Fact-Checking the Medicare Advantage Clash at Biden/Ryan Debate
Like most, I found the Biden/Ryan debate last week some of the best TV of the election season. Both were well-prepared and spoiling for a fight, and moderator Martha Raddatz did a terrific job. There was one exchange that really got our attention when the topic turned to Medicare Advantage:
Rep. Paul Ryan:"7.4 million seniors are projected to lose their current Medicare Advantage coverage they have. That's a $3,200 benefit cut."
Vice President Biden: "That didn't happen."
Ryan:"What we're saying. . ."
Biden:"More people signed up."
Ryan:"These are from your own actuaries."
Biden:"More people signed up for Medicare Advantage after the change."
WaPo's Fact Checker Glenn Kessler did a nice piece today on the veracity of the claims made:
"Many viewers were probably puzzled by this back-and-forth over Medicare between Vice President Biden and the GOP vice presidential nominee, Rep. Paul Ryan (R-Wis). The strange thing is that both are right — but Ryan has a distinct edge in the argument.
The Facts
Medicare Advantage is the private alternative to the traditional insurance program for seniors, with 13.1 million beneficiaries, or about 27 percent of the Medicare population. We've previously explored some of the debate concerning the $145 billion reduction in projected spending for Medicare Advantage contained in the health-care law, which is intended to reduce costs in a program in which the government pays more per senior than in traditional fee-for-service Medicare.
Ryan is correct that the Medicare actuary, Robert S. Foster, estimated that the projected enrollment in Medicare Advantage would be halved under the law. "We estimate that in 2017, when the MA provisions will be fully phased in, enrollment in MA plans will be lower by about 50 percent (from its projected level of 14.8 million under the prior law to 7.4 million under the new law)," Foster wrote.
Note that this is from a projected level that is currently higher than enrollment today (13.1 million), so the actual projected reduction from today's level is 5.7 million. But Ryan absolutely nailed the number in Foster's estimate, even noting that it is a projected figure. (His claim of a $3,200 benefit cut came from a report by the right-leaning Heritage Foundation.)
What about Biden's response that enrollment has gone up "after the change"? This is technically correct, but misleading. Enrollment in Medicare Advantage plans have gone up from 11.1 million (when the health care law was approved) to 13.1 million today — but most of the reductions in Medicare Advantage have not taken effect yet.
Moreover, in what Republicans believed was a politically motivated move, the administration earlier this year essentially deferred the planned cuts with a $6.7 billion infusion of funds into Medicare Advantage. The cuts were to begin to take effect this year, but the action helped mitigate the impact in this election year.
Still, the Kaiser Family Foundation cautioned in a report that the extra payments could not fully explain why enrollment has continued to climb:
The Medicare Advantage marketplace is robust based on plan participation and enrollment. While new quality based bonus payments may have helped to mitigate the effects of the payment reductions that are now being phased in, the trend towards growing Medicare enrollment has been persistent over time and is unlikely to be fully explained by quality bonus payments alone, but rather a combination of historical trends in payment, new quality bonuses, the continued erosion of retiree benefits, and other factors affecting beneficiary choice.
The Pinocchio Test
Readers should always keep in mind that projections are only estimates, and so claims of potential cuts should be taken with a grain of salt. Still, Ryan was correct that the Medicare actuary estimated that millions of retirees would switch out of Medicare Advantage in response to the reductions contained in the health care law — and Biden was being misleading when he said enrollment has continued to climb "after the change." Those cuts have largely not yet taken place, in part because of some election-year spending by the administration. So Biden gets the (2)Pinocchios in this case."
I think Kessler is showing the Vice President some tough love here. Technically Joe is also right, and it's not misleading to make the claim he did without the cuts having been implemented yet (they were deferred via CMS's massive $8 billion Star Ratings Demonstration). Medicare Advantage continues to grow at a blistering 10+% pace even after health reform's passage. And that's something both parties can claim credit for.
#DenverDebate
Who saw last night's presidential debate in Denver? Certainly there is a great deal of water cooler discussion going on today. Something that irked me was the continual reference to the fact that Medicare would continue to be available for "seniors". Anyone working in the Medicare Advantage arena (whether it's in Medical Management, Sales, Customer Service, you name it) knows that Medicare is not just for seniors. The Marketing guidelines even prohibit targeted marketing in this regard, i.e. implying a plan is available only to seniors as opposed to all Medicare beneficiaries. In fact, the list of under-65 recipients who qualify is as long as the list of over-65 qualifications.
