Medicare Advantage(MA) and Private-Fee-for Service (PFFS) Plans
(4/9/13)- In mid-February, officials from the Centers for Medicare and Medicaid Services (CMS) stated that they would cut by 2.2% the rate that the government pays the insurers of Medicare Advantage plans. Their final decision as to the exact amount of the cut would be announced in early April.
And then the lobbyists went to work. And then at least 160 members of Congress signed letters to the CMS advocating against that cut in the rate. Then we heard a lot about cutting the federal deficit and sequestration. And then the real world set in, so that instead of cutting the rate by 2.2%, they would increase the rate by 3.3% "growth positive".
The federal Payments Advisory Commission has estimated the Medicare Advantage already costs about 7% more than regular Medicare. President Obama has acknowledged the fact that Medicare Advantage costs the government more than does regular Medicare.
There are articles in the media that Congress is contemplating merging Part A and Part B of Medicare, in order to effectuate savings by combining the 2 Parts. Just wait and see what happens once the lobbyists for the medical facilities and medical professionals get to work on this issue.
(2/21/13)- Government officials announced that costs per person for Medicare Advantage plans will fall more than 2% in 2014. The government uses this figure as a benchmark to determine payments to Medicare Advantage insurers.
As we noted in our item dated 8/17/12 below, Medicare Advantage costs the government from 3% to 5% more than does regular Medicare, and this will help to narrow that cost gap.
(8/17/12)- Medicare Advantage costs the government anywhere from 3% to 5% more than does regular Medicare. Under the Patient Protection and Affordable Care Act that gap will be eliminated, thus saving the government an estimated $156 billion over 10 years, according to the Congressional Budget Office.
Republican vice-presidential nominee Paul Ryan would use those savings to "shore up Medicare".
The Act changes the formulas for reimbursing hospitals and other health-care providers who treat Medicare patients, which in turn would restrict the growth in payments over the years for Medicare.
Nearly 2 million Medicare beneficiaries are readmitted within 30 days of release each year, costing Medicare $17.5 billion in additional hospital bills. The national average readmission rate has remained steady at slightly above 19 percent for several years, even as many hospitals have worked harder to lower theirs.
(3/28/12)- The recently released data from the Centers for Medicare and Medicaid services showed, that for the period through February 10, Medicare Advantage enrollment is up 738,000 lives year-to-date.
If the industry average 52,000 lives a month over the remaining 9 months of the year, total Medicare Advantage membership will grow by 1.2 million lives, up from 750,000 lives in 2011.
The basic motivation behind this growth in membership is the fact that Medicare Advantage plans offer seniors far better benefits than what the government provides through the regular fee-for-service program.
(2/9/12)- Medicare Advantage enrollment continues to be very strong through the months of January and February. The Centers for Medicare and Medicaid Services (CMS) released both January and February enrollment numbers, covering applications through January 12, showing membership increased by 693,000 lives so far.
Over the last 6 months of 2011, the industry averaged a monthly increase of 53,000 lives. If that pace continues over the balance of the year, it would bring the new membership total to 1.2 million. Only 750,000 new members were added to Medicare Advantage in 2011.
As of February 1, total membership in Medicare Advantage stood at 13,315,692 lives. There were 518,239 members enrolled in Private Fee for Services (PFFS), as of February 1.
(1/14/12)- Medicare Advantage enrollment has been quite strong so far in the month of December, with membership up 58,000 for the month. That brought the total membership growth for Medicare in 2011 to increase by 748,000 members this year.
The industry added an average of 53,000 lives a month since July, indicating that growth in 2012 outside of open enrollment can approach 600,000 lives.
Private-fee-for-services membership finished the year down 1.06 million lives. HMOs had over 8 million members by the end of their year with the addition of 570,000 lives this year. Preferred provider organizations had a membership increase of 1.2 million lives in 2011.
(12/20/11)- Medicare enrollment has been quite strong so far in the month of December, with membership up 58,000 for the month. That brought the total membership growth for Medicare in 2011 to increase by 748,000 members this year.
The industry added an average of 53,000 lives a month since July, indicating that growth in 2012 outside of open enrollment can approach 600,000 lives.
Private-fee-for-services membership finished the year down 1.06 million lives. HMOs had over 8 million members by the end of their year with the addition of 570,000 lives this year. Preferred provider organizations had a membership increase of 1.2 million lives in 2011.
(10/29/11)- Medicare enrollment for 2012 has begun and will run through December 7. Last year, it began on November 15th and ran through December 31st. Medicare Advantage premiums are expected to decrease by 4% on average next year, and average drug-plan premiums for Part D of Medicare are estimated to decrease about 2% to $30 a month, according to the federal Centers for Medicare and Medicaid Services (CMS).
Advantage plans will not be able to charge users for preventive services that are free to users of traditional Medicare. There will no time limit to switch into a five-star Advantage or prescription-drug plan. Medicare users have one chance to switch to one of these top-rated plans at any point next year.
(See Medicare's Plan Finder tool at medicare.gov/find-a-plan)
(8/21/11)- Medicare Advantage enrollment grew by 51,500 in the month of August, bringing year-to-year enrollment growth to 543,000 lives. This is the second consecutive month of better than anticipated enrollment growth.
Some medical experts attribute this growth to the fact that we will be having a lot more people achieving the age of 65 in the coming years. They are now calling for added membership to Medicare Advantage in the 675,000 range for this year, up from the previously projected number of 625,000 to 650,000 new lives projection of last month.
