Fwd: New Rules for Medicare Private Health Plans

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REGULATE! AFTER THE CHICKEN FLEW THE COUP.

Asclepios

Your Weekly Medicare Consumer Advocacy Update

New Rules for Medicare Private Health Plans

September 18, 2008 • Volume 8, Issue 38

After four years of complaints from insurance commissioners, exposés in

the press, congressional hearings and the testimony of numerous victims

of fraud and deception and, finally, a legal mandate from Congress, the

Bush Administration has decided it is time to regulate the marketing of

Medicare private health plans.

The new regulations on commissions for brokers selling Medicare private

health and drug plans that take effect today are modeled after the rules

that have governed the sale of Medigap supplements for over a decade.

Companies must pay commissions over a minimum of six years and the

commission for initial enrollments cannot be more than twice the rate for

any subsequent year.

The structure is designed to discourage “churning‗moving people from

plan to plan to earn a commissiion—and to encourage agents to sell plans

that are in the long-tterm interest of their clients. If enforced, it may

work and weed out the agents who are in it just to make a quick

buck.

But there are fundamental differences between the Medigap market and the

market for private Medicare “Advantage†plans that undermine the

commission structure developed by the Centers for Medicare and Medicaid

Services.

An agent selling a Medigap plan knows the benefit package will be just as

good two or six or ten years from today, because the benefits are

standardized and mandated by law. Premiums can go up, but even these are

subject to state regulation.

Not so with Medicare Advantage plans. Every year the benefits can change.

Premiums can go up, but so can copays for hospital stays. The annual cap

on out-of-pocket spending can double, or even disappear. The incentives

for the plan are to shift costs onto the sick and keep premiums low

enough to attract new healthy members. What seemed at the outset like a

suitable plan for someone living with multiple chronic conditions can

devolve over time into a benefit package riddled with holes.

There are other problems with the rules established by CMS. Insurance

companies can still provide higher commissions to push low-value plans

over plans that offer greater financial protection for the enrollee (and

greater financial risk for the company). After all, it takes more work to

cajole or trick someone into a lousy deal.

The solution to these problems lies in establishing a minimum standard

for the financial protection provided to enrollees in Medicare Advantage

plans, standardizing the benefit packages to make facilitate comparison

and providing some guarantee of year-to-year continuity in coverage.

The current situation—where only the fine prinnt of benefit packages can

reveal the traps that are set for cancer patients and others with

high-cost illness—is unacceptable, both too people with Medicare and to

the honest brokers trying to find the best plans for their clients. CMS

took a step today toward choking off the cash flow to predatory agents.

It should take the next step and weed out unscrupulous plans.

Medical Record

“My father currently has a Medicare Advantage plan. He had a stroke 6

weeks ago and was receiving physical therapy from an acute facility. He

was moved to a sub-acute facility to continue his recovery. He is

receiving less than half the therapy he was receiving. I am being told

that he will not be covered for the 100 days allowed by Medicare, because

the HMO will not approve it. I want to dis-enroll him from the Medicare

Advantage plan, but am being told I can not at this time. What can I do

to protect him?†(Story submitted to the

Private Health Plan Monitoring Project from Ossining, NY, May

2008)

“In 2005, annual out-of-pocket costs for plan members ranged from under

$100 for beneficiaries in good health to over $6,000 for those in poor

health. Costs for beneficiaries in poor health would actually have been

higher than fee-for-service in 19 of the 88 MA plans examined. Despite

the high payments, relative to fee-for-service costs, that MA plans

receive from Medicare to enrich enrollee benefits, these plans may not

always be a good deal for sicker beneficiaries who use more health

services.

(Medicare Beneficiary Out-of-Pocket Costs: Are Medicare Advantage Plans a

Better Deal?, Commonwealth Fund, May 2006)

“CMS also issued an interim final rule that would implement other

provisions included in the new Medicare law. A key provision specifies

restrictions on how agents and brokers are paid for signing up a

beneficiary in a plan to eliminate incentives for agents or brokers to

move beneficiaries from plan to plan, a practice known in the industry as

churning. These guidelines, designed to protect beneficiaries from agents

and brokers who may have been acting in their own financial interest

rather than meeting the needs of the beneficiary, are based on existing

industry standards for agent and broker compensation structure.

(

Medicare Issues New Rules to Enforce Marketing Requirements During

Upcoming Health and Drug Plan Enrollment Period, CMS,

September, 2008)

* * * *

Medicare Part D Appeals Help for Advocates Is

Here!

Medicare Rights Center’s new Medicare Part D Appeals: An

advocate’s manual to navigating the Medicare private drug plan appeals

process offers an easy-to-understand, comprehensive overview of the

entire appeals process, including real-life case examples, a glossary of

important appeals terms, a sample protocol for advocates, and links to

important resources.

Register for a

FREE

copy of this great resource.

* * * *

Medicare Private Health Plan Monitoring

Project

The Medicare Rights Center would like to hear about your experience, or

that of someone you know, enrolled in a private health plan. With

information about what the issues are with Medicare Advantage plans, we

will be able to demand that those problems be fixed.

Submit your story at

www.medicarerights.org/maplanstories.html.

* * * *

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