1. Medicare’s New Alphabet Soup Mm’m Good? The Beneficiary’s Perspective
-- Families USA Conference --
January 26, 2007
Presenter: David Lipschutz
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2. California Health Advocates
Outline
Benefits & Drawbacks of Medicare Health Plans (Overview)
Medicare Modernization Act (MMA)
Types of Medicare Advantage Plans
Marketing of Medicare Advantage Plans
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3. I. Benefits & Drawbacks of Medicare Health Plans (Overview)
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4. 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 benefits
E.g. limited prescription drug coverage prior to Part D
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5. 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
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6. II. Medicare Modernization Act (MMA)
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7. 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
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8. California Health Advocates
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)
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9. III. Types of Medicare Advantage Plans
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10. Medicare Advantage Plans
3 Types of MA plans:
Coordinated Care Plans (HMOs, PPOs, SNPs)
Private Fee-for-Service (PFFS) Plans
Medicare Medical Savings Accounts (MSAs)
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11. 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
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12. Health Maintenance Organizations (HMOs)
For many years, the only real option through Medicare Advantage (formerly Medicare+Choice)
Well entrenched in certain parts of CA
Network of contracting providers, generally lower cost-sharing than Original Medicare, some additional benefits
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13. 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 plans
Problems 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
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14. 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
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15. Special Needs Plans (SNPs)
Potential to use specialists, case management, other tailored services to provide better coordinated care
Potential to coordinate with state Medicaid coverage
not 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.)
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16. 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
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17. California Health Advocates
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 plan
Deemed-contracting – provider is “deemed” as contracting with plan
Non-contracting – provider does not have a direct contract and is not deemed
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18. California Health Advocates
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, , FAX, telephone or website
The service provided is covered by the plan
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19. 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
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20. 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
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21. Medical Savings Accounts (MSAs)
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 years
If not enough $ in account to meet plan deductible, enrollee must pay using own $ until deductible is met
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22. Medical Savings Accounts (MSAs)
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)
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23. Medical Savings Accounts (MSAs)
Health plan/policy
Medicare pays premium ($0 for enrollee)
Only expenses for Medicare-covered services will apply towards deductible
What 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
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24. 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
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25. Medical Savings Accounts (MSAs)
Restrictions on enrollment :
Medicaid
EGHP, retiree coverage
VA, FEHBP, Medigap
Any 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
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26. IV. Marketing of Medicare Advantage Plans
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27. California Health Advocates
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 marketing
Many sponsors offering multiple products (PDP, PFFS, Medigap, etc.)
Many agents selling multiple products
Lock-in rules mean limited opportunities to change plans
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28. California Health Advocates
Marketing of MA Plans
Multiple plans/variations not always understood by agents and beneficiaries
Some 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 enrollments
Ex. “enroll and migrate” strategy
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29. California Health Advocates
Marketing of MA Plans
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
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