Medicares New Alphabet Soup Mmm Good? The Beneficiarys Perspective -- Families USA Conference --...

Medicare’s New Alphabet SoupMm’m Good? The Beneficiary’s

Perspective

-- Families USA Conference --

January 26, 2007

Presenter: David Lipschutz

California Health Advocates

California Health Advocates 2

Outline

I. Benefits & Drawbacks of Medicare Health Plans (Overview)

II. Medicare Modernization Act (MMA)

III. Types of Medicare Advantage Plans

IV. Marketing of Medicare Advantage Plans


I. Benefits & Drawbacks of Medicare Health Plans (Overview)


Benefits of Medicare Health Plans

Medicare HMOs, until recently, were only real option for most Medicare beneficiaries

Beneficiaries drawn to plans because generally lower out-of-pocket costs than original Medicare, and often additional benefitsE.g. limited prescription drug coverage prior

to Part D


Drawbacks of Medicare Health Plans

Choice of providers often limited – health plans generally have networks of contracting providers members “locked-in” to plan network

In HMOs, often a primary care physician acts as a “gatekeeper” to specialists and other services


II. Medicare Modernization Act (MMA)


Medicare Modernization Act

The Medicare Modernization Act (MMA) increased incentives for insurance companies to offer plans

As a result, the types of plans and numbers of plans increased greatly

At the same time, rules restricting individuals’ rights to enroll in, switch, or disenroll from plans went into effect


Basics – PDP v. MA-PD

Stand alone prescription drug plans (PDP) Coordinate with Original Medicare, and some

Medicare Advantage plans (see below)

Medicare Advantage (MA) Enrollees generally obtain all Medicare-

covered care through private plan MA plan that does not offer Part D coverage

(MA or MA-only)MA plan that offers Part D coverage (MA-PD)


III. Types of Medicare Advantage Plans


Medicare Advantage Plans

3 Types of MA plans:Coordinated Care Plans (HMOs, PPOs,

SNPs)Private Fee-for-Service (PFFS) PlansMedicare Medical Savings Accounts

(MSAs)


MA Plans and Other Part D Coverage

Individuals enrolled in an MA coordinated care plan (HMO, PPO, SNP) cannot also be enrolled in a PDP, even if MA plan does not provide Part D coverage

PFFS enrollees – if plan does not offer Part D coverage, can enroll in a PDP

MSAs cannot offer Part D coverage, so enrollees can also enroll in a PDP


Health Maintenance Organizations (HMOs)

For many years, the only real option through Medicare Advantage (formerly Medicare+Choice)

Well entrenched in certain parts of CANetwork of contracting providers,

generally lower cost-sharing than Original Medicare, some additional benefits


Preferred Provider Organizations (PPOs)

Preferred Provider Organization (PPO) is a plan that has a network of providers who have agreed to a specific payment rate for covered benefits with the plan

Plan provides for all covered benefits regardless of whether the benefits are provided within the network of providers

CA – limited enrollment, experience with these plansProblems primarily with people who were not aware

of high deductible and those who sought a different type of plan (e.g. Medigap) from same sponsor


Special Needs Plans (SNPs)

A coordinated care plan that exclusively enrolls (or enrolls a disproportionate %) of special needs individuals:Dual eligibles (Medicare and Medi-Cal, possibly MSP)Institutionalized – individual who continuously

resides, or who is expected to reside, for 90 days of longer in a long-term care facility (skilled nursing facility (SNF); nursing facility (NF); intermediate care facility for mentally retarded (ICF/MR); or inpatient psychiatric facility; (may also includes those in community but requiring a nursing home level of care)

Individuals with chronic or disabling conditions


Special Needs Plans (SNPs)

Potential to use specialists, case management, other tailored services to provide better coordinated care

Potential to coordinate with state Medicaid coveragenot currently required to require their network

providers to participate in Medicaid and their network pharmacies to attempt to bill Medicaid when Medicare drug coverage is denied

Some of the same restrictions as most other MA plans (e.g. limited networks, referrals, etc.)