The Centers for Medicare and Medicaid Services (CMS) now estimates that the average Medicare plan will see rates rise 0.4% in 2012.
Private-fee-for-services (PFFS) enrollment was up by 67 lives for August, and thus for the year it has seen a loss of more than 1 million lives.
(7/15/11)- Medicare Advantage enrollment was up 53,000 lives in July, bringing the year to date membership up to 482,000 new lives. Last year the industry averaged 33,000 new lives per month over the last 5 months of the year so it looks like total membership will grow between 625,000-650,000 for all of this year.
The industry added 582,000 lives in 2010. There were a total of almost 1.1 million lives lost in private-fee-for services this year, with industry experts looking for growth of between 750,000 to 1 million new members in 2012.
(6/15/11)- WellPoint Inc., the large health insurer announced that it would purchase CareMore Health Group, one of the largest senior-health care providers who cover 54,000 Medicare Advantage beneficiaries.
The transaction increases WellPoint's entry into Medicare Advantage plans, in anticipation of some of the provisions of the new health care law that was passed in 2010. CareMore owns a network of 26 clinics in California, Arizona and Nevada that specialize in preventive services and managing the care of weak and chronically ill seniors.
WellPoint currently has 550,000 Medicare Advantage beneficiaries enrolled under its plans. Under the terms of the new law Medicare Advantage payments will be tied into bonuses for improved results to Medicare patients.
(3/25/11)- Medicare Advantage enrollment was up by 35,300 members in March. Medicare Advantage insurance companies are expecting a growth of about 600,000 net new members this year. Total enrollment in Medicare Advantage plans was 12,200,116 as of March 1, 2011.
(2/17/11)- The data for Medicare Advantage for the month of February showed that the industry added 646,000 new members, after losing 355,000 members in January. Thus the year-to-date membership in Medicare Advantage plans has grown by 291,000 lives so far this year.
Total membership in Medicare Advantage plans stood at 12,164,795 as of February 1, 2011, which represents a 1.60% increase or 101,166 members from a year ago February 1, 2010
(12/25/10)- There were 23,000 new members who joined Medicare Advantage programs in December, which was up from the16,000 new members who joined MA plans in December 2009. 16,000 new members joined Medicare Advantage plans in November 2010.
So far this year there are 582,000 new members to have joined MA plans this year through early December.
For the year, private-fee-for-services has declined by 794,000 members.
(11/27/10)- Although the new health-care legislation that was passed in 2010 will cut about $100 billion from Medicare Advantage during the next 10 year, average premiums will remain essentially flat in 2011, according to the federal Centers for Medicare and Medicaid Services.
Advantage plans will have to cap at $6,7000 member's annual out-of-pocket expenditure for Medicare-covered services within their network. The plans will be barred form charging higher co-payments or co-insurance rates for some services, including chemotherapy, than patients would pay under traditional Medicare.
The plans will be able to charge higher deductibles and co-payments for other services.
Advantage participants who want to switch to another Advantage plan will have to make a move by December 31 instead of being able to do so between January 1 and March 31. An Advantage participant can drop an Advantage plan from January 1 to February 14, but will only be able to switch to regular Medicare during this period of time
(10/8/10)- In 2011, open enrollment for Medicare Advantage plans will be from January 1 through February 15, instead of its present timeframe of January 1 through March 31. Under the old system Medicare Advantage plan participants could change insurers or go back to regular Medicare. Under the new law, a beneficiary will be allowed to only go from Medicare Advantage plans back to regular Medicare. You will not be allowed to switch from regular Medicare to Medicare Advantage.
(9/27/10)- Starting October 1, insurers can start their marketing campaigns to enroll Medicare beneficiaries into their Medicare Advantage plans. There are about 11.3 million out of the total of almost 46 million Medicare beneficiaries enrolled in Medicare Advantage plans. Jonathon Blum, deputy administrator of the Centers for Medicare and Medicaid services said: "Medicare Advantage plans project that enrollment will increase by 5% in 2011".
The Centers for Medicare and Medicaid Services announced that it had denied rate increases and benefit cuts sought by 298 privately run Medicare plans out of the 2,100 bids that had been submitted to the agency.
"For these plans we said 'No, you have to do better,'" said Donald Berwick, the administrator for the CMS. Last year, the CMS did not deny any bids. It predicted that Medicare Advantage premiums would be 1% lower. When the premium change is combined with higher deductibles and co-payments that insurers plan to change, the core benefit package will cost members $13 per month more on average, the agency said.
In 2012, the government will begin cutting $136 billion in payments to insurers who run Medicare Advantage plans. "The administration may be trying to persuade seniors that everything is fine, but the millions of Medicare beneficiaries who will lose their current coverage or see fewer benefits in the coming years will disagee, " said Iowa Republican Senator Charles Grassley. Mr. Grassley would become head of the Senate Finance Committee if the Republican gain the majority in the Senate in the upcoming elections.
(9/22/10)- Medicare Advantage gained 35,000 new lives (a 0.3% growth rate), down from 39,000 members added the prior year and 39,000 members added in August. Year-to-date membership has grown by 517,000 lives, and the industry is on track to add about 600,000 new members for the year.
(6/9/10)- The Medicare Payment Advisory Commission, an independent congressional agency estimates that the government pays private insurance companies an average of 9% more to operate Medicare Advantage programs than it costs the government to run traditional Medicare.
Insurers that sell Medicare Advantage plans must submit their 2011 bids to the government, and because the government is cutting back on the subsidies that it pays to these carriers, it is expected that they will pass along some fairly substantial premium increases to their members.
