What a Difference a Year Makes
Since the passage of the Medicare Modernization Act, Gorman Health Group has been discussing the value that Medicare Advantage (MA) and Prescription Drug Plans (PDP) offer to both public sector and private sector employers for their Medicare eligible retirees. The value proposition includes FASB/GASB benefits as well as more affordable coverage. A number of employers have moved their retirees to these plans over the last seven years. Some employers contract directly with a MA plan or PDP plan while other employers offer their retirees a choice of plans through a private exchange such as Extend Health. This has been a gradual movement. However, during the last year, the shift has been very dramatic. CMS enrollment data for August 2013 show that employer group enrollment in PDPs was 4.4 million which is more than double the 2 million employer group enrollment in August 2012. Employer group enrollment in MA plans increased to 2.6 million in August 2013 compared to 2.4 million enrollment in August 2012.
One of the drivers of the PDP enrollment has been the repeal of the Retiree Drug Subsidy tax benefits in 2013. The repeal provided an opportunity for private sector employers to review their coverage of retiree drug benefits and many concluded that the PDP was the best choice for both the employer and the retirees. We expect this shift to MA and PDP plans to continue as more employers are moving their retirees to private exchanges. The Wall Street Journal reported on September 9 that Time Warner has joined IBM in shifting retirees to Extend Health which is owned by Towers Watson & Co. to choose a Medicare plan. Extend Health offers MA plans, PDPs and Medigap supplemental plans. According to the Journal, Extend Health has 300 companies that use their private exchange and that one third of these employers joined this year.
Resources
We can help your PDP develop and implement efficient and compliant internal operations and prepare effectively for CMS audits with professional services and unmatched compliance tools. Visit out website to learn more.
Join us on Oct. 1 and hear Gorman Health Group's Chief Sales and Marketing Officer, RaeAnn Grossman, outline the components of a successful risk-adjustment program.
Variation in ACA Premiums
ACA premiums have been a key topic of discussion this month as more state marketplaces and companies released proposed and final rates for QHPs or "qualified health plans" that will be available on October 1. As discussed in an earlier blog, ASPE released an analysis of rates in July from 10 mostly state based marketplaces that showed premiums will be 10 — 18 percent lower than CBO estimates. Subsequent releases show that premiums will increase in some markets, for example Ohio and Florida, as plans move to more comprehensive "essential health benefit packages". Rates for plans in the federally facilitated marketplaces will not be released until September.
The Alliance for Health Reform held a meeting on ACA premiums entitled "Rate Shock or Not" that discussed the reasons for some of the premium differences. These include variations by age, smoking, cost sharing differences, network size and provider reimbursement rates, level of competition, an active vs. passive Marketplace, the ability of Medicaid managed care companies to build on discounted provider payments, the presence of a dominant hospital system, insurer size and experience in the individual and small group markets. There is also a lack of data on current premiums in the individual market and the health status of the uninsured that make pre and post ACA comparisons difficult.
Joel Ario et al wrote an interesting Health Affairs blog that provided some additional insight on the wide variation in premiums that they called "startling". They cite a 76 percent difference in premiums between the second highest silver plan and second lowest silver plan in New York and only a 3 percent difference in San Francisco. They cite a number of reasons that premiums vary so much: actuaries are working in the dark, similar to Part D plans are willing to bid low in the first year to acquire members, plans sponsors are not all the same (e.g. some plans have more narrow networks or more generous drug benefits) and active purchasing works.
Resources
Health plans operating within the Exchanges must evolve from a culture of sales and marketing to a culture that is member-centric and more accountable with a greater sense of urgency. GHG can help, find out how.
From sales and marketing to staff training, data management and reconciliation, GHG Founder & Executive Chairman John Gorman breaks down each potential roadblock and offers tips and suggestions on how to keep your organization moving on the right path before the launch of the Exchanges, in this recording from the 2013 GHG Forum.
Big News: A Health Care Cost Indicator Went *DOWN*. AGAIN!
The national average bid for Medicare Part D drug coverage is going down, again. Since 2011, the average bid has declined every year. The amount of each year's reduction, compared to the prior year, has ranged from 1.4% in 2011 to 5.8% in 2013. The 2014 decrease of 4.7%, fits the pattern. So why, you ask, is the price of Medicare drug coverage going down? And especially why is it going down at a time when drug plans are being required to fill in more of the coverage gap (aka "donut hole") each year?