As of December 2011, there were over 8.3 million disabled men and women under the age of 65 enrolled in Medicare Part A. I urge all those who have the privilege (and challenge!) of holding or seeking elected office not to forget this important fact, and I urge all readers to go out and vote on November 6.
Hospital insurance (Part A) (From SSA Publication No. 05-10043, ICN 460000, July 2012)
Most people age 65 or older who are citizens or permanent residents of the United States are eligible for free Medicare hospital insurance (Part A). You are eligible at age 65 if:
- You receive or are eligible to receive Social Security benefits; or
- You receive or are eligible to receive railroad retirement benefits; or
- Your spouse is eligible; or
- You or your spouse (living or deceased, including divorced spouses) worked long enough in a government job where Medicare taxes were paid; or
- You are the dependent parent of a fully insured deceased child.
Before age 65, you are eligible for free Medicare hospital insurance if:
- You have been entitled to Social Security disability benefits for 24 months; or
- You receive a disability pension from the railroad retirement board and meet certain conditions; or
- If you receive Social Security disability benefits because you have Lou Gehrig's disease (amyotrophic lateral sclerosis); or
- You worked long enough in a government job where Medicare taxes were paid and you meet the requirements of the Social Security disability program; or
- You are the child or widow(er) age 50 or older, including a divorced widow(er), of someone who has worked long enough in a government job where Medicare taxes were paid and you meet the requirements of the Social Security disability program.
- You have permanent kidney failure and you receive maintenance dialysis or a kidney transplant and:
- You are eligible for or receive monthly benefits under Social Security or the railroad retirement system; or
- You have worked long enough in a Medicare-covered government job; or
- You are the child or spouse (including a divorced spouse) of a worker (living or deceased) who has worked long enough under Social Security or in a Medicare-covered government job.
Medicare Part D is Crushing It
A bipartisan group came out with another survey showing that Medicare Part D is just about the greatest thing the government's done in a generation.
The survey of 2,363 seniors ages 65 and older, conducted by KRC Research and Medicare Today, showed that 90 percent of seniors surveyed are currently satisfied with the Medicare prescription drug coverage they receive. That's the highest level of satisfaction on record, and the survey found both Republicans and Democrats surveyed were equally happy with it. Sixty-one percent of those surveyed said without the program, they wouldn't be able to fill their doctor's prescriptions.
David Kendall, senior fellow for health and fiscal policy at Third Way, said on a call with reporters that the Medicare prescription drug benefit was a key example of successful bipartisanship because it was "enacted by Republicans and perfected by Democrats...Republicans left a doughnut hole, and Democrats have successfully fought to fill it." He also noted that the program is currently coming in under original cost projections and studies have shown that prescribing drugs bring down other health care costs for patients: Harvard researchers found that the Part D program saves Medicare about $1,200 per year for each senior who previously did not have good drug coverage through lower hospital, nursing home, and other costs. Even though drugs cost money upfront, they reduce spending downstream through fewer surgeries or other medical procedures.
Grace-Marie Turner, the Galen Institute's president, said, "The key is that [Part D] really continues to demonstrate the effectiveness of competition and consumer choice."
These studies are new testaments that private sector health plans, when aggressively regulated, can deliver on a tremendous public good at a cost lower than anticipated -- Part D has consistently come in $100 Billion less than projected when it became law. It's one of the best things the government has done in decades -- and Congress should keep their paws off it as the fiscal cliff approaches.
Medicare Advantage in 2013: Stronger Than Ever
CMS recently released the September 2012 enrollment figures and market data on Medicare Advantage (MA) offerings for 2013, and the numbers show a program that's stronger than ever and defying all predictions. It's proof that this industry is capable of adapting to the new market conditions brought by the Affordable Care Act.
CMS says Medicare Advantage will grow by around 1.24 million members in 2012: individual Medicare enrollment has grown almost 800,000 lives this year, while group employer plan membership is up 200,000 lives. Special needs plan (SNP) enrollment is up nearly 100,000 lives. These are astounding figures for a program most on Capitol Hill thought would be in its death throes by now.
