Fwd: Issue 25, December 9, 2008

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Welcome to MEDICARE WATCH, a biweekly electronic newsletter of the

Medicare Rights Center

Vol. 11 , No. 25 : Decemeber 9, 2008

Contents:

1. FAST FACT

2. STUDY: PART D DID NOT LOWER HEALTH COSTS FOR MOST OLDER ADULTS

3. EXTRA HELP ENROLLEES FACE CHANGES IN 2009

4. STUDY TOUTS HMO SAVINGS FOR DUAL ELIGIBLES

5. CASE FLASH: REVIEW YOUR MEDICARE PRESCRIPTION DRUG PLAN OPTIONS

EVERY YEAR

1. FAST FACT

As of June 2008, nearly 1.7 million people with Medicare were enrolled in

group Medicare Advantage (MA) plans sponsored by their former employer or

union, up from just over 900,000 in 2006. One particular type of MA plan,

the private fee-for-service (PFFS) plan, has gained the majority of new

enrollment in group MA plans, with enrollment increasing from about

33,000 in 2006 to more than 600,000 in 2008.

(“

The Emerging Role of Group Medicare Private-Fee-For-Service Plansâ€,

Kaiser Family Foundation, December 2008).

2. STUDY: PART D DID NOT LOWER HEALTH COSTS FOR MOST OLDER ADULTS

Medicare’s Part D prescription drug benefit has not significantly

reduced health care–related expenditures foor people with Medicare,

according to a new study conducted by The Center for Economic and Policy

Research (CEPR).

Middle- and high-income households with Medicare coverage actually

experienced a more rapid increase in prescription drug and insurance

expenditures since the implementation of the drug benefit. For example,

20 percent of the older adult population with annual incomes averaging

$14,836 in 2006 saw drug and insurance spending rise by 15.6 percent

between 2005 and 2006, compared to an average 8 percent increase for all

households during the same period.

The study acknowledges that the increase in expenditures by middle- and

higher-income households may correspond to the greater use of drugs that

improve health.

Low-income households, those in which individuals qualified for some type

of health assistance program, were the only group to experience decreases

or significantly slower rates of spending increases from year to year

since the implementation of Part D. For example, expenditures on health

insurance and prescription drugs by households with the lowest

income—average incommes of $7,718 per year—dropped by 9.8 percent from

2005 to 20006. CEPR speculated that the decrease in expenditures was

likely the result of subsidies for Part D coverage provided to low-income

people through the Extra Help program.

CEPR used the Consumer Expenditure Survey conducted by the U.S. Bureau of

Labor and Statistics to examine changes in health care–related spending

across income levels in households of people with Medicare from 2004 to

2006.

3. EXTRA HELP ENROLLEES FACE CHANGES IN 2009

Over 2 million people with Medicare enrolled in Extra Help—the program

that helps low-income people with the cost of prescription drugs and

premiums under Part D—will need to selecct a new Part D plan or will be

randomly assigned to a new plan for 2009 in order to avoid paying a

premium, according to a new study by the National Senior Citizens Law

Center.

In order to receive the full benefit of Extra Help—having the Part D

premium paid in full—people with Extra Hellp must be enrolled in a Part D

plan with a premium at or below a certain amount known as the benchmark.

Low-income people with Medicare face a sharp decline in the number of

plans that qualify for a full premium subsidy. In 2007, there were 987

plans throughout the country that qualified as “benchmarkâ€

plans—plans in which peeople with Extra Help could enroll and not pay a

premium. As a result of increased premiums, changes in benefit

structures, and plans leaving the market altogether, there will be only

474 such plans available in 2009. In Nevada there will be only one plan

and in Arizona there will be only two plans available at no premium to

Extra Help enrollees.

Over 1.6 million beneficiaries will be reassigned to a new plan in 2009.

California will have over 200,000 people reassigned. In New York it is

over 140,000 people.

People who receive Extra Help and elect to remain in the same plan must

pay the difference between the full premium amount and the subsidy

amount. People who did not actively select their Part D plan and who do

not select a new plan will be assigned by the Centers for Medicare and

Medicaid Services (CMS) to a new plan that qualifies for a full premium

subsidy. With the exception of the 450,000 people who are reassigned to a

below-benchmark plan offered by the same company operating their current

plan, CMS is randomly reassigning people to new below-benchmark plans

without determining whether the plan covers the person’s prescriptions

or imposes limits on coverage.