First, a detour to discuss the donut hole, the gap between coverage of routine prescriptions and catastrophic coverage: The Affordable Care Act includes a provision that requires Part D plans to fill in the hole for generic drugs, by covering 7% more cost each year, until they cover 75% by 2020. Meanwhile, manufacturers of brand name drugs will offer increasing discounts on their products until the cost of brand drugs for people in the "hole" is only 25% of retail. At that point, coverage in the hole will be equal to coverage before a beneficiary falls into the hole, with beneficiaries paying 25%.
So, all other things being equal, we would expect to see bids increase each year to fund the added cost of this annual 7% increment in coverage in the coverage gap. In addition, the Affordable Care Act imposes a fee on all insurance companies, starting in 2014, to help fund the premium subsidies for low income enrollees. This fee, which is a fixed dollar amount that is pro-rated among insurance companies based on their relative premiums, will fall more lightly on Part D plans, due to their relative low premiums compared with comprehensive health insurance. But it still represents an added cost that one would expect to flow through to the bid.
The logical conclusion, since the average bid went down instead of up, is that all other things are not equal.
Since the average bid was announced, there has been considerable speculation about what's happening. Here's my guess. First, remember that the national average bid is a weighted average, and so reflects the bids submitted by the behemoths of the industry. The small guys' bids essentially don't count. It's logical to conclude that the big guys are continuing to improve their ability to wring more price concessions from both manufacturers and drug chains.
Second it's just possible that medication therapy management (MTM) is beginning to make significant inroads into the cost of total drug therapy. Or, since the bids represent plans' expectations about 2014 costs, it's at least possible that plans expect MTM to make significant inroads.
Third, it's possible that more of the total cost of the program is being transferred to the federal government through the reinsurance payments for catastrophic coverage. More on that in a minute.
And, finally, 2014 is the year that the 85% floor on medical loss ratios goes into effect for Medicare drug plans. If a plan is running a lower loss ratio, it will need to refund money to the government if it carries the low loss ratio into 2014. A low loss ratio is no longer a mark of success. Faced with a potential refund to Uncle Sam, the most profitable plans may have concluded it's better to reduce their premium to achieve the minimum loss ratio floor, and use the lower premium to gain a market place advantage. Of course, if everyone has done this, they are really just avoiding the loss of market share.
Curiously, while the average bid has gone down every year since 2011, the base beneficiary premium has gone up in three out of those four years. The base premium is used to calculate the subsidy payment from Medicare to Part D plans. The subsidy is the average bid minus the base premium. The base premium is 25.5% of the average bid, adjusted to account for the expected payments from Medicare to plans to cover the catastrophic reinsurance segment of the Part D benefit. When a beneficiary exits the donut hole due to cumulative prescription costs above the upper bound of the gap, Medicare pays 80% of any additional drug costs. The calculation of the base premium is adjusted to compensate for these payments, in a way that varies the base premium in proportion with changes in expected catastrophic payments. As these reinsurance payments increase, the base premium increases. That is what we have seen in three of the past four years, meaning that the costs to Medicare of the catastrophic component are going up faster than the average bid is going down. Since Medicare pays 80% of these costs, and plans only pay 15% (members pay the rest), an increase in catastrophic, above-the-donut-hole, claim expenses will be borne disproportionately by Medicare, which would be consistent with slower increases, or absolute decreases, in the average bid. That is, more of the total cost of the benefit package is being shifted to Medicare from the Part D plans due to this catastrophic reinsurance provision. But increasing the base premium reduces the subsidy to the plans, since the subsidy is the average bid less the (higher) base premium.
Whatever is behind this, it's been a trend since 2011, and this year's result shouldn't be surprising in that regard. Three conclusions suggest themselves:
- Part D plans will get paid less because the average bid is less, and because the base premium that is deducted from the average bid is greater;
- It's going to be tougher for small plans to compete with big plans, if the main driver of low bids (and lower subsidies as a result) is better price negotiation due to bigness; and,
- Herb Stein's law will eventually overwhelm whatever else is going on.
Stein's law, which is becoming my favorite response to criticisms of Medicare, and the general ill humor of the governing classes these days, says that "If a thing cannot go on forever, it will stop."