CMS estimates average member premiums will increase by 4.7% while MA enrollment is projected to grow by 11% -- or roughly another 1.5 million -- in 2013. MA plans will offer nearly 43,200 distinct MA product offerings and nearly 11,900 SNP offerings in 2013; the industry clearly remains heavily committed to MA despite a cloudy rate outlook with the ACA's payment cuts beginning to be felt next year. 32% of MA/SNP products are zero-premium in 2013 -- exactly in line with the 2012 ratio.
Humana will again offer the most MA/SNP plans (12,125) for the 2013 MA plan year, again dominating the Medicare market with over 22% of the entire MA/SNP market in 2013. Humana continues its expansion with increased network-based HMO and PPO products by nearly 16%.
Overall HMO/PPO products expanded by 21% for 2013. PPO products will account for 63% of Humana's product portfolio in 2013. United Healthcare expanded its product offerings by nearly 250% to 10,155 distinct products in 2013 from 2,939 in 2012. This growth was largely driven by the acquisition of XL Health and its vast SNP product portfolio earlier this year. Of the other major Medicare players, WellCare and United will offer the highest mix of zero premium non-SNP MA plans at 90% and 86%, respectively.
MA plans are also extraordinarily positioned for the migration of some 9 Million dual eligibles that will begin transitioning to plans in 2013. The number of Special Needs Plans (SNPs) available will increase by 61% in 2013 to 11,881, rapidly outpacing the 21% growth rate in 2012. United's SNP product portfolio is expanding by over 800% due to its acquisition of XL Health, and is now the leading SNP carrier in the market by a wide margin.
CMS expects 11% enrollment growth, so the MA market will continue to grow as a percentage of overall industry revenue in 2013. The average MA member premium rate increase of 4.7% should also provide some offset to weak-to-falling rates from CMS as the ACA cuts take effect. However, overall pricing in MA will remain muted and Medicare cost trends are creeping up slightly -- so MA margins will likely compress in 2013, an indication that plans will trade margin for membership as the ACA cuts become the norm over the next few years.
Anyway you look at it Medicare Advantage is thriving and a resounding success -- and provides the best blueprint going for reform -- both of Medicare itself, and the health system more generally as the ACA is implemented in 2014.
Customer Service Week
As it is Customer Service Week and many companies across the country are celebrating the unsung heroes who answer calls and solve problems all day, this seemed like a good time to talk about the pitfalls and problems which can plague customer service centers. We have all had experience with customer service call centers at some point in our daily lives. Some positive, some not so much! Here are a few common issues which can occur in any call center — health care or automotive supplies:
• Miscommunication between the Customer Service Representative and the customer/member/patient
• Insufficient resources at hand for the representative to give a correct and informative answer to the caller
• Poor attitude on the part of the representative — not a true "People Person"
• Lack of empathy on the part of the representative — disengaged
• Lack of preparation and training for the representatives on the part of the company
• Outdated and/or lacking technical system for representatives to utilize
• Improper screening of new hires — starting out with the wrong individuals
A well run Customer Service center can make the difference for high or low grievance and CTM rates. Customer service representatives need a combination of skills — "Hard Skills" or knowledge based and "Soft Skills" or people and phone skills. Without this combination, a representative will not be equipped for the job. Calls should always be resolved the first time in an accurate and pleasant manner. Upset and ill-informed members will call back, file a complaint and call our friends at Medicare. This is not an easy department to keep running smoothly, but here are some tips for things to pay the most attention to:
• Training; there is no such thing as too much training! A three pronged approach works best —
1. Overall Company training - Compliance, Medicare, HIPAA, etc.
2. Specific training — AEP, new benefits, how to use resources, enrollment/disenrollment, billing, claims, Part D, etc.
3. Targeted issue related training — subjects where representatives seem to be struggling with answers, for instance SEP's or disenrollment periods, Part D details
• Technology; Review the systems being utilized by your customer service center. Is it adequate? Easy to use while speaking with a member? Does it access other systems within the company well? Claims? Referrals?
• Start in Human Resources; choose the right people to begin with. Use testing to find staff who can relate to people, who can stay calm with an irate caller, and who can do the required research under pressure.
• Coaching; if representatives are not displaying true customer service qualities, coach them on "Soft Skills" or the art of engaging with a customer or member.
• Always keep customer service in the loop with any changes or processes which may affect call volumes or need special talking points and available resources.