The rate the government will pay these insurers is frozen for 2011 at 2010 levels. Starting in 2012, the new health care law calls for a gradual reduction in government payments to the insurers, totaling $136 billion by the year 2020.
Some of the insurers are planning to cut back vision, dental and prescription benefits. The administration has sent a letter to 4 of the larger plans warning them against increasing premiums and co-payments for their members.
(1/20/10) Enrollment in Medicare Advantage (MA) declined by 321, 000 net lives in the month to 10.9 million as of December 11 for January 1 effective date. Enrollment decreased sequentially by 2.8% for January 2010 compared to a sequential increase of +1.6% in January 2009 and +2.4% in January 2008.
The decline in MA enrollment is most likely attributable to plan sponsors exits from the Private Fee-For-Service (PFFS) market, and to a lesser extent benefit design changes in anticipation of the MA reimbursement cut in 2010.
While the report is labeled "January" by the Centers for Medicare and Medicaid Services (CMS), it only reflects adds collected through December 11, 2009, for an effective date of January 1, 2010 enrollment. Thus, the report is not comprehensive because it excludes the last 3 weeks of enrollment.
Of the 321,000 net sequential MA losses, -794,000 came in PFFS offset by gains in PPO products (+412,000), HMO products (+55,000), and other MA products (+6,000).
Enrollment in employer sponsored plans decreased 19,900 net new lives to 1,990,000 as of December 11, 2009 for January 1 effective date, compared with +3,700 net new lives last month.
Employer plan membership now represent 18.2% of total MA membership. Enrollment in Special Needs Plans decreased 128,000net new lives or -9.2% sequentially to 1,300,000 as of December 11 compared to +9,000 net new lives last month. SNP membership represents 11.5% of total MA membership. Note plans can enroll members in SNP plans year-round.
(12/26/09)- In the great health care reform debate, many Americans are asking, "Why does the Obama administration want to cut back on Medicare Advantage"? The answer is simple; Medicare Advantage costs the government about 12% more than does regular Medicare, according to an independent analysis from the Medicare Payment Advisory Commission (MedPAC).
Enrollment in Medicare Advantage (MA) grew by about 16,000 net new lives in the month to 11.29 million as of November 13 for December 1 effective date, compared with 18,000 net new lives last month and 26,000 for the same month last year.
Eighty-two percent of the enrollment growth for the month was in HMO plans and 63% was in PPO plans. Private-Fee-for-Service (PFFS) plans shed 8,400 lives, while enrollment in employer plans grew by 3,700 net new lives to 2.01 million as of November13 for the December 1 effective date. Enrollment in Special Needs Plans grew by 9,000 new lives for the period in question
(10/18/09)- The average premium for all Medicare private plans will increase to $39 a month in 2010, from about $32 this year, according to comments from Timothy Hill, deputy director for the Center for Drug and Health Plan Choice, the federal agency that manages Medicare.
Insurance companies had signaled there would be an increase in premiums, citing the government's decision to cut payments to Medicare Advantage by 4.5%. A federal law enacted in 2008, required Private Fee for Service (PFFS) plans to establish provider networks.
Rather than provide the networks many of the insurers ditched these PFFS plans, thus in effect dropping 667,000 seniors from these plans.
Since Medicare Advantage costs the government about 12% more than regular Medicare, President Obama is hoping to eliminate close to $100 billion over a 10-year period of time for this type of plan.
(9/4/09)- Karl Rove, the former senior adviser and deputy chief of staff to President George W. Bush wrote a letter in the August 28th edition of the Wall Street Journal condemning President Barack Obama's proposed cuts to the Medicare Advantage (MA) program.
His letter stated that "an estimated 10.2 million seniors (editor's note-there are now over 10.8 million seniors enrolled in Medicare Advantage programs) -one of five in America" who would be negatively impacted by any cuts that may occur in the Advantage program.
Please keep in mind, as per our item dated 12/4/08 below the Medicare Payment Advisory Commission (MedPAC) studies have shown that the government pays about 13% more for MA plans than what it pays for regular Medicare plans.
This discrepancy in cost to the government is costing all Americans money and is unfair to regular Medicare beneficiaries. You then might rightfully ask, "Why don't all Americans join a Medicare Advantage program?" We will leave that question unanswered.
(6/20/09)- Every June, the Medicare Payment Advisory Commission (MedPAC) releases a report to Congress detailing the important issues faced by Medicare. Please see our item dated 12/4/08 below for more information about MedPAC. The report focuses on ways incentives in the current system could be changed to reward for value as opposed to volume.
In the latest report, MedPAC estimated that in 2009, Medicare Advantage plans will be paid $12 billion more than if those beneficiaries were enrolled in traditional Medicare. The report also called for reforming medical education to focus on care coordination and quality.
In a speech at the recent American Medical Association meeting in Chicago, President Barack Obama called for cuts to Medicare Advantage, urging the introduction or competitive bidding. That step, he said, "will save $177 billion over the next decade, just that one step."
The report also said that "when physicians have a financial interest in imaging equipment, they are more likely to order imaging tests and incur higher overall spending on their patients' care."
(4/17/09)- The Centers for Medicare and Medicaid Services (CMS) announced that reimbursement rates to private insurers that administer Medicare Advantage plans would fall by as much as 4% to 4.5% next year. The agency also announced that it would raise the baseline rate for the private plans by 0.81%, which certainly pales in comparison to the recent 4% increases that insurers have gotten in the last few years.