So take heart. And, if you are a Medicare beneficiary, enjoy your lower premium.
Resources
The rapid changes to Part D regulations make the tracking and implementation of these CMS requirements exceptionally difficult -- to say nothing of actually managing to them. Find out how GHG can help.
In 2013, GHG Forum attendees went on a detailed walk-through of Part D rejected claims including frequency, sampling, data validation and documentation. Learn what CMS was looking for in past audits, and what plans need to do differently when filing 2013 audits.
Navigating through the maze of Part B versus Part D coverage can be difficult. See how GHG Senior Consultant, Sharon Durfee, breaks down the differences between Medicare Part D and B.
State Marketplace Variation
The Alliance for Health Reform held a briefing entitled "Health Insurance Marketplaces: Different Strokes for Different States". I think the title was an apt description of all the variation that is going on in states that are implementing their own Marketplaces. In many ways, it looks like a natural experiment. Sarah Dash of the Georgetown University Health Policy Institute (CHIR) highlighted some of the different approaches states are taking which are discussed in more detail in a recent report by Urban and CHIR. For example, 4 states are choosing to selectively contract with a limited number of plans, 6 states are serving as a market organizer by limiting the number or type of plans and 8 states are allowing all plans who meet standards to participate. Three states and DC required insurer participation. Maryland for example is requiring that insurers above a certain size in both the individual and small group market must participate in their Marketplace. Five states are setting "waiting periods" for insurers who decide not to participate during the first year. Six states aligned coverage inside and outside their Marketplaces to minimize adverse selection. 8 states and DC are requiring additional coverage levels beyond silver and gold. Six states required insurers to offer standardized plan designs ranging from 3 plans in Oregon to 17 in California and 7 states and DC required plans to be meaningfully different.
States are ahead of the federal requirements in several areas, for example, the federal regulations will require quality reporting in 2016, however 9 states are displaying quality measures the first year and 10 states are developing state-specific quality rating systems. Most states are providing employee choice options on the SHOP, while the federal marketplace has postponed employee choice until 2015. Some states have released plan premiums. Sara Collins from the Commonwealth Fund discussed a recent analysis by ASPE in HHS that found the proposed individual silver plan premiums in 2014 range from 10 — 18 percent lower than CBO estimates. Premiums in the federal marketplace will not be released until September.
Joseph Thompson, the Surgeon General for the State of Arkansas, discussed the state's premium assistance waiver program where the state plans to send 225,000 uninsured low income residents to private plans in the Marketplace rather than expand their Medicaid program. The state is hopeful that enrollment in the same QHPs that serve the commercial population will improve payment and delivery of care. Under the plan the state will send low income persons that are not medically frail to the Marketplace to select a QHP. The state has been developing a standardized self-assessment screening form and estimates that about 10 percent of the uninsured will be determined frail and be referred to the Medicaid fee for service program while the rest will be served by the Arkansas Marketplace.
Resources
Listen as GHG Senior Consultant, Donna Burtanger, discusses sales and marketing capabilities in the upcoming Health Insurance Marketplaces (Exchanges). Learn the three most important items customers participating in the Exchanges look for in a potential health plan, and how to ensure you are marketing to the correct demographic.
Health plans operating within the Exchanges must evolve from a culture of sales and marketing to a culture that is member-centric and more accountable with a greater sense of urgency. GHG can help, find out how.
From sales and marketing to staff training, data management and reconciliation, GHG Founder & Executive Chairman John Gorman breaks down each potential roadblock and offers tips and suggestions on how to keep your organization moving on the right path before the launch of the Exchanges, in this recording from the 2013 GHG Forum.
ACOs: Here to stay or gone tomorrow?
With the recent announcement by CMS that nine of the 32 Pioneers were dropping out of the program there has been much "Sturm und Drang" about the passing of ACOs into obscurity. A recent article in the Investor Business Daily has gone as far as to predict that not only are all ACOs going to fail, but while in existence they "will diminish the quality of care received" by Medicare patients.
Seriously? Is anyone buying this stuff? Think about it. The program, Pioneer and MSSP, has improved beneficiary access to services, and allowed better coordination of services. This is achieved by ensuring that patient information is shared among caregivers, which improves joint decision making between a care giver and the patient about treatment options. If it all goes according to plan, there should be a reduction in the cost trend because the elimination of unnecessary procedures or treatment results in less "stuff" to charge for. But even if savings do not materialize, isn't the prospect of earlier diagnosis and better treatment outcomes just as good of a result?