The call center is the face of any company. It should be your best foot forward. They are the people in your company that your customers or members will interact with the most. Make sure they have the training and tools to be successful and represent your company in the best manner possible.
Happy Customer Service Week!!
Affordable Care Act and Insurers of Last Resort
From the Detroit News, 9/12/12:
Gov. Rick Snyder says his plan to reform Blue Cross Blue Shield of Michigan would make health care more affordable and improve health, but it was met Tuesday by resistance from other insurers, the state's attorney general and a consumer group.
Snyder's proposal would convert the state's largest health insurer into a mutual insurance company owned by its members, end its special exemption from state taxes and make it comply with state rules that other insurers must meet.
This reminds me of BCBS of NW Ohio, which became Medical Mutual. They gave up not-for-profit status to go mutual, and, unlike Michigan (at least so far), gave up the Blue Brand. Surprisingly, they have remained a mutual company and not gone the rest of the way to stockholder ownership.
If the economy in Michigan turns around, and people start moving to Michigan instead of away, I could see BCBSMI going for-profit. Until then, I would expect their stock would fare worse than Facebook.
I do expect the exchanges to generate a trend among Blues to try to shed their "insurer of last resort" role. They will compete better outside the exchanges if they can get the exchange plans, including their own, to carry the last resort risk. Sort of like bad banks and good banks dealing with toxic assets. This would be another step in the process of turning the exchanges into high risk pools. Health insurance will continue to be a game of Old Maid until everyone operates by the same set of rules. I'm thinking Medicare for all, with MA at the center, but we'll see.
That would also fix the biggest problem with Ryan/Wyden: the GDP+1 cap on the vouchers to buy Medicare plans will shift more costs into the commercial sector, which has no such cap. If the Medicare and commercial sectors merge, that problem goes away.
Romney-Ryan Plans for Medicare Are Kid Stuff Compared to What They'd Do to Medicaid
GOP nominees Mitt Romney and Paul Ryan have big plans for Medicare reform, as we've written about here often. But health plans and other stakeholders need to start paying attention to their plans for Medicaid, which are game-changing, would affect millions more Americans, and would take effect much sooner: a recent Bloomberg report found that Romney/Ryan's changes to Medicaid would lead to an estimated $1.26 trillion drop in federal funding from 2014 through 2022. Other analyses estimated that 14-27 million Medicaid beneficiaries could lose coverage if the campaign's promise to block-grant the program became reality.
If Romney becomes President in January, the potential consequences for our industry are both massive and uncertain. While he speaks daily to his intention to repeal the 2010 health-care law, he has spent less time talking about what policies he would replace it with. His campaign website, www.mittromney.com, lists 15 health-care proposals — some specific, others vague — which, taken together, would dramatically affect the business landscape, no matter what your politics may be.
Medicaid is the largest source of health coverage in America -- covering 53 million people at a cost of about $457 billion a year, and needless to say covers the most vulnerable patients in the nation. Of those covered, around 24 million are in health plans, a number expected to double this decade. Its addition of as many as 16 million new Americans in the Affordable Care Act and moves by dozens of states to enroll dual eligibles in health plans also present the biggest opportunity for health plans since the launch of the Medicare drug benefit. The duals alone represent a bigger opportunity for health plans than the 16 million uninsured expected to enter health insurance exchanges in 2014. In the wake of the Supreme Court decision we think almost all states will eventually take the ACA's Medicaid expansion money as a deal too good to pass up.
But if Romney and Ryan win, all bets are off. It'd take them years to unwind the ACA, even if the GOP retakes the Senate -- but they could take a meat-axe to Medicaid much easier and quicker. Republicans would need a super-majority in the Senate to repeal the ACA, which they likely won't have, even if they reclaim control of the upper body. But Medicaid can be gutted through budget reconciliation, which only requires simple majorities. And their cuts to the program would take effect almost immediately in 2013, as opposed to Ryan's Medicare plan, which wouldn't be effective for almost a decade.
Medicaid is an easy target for budget hawks. Providers and states alike hate it. While Romney and Ryan would have to face the music with colossus AARP to enact their Medicare vision, there is no National Association for Poor Folks, just a gaggle of underfunded nonprofits fighting for Medicaid, and its beneficiaries often don't vote. But it remains the most important source of health insurance in America, and the biggest opportunity going in health insurance. Remember that while you're "voting your wallet" in November.
