it hasn’t caused big changes in plan premiums, but that’s something to watch for over the next few years.

According to the Wall Street Journal, United Health Group, the nation’s largest Medicare Advantage insurer, has in the past year cut an estimated 10% to 15% of the doctors and hospitals from its nationwide network. Consumer advocates say the insurer targeted providers with the sickest and most expensive patients, leaving those patients in the lurch. The company says the changes enable it to better coordinate care and that it is “extending continuity‑of‑care exceptions to members in active treatment.”

That has not sat well on Capitol Hill, where Democratic Sen. Sherrod Brown, D‑Ohio and Rep. Rosa DeLauro, D‑Conn recently introduced legislation that would bar insurers from dropping providers outside of Medicare’s annual open‑enrollment period.

 

Prescription Drug and Medigap Plans

This year will offer the smallest number of stand‑alone prescription drug plans since the Medicare Part D program began in 2006, down about 14 percent. You should have a choice of at least two dozen plans in most areas of the country and the drug plan consolidations that are reducing the choices are likely to shift many beneficiaries into lower cost plans, resulting in a slight decline in premiums to about $39, according to an Avalere Health analysis.

But be aware, what looks like a savings for seniors, really is obscuring significant price hikes by some of the biggest plans. According to Avalere, the average premium for the WellCare Classic plan, for example, will rise 52 percent in 2015 to $31.46 while the Humana Walmart RxPlan premium will rise 24 percent to $15.67. About 70 percent of the stand-alone drug plans are likely to see their premiums increase if you stay with the same plan in 2015, Ross Blair, senior vice president for EHealthMedicare.com, an online vendor told Kaiser Health News recently.

Insurers will continue to shift more costs to beneficiaries next year. And like last year, most of the plans won’t offer any coverage in the “donut hole”, the coverage gap in which beneficiaries are responsible for a much larger share of their drug costs. But the donut hole will shrink in 2015, as a result of the Affordable Care Act. Next year, when your out‑of‑pocket drug costs are between $2,960 and $4,700, you’ll be in the donut hole (that started at $2,850 in 2014). Then, you’ll pay 45% of the cost of brand‑name drugs, down from 47.5% in 2014, and 65% of generics, down from 72%.

If you decide to go for a medigap plan, you will need additional prescription drug coverage from Medicare Part D. Talk to your doctor about the specific drugs you take to see if generic drugs are available and if they will be an option to help you save money. Some insurance companies change their list of covered drugs and even the partner pharmacies every year.

 

Fraud Season on Seniors

Open enrollment for seniors also can mean open season for those who try to scam or defraud seniors.

Be aware: No one working for Medicare will ever call you unsolicited and request your bank account information or your Social Security number. Most often, scammers pose as employees of Medicare or some other government agency, claiming that new cards are being issued. To get yours, they say, you have to verify or update sensitive information, including your Medicare or Social Security number, or your bank account numbers either. Also phone calls promising free medical supplies are another scam designed to get your personal information, things like a credit card for alleged shipping charges.

Another novel twist to the Medicare scams are offers when you go to a free medical checkup,
where they tell you they can provide something that isn’t usually covered by Medicare or they have a way around the rules, or they offer kickbacks for providing unnecessary treatment. Ask Medicare directly if something doesn’t sound right.

Finally, unscrupulous sales people may try and pressure you into buying supplemental insurance
products they promise will save you thousands of dollars. Before signing anything, compare what they are offering with what is legitimately being offered at www.Medicare.gov.

 

Useful Medicare Resources

  • Compare plans by checking out the Medicare Plan Finder at Medicare.gov/find‑a‑plan.
  • The Medicare Rights Center (https://www.mymedicarematters.org/?SID=54232b7c4d7fc) advises you call 1‑800‑Medicare, rather than calling a plan provider.
  • AARP's Medicare Question and Answer Tool http://www.aarp.org/health/medicare-qa-tool/
  • For programs designed for people struggling to pay their prescriptions, health premiums, deductibles, and co‑insurance, NCOA offers a free online BenefitsCheckUp where you can see if you’re eligible for help. Or, contact your State Health Insurance Assistance Program to see what’s available. https://shipnpr.shiptalk.org/

 

[Also contributing to this story were: Fiscal Times, Kaiser Health News, CNBC, the Washington Post, AARP; and the Wall Street Journal]

Alan Schlein is the author of "Find It Online," and an internet consultant. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.

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