Interestingly enough, I do not recall any of the Pioneers who dropped out suggesting that they would stop their efforts at coordinating care or encouraging joint provider patient decision-making, etc.
What's the point you ask? The point is that the underpinnings of the Pioneer and MSSP programs, i.e. providing the right services in the right setting at the right time for the right price, will survive the ACO and will serve as the legacy for all who participated in the program --stay or leave.
Those of us in the healthcare industry committed to the improvement of clinical outcomes while curtailing costs see ACOs for what they are. ACOs are one small step for service delivery engineering, and one giant incentive for continued health care practice reform at the provider and payer level.
So let's stop wasting energy speculating whether, and or when ACOs disappear. The more important question is how do we build on the foundation that CMS has created with the Pioneer, MSSP and other demonstration programs designed to elicit service delivery and pricing innovations. Opportunity knocks.
Resources
If conceived and executed well, the ACO represents a unique opportunity for provider organizations to redefine their financial relationships with payers, beginning with Medicare. Read more on ACO opportunities in our white paper on the topic
Join us on August 8 to get practical advice on the best ways of getting into the MA market from GHG's Chief Development Officer, Aaron Eaton, Senior Vice President of Finance, William A. MacBain, and Senior Director of Compliance Solutions, Regan Pennypacker.
Our comprehensive management solutions provide ACOs in transition with the tools, processes, and expert guidance to drive overall performance through new models of finance, leadership, and clinical value. Visit our website to learn more.
The Market is Working in Part D (Just Like it Will in ObamaCare)
We've always maintained that Medicare Part D is one of the most successful market-based experiments this country has ever attempted, and that it provides the playbook for ObamaCare's health insurance exchanges. There's further evidence out today of the FACT that the government is capable of creating an insurance market from a green field, regulating the hell out of it, and achieving an enormously popular social good.
WaPo reported today that the average monthly premium for Medicare prescription drug plans will creep up by $1 next year, to $31. Average Part D premiums have held steady at around $30 a month for the past 3 years. We'd agree with CMS's assessment that the negligible increase means competition among drug plans is holding down costs, even as benefits have improved for seniors with high prescription bills. It's a dynamic that will become familiar in the exchanges in a few years.
But there's more: last year 7 out of the top 10 plans raised their 2013 premiums by double-digit percentages -- which means that by aggressively shopping, and by some 5,000-6,000 Baby Boomers aging into Medicare daily with low drug utilization, seniors helped keep the average premium from going up more than a buck. That speaks to the growing maturity of the Part D market now 7 years in operation (such as the shift coming in 2014 to "preferred" pharmacy networks), the availability of real consumer information to make good choices, and the improving sophistication of beneficiaries in making them.
Seniors have learned in these seven years some important but subtle tenets of plan selection, many of which are transferable to the exchanges. First is, the monthly premium isn't the whole story. Many seniors, especially those who take several drugs for chronic conditions, have learned that the best values for them often aren't the low-premium plans but rather those with drug formularies and benefit designs that don't penalize them for their health status in out-of-pocket costs.
Example:
- XYZ Health Plan offers a $20/month Part D program, but with a very tight "Tier 1" formulary with few drugs at lowest cost sharing (say, a $5 copay here) and the most common drugs for seniors on Tier 2 with a $25 copay.
- ABC Health Plan charges $40/month for its drug plan, but its Tier 1 covers most oral insulins, statins and cardiac therapies for a $5 copay.
- Therefore, the typical Medicare beneficiary taking one or more of those drugs gets a much better deal from ABC when total out-of-pocket costs are considered.
- Sure, XYZ plan's monthly premium is a fraction of ABC's ($240/year vs. $480/year), but that "savings" is wiped out by higher copays: three drugs on XYZ's Tier 2 gets you copays of $75/month or $900/year. At ABC, those same three drugs are $15/month or $180/year. So, interestingly, the 3-drug senior saves $480/year by joining the higher-premium plan.