The payment rate also includes a 3.41% reduction as a result of a change in how the government uses a reimbursement scale pegged to enrollees' health. According to the Medicare law, physicians are due for a 21% rate cut next year, and based on the reality of that situation, " there have never been rate cuts to Medicare physicians in the past and it ain't going to happen next year either".
If, as expected, the rate cuts to physicians do not occur, it is only reasonable to expect that the rate cuts to the Medicare private insurers will certainly be lessened, depending, ultimately on how much the physicians rate increase turns out to be.
(3/23/09)- Medicare Advantage enrollment grew by 90,400 net new lives in the month of February to 10,748,045 million as of February 10 for the March 1 effective date. This represented a 0. 8% sequential growth. Enrollment was negatively impacted by some plans exiting unprofitable markets.
(3/12/09)- The Centers for Medicare and Medicaid Services (CMS) proposed payment increases for Medicare Advantage plans of just 0.5% in 2010, compared with the roughly 4.0% increase that private plans have seen in recent years. Please keep in mind, as per our item dated 12/4/08 below the Medicare Payment Advisory Commission (MedPAC) studies have shown that the government pays about 12 % more for MA plans than what it pays for regular Medicare plans.
The Obama administration is hoping to achieve universal health care coverage, and under its proposal, insurers would be required to competitively bid to offer plans beginning in 2012, which the administration believes would lower per-patient outlays for Medicare Advantage plans. Insurers would be paid according to the average of those bids in a given area.
Before any changes can take place, Congress must approve them, and that is likely to be a long, interesting battle, as the insurers hope to prevent the changes from taking place.
(3/1/09)- WellCare Health Plans inc., which has the dubious distinction of having the highest number of beneficiary marketing complaints among large Medicare Advantage plans said that it was suspending new enrollments. Please keep in mind that the next time that open enrollment takes place for new coverage is November 15th, 2009.
The CMS had previously ordered the company to suspend marketing to and enrollment of Medicare beneficiaries by March 7 because of the company's misleading advertisements, deficiencies in Medicare prescription drug payments and noncompliance with Medicare rules in general.
CMS's undercover shoppers found substantial evidence that WellCare misled and confused beneficiaries at a December sales event. The CMS also accused the company of failing to discover forged applications.
(12/4/08)- An article in a recent edition of the journal Health Affairs stated that the results of a study done by two analysts from the Medicare Payment Advisory Commission (MedPAC) indicates that the government pays an extra 13% to cover Medicare Advantage beneficiaries than it does for regular Medicare beneficiaries.
The two analysts, Carlos Zarabozo and Scott Harrison found that health maintenance organizations are, on average, 12% higher than what the government would spend for beneficiaries in traditional Medicare, while payments to private fee-for-service plans were 17% higher.
Medicare Payment Advisory Commission (MedPAC)- http://www.medpac.gov The Medicare Payment Advisory Commission (MedPAC) is an independent federal body established by the Balanced Budget Act of 1997 (P.L. 105-33) to advise the U.S. Congress on issues affecting the Medicare program.
The Commission's statutory mandate is quite broad: In addition to advising the Congress on payments to private health plans participating in Medicare and providers in Medicare's traditional fee-for-service program, MedPAC is also tasked with analyzing access to care, quality of care, and other issues affecting Medicare. The Commission's 17 members bring diverse expertise in the financing and delivery of health care services.
Commissioners are appointed to three-year terms (subject to renewal) by the Comptroller General and serve part time. Appointments are staggered; the terms of five or six Commissioners expire each year. The Commission is supported by an executive director and a staff of analysts, who typically have backgrounds in economics, health policy, public health, or medicine. MedPAC meets publicly to discuss policy issues and formulate its recommendations to the Congress.
Our thanks to Margo Harrison, a research analyst at the commission for emailing us with this info.
Both President -elect Barack Obama and former Senator Tom Daschle, who is his choice to become the next secretary of health and human services have stated that they would like to see this subsidy reduced or even eliminated.
(11/15/08)- Medicare Advantage enrollment grew by 34,000 net new lives in the month to 10.2 million as of October 10 for the November 1 effective date. This compares with 53,000 net new lives last month and 33,000 for the same month last year.
Forty-six percent of the enrollment growth for the month was in PPO plans. Thirty-five percent of the enrolment growth was in HMO plans, and 16% of the growth was in Private-Fee-For-Services plans.
Enrollment in Special Needs Plans grew by 14,000 net new lives to 1.3 million as of October 10 for the November 1 effective date, compared with 28,000 net new lives last month.
Enrollment in Employer Plans grew by 6,000 net new lives to 1.8 million as of October 10 for the November 1 effective date, compared with 10,000 net new lives last month. Employer plan membership now represents 17.5% of Medicare Advantage membership.
(11/5/08)- The latest figures, as shown in our item dated 1/19/08 show that 10.2 million Americans are enrolled in Medicare Advantage as of September 11, 2008. According to a June report from The Medicare Payment Advisory Commission, or (MedPAC), an independent congressional agency, projected that 2008 payments to these private plans would be 13% higher than what the government would have spent on direct coverage under regular Medicare.
The projected net dollar cost to the government by MedPAC would be $10 billion. Medicare spending hit $431.5 last year according to the Medicare trust funds report. This meant that Medicare spending has almost doubled in the last 7 years.
Democrats in Congress have called for cutbacks in spending to Medicare Advantage plan insurers, while Republicans, as a general rule feel that Medicare Advantage plans ultimately save the government millions of dollars.
