With the help of Senator Kennedy, the Senate passed the “Baucus version” of the Medicare Bill to cut funding for Medicare Advantage by $13.5 billion over 5 years in order to avert a pending 10.6% cut in Physician’s Medicare fees.
President Bush has promised a veto which he may not deliver on given the House and Senate vote. Even so, he likely will not win this fight.
The impact of the funding cuts will likely be felt in Medicare Advantage, generally, in 2010.
While painful, the Medicare Advantage cuts to HMO and PPO products will probably be manageable.
However, the situation is worse for Private Fee for Service. Also included in the bill is a requirement that Private Fee for Service (PFFS) plans would be forced to set up their own networks (like a PPO). This will force some Private Fee for Service insurers to drop their plans, according to the Congressional Budget Office.
I’ll continue to blog on this issue as I hear more from carriers on their analysis of the impact and I’ll also keep you up to date with what I believe will be the proper strategies for insurance agents to take with clients in 2009 and beyond.
Feel free to add your comments below!
Craig
Craig,
Thanks, that pretty much answers the question except that the choice made by many of my clients was not to enroll in any kind of ppo or hmo. Their choice was for private fee for service. So if private fee for service no longer exists in their contract shouldn’t that in itself make them gauranteeed issue for a supplement?
J,
I believe the network requirements on PFFS plans will take effect on 01/01/2011. . .I may have mistaken indicated that this will take place 01/01/2010. The only change which occurs on 01/01/2010 with respect to PFFS is that the carriers will need to adhere to the same Quality of Service standards as HMO and PPO MA plans.
In any case, one of two things will happen to a PFFS member on 01/01/2011.
First the PFFS plan may be able to build an adequate network to pass CMS approval. CMS requires adequate coverage for Doctors, Hospitals, Skilled Beds, etc., etc. If this happens, the member could stay in the plan.
Second, if the PFFS plan is NOT able to meet guidelines for adequate coverage, the members will be disenrolled from the plan on 01/01/2011. If this happens, the Medicare Beneficiary would have the choice of either electing another Medicare Advantage plan in that county OR they would be guaranteed issue into a Medicare Supplement plan (A, B, C or F), so long as they apply within 63 days of having lost their coverage (around the first week of March 2011).
Does this answer the question?
Craig,
On Jan 1 2010 will those persons on pffs plans be forced to stay on an Advantage plan when pffs plans transform into ppo network type plans? Or, since they signed up for a type of plan that no longer exists will they have the right to enroll garanteed issue into a supplement if they return to parts A and B of Medicare?
Has CMS addressed this at all? I am hesitant to enroll any further people in advantage plans without having this information. It should be the agent’s obligation and the client’s right to have knowledge of this eligibility issue.
POST # 14 above was from author was Chad Hamilton
Dear Concerned:
Thanks for the post. I understand what you are saying. I think there is a place in the Medicare system for Private Insurance and also the “single payor”, Original Medicare.
I know this debate has been positioned as Insurance Companies versus Doctors, but I think that’s political. If the Private companies are driven out of Medicare, you will be left with a “Single Payor”, Original Medicare.
The Single Payor would have tremendous bargaining power over Doctors. With private insurance, at least the doctors have the choice as to whether to accept or reject a particular plan.
If the Single Payor cut your reimbursements and there was no competition from Private Insurers, you’d be forced to either accept the lower reimbursements or not accept any Medicare patients. Either senario would not be good.
Just something to think about that once the private companies are gone, you’d be at the mercy of the government beuracracy/monopoly, which might be worse than Insurance companies.
Thanks again for the comment! Best wishes to you in your career in the medical profession! I imagine you will be able to make a postive impact on the people who rely on you for their care and that’s an awesome future you’re looking toward!
Craig
I believe real changes will only take place at the behest of the people, and people will only take notice once their care suffers.
So long as the medical community is willing to accept financial cuts and maintain a reasonable level of care, finances will continue to be cut! The medical community’s deep caring for patients is being used against us to force us to work under unfair conditions. If physicians began refusing to accept Medicare and all other insurers who reimburse below an acceptable rate in sufficient numbers, we would see real change. Of course this is so difficult to accept because of the nature of our business.
I do feel deeply for people in need, and I believe strongly that all medical professionals are compelled to provide charity, however we can no longer accept abusive insurance contracts!
A Concerned Medical Student
If it was self-interest I was after I would be applauding the democrats push (don’t get me me wrong along with several weak republicans) over this medicare advantage bill and with most of your statements. This piss poor bill does nothing more than prolong these cuts to our Dr’s for another 18 months where it will then accumulate to a 20% cut. Then who will pay for it?
I can’t say as I totally disagree with you on one statement- “irresponsibility for the past 8 yrs”.
Of course you are also correct in assuming I’m a republican, more specifically a conservative and I have been disappointed with the lack of leadship in the republican party over key issues.