Medicare Advantage in the Spotlight
Medicare Advantage (MA) has been in the news quite a lot recently. HHS issued a press release entitled "Medicare Advantage Remains Strong" reporting that since the ACA was passed, MA premiums have fallen by 10 percent and enrollment has risen by 28 percent. Today, 27 percent of Medicare beneficiaries are enrolled in MA plans. HHS projects that enrollment in MA plans will increase another 11 percent in 2013. The number of plan choices will increase by 7 percent in 2013. Surprisingly, discussion at the recent AHIP Medicare conference revealed that even more plans are in the process of submitting new applications for 2014.
Given recent legislation that has substantially cut MA expenditures including cuts in the ACA and the expected two percent cut beginning next year as a result of sequestration, it is amazing that MA plans on average are only increasing premiums by $1.47 next year. At a Ways and Means Subcommittee on Health hearing on September 21, 2012 GAO described how the $8 billion CMS quality bonus demonstration has backfilled 70 percent of the ACA cuts to date. At the AHIP Medicare conference, Bob Berenson seemed to have an explanation for how MA plans are able to maintain their low premiums noting that MA plans do not experience the same level of fraud and abuse as the FFS program, are able to selectively contract and manage utilization, and peg payment rates to Medicare FFS levels. Berenson questioned why MA costs are not lower than FFS given these advantages. CMS indicated that since the ACA was enacted MA costs have declined from 114 percent of FFS to 107 percent of FFS. MA plans note that their expenses are higher since they provide extra benefits, reduced cost sharing and care coordination programs and have higher administrative costs including marketing costs.
At the Ways and Means hearing AHIP's Karen Ignani warned that the impact of MA cuts will not be realized until 2014. She also pointed out that the cuts will be compounded by the introduction of a new premium tax that will result in a net cost of $220 per beneficiary in 2014 and a $9 increase in Part D costs.
More Swing-State Voters Trust Obama on Medicare
We all know seniors vote in huge numbers, and that Medicare has become a centerpiece issue in this Presidential campaign with the selection of Rep. Paul Ryan as the GOP VP candidate. Gallup is out with a new poll showing registered voters in swing states prefer President Obama to Mitt Romney on Medicare.
National polls mean exactly Jack Shitola in our electoral system, and that's why it's worth paying attention to polls of registered voters in swing states, which mean a lot. Fifty percent of registered voters in 12 swing states trust Obama to handle Medicare, compared to 44 percent who trust Romney more.
Another interesting finding: A majority of voters are pessimistic that Medicare will still provide elderly Americans with adequate health care two decades from now, with 53 percent of swing-state voters and 55 percent nationally saying it won't.
Time to Reauthorize Special Needs Plans
Special Needs Plans (SNPs) are a special type of health plan for America's most vulnerable and complex seniors that are set to expire at the end of 2013. Over 500 SNPs serve more than 1.5 million Medicare beneficiaries across the United States. Done well, the SNP significantly improves outcomes and brings down costs thanks to personal care planning, care-transition assistance, disease management, and medication therapy management. Not all SNPs are good at what they're designed to accomplish, but there are many providing patient-centered, coordinated care to vulnerable populations showing signs of success -- the program should be allowed to continue.
There are three types of SNPs since their launch in 2006: Institutional SNPs serve individuals who reside in institutional settings or are eligible for skilled nursing. Chronic SNPs serve individuals living with multiple chronic conditions, such as diabetes, congestive heart failure, and end-stage renal disease. Dual-eligible SNPs serve those eligible for both Medicare and Medicaid (MediCal in California).
An April 2012 study found that SCAN Health Plan's dual-eligible members had a hospital readmission rate that was 25%lower than dual eligibles with identical risk profiles in Medicare fee-for-service. The study also found that SCAN performed 14% better than fee-for-service on keeping people out of the hospital for preventable conditions and episodes of care.
A five-year extension for SNPs would stabilize specialty care for the 1.5 million beneficiaries in SNPs while continuing the progress they are making in reducing emergency department visits, hospitalizations, re-hospitalizations and nursing home stays. An extension would also allow states, if they choose, to construct their duals and long-term care demonstrations on a SNP framework, and allow time to evaluate findings from SNPs so that CMS can work with Congress to enact a permanent program going forward.