Private Fee-for-Service (PFFS)

PFFS plans do not limit enrollees to a network of doctors or hospitals; enrollees can go to any Medicare provider as long as provider is willing to accept the PFFS plan’s fees and terms

Care is generally not “coordinated” Relationship between an individual

provider and plan is key factor re: PFFS plans


PFFS Provider Types

When a PFFS enrollee obtains services from a provider, for those services a provider is classified into one of 3 provider types: Direct-contracting – provider has a direct,

signed contract with planDeemed-contracting – provider is “deemed”

as contracting with plan Non-contracting – provider does not have a

direct contract and is not deemed


PFFS Provider Types

Deemed-contracting – provider is “deemed” as contracted if:Provider is aware in advance of furnishing services

that individual is in the PFFS plan;Provider has reasonable access to the plan’s terms

and conditions of participation; If plan makes this information available

through postal service, e-mail, FAX, telephone or website

The service provided is covered by the plan


Private Fee-for-Service (PFFS)

Benefits – generally have cost-sharing similar to other MA plans and may have maximum out of pocket limits for Medicare covered services

But beware of certain rules … Example: Today’s Options in CA

DME – if no pre-approval sought, could pay up to 50% of costs (instead of 20%)

Disadvantage: Some providers may be unwilling to treat PFFS enrollees


Medical Savings Accounts (MSAs)

MSAs have 2 parts: High Deductible Health Plan – MA plan that

covers Part A and B benefits once high deductible is met

Medical Savings Account – independent bank account owned by the member into which Medicare makes a deposit; members can use funds to pay for healthcare services



Medical Savings Account Must establish an MSA with designated bank,

which will issue debit card, checkbook Medicare will make one, annual deposit into

account in the beginning of the year Members may not make deposits into this

account Unused amounts roll over in subsequent yearsIf not enough $ in account to meet plan

deductible, enrollee must pay using own $ until deductible is met



Medical Savings Account (Cont’d)Funds not subject to federal taxes if used for

“qualified health expenses”See IRS Publication 502

Use of funds to pay Part D premiums not “qualified” but payment for Part D copays, coinsurance and deductibles is qualified (and these payments will count towards TrOOP)



Health plan/policy Medicare pays premium ($0 for enrollee)Only expenses for Medicare-covered services

will apply towards deductibleWhat Medicare + beneficiary would pay in FFS

Once deductible is met, plan pays 100% for Medicare covered services (Parts A & B)

No provider network – like PFFS plan, providers must agree to deliver services to enrollees


Medical Savings Accounts (MSAs) (CA Example)

Plan Deductible Deposit Amount Gap/Deficit

$2,500 (SmartSaver I)

$1,000 $1,500

$3,500 (SmartSaver II)

$1,375 $2,125

$4,500 (SmartSaver III)

$1,725 $2,775



Restrictions on enrollment : Medicaid EGHP, retiree coverageVA, FEHBP, MedigapAny coverage that would pay for services

before deductible is met Hospice patients ESRD (like all other MA plans)If live in U.S. less than 183 days a year


IV. Marketing of Medicare Advantage Plans


Marketing of MA Plans

Number of factors converge to make informed decision making/choice more difficult for Medicare beneficiaries

Great increase in numbers and types of plans being offered, with minimal oversight of marketingMany sponsors offering multiple products (PDP,

PFFS, Medigap, etc.)Many agents selling multiple products

Lock-in rules mean limited opportunities to change plans



Multiple plans/variations not always understood by agents and beneficiariesSome MA rules, benefit designs not

adequately explained (e.g. PFFS rules, PPO deductibles, etc.)

Plans can pay higher commissions to agents for MA enrollments vs. PDP enrollmentsEx. “enroll and migrate” strategy



Beware: dual eligibles being targeted for plans that may be inappropriate for them Agents aggressively selling PFFS plans Using lists of same sponsor’s PDP enrollees

Beware – new enrollment period allows PFFS plans w/ no Part D benefit to market year round

Medicares New Alphabet Soup Mmm Good? The Beneficiarys Perspective -- Families USA Conference --...

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