NAMSA and Proposed Legislation for Medicare Supplements

[azmedsupagent]

There were many different proposals, most notable the Coburn/Lieberman bill from 2011, which resurfaced again in September 2013. Here's a summary of that one:


http://www.coburn.senate.gov/public...&File_id=2741a751-37b5-4847-b1ee-c52c3801754e


There were others, in addition to the HHS requirement in the Healthcare reform effort that required the NAIC to take a look at first dollar coverage in Medicare supplement plans & see if they should be eliminated. I believe (and don't quote me, I'm trying to remember), that their initial look at it determined that these plans did not "create, or contribute to" overutilization of Medicare services.


There was also a push to have the Medical Loss Ratio formula applied to Medicare supplement sales commissions - this didn't happen because of many disparate efforts of different groups who fought hard not to have the MLR apply - but if that idea comes back - forget getting paid . . . .what happened to individual insurance, part D plans & this constant scrutiny in the Medicare Advantage world to cap commissions with be the norm.


Paul Ryan and others also believe that first dollar coverage leads to overutilization, and he wants to get rid of the system the way it exists today and provide "vouchers", so that anyone currently under the age of 55 will be able to buy insurance with a set number of dollars when they become "Medicare Eligible" - that you know will not keep up with inflation. I'd rather have the money . . . .skip the "voucher" - it will be worthless as healthcare costs continue to skyrocket. His proposal would allow those who are over the age of 55 right now, to have Medicare as the program exists today - so they would remain unaffected for the most part.


There may not need to be a "bill" per se, if these ideas are simply wrapped in the packaging of a budget compromise. If they are in there & the budget passes, well, there you are . . . .

Cady I think the one thing we can hope for is that the complexity involved in combining A and B would prevent congress from just piggy backing this on a budget compromise. This type of change would require a massive restructuring of the medicare payment system and they would also need to work out the kinks of how to integrate the funding mechanisms of both Part A and B. Since part a hospital trust is funded by a payroll tax and part b is funded by General funds authorized by congress in the annual budget they would need to figure out how to combine the two funding mechanisms.

Another thing to consider is if medicare would be treated as an entitlement like Part A or an optional benefit like part B. For example, if someone currently has employer coverage they can take part A coverage as they are entitled and opt out of part b. If A and B are combined as one then this person would either need to opt out of medicare all together hence loosing the part a entitlement they paid into, or this person would need to cancel the group plan to go onto medicare. If one of these two things doesn't happen then the new AB medicare would be duplicate coverage to the existing group plan. So this kind of thing is not a quick fix.

Also, the 2014 budget that was just passed by the house is still pitching the same old Paul Ryan Idea for turning medicare into a voucher system which will never ever be passed by the left leaning senate.

I'm hoping Craig Ritter can jump in and provide some insight on the implications of this potentially devastating proposal.

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Kaiser testified in Feb 2013 to the ways and means sub committee on health reform and pretty much slayed the idea.

House Ways and Means Subcommittee on Health Hearing - Top News - InsuranceNewsNet.com

 

[craig_ritter]

I'm hoping Craig Ritter can jump in and provide some insight on the implications of this potentially devastating proposal.

AZ:

I spent a fair bit of time on these in my webinar today. I can PM you (or anyone else who wants it) the link to the recording. I'll summarize here, though.

There are a number of proposals which attempt to limit Medigap based on the idea that Medigap increases utilization:

1. Unifying A/B deductibles and not allowing the deductible to be covered by Medigap. (I've also seen the deductible phasing out at lower incomes.)
2. Adding a tax or surcharge to Part B for Medigap purchasers.
3. Banning first dollar Medigap entirely.

I'm not losing a ton of sleep over these. I think they're based on flawed logic. An agent I work with said that blaming Medigap for Medicare claims is like blaming trailer parks for tornadoes. The reason I'm not as worried about these is that they hurt Medicare beneficiaries, AARP is opposed to them, they are difficult to implement and they tax people FOR buying insurance (as opposed to taxing people for NOT buying insurance, like the ACA does).

Minimum MLR is my biggest fear and a total nightmare for a host of reasons. I haven't seen this coming up as much recently, thankfully.

 

[midwestbroker]

True, this is what under 65 agents were saying, but they did not have one of the largest PACs representing their clients making over 50% of their income off the sales of the products they sell.

I don't see any radical changes to Medicare. Look at the last round with Paul Ryan. Changes to Medicare, forget it. As long as seniors remain one of the largest voting blocks, they can rest assured they will not see any changes.

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Thanks Craig for the recap.

Here is a news article about MLR...how in 2011 MA carriers averaged 86.3%, 1.3% higher than the 85% required under the ACA.