(10/19/08)- Medicare Advantage enrollment grew by 53,000 net new lives in the month to 10.2 million as of September 11 for the October 1 effective date. This compares with 46,000 net new lives last month and 29,000 for the same month last year. Plans began their marketing for prescription drug Part D and Medicare Advantage programs on October 1, and the 2009 open enrollment season begins on November 15th.
Fifty-two % of the enrollment growth for the month was in HMO plans, with 28% of the growth coming in PPO plans, while 17% of the growth was in Private-Fee-for Service (PFFS).
Special Needs Plans grew by 28,000 net new lives to 1.3 million as of September 11th for the October 1 effective date, compared with 23,000 net new lives last month. Special Needs plan membership now represents 12.7% of total Medicare Advantage membership.
(10/7/08)- The Centers for Medicare and Medicaid Services announced the final new rules that will become effective October 1 for the marketing of Medicare Advantage plans to Medicare beneficiaries.
The new rules would bar a number of practices considered "deceptive" or "high pressure" by the CMS. They prohibit providing free meals during promotional events for Medicare plans and conducting sales activities in doctor's offices or educational events, as well as gifts to prospective enrollees that are larger than $15 in value.
Other banned activities include "unsolicited direct contact like door-to-door solicitation, outbound telemarketing, approaching beneficiaries in parking lots, or follow-up calls abut mailing without prior consent".
The new rules set a cap for overall compensation for agents who are signing up beneficiaries for the first year of a plan. The regulations set up a six-year payment commission plan for agents, and stipulate that, for a beneficiary's first year of enrollment, "the compensation paid can be no more than 200% of the compensation paid in the second year, or any individual subsequent renewal year, up to a total of five renewal years."
(9/16/08)- Medicare Advantage enrollment grew by 46,000 net new lives in the month to 10.14 million as of August 8 for the September 1 effective date. This compares with 57,000 net new lives last month and 56,000 for the same month last year. Plans may begin their marketing for prescription drug Part D and Medicare Advantage programs as of October 1.
About 53% of the 46,000 new enrollee membership for Medicare Advantage came from enrollment through HMO membership, 18% came from Preferred Provider Organization membership and 14% came form Private-Fee-For-Service plan membership.
Enrollment through employer plans grew by only 8,000 new lives to 1.8 million members as of August 8 for September 1 effective date, compared with 15,000 net new lives last month. Employer plan membership now represent 7.5% of total Medicare Advantage membership. We would not be surprised to see this number head into the minus column as employers may opt out of Medicare during these hard economic times.
(7/28/08)- Medicare Advantage enrollment grew to 10.1 million as of the report of June 11, 2008 for the July 1 effective date. Thus MA grew by 55,000 net new lives in the month compared with 46,000 net new lives last month, and 112,000 net new lives for the same month last year. This figure represents an 11.7% increase since December 1, 2007.
Special Needs Plans (SNP) membership was 1.2 million in the June report, which represents 11.8% of total Medicare Advantage membership. This figure represents an increase of 30,000 net new lives for the month, compared with 27,000 net new lives last month and 29,000 net new lives for the same month last year.
Employee plan membership grew by 14,000 net new lives last month compared with 5,000 net new lives last month. Employee plan membership now represents 17.3% of total Medicare Advantage membership.
Please keep in mind that GM has announced that it will no longer extend its health care benefits to its white collar retirees who are older than 65 effective in January 2009.Even though the company promised, in writing, that the health care benefits were lifetime guaranteed, the courts have upheld companies that do not adhere to this promise.
(7/17/08)- President George W. Bush vetoed the Medicare bill that we wrote about in our item dated 7/16/08, but both houses of Congress voted to override the veto, so the bill is now the law. For more information on some other provisions of the new law please see our article dated 7/18/08 on Medicare-Who Pays for What.
The vote in the House was 383 to 41, with 153 Republicans voting in favor of overriding the president's veto. In the Senate the vote was 70 to 26, with 21 Republicans voting in favor of overriding the veto.
This is the fourth time that a bill has been enacted in Congress overriding President Bush's veto. Two of the previous overrides occurred in connection with farm bills and the third one was on a water-project bill.
The new law will cost around $20 billion over 5 years. Beneficiaries will see a cut in their out-of-pocket costs for mental health services, as well as some new coverage, including for certain classes of drugs often used to treat anxiety and insomnia.
Medical equipment manufacturers will get a delay in a competitive bidding process for suppliers of equipment such as oxygen tanks and power wheelchairs. The bill cuts extra payments that currently go to Medicare Advantage plans based on local costs for care at teaching hospitals, and imposes new limits on private-fee-for-service plans.
Under the Medicare formula, doctors will be faced with a 20% cut in their fees in 18 months Instead of a 10.6% cut under the formula that was to go into effect on July 1 of this year there will be a 1.1% increase for physicians fees. Medicare Advantage insurers will be cut by 2% under this new bill.
The bill also sets strict standards for the marketing of private plans, to curtail high-pressure sales tactics that have prompted complaints from beneficiaries and state insurance regulators.
(7/16/08)- In early July the House passed a bill to prevent the Medicare 10.6% pay cut to physicians by a vote of 355 to 59. Senate Republicans barely blocked efforts to take up the bill by 1 vote. During the July 4th recess holiday the American Medical Association ran an ad supporting the bill in the home state of 10 Republican Senators who had previously voted against it.
The Senate Democrats won a decisive vote by a margin of 69-30 to cut off debate on the bill after the recess for the holiday ended, with Senator Ted Kennedy (D-Mass.) making his first appearance on the floor of the Senate since his recent bout with cancer was announced, and casting his vote for the bill.
