Medicare’s New Alphabet Soup Mm’m Good? The Beneficiary’s Perspective -- Families USA Conference -- January 26, 2007 Presenter: David Lipschutz California Health Advocates

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 California Health Advocates

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

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 California Health Advocates

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 California Health Advocates

II. Medicare Modernization Act (MMA) California Health Advocates

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 California Health Advocates

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) California Health Advocates

III. Types of Medicare Advantage Plans California Health Advocates

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) California Health Advocates

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 California Health Advocates

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 California Health Advocates

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 California Health Advocates

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 California Health Advocates

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.) California Health Advocates

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 California Health Advocates

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 California Health Advocates

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, e-mail, FAX, telephone or website The service provided is covered by the plan California Health Advocates

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 California Health Advocates

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 California Health Advocates

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 California Health Advocates

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) California Health Advocates

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 California Health Advocates

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 California Health Advocates

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 California Health Advocates

IV. Marketing of Medicare Advantage Plans California Health Advocates

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 California Health Advocates

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 California Health Advocates

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 California Health Advocates