GAO: Most Medicare Advantage Plans Met Medical-Loss Ratio - California Healthline

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Here is AARP stance on changes (from 2012)

AARP lobbies against Medicare changes that could hurt its bottom line - The Washington Post

 

[cadylou]

Thanks Sam, signed that petition.

Petition

You may want to also pass along to clients too. I began this thread referencing this e-mail that I'm sending out to some of my clients, which has the link to the petition embedded in it so that they can also send to friends & neighbors that may want to weigh in on this. Feel free to use my verbiage if it suits you.

 

[azmedsupagent]

AZ:

I spent a fair bit of time on these in my webinar today. I can PM you (or anyone else who wants it) the link to the recording. I'll summarize here, though.

There are a number of proposals which attempt to limit Medigap based on the idea that Medigap increases utilization:

1. Unifying A/B deductibles and not allowing the deductible to be covered by Medigap. (I've also seen the deductible phasing out at lower incomes.)
2. Adding a tax or surcharge to Part B for Medigap purchasers.
3. Banning first dollar Medigap entirely.

I'm not losing a ton of sleep over these. I think they're based on flawed logic. An agent I work with said that blaming Medigap for Medicare claims is like blaming trailer parks for tornadoes. The reason I'm not as worried about these is that they hurt Medicare beneficiaries, AARP is opposed to them, they are difficult to implement and they tax people FOR buying insurance (as opposed to taxing people for NOT buying insurance, like the ACA does).

Minimum MLR is my biggest fear and a total nightmare for a host of reasons. I haven't seen this coming up as much recently, thankfully.

Craig,

according to a 2011 HHS report most medigap plans are already near, at or above the proposed 80% MLR. If this is infact true it doesn't seem like there would be a huge impact, am I missing something?
http://aspe.hhs.gov/health/reports/2011/medigappremiums/index.pdf

 

[cadylou]

Craig,

according to a 2011 HHS report most medigap plans are already near, at or above the proposed 80% MLR. If this is infact true it doesn't seem like there would be a huge impact, am I missing something?
http://aspe.hhs.gov/health/reports/2011/medigappremiums/index.pdf

I think that it really doesn't matter to them whether or not they are 'at or near' MLR levels now - it would tighten control over the insurance companies again & add another layer of "policing" and "administrivia" that would most likely result in the same type of action that occurred when they applied it to the individual market. Commission cuts across the board. . . . .


Too bad that the independent agent/broker is caught up in this since we are not "fully loaded" employees contributing to the insurance companies' overhead - our little commissions are all we get. I believe the original intent was to limit insurance companies spending on "overhead" rather than delivery of % of premium in the form of medical services claims. Sounds good on its face to limit heavy duty marketing expenditures, executive boondoggles, etc.


Efforts have apparently been made to have the independent broker/agent excluded from this formula, but they've been unsuccessful to date. Face it - we're in a hostile environment now . . . .

 

[azmedsupagent]

Thank you google alerts!
Hill Plan Would Reward Medicare Doctors For Quality - Kaiser Health News

 

[somarco]

Focusing Medicare physician payments more on quality mirrors ongoing efforts in the private sector, some of the health law's payment changes to hospitals and Medicaid efforts to improve medical care and lower costs.

There are some areas where a reward system can have a negative impact, and this is one of them.

If health care providers are rewarded for positive outcomes there could be a tendency to cherry pick those patients where good results are likely.

In a correlation (of sorts), school systems tried rewarding teachers whose student have higher test scores and pass rates. Care to guess what happened?

 

[houcoogster]

There are some areas where a reward system can have a negative impact, and this is one of them.

If health care providers are rewarded for positive outcomes there could be a tendency to cherry pick those patients where good results are likely.

In a correlation (of sorts), school systems tried rewarding teachers whose student have higher test scores and pass rates. Care to guess what happened?

This could have disastrous consequences. Take an aids patient for example how much work does the Dr have to invest in this patient and to get a fraction of the pay for a not so good outcome? The Dr might just give up early (or at least not give it his all) and cut his losses and move to the next one. The people writing these laws are probably unaware of a relatively new field of study called "Behavioral Economics".

 

[somarco]

This could have disastrous consequences. . . . The people writing these laws are probably unaware of a relatively new field of study called "Behavioral Economics".

I rest my case.

Something similar already occurring in Medicare with penalties for higher than expected hospital readmission rates. Hospitals react by admitting a patient for 1 - 4 days for observation. Technically they are outpatient, not inpatient. As such it is a Part B claim, not Part A.

It gets worse for the patient on maintenance meds. If administered by the hospital staff it is a non-covered item under Medicare which further inflates the OOP cost to the patient.

But at least the hospital isn't penalized for readmission if the patient has to come back a few days later.