A number of Republican Senators targeted by the ad from the AMA supported the bill after having previously voting against it. Besides heading off the cut to doctors' fees for 18 months, the bill gives the physicians a1.2% increase. The bill would also increase payments to physicians who make the switch from handwritten prescriptions to digital ones, then docking doctors' fees in later years if they fail to adopt the technology.
The bill would cut payments to Medicare Advantage and Private-Fee-for Service providers by 2 %. Because of the cut to Medicare Advantage and PFFS insurers, the president has threatened that he will veto the bill.
(7/2/08)- According to a spokesman for the CMS, Medicare will delay processing doctors' claims until July 15th, thus enabling Congress to pass legislation that would block the scheduled 10.1% cut to their fees that was to go into affect on July 1. When, as and if Congress passes the needed legislation it can be made retroactive so that the doctors will not have their fees cut. If the legislation contains cuts to Medicare Advantage insurers, the president has threatened to veto such legislation, since he is desirous of expanding that program.
(6/28/08)- Medicare spent $12 billion in 2007 on the targeted population for special needs plans, or about 15% of the $80 billion for all Medicare Advantage plans, according to Joseph Kuchler, a spokesman for the Centers for Medicare and Medicaid Services.
All Medicare Advantage insurers are paid based on how sick a patient is, and the special-needs plans tend to have higher portions of sick enrollees.
The battle between the president and the Democratic congressmen continues as to cuts to be made to Medicare Advantage plan allowances from the government in order to be able to avoid the required cut in physician fees mandated by the law. The president would like to continue to expand Medicare Advantage plans, while the Democrats feel that Medicare Advantage plans are being overpaid at the expense of the government and the taxpayers.
As things stand now, physicians face an over 10% cut in theiir allowable Medicare fees effective July 1. It is unlikely that Congress will act in time to change anything by July 1, but any change made in fees can be made retroactively, so that changes in payment can be made after that date.
For more info on the proposed cut to physicians fees under Medicare please see our item dated 12/21/07 below.
(6/15/08)- Medicare Advantage enrollment grew to 10.1 million as of the report through May 9, 2008 for the June 1 effective date. This figure represents an 11.7% increase since December 1, 2007.
Special Needs Plans (SNP) membership was 1.2 million in the June report, which represents 11.8% of total Medicare Advantage membership. Employee plan membership now represents 17.3% of total Medicare Advantage membership.
(6/4/08)- Enrollment in Medicare Advantage plans grew to 10 million as of the report through April 11, 2008 for May 1 effective date. This is the first time that the number of enrollees in Medicare Advantage plans has grown to 10 million. This figure represents an 11.2% increase since December 1, 2007.
In this latest report the Centers for Medicare and Medicaid Services included the fact that for the month of May, Special Needs Plans (SNP) membership represented 11.6% of the total number of Medicare Advantage membership while employer plan enrollees represented 17.3% of total Medicare Advantage membership.
(5/12/08)- According to the latest figures there are an now an estimated 9.4 million Medicare beneficiaries enrolled in Medicare Advantage plans, up from the 9.22 million that we mentioned in our item of 1/21/08 below. The federal government will spend an estimated $86.4 billion this calendar year on coverage of the 9.4 million people enrolled in these plans.
There has been a large outcry in connection with some unscrupulous sales practices that insurance companies have used in connection with selling this type of plan to Medicare beneficiaries. In fact Senator Max Baucus, the Democrat from Montana who heads the Senate Finance Committee vowed to introduce legislation to try and curb many of these practices.
There are many health professionals who feel that the states should introduce legislation that would rein in many of these illicit sales practices. The Bush administration is introducing several proposals that are intended to deal with this problem.
State can regulate the activities of insurance agents and brokers who sell private Medicare plans, but they generally can't regulate the insurance companies that offer such plans. Under the 2003 Medicare law, which added a drug benefit to Medicare, the federal government sets standards for private Medicare plans, and these standards supersede state laws and regulations except in two areas, the licensing and solvency of insurers.
In the draft of a report prepared by the National Association of Insurance Commissioners, state officials say they hope to propose common standards for marketing the private plans, which could then be enforced by states that adopt them.
The Bush proposals would outlaw unsolicited visits and telephone calls to beneficiaries, regulate commissions paid to sales agents and increase the fines that could be imposed on insurers.
Federal officials intend to issue final rules before the marketing of plans for 2009 begins this October. Medicare pays private insurers 13% more on average than it would spend for the same beneficiaries in the traditional Medicare program.
The president's proposal would prohibit door-to-door marketing of private Medicare Advantage plans. Agents would not be allowed to "cold-call" prospective clients on this product. The proposal includes a ban on the value of gifts and promotional items being offered to potential customers in excess of $15. Insurers would not be allowed to offer free meals, no matter what the value of the meal was.
The proposed rules would also prohibit agents from offering annuities, life insurance and other "non-health care related products" while selling Medicare Advantage plans.
Violation of these rules could result in fines up to $25,000 for each beneficiary who was "directly adversely affected".
Under the new proposals, the commission paid for the initial coverage could not exceed the commission paid for renewal coverage in a subsequent year. Man insurers pay a higher commission in the first year, which could some agents to encourage beneficiaries to change plans each year. The insurer would have to pay the same commission for all its Medicare Advantage plans and a uniform amount for all its drug plans.
(3/7/08)- In a report issued by the Government Accountability Office, an investigative arm of Congress, investigators determined that many people in private Medicare Advantage plans face higher costs for home health care, nursing homes and some hospital stays. There are about 9 million people in such plans, or abut 1/5 of the total 44 million people who are beneficiaries under these plans.