Nationwide, 620,000 Extra Help recipients who chose their plan will not

be reassigned and will have to pay a premium in 2009 unless they select

another below-benchmark plan.

4. STUDY TOUTS HMO SAVINGS FOR DUAL ELIGIBLES

Forcing the 8 million “dual eligibles†covered by both Medicare and

Medicaid into HMOs could save $50 billion of state and federal dollars,

according to a recent report conducted by The Lewin Group on behalf of

the Medicaid Health Plans of America (MHPA) and by the Association of

Community Affiliated Plans (ACAP).

The study estimated the impact of enrolling all dual-eligible individuals

into a HMO on a mandatory basis. Calculations for these savings were

based on assumptions that HMOs could reduce nursing home admissions by 25

percent, drug expenditures by 14 percent and hospital costs for Medicare

by 15 percent and for Medicaid by 20 percent.

Given these assumptions, the report estimates total savings of nearly $50

billion for Medicaid and Medicare combined over five years and savings of

$300 billion for both programs over 15 years.

Dual eligibles account for 40 percent of total Medicaid spending and

approximately 25 percent of Medicare expenditures. Currently, the

majority of spending for dual eligibles is through fee-for-service

Medicare and Medicaid. In 2005 only 6 percent of Medicaid spending and 15

percent of Medicare spending on dual eligibles was paid through HMOs.

Spending for dual eligible is estimated at $220 billion per year, or

roughly $28,000 per individual.

5. CASE FLASH: REVIEW YOUR MEDICARE PRESCRIPTION DRUG PLAN OPTIONS EVERY

YEAR

Mrs. R has Original Medicare Parts A and B, and gets prescription drug

coverage through a stand-alone Medicare Part D plan. She takes three

expensive thyroid medications and a medication for high cholesterol. In

October, Mrs. R received a letter from her Part D plan saying that

beginning in January, her monthly premium would go up. Mrs. R was

concerned, as this would make her Part D costs go up by at least $100 a

year.

In early December, Mrs. R called the Medicare Rights Center and spoke to

a hotline counselor about her options. The counselor first assessed

whether Mrs. R would be eligible for Extra Help—a program that helps pay

for most of the costs of Part D coverage—but unfortunately her income was

too high to quualify. The counselor then explained that Mrs. R had the

right to change Part D plans now, during the Annual Coordinated Election

Period, which runs from November 15 to December 31 each year. He

suggested that they look together for another plan with a lower premium

that would still cover her medications. The hotline counselor used the

Prescription Drug Plan Finder tool on

www.Medicare.gov to look for lower-cost options that took into

account Mrs. R’s drug needs.

The counselor found a number of plans in Mrs. R’s area that had lower

premiums than her current plan. However, each plan placed a restriction

on Mrs. R’s medications, requiring that she get official permission

(“prior authorizationâ€) from the plan before the prescriptions she

needed would be covered. The hotline counselor explained to Mrs. R that

to get her medications under any of these plans, she would need to have

her doctor write a formal coverage request explaining why Mrs. R needs

each medication.

As they talked, Mrs. R reconsidered her decision to switch plans. She

said that her current plan already covered all of her medications without

any restrictions. The counselor explained to Mrs. R that since plans can

change the prescriptions that they cover from year to year, she would

need to call her plan to make sure it would continue to cover her drugs

next year. Once she found out whether her prescriptions would still be

covered without restrictions, she could then make a final decision. Mrs.

R took the counselor’s advice and, after consulting with her plan,

found out that her medications would continue to be covered, and that her

copayments would go up only slightly next year. Mrs. R decided that

rather than switch to a different plan to save a few dollars every month,

she would rather stay in the same plan, where she would continue to have

coverage of all of her drugs without any extra hassle.

This message was generated by the Medicare Rights Center

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Medicare Watch is the Medicare Rights Center’s

fortnightly newsletter, established to strengthen communication with

national and community-based organizations and professional agencies

about current Medicare policy and consumer issues. Each edition contains

news of recent policy developments affecting Medicare and health care

generally and a case story from our hotline that illustrates steps

professionals can take to get older adults and people with disabilities

the health care they need.

The Medicare Rights Center is a national, not-for-profit consumer service

organization that works to ensure access to affordable health care for

older adults and people with disabilities through counseling and

advocacy, educational programs and public policy initiatives.

© 2008 by Medicare Rights Center. All rights reserved.

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