I'm willing to bet that we're seeing mid-60's Boomers skew toward the low-premium plans as many aren't yet using multiple drug therapies and are unconcerned by tighter pharmacy networks; and older, sicker beneficiaries beginning to look to higher-premium plans with more generous formularies and cost-sharing. This kind of consumer sophistication takes a few years to take hold in a new insurance market. But it's exactly the kind of purchasing behavior we'll be seeing in the exchanges in 2014 and beyond.
The Part D experience shows how important it will be to bring the "bro's" and the "young invincibles" into the exchanges early to spread risk and help suppress premium growth, and how tight provider networks of high performers impact pricing. It also shows how wildly popular ObamaCare will be after what promises to be a rough first year of implementation and consumers finding their way through the confusion and white noise from the opposition.
Resources
In 2013, GHG Forum attendees went on a detailed walk-through of Part D rejected claims including frequency, sampling, data validation and documentation.
GHG Founder and Executive Chairman John Gorman addressed the critical issues issuers must address before the launch of the Exchanges at the 2013 GHG Forum. Click here to download the recording.
Join us on August 13 and hear GHG's Chief Development Officer, Aaron Eaton, and Independence Blue Cross' Senior Vice President of Health Care Reform Implementation, John Janney, walk through an operational readiness checklist to help make sure your health plan is ready to go live on October. 1.
Would the GOP Really Shut Down the Government Over ObamaCare?
As Congress begins its summer recess there's been some hand-wringing in Washington about whether Congressional Republicans will make good on their threat to shut down the Federal government in another game of chicken with President Obama over the Affordable Care Act this fall. Senior members of the GOP are threatening to hold up a continuing funding bill for government operations AND to hold the upcoming debt ceiling hostage unless ObamaCare is defunded. We hope that common sense will prevail, as a government shutdown would be a disaster for Republicans. So blind in their hatred for the President and his signature accomplishment, they have to be saved from themselves.
It all started last week when as many as 15 Senate Republicans, including the #2 and #3 members of the Senate GOP leadership, threatened to vote against any continuing resolution to fund government operations if there was a single penny of ObamaCare funding included -- the current funding resolution expires September 30. A parallel effort began in the House as well. Talk included holding the debt ceiling bill hostage again if needed to defund ObamaCare. The extremists know this is their last chance to derail the ACA before the exchanges and subsidies go live for millions of uninsured Americans -- most of whom, in a supreme bit of irony, live in the red states represented by the partisans.
House Republicans and Senate Democrats remain more than $90 billion apart on 2014 discretionary spending, with prospects for a House-Senate conference on the budget dwindling daily. Obama has issued veto threats for two spending bills already approved by the House. So both sides are already preparing for a continuing resolution to fund the government into next year, and that's where the threat from the right comes in.
For thre record, many began to concede a shutdown just ain't gonna happen over ObamaCare. Late last week, Sen. Rand Paul (R-KY) laughed out loud when Sean Hannity of Fox News asked if the GOP has the "courage" to stand tough against legislation that funds Obamacare. "Frankly, probably not," Paul chuckled. The reality is, what they lack the votes they'll overcompensate for with noise.
Senator Ted Cruz (R-TX), one of the right-wing-ringleaders, said yesterday, "The problem right now is we don't have Republicans willing to stand up and do this. We need 41 Republicans in the Senate or 218 Republicans in the House, to stand together, to join me, to join Mike Lee, to join Marco Rubio, all of whom have said, we will not vote for a single continuing resolution that funds even a penny of ObamaCare."
Don't these guys get that they LOST the election? And that the last debt ceiling battle was a disaster that spiked our national credit rating and resulted in the dreaded budgetary meat-axe called the sequester?
There are some cool heads prevailing thus far, folks who remember the disaster that ensued in 1995 when then-House Speaker Newt Gingrich forced a government shutdown on President Clinton -- and watched the backlash sweep him and many GOP colleagues right out of office. To the point, Senate Majority Leader Harry Reid said today "If Republicans force us to the brink of another government shutdown for ideological reasons, the economy will suffer. I would suggest to any of my Republican colleagues that has this idea: Give a call to Newt Gingrich. He'll return your phone calls. Ask him how it worked. It was disastrous for Newt Gingrich, the Republicans and the country."
