According to a recent story by US News & World Reports, seniors enrolled in Medicare Advantage plans can expect to pay an extra $40 to $70 a month in premiums in 2010. Another alternative could see a reduction in benefits by a comparable amount, according to estimates by the Blue Cross and Blue Shield Association, based on new plan payment rates that the government recently.
“The most likely thing that Medigap plans will be forced to do is to change their benefit packages, increase benefit premiums, or increase cost sharing,” says Kris Haltmeyer, the deputy executive director for legislative and regulatory policy for the association, which represents 39 independent Blues plans across the country. Collectively, the plans cover 1.5 million Medicare Advantage members. Altogether, roughly 10 million seniors are in Medicare Advantage plans.
The Obama administration had signaled for months that it planned to trim the higher reimbursement rates that the government currently pays for beneficiaries in Medicare Advantage plans. The government pays 14 percent more for a beneficiary in a Medicare Advantage plan—which combines hospitalization, outpatient, and drug services into a single managed-care plan—than it does for a patient in traditional Medicare’s fee-for-service plan. Obama is counting on revenues from lower Medicare Advantage payments to help finance his health reform agenda.
Last month, the administration also announced that, starting in 2010, the Centers for Medicare and Medicaid Services would review cost-sharing requirements under Medicare Advantage to make sure sicker patients aren’t paying more and would ask insurers to eliminate plans that are substantially alike and cover relatively few individuals.
Defending the plans, insurance industry experts cite the extra benefits that Medicare Advantage plans often offer seniors, including dental and vision coverage and disease management and care coordination services for patients with chronic diseases that are not available in traditional Medicare.
But consumer advocates aren’t buying it. They say the plans don’t provide enough bang for the buck in enhanced services to justify their higher reimbursement rates. Moreover, there’s a basic issue of fairness, they argue. “The majority of Medicare beneficiaries are now subsidizing the minority through higher Part B premiums,” says David Lipschutz, a staff attorney with California Health Advocates, a Medicare advocacy group. The higher payments also affect the program’s fiscal health overall, advocates argue.
It’s too soon to say for sure how the change will affect seniors. Advocates expect there to be fewer zero-premium Medicare Advantage plans offered, along with an almost certain reduction in benefits. Plans in some areas may shut down entirely. One thing is certain: Next year, seniors in Medicare Advantage should carefully evaluate whether their plan still offers them the best benefits for the price. If you are not happy with the changes in your Medicare Advantage plan, you may also want to consider switching back to original Medicare, and adding a Medicare Supplement plan to help fill in the gaps that Medicare does not cover.
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Wiley Long is founder and president of Medigap Advisors, and is passionate about helping people navigate the confusing waters of Medicare. He is the author of The Medicare Playbook: Designing Your Successful Health Coverage Strategy, a clear and simple explanation so you can make the most of your Medicare coverage.