But lets face reality when we look at both parties it is very clear to me the republican party is the less of to evils. The only party if our clients are to have any choice in healthcare in the future.
Chad Hamilton
Your biased self interest has revealed itself as you responded so condesendingly to the above writers in this blog. Your ignoramous cliched comments like “how democratic of you”, “right out of the democratic Playbook” shows you are right in line with the Republican business genius phonys who have used bullying and bluster to to mask their incompetence and irresponsibility for the past eight years.
J Saleeby,
Seems like your taking a page right out of the Democrats play book. How mis-informed you are. Did you even read the some of the cost studies??? Try going to “Medicare vs. Private Health Insurance: The Cost of Administration” and
can be found at http://www.cahi.org. Don’t you read the news?just about weekly you’ll read abiut medicare auditing their books and find out that they overpaid $ millions in claims, for DME or some other place.
You do have one thing correct I believe in private business and that the o’mighty insurance company can easily do a much better job than the gov’t any day. Don’t believe me just ask any senior.
But, if you would read the blog posted on this site dated July 8th by Craig Ritter you would get a better idea of this efficient system you call Medicare. It reads like this- “This comes from an AMA position paper on the subject of Public vs. Private.
Here are some of the costs associated with Medicare, but which are NOT included in Medicare’s Admin figure:
-Tax collection to fund Medicare—this is analogous to premium collection by private insurers, but whereas premium collection expenses of private insurers are rightly counted as administrative costs, tax collection expenses incurred by employers and the Internal Revenue Service do not appear in the official Medicare or NHE accounting systems, and so are usually overlooked
-Medicare program marketing, outreach and education
-Medicare program customer service
-Medicare program auditing by the Office of the Inspector General
-Medicare program contract negotiation
-Building costs/utilities of the Centers for Medicare & Medicaid Services (CMS) dedicated to the Medicare program
-Staff salaries for CMS personnel with Medicare program responsibilities
-Congressional resources exhausted each year on setting Medicare payment rates for services for medicare.
To add to this list is the gov’t pensions and insurance for the rest of their lives.
“Although none of the cost of Outreach, Education, Marketing, Customer Service or Auditing is included in the widely publicized Medicare Administrative Cost figure, these unaccounted for costs would surely be higher in the absence of the efforts of Medicare Advantage companies and Insurance Agents in servicing and educating their clients.”
Just when you think it’s such an efficient system read back over the realities instead of turning to your pro-gov’t, democrat mentality.
Supplements not paid for by the taxpayer- who pays for them? Seems to the clients/taxpayer it’s the same person.
Second issue- A vast majority of clients went on the plans after having just medicare. What would you do with them? Send them back to original medicare where they were SEDUCED out of? or are you going to be so kind to the supp company to send them there guar. issue also?
Take this from an agent who still has the majority of his and his agencies business sold into supplements. You have to realize that these plans may be slightly overpaid and the numbers as far as I’m concerned can be fudged either way
but, this program is necessary. Many of the clients my agency deals with can’t afford your supplement and can’t afford the rate increases they have. Guaranteed issue or not. I would love to have you sit down and look some of these clients in the face and tell them “it’s ok you’ll be guar issue on a supp but, instead of $0/mo it’s $150+ a month. and it’s doesn’t have any vision, dental, fitness, or hearing but, that’s ok your guar issue”.
A good portion of these people that I work with personally day in and day out have been screwed about 10 yrs ago when a liberal democratic wacko was president who didn’t stand up for them then. The same group is part of doing it
again.
Supplements not paid for by the taxpayer- who pays for them? Seems to the clients/taxpayer it’s the same person.
Clouding my business sense- I guess I care about my clients and would like them to have a choice and let them decide what’s best. The harsh reality of what you consider business sense is that like 10 yrs ago I will once again make more money writing these clients to supplements and with less aggrevation, steady monthly commissions, no 45 days of hell, and all the money that comes with it. Supplement companies will create teaser rates and raise commissions to get the business. After a year or so the supp company will get handle on all the guar issue crap YOU sent them and every client with that carrier in any plan will pay a hell of a lot more. So yes, for me I will win monetarily but, once again seniors will get screwed. The same seniors I care about and work hard for. Caring about my clients comes above BUSINESS SENSE.
Time for a wake-up call.
chad Hamilton
Your anti-government bias is clouding your business sense. The administrative costs on Medicare are figured reflected in its 3 to 4% overhead, which makes it the most efficient deliverer of health insurance payments to providers in the world, even better than the much heralded Canadian system. Even if you assume the 1 to 3% (Heritage Foundation) extra cost is correct, that is still 11 to 14% shy of the cost of pffs.
And yes, supplements do offer more than parts A and B alone, but they are not paid for by the taxpayer, and except for the 6 month open enrollment and 63 day gauranteed issue, can be as actuarially sound as their underwriting practices. As for the millions of people who will flood to supplement plans gauranteed issue, they have a right to return to the secure, private supplemets from which they were seduced into leaving by questionable marketing in the first place.