MA Funding Rant/Question

[Norwayguy]

Okay lets set the scene.

Medicare beneficiary anywhere in the United States on Original Medicare aka Medicare Parts A&B. This senior has exactly the same coverage, deductibles and co-insurance. Which sounds about right considering it is a Federal Government program.

Now we fast forward to Medicare Part C aka Medicare Advantage. I hear from some of you on the Left coast about these great MA plans with $0 Premium Max OOP expense in the $3200 per year range, low co-pays at Dr, ERs etc and reasonable co-pays for the first few days of being admitted to a hospital. Now we jump to Maine or a ton of other places around the country and the plans are no where near the same you have premiums, Max OOP is $6K+ and co-pays for hospital admitances in the first week are much higher than original Medicare Part A deductibles.

So since this is a Federal program can someone explain to me the huge differences in these programs...Yes I know these plans are run by the private sector, Yes I know its the free market my issue is that beneficiaries don't have the same freedoms they have elsewhere in the free market because they are limited in their purchases based on the county they live in.

 

[wehotex]

Okay lets set the scene.

Medicare beneficiary anywhere in the United States on Original Medicare aka Medicare Parts A&B. This senior has exactly the same coverage, deductibles and co-insurance. Which sounds about right considering it is a Federal Government program.

Now we fast forward to Medicare Part C aka Medicare Advantage. I hear from some of you on the Left coast about these great MA plans with $0 Premium Max OOP expense in the $3200 per year range, low co-pays at Dr, ERs etc and reasonable co-pays for the first few days of being admitted to a hospital. Now we jump to Maine or a ton of other places around the country and the plans are no where near the same you have premiums, Max OOP is $6K+ and co-pays for hospital admitances in the first week are much higher than original Medicare Part A deductibles.

So since this is a Federal program can someone explain to me the huge differences in these programs...Yes I know these plans are run by the private sector, Yes I know its the free market my issue is that beneficiaries don't have the same freedoms they have elsewhere in the free market because they are limited in their purchases based on the county they live in.

Thanks for asking that question. I've wondered that too. I have somewhat thankful that I've lived in high-cap areas (LA Cty, calif and San Antonio, Tex), but have never understood how CMS calculates these amounts. As a matter of fact, I thought that the legislation passed in 1997 was supposed to equalize this; taking away from the high cap areas to give to the low cap areas. But that doesn't seem to be the case.

 

[houcoogster]

The only logical thing that comes to mind is the Network Participants. Outside of that it has to be big politics and special interest.

 

[Josh]

The only logical thing that comes to mind is the Network Participants. Outside of that it has to be big politics and special interest.

The network is a part of it, but the rest of what you're talking about is mostly BS. There are hard and fast reasons for the differences in the benefits and funding.

Peter, I seriously love that you're this interested in this. I'm only going to dig into this so deep because I have a pretty intense week ahead of me, but here is a chunk of it:

Reason one, the less important: the cost of care varies for a pile of reasons. Some areas simply have a higher cost of care, some areas have higher utilization, some areas have doctors that demand higher reimbursements and other areas are more reasonable. For example, if someone wants to have a triple bypass surgery in Hartford, CT the cost will much likely be much higher than in an area like Bangor, ME. Without actually looking at a chart with specifics it's tough to give many examples, but the actual cost of the healthcare is going to be higher. So if 1 out of 100 seniors are going to need a major surgery and that number is the same here, there, and everywhere, but the cost of the surgery is twice as high in one area over the next, then that does change thing by region. That leads wonderfully to ~>
Second, and most importantly, the reimbursement to the carrier is going to vary by area, sometimes by more than you'd think. The whole methodology of how carriers get reimbursed by CMS is a madness unto itself, but to answer your bigger question of "why wouldn't the plans all be the same?", the answer is at least partially that the carriers are playing games with CMS on the comp and choosing to do business in areas where they like the compensation to cost of care ratio. Going back to using the number of 1 in 100 seniors are going to need a major surgery (example number, have no source on it or a reason to believe it's true) and the cost of that surgery will be twice as high in one area over another, but the compensation to the carrier does not reflect the difference in the cost of care then we're going to have an uneven playing field.

The main reason MA has problems is that the program is entirely too complicated at every level. MA has a ton of potential and could be doing wonderful things, both on by being able to provide bennys with a higher level of care AND by being able to provide real cost savings, but as the program sits right now it is set to self-destruct because that's all it can do.

 

[jdeasy]

The network is a part of it, but the rest of what you're talking about is mostly BS. There are hard and fast reasons for the differences in the benefits and funding.

Peter, I seriously love that you're this interested in this. I'm only going to dig into this so deep because I have a pretty intense week ahead of me, but here is a chunk of it:

Reason one, the less important: the cost of care varies for a pile of reasons. Some areas simply have a higher cost of care, some areas have higher utilization, some areas have doctors that demand higher reimbursements and other areas are more reasonable. For example, if someone wants to have a triple bypass surgery in Hartford, CT the cost will much likely be much higher than in an area like Bangor, ME. Without actually looking at a chart with specifics it's tough to give many examples, but the actual cost of the healthcare is going to be higher. So if 1 out of 100 seniors are going to need a major surgery and that number is the same here, there, and everywhere, but the cost of the surgery is twice as high in one area over the next, then that does change thing by region. That leads wonderfully to ~>
Second, and most importantly, the reimbursement to the carrier is going to vary by area, sometimes by more than you'd think. The whole methodology of how carriers get reimbursed by CMS is a madness unto itself, but to answer your bigger question of "why wouldn't the plans all be the same?", the answer is at least partially that the carriers are playing games with CMS on the comp and choosing to do business in areas where they like the compensation to cost of care ratio. Going back to using the number of 1 in 100 seniors are going to need a major surgery (example number, have no source on it or a reason to believe it's true) and the cost of that surgery will be twice as high in one area over another, but the compensation to the carrier does not reflect the difference in the cost of care then we're going to have an uneven playing field.