Senior Republicans are deriding the plan as "dumb," "silly" and a "temper tantrum," warning that it will fail and damage the party's prospects in the upcoming 2014 elections. There's more. "I think I want to challenge Obamacare on all fronts, but that's a bridge too far for me," Sen. Lindsey Graham (R-SC) told Talking Points Memo (TPM), a liberal blog, on Tuesday. "As much as I want to replace Obamacare I'm not going to deny Social Security payments, funding of the military and the FBI at a time of great national security concerns. I think that's a bridge too far."
Sen. Richard Shelby (R-AL) told TPM, "I hope we wouldn't shut down the government, but I'd like to shut out Obamacare." Sen. Saxby Chambliss (R-GA) told TPM that "Obamacare is not working" and "needs to be fixed." But when pressed on whether it's worth risking a government shutdown over, he demurred: "I'm not going to get that far."
House Deputy Whip Tom Cole (R-OK) said yesterdaythat "Shutting down the government is a suicidal political tactic. Eventually it will be reopened, but the president will not have capitulated and you will have discredited yourself and along the way you will have hurt the American people," Cole said on MSNBC.
TPM points out that:
"Even so, the base isn't officially giving up. A letter signed by more than 50 influential conservatives — including heavyweights like Heritage Action, Club For Growth and FreedomWorks and Grover Norquist's Americans for Tax Reform — calls on House Speaker John Boehner (R-OH) and Majority Leader Eric Cantor (R-VA) "to include language fully defunding Obamacare when they consider their upcoming legislation to fund the government."
The divisions reflect the GOP's catch-22 over Obamacare. After riling up their base and repeatedly promising to spare no effort to thwart the health care law, they face the wrath of conservatives for refusing to put themselves on the line in service of the cause, despite daunting political odds. Some conservative activists say they feel played by the GOP for regularly invoking Obamacare to raise money but failing to fight it when it counts. Now that the ploy seems hopeless, it frees bomb-throwers like Cruz, Rand and Rubio to pontificate further on defunding to further work the base -- and will only intensify the betrayal felt by the hard-right activists.
Conservative blogger Ramesh Ponnuru exhorted fellow Republicans this way:
"The chance that Democrats would go along — would give up on their signature legislative initiative of the last decade soon after having won the presidential election and gained Senate and House seats — approaches zero percent. So if Republicans stay firm in this demand, the result will be either a government shutdown or a partial shutdown combined with a debt default. Either would be highly unpopular, and each party would blame the other. The public, however, would almost certainly blame Republicans, for five reasons.
"First, Republicans are less popular than the Democrats and thus all else equal will lose partisan finger-pointing contests. Second, the executive has natural advantages over a group of legislators in a crisis atmosphere. Third, people will be naturally inclined to assume that the more anti-government party must be responsible. Fourth, some Republicans will say that government shutdowns or defaults are just what the country needs, and those quotes will affect the image of all Republicans. And fifth, the news media will surely side with the Democrats."
I'd be lying if I didn't say there's a part of me that's just dying to see the Lee/Cruz/Rubio faction push this tactic, just to be able to watch President Obama pull a Clinton on these obstructionists and crush this nonsense once and for all. I do believe the more rational governance-minded Republicans left in Congress will prevail and there won't be a shutdown, but I've been overly optimistic about the Obama-haters before.
If they don't desist, it's going to force House Speaker John Boehner (R-OH) to hold his nose and cobble together a Democrat/moderate GOP coalition with Nancy Pelosi to keep the government's doors open, which will mean the end of his speakership and more disarray in the House. That would be a great outcome in the worst partisan environment I've ever seen in 23 years here in DC. And argues why "establishment" Republicans like Boehner won't let this charade go on much further.
Resources
GHG's Founder and Executive Chairman John Gorman addresses the critical issues issuers must address before the launch of the Exchanges in this recording from the 2013 GHG Forum, June 13-14 in Washington, DC.
Jean LeMasurier provides an overview of key takeaways from CMS' proposed rule CMS-9957- P-Patient Protection and Affordable Care Act; Program Integrity; Exchange, SHOP, Premium Stabilization Programs, and Market Standards.
Join us on August 8 to get practical advice on the best ways of getting into the MA market from GHG's Chief Development Officer, Aaron Eaton, Senior Vice President of Finance, William A. MacBain, and Senior Director of Compliance Solutions, Regan Pennypacker.