The report stated: "Medicare spends more per beneficiary on Medicare Advantage than it does for beneficiaries in the original Medicare fee-for-service program, at an estimated additional cost to Medicare of $54 billion from 2009 through 2012.)
The researchers found that "48% of Medicare Advantage beneficiaries were in plans that had an out-of-pocket maximum" that ranged from $2,750 to $4,600 a year and averaged about $3,500.
It went on to show that certain costs are not counted towards the out-of-pocket limits. Twenty-nine percent excluded the cost of some cancer drugs, 23% exclude the cost of some mental health services and 21% exclude home health care expenses.
"If the policy objective is to subsidize health care costs of low-income Medicare beneficiaries," the report said, "it may be more efficient to directly target subsidies to a defined low-income population that to subsidize premiums and cost-sharing for all Medicare Advantage beneficiaries, including those who are well off."
(2/3/08)- Senator Max Baucus (D-Montana), chairman of the Senate Finance Committee said that his committee is considering whether to legislate on reforms to act as a check against the growth of Medicare private-fee-for services plans (PFFS). PFFS plans grew enrollment by 120% in 2007 and accounted for 60% of Medicare Advantage growth.
PFFS plans have come under renewed attack by the Democrats because of their misleading marketing plans, and because of questions of whether or not they add sufficient value in comparison to what they are paid.
According to a study done by the Kaiser Family Foundation, about one-half of the enrollees in PFFS are in counties where another type of Medicare Advantage plan is available that offers more benefits with a greater net value. Senator Baucus had considered last year legislative changes that would have curtailed PFFS in areas where other types of Medicare Advantage plans are available.
President Bush remains opposed to most cuts, including changes that would reduce payments to PFFS
(1/21/08)- The Centers for Medicare and Medicaid Services (CMS) released Medicare Advantage (MA) enrollment data as of the January 2008 payment. Enrollment in MA grew to 9.22 million from 9.01 million as of December 7, 2007. This is an increase of 2.4% which reflected enrollments accepted through November 8, 2007.
The February report will contain the most meaningful data, since it will contain the data for the final 3 weeks in December. The open enrollment period for Medicare Part D ran from November 15th thru December 31st, so the January data will reflect results from the beginning half of open enrollment.
(12/21/07)- The House by a vote of 411 to 3 cleared the legislation passed by the Senate unanimously on 12/18 that would replace a pending 2008 physicians pay cut of 10% through June 30th with a 0.5% pay increase and re-authorized the children's health program with funding to maintain current enrollment levels through March 2009.
The president is expected to sign the legislation into law before January 1. Medicare Advantage plans will suffer only some minor cuts, even though the Democrats had hoped to make more significant cuts to this type of plan.
The package would cut more than $1 billion from a "stabilization fund" created in a 2003 bill to help faltering Medicare Advantage insurers. The package would also cut an incentive fund passed by Congress last year to encourage physicians to report quality data to the government. Such cuts would be made to comply with Congress's pay-as-you-go budget rule that requires new spending to be offset.
Once again we see that the law requiring physician fees to be cut under the Medicare formula are subverted.
(12/12/07)- Under the Medicare fee formula for physician payments rules, the payments to doctors and other medical professional is due to be cut 10% starting in 2008. If this were to happen many doctors would opt out of participating in Medicare. These called for cuts in fee payment occurred under the formula in prior years also, but this has never happened before.
With the Congress and the president locked in a battle over the budget, mainly over the expenditure for the Iraq-Afghanistan war and child-health care cost legislation, the Medicare Advantage program has come to the forefront as a potential area for cost savings for the Medicare program.
Medicare Advantage plans currently account for almost 9% of the 43 million Medicare beneficiaries. Based on calculations from both the Congressional Budget Office and the federal Medicare Payment Advisory Commission (MedPAC-for more info on this commission please see our article Helpful Web Sites ) Medicare Advantage plans cost taxpayers about 12% more than does regular Medicare plans.
The federal payment for Medicare Advantage plans vary from locality to locality, but on average it costs about $9,000 per enrollee nationwide. Humana currently has 1.1 million members enrolled in its Medicare Advantage program, making it the number four player in this program, and UnitedHealth, which markets its plans along with AARP has 1.3 Medicare Advantage members, making it the number one insurer under this program.
Democrats in general favor cutting back on the Medicare Advantage program, while the president and the Republicans are in favor of maintaining it, since its members in general are quite satisfied with the program. If the program goes unchanged, government spending on it is projected to exceed $100 billion in 2009.
(11/21/07)- The Centers for Medicare and Medicaid Services (CMS) released Medicare Advantage (MA) enrollment data as of November 1, 2007 payment. Enrollment in MA grew to 8.98 million from 8.95 million as of July 1, 2007. This is an increase of 0.4% which reflected enrollments accepted through October 17, 2007. November is normally a slow period and most enrollment comes in January and February when over 700,000 enrolled in 2007.
(8/22/07)- The Centers for Medicare and Medicaid Services (CMS) released Medicare Advantage (MA) enrollment data as of August 1, 2007 payment, which reflects enrollments accepted through July 13, 2007. Enrollment in MA grew to 8.79 million from 8.68 million as of July 1, 2007. This is an increase of 0.9% which reflected enrollments accepted through June 13, 2007.