The main reason MA has problems is that the program is entirely too complicated at every level. MA has a ton of potential and could be doing wonderful things, both on by being able to provide bennys with a higher level of care AND by being able to provide real cost savings, but as the program sits right now it is set to self-destruct because that's all it can do.

It was already answered by a wise sage here at the forums. The providing company gets the person's part B premium and what ever they can get done with that is all gravy.

 

[Josh]

It was already answered by a wise sage here at the forums. The providing company gets the person's part B premium and what ever they can get done with that is all gravy.

That's my favorite. There is nothing that I've seen an agent do that drives me more batty than that. The worst part is it involves a complete and total ignorance to even the concept of medical claims.

I kid you not, I watched one of Aetna's top reps say:

"It's not even all of the part B premium, it's just a small portion of it." That's what happens when you have silicon for brains. I just shook my head and died a little inside.

 

[Norwayguy]

Medicareplansolution,

I appreciate your post and understand the mechanics....It just funny that the cost of care in Maine as you pointed out should be less costly than in Hartford, CT but we end up with MA plans that are poorer and leave the member more exposed to the financial risk.

I understand what you say when you say the carriers are picking and choosing where to really be competitive based on Medicare payments and I don't blame them because it makes fiscal sense.

I am in agreement with you that we would be better off if Medicare designed 1 MA plan for the country and then paid the insurance carriers a small monthly fee to manage it only and not take on the financial risk leaving that part for Medicare.

 

[AttillaTheOne]

1) the MA Company gets a LOT MORE than just the Part B premium!
2) Peter, have you ever sold an MA plan? My guess >>> NO
3) Peter, why would you say that an MA plan leaves the Medicare Beneficiary open to more liability than Original Medicare? WRONG.

I have sold many MAPD plans and have many clients who have saved a LOT of money of CoPays and deductibles compared to Original Medicare!

Peter, I think you just ask questions like this so you take our attention away from dealing with people who really would like to learn from the smart people on this forum.
STOP THE MADNESS!!!

 

[Norwayguy]

1) the MA Company gets a LOT MORE than just the Part B premium!
2) Peter, have you ever sold an MA plan? My guess >>> NO
3) Peter, why would you say that an MA plan leaves the Medicare Beneficiary open to more liability than Original Medicare? WRONG.

I have sold many MAPD plans and have many clients who have saved a LOT of money of CoPays and deductibles compared to Original Medicare!

Peter, I think you just ask questions like this so you take our attention away from dealing with people who really would like to learn from the smart people on this forum.
STOP THE MADNESS!!!

You sir need to stop and go back and reread this thread and any other thread I have posted in...I have never in any thread said that the MA companies recieve the Part B premiums...Though I have been in a thread where Petrinoknowsbest believes that.

Have I sold an MA plan and the answer is no even though I have certified with multiple carriers each year I always become very disenchanted.

I don't believe I have ever said that an MA plan leaves some with more liability than original medicare...I did state in one thread that if a person only goes to the Dr 2-3 times per year than they would have been better off on Original Medicare alone. And that is based on simple Dollars (please remember I have no $0 plans in my state). Its the same concept as a person under 65 self insuring and only going to the DR 2-3 times per year...Would I recommend this approach no because I understand that Insurance is for the unexpected.

So Attila please reread my threads before you make those accusations.

 

[Josh]

1) the MA Company gets a LOT MORE than just the Part B premium!
2) Peter, have you ever sold an MA plan? My guess >>> NO
3) Peter, why would you say that an MA plan leaves the Medicare Beneficiary open to more liability than Original Medicare? WRONG.

I have sold many MAPD plans and have many clients who have saved a LOT of money of CoPays and deductibles compared to Original Medicare!

Peter, I think you just ask questions like this so you take our attention away from dealing with people who really would like to learn from the smart people on this forum.
STOP THE MADNESS!!!

Classic read, fire, AIM!

2, Peter has a pretty good handle on what he's talking about.

3, Yes, sometimes an MA plan will leave the benny with more liability, particularly with inpatient hospitalizations. All MAs have to be at least actuarially equivalent to Original Medicare (OM), but that doesn't mean that the average user won't have more liability. Many carriers in many areas have per day inpatient hospitalization copays that can easily exceed $1,500 on a reasonable stay, that is higher than OM. The skilled nursing facility benefit can always have a significantly higher cost share than OM.

AtillaTheOne, you're shooting your mouth (or fingers) off about something you clearly don't have as much of an understanding of as you seem to think you do. To make matters worse, you're insulting Peter for no good reason. Sold a plan or not, he has more than a functional understanding of plans and the way they work.