Cost Sharing in Medicare
The Alliance for Health Reform held a meeting on "Streamlining Cost Sharing in Medicare: The Impact on Beneficiaries" on July 22, 2013 which focused on a number of proposals to modernize Medicare benefits. The Medicare benefit package has not been updated since 1965 and it needs streamlining and improving. Medicare Advantage has already updated many cost sharing features, for example charging co-payments rather than coinsurance for many services and charging a single predictable premium that covers Medicare cost sharing for Parts A, B, and D and supplemental coverage. Medicare Advantage plans also have an out of pocket maximum that protects beneficiaries from catastrophic costs. My colleague Bill McBain recently discussed "Medicare Essential" which was developed by the Commonwealth Fund and would combine Medicare Parts A, B and D into a single premium plan run by the government unlike Medicare Advantage which is offered by private plans. The Bipartisan Policy Center (BPC) has developed its own proposal to modernize Medicare Fee For Service benefits beginning in 2016. The BPC proposal would build on some of the reforms already offered by MA plans and recommended by CBO and MedPAC including a unified Part A and B deductible and an out of pocket spending cap. The BPC proposal includes a catastrophic cap of $5,300, a single $500 deductible and a simplified copayment structure. To provide incentives for primary care, the BPC proposal would not apply the deductible to physician office visits. The BPC proposal would also provide new federal subsidies for beneficiaries between 100 — 150 percent of the FPL. The BPC plan would prohibit all supplemental plans including Medigap, employer coverage, FEHBP and Tricare for Life from providing first dollar coverage.
All of the proposals under discussion would cause major restructuring in the Medigap industry. The impact on Medicare Advantage would depend on the details. MA plans have successfully competed against high cost Medigap policies because beneficiaries realize significant cost savings and have greater protection from catastrophic costs. The BPC proposal is not that different from the cost sharing structures that many MA plans offer today. It is hard to imagine that the BPC's proposed new subsidies for low income beneficiaries would not be extended to low income beneficiaries enrolled in MA plans. MA's value proposition compared to Medigap might not be as strong if the expensive first dollar coverage Medigap policies were eliminated but MA delivery system reforms should continue to give MA plans a competitive advantage.
Resources
Join us on August 8 to get practical advice on the best ways of getting into the MA market from GHG's Chief Development Officer, Aaron Eaton, Senior Vice President of Finance, William A. MacBain, and Senior Director of Compliance Solutions, Regan Pennypacker.
On June 14th at the 2013 GHG Forum, William MacBain presented on the future of Medicare and ways to combat its projected increase in per capita spending in the next two decades. View the recording here.
End-of-Life Shows Signs of Life in Congress
End-of-life care and planning is something we're passionate about here at GHG, and I've gotten in some trouble over the last couple years in arguing Sarah Palin's "death panels" distortion set the debate back a decade. I may have been too pessimistic, or over-estimated the former half-term Alaska governor's influence: end-of-life planning is showing signs of life in Congress. Politico had a great story out profiling Rep. Earl Blumenauer (D-OR) and his bipartisan crusade on the issue, reprinted in full below.
The ‘death panel' bill lives
By Joanne Kenen | 7/21/13 4:00 PM EDT
Rep. Earl Blumenauer wants Congress to talk about death.
Much of Congress would rather walk over hot coals.
The bow-tied, bike-riding Oregon liberal was the author of the 2009 bill aimed at encouraging doctors and physicians to talk to patients about what kind of care they want near the end of life. It notoriously became known as the "death panel."
The bill is back. Or rather, it's never gone away.
Each Congress, Blumenauer reintroduces it. He's even added a few new elements, for instance to make sure that care preferences are incorporated into electronic medical records, not stuffed in someone's bedside table. He's picked up 15 co-sponsors, including a few Republicans. Among them is Rep. Phil Roe (R-Tenn.), an outspoken member of the conservative House GOP doctors caucus, which helps drive an unwavering opposition to Obamacare.
Since the heated "death panel" days, Blumenauer's "made it less radioactive," Jon Keyserling, senior vice president and health policy director of the National Hospice and Palliative Care Organization, said of the congressman's persistence.
But "less radioactive" isn't a glide path to passage, particularly not in a highly partisan Congress with Obamacare still rolling out amidst charges and countercharges about rationing, care quality and Big Government intrusion.
Blumenauer talked to POLITICO about his bill this spring and allowed a reporter to listen this month as he addressed critical care physicians who deal with life-and-death situations all the time — and who too often face ambiguity or dissension within families about what their loved one would have wanted.