(7/17/07)- The Centers for Medicare and Medicaid Services (CMS) released Medicare Advantage (MA) enrollment data as of July 1, 2007 payment, which reflects enrollments accepted through June 13, 2007. This is an increase of 1.3% which reflected enrollments accepted through May 15, 2007.
(5/20/07)- The Centers for Medicare and Medicaid Services (CMS) released Medicare Advantage (MA) enrollment data as of the May 1, 2007 payment, which reflects enrollments accepted through April 13, 2007. Enrollment in MA grew to 8.62 million from 8.51 million since the data of April 1, 2007, which reflected enrollment accepted through March 15, 2007.
There are two types of Medicare Advantage plans. One is the regular Medicare Advantage plan and the other is called a private-fee-for-service plan (PFFS). PFFS were created in 1997, but they received a big boost by the new prescription drug law of 2003. It is estimated that there are about 1.3 million Medicare beneficiaries who are enrolled in PFFS.
Medicare Advantage members have limits on their choice of providers, whereas PFFS members have an open-access option as to their providers.
Recently Medicare officials have warned Congress and the public about the overly aggressive sales pitches being employed by the PFFS. To try and remedy the problem, Medicare will require PFFS plans next year to call all new enrollees to make sure they understand what PFFS are, and exactly how much of a premium they will have to pay for their coverage.
The Medicare Payment Advisory Commission, which advises Congress on Medicare issues estimated that the government spends 12% more on beneficiaries in Medicare Advantage plans, and 19% more on beneficiaries in PFFS than it does on regular Medicare beneficiaries. The commission has recommended to Congress that it cut payment to these plans so that they are at the same level as is the cost for all Medicare participants.
(1/24/07)- Medicare Advantage insurance companies received a substantial subsidy increase under the new prescription drug law written in 2003. With the Democrats now in control of Congress, many are questioning the wisdom of that increase. Please keep in mind also that President Bush has emphasized Medicare Advantage as the key to his Medicare revamping strategy.
As of the most recent count, there were 7.6 million people enrolled in Medicare Advantage programs as of December 2006. That compares with about 6.1 million who were enrolled in the plans as of December 2005. Incidentally, there are about 44 million enrolled Medicare beneficiaries as of the end of last year.
A November 2006 report that was written by the Commonwealth Fund, a private nonprofit foundation that supports health research, concluded that, on average, the government is spending about $922 more each year for every Medicare beneficiary who is in the Advantage program, than for the beneficiaries in the regular Medicare program. That comes to a total cost of about $5.2 billion.
The main author of that report was Former House Democratic aide Brian Briles. MedPac, the independent panel that advises Congress on Medicare issues concluded that the government is paying substantially more for Medicare Advantage beneficiaries than it is for regular Medicare beneficiaries.
"There are precious few areas where we can save money. Medicare Advantage is a prime target to pick up a few dollars," said Rep. Pete Stark (Dem.-CA) who heads the House Ways and Means panel's health subcommittee. The House Ways and Means Committee, and the Senate Finance Committee are the respective panels from which legislation pertinent to Medicare arises from.
(9/3//06)- Congress created private-fee-for service (PFFS) plans in 1997 as an alternative to Medicare. This type of plan has experienced phenomenal growth the last few years as Congress has continued to increase the subsidies to these plans to encourage more and more seniors to join them. President Bush has also been in the forefront of encouraging seniors to join these plans as a way of reducing the growing health care benefit coverage cost for Americans.
Sometimes called Medicare alternative plans, but better known now as Medicare Advantage Plans they are becoming more and more attractive to participants since they not only cover physician and hospital services under one roof, and in addition they continue to add benefits for its members.
Instead of paying the beneficiaries claims through the Medicare payments system, these plans involve the direct payment by the federal government to the insurance company to manage the health care needs of its members.
Under the terms of the Prescription Drug Act of 2003, Congress raised the reimbursement rate to companies offering Medicare Advantage plans to about $10,000 per enrollee, per year.
Some of the plans have responded by offering their members additional services such as vision care as well as prescription drug coverage.
As of July, more than seven million Americans were in some form of Advantage plan, which represents about 17% of all Medicare beneficiaries, up from 14,3% in December according to Avalere Health LLC, a health-care advisory firm that analyzes Medicare data.
Enrollment in private fee-for-service plans jumped to 82,068 as of August 1 from just 20,000 three years ago, says David Lewis, acting director of the Medicare Advantage Group at the Centers for Medicare and Medicaid Services.
Wellpoint Health Services said that it plans to offer Advantage plans in all 50 states in 2007. Because of the subsidies that the Advantage plans get from the federal government, many of them have lower premiums than do the HMOs or PPOs in particular areas.
Humana Inc. is the largest provider of PFFS plans, with over 60,000 enrollees.
One potential huge market for the insurance companies will be the millions of enrollees that they recently signed up for Part D Medicare coverage plan.
The Medicare Payment Advisory Commission, (http://www.medpac.gov ) which advises the government on Medicare issues has warned that the government pays 11% more on average for Medicare Advantage plans for physician and hospital services than for the traditional Medicare plan.
There are many of us who remember how the insurers abandoned their plans when they felt that they were not making enough money off these plans. The government continues to increase the subsidies to these plans, but even that did not stop them from abandoning their members in many localities.
Advantage members must still pay the Medicare Part B premium for physician and outpatient services, which is $88.50 in 2006.
FOR AN INFORMATIVE AND PERSONAL ARTICLE ON PRACTICAL SUGGESTIONS WHEN SELECTING A NURSING HOME SEE OUR ARTICLE "How to Select a Nursing Home
By Allan Rubin
updated April 9, 2013
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