He says he's convinced his measure calling for doctors to get compensated for these voluntary conversations could "pass pretty comfortably" — if it were to reach the floor. That's a big "if." The hangover of 2009 has not totally dissipated. A lot of people still don't want to go anywhere near the volatile issue four years after the "death panel" summer.
The ongoing conflict over health care reform adds to the difficulty. "There are some people so invested in repealing Obamacare that they don't want distractions," Blumenauer said.
That frustrates him.
"We have allowed people with ideological or political agendas to play this out," Blumenauer said. "We've really obscured the fact that this is all about making an informed decision that is respected. "
Roe doesn't see eye-to-eye with Blumenauer about Obamacare; he's voted to repeal all or part of it repeatedly and would do so again.
But he's been reaching out to colleagues, trying to explain that this end-of-life medical consult legislation isn't Obamacare. It's about getting people the care they want and helping document their wishes, which may change over time. Both lawmakers noted that an advanced directive doesn't mean a do-not-resuscitate order. People can and do opt for very aggressive do-everything care.
No companion legislation has yet been introduced in the Senate, but Sens. Mark Warner (D-Va.) and Johnny Isakson (R-Ga.) are working on a separate bill addressing several aspects of advanced care planning as well as care for people with life-threatening illness. The bill, which could be introduced soon, won't be identical to the House version, which could prove another impediment to passage.
The heart of the Blumenauer bill is simple: Doctors and patients should talk about aging and about how a disease is likely to progress so that the patient can make clear and informed choices and the doctor can understand and respect them. Those conversations can and should take time.
Doctors get well-paid for doing procedures, Blumenauer said. They should also be paid for the time they talk to a patient about something this important. The bill calls for Medicare to reimburse the physician for one such conversation with the patient every five years, more frequently if the patient's health deteriorates.
Blumenauer notes that Medicare will pay doctors, hospitals and rehab centers tens of thousands of dollars for a terminally ill 90-year-old to get a hip replacement. But it won't pay a couple hundred bucks for a conversation about other dimensions of that terminal illness.
That's not how the legislation got framed in the summer of 2009. Rather than being about finding out what granny wants, it became about throwing granny off the cliff. The measure stayed in the House health care reform bill — but didn't make it into the Senate legislation, which eventually became the law.
"We had over 400 experts and professional organizations come forward and say this is silly, there are no death panels," Blumenauer recalled. "It's simple common sense." That message didn't get through. It fueled the tea party, nearly derailed the health law and left large swathes of the public convinced that death panels exist, that a group of government bureaucrats will say who lives and whose time is up.
Roe knows a lot of that death panel rhetoric came from within his own party — and as much as he dislikes Obamacare, he finds this vein of attack disturbing. The political discussion is so far removed from what people — Democrats and Republicans, lay people and doctors — experience in their own families, he says. He's gone through hard conversations and hard choices himself, he says, both in his own family and as a physician.
Many Oregon lawmakers have taken an interest in end-of-life care as the state pioneered legalization of physician-assisted suicide. That, Blumenauer stresses, is not part of his bill.
He says he really got engaged with the issues during the Terri Schiavo case — or the Terri Schiavo "debacle," as he calls it.
"It was one family's tragedy turned into a national political spectacle," he said. "It could have been avoided if she had documented her wishes."
That made him think about policy steps that could encourage making advanced care planning simpler and more routine. "It struck me as perfect alignment of policy, politics and personal empowerment," he said. "And nothing that I've seen since suggest that it isn't."
Blumenauer doesn't describe his mission as quixotic. It's like any other bill, he says. Building support is a process. Just keep plugging away, one vote at time. He's set a goal of talking personally to every single House member, all 435 of them, in the coming months.
He sees some signs that society may be hitting the tipping point. A lot more books and memoirs are being written about aging, caregiving and death. Millions of Americans are helping care for elderly relatives and finding themselves thrust into wrenching choices, wishing they had more guideposts. No family, Democratic or Republican — or even member of Congress — is immune.
Roe shares that belief, and he joins Blumenauer for strange bedfellow presentations to health and medical groups. But he's less sanguine about how much the winds have changed in Congress.
The bill will pass someday, he said. Asked when that may be, he replied with a joke: "Maybe after I retire."
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