Archive for the ‘News’ Category

Most Medicare beneficiaries believe that AEP ends on December 31st, followed by December 1st.  About 22% of Medicare beneficiaries answered correctly that AEP ends on December 7th.

Here is a link to the poll that was taken by HealthPocket:

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The following email came from the State of California Department of Insurance.


TO:  All Admitted Insurers, Insurance Producers, Bail Agents, Independent and Public Adjusters and Other Interested Parties

SUBJECT:  Reporting of Administrative Actions and Criminal Convictions

DATE:  August 16, 2013

On January 1, 2005, Section 1729.2 was added to the California Insurance Code. This section requires all licensees and applicants for licenses issued by the California Department of Insurance’s (CDI) Producer Licensing Bureau to report any administrative actions or criminal convictions to CDI within 30 days of the final disposition of the matter. This requirement applies to both California resident and non-resident licensees and applicants.

Several licensees have told CDI that they are not aware of the reporting requirement. Therefore, the purpose of this notice is to remind all affected parties of the requirement and to provide instructions for how to report the information.

What needs to be reported?
Background information that must be reported includes any of the following:

• A misdemeanor or felony conviction

• A filing of felony criminal charges in state or federal court

• An administrative action regarding a professional or occupational license

• A licensee’s discharge or attempt to discharge in a personal or organizational bankruptcy proceeding an obligation regarding any insurance premiums or fiduciary funds owed to any company, including a premium finance company, or managing general agent

• Any admission, or judicial finding or determination, of fraud, misappropriation or conversion of funds, misrepresentation, or breach of fiduciary duty

How to report
To report information to CDI in writing, you may use the background change disclosure form available on our website at http://www.insurance.ca.gov by selecting “Producer Background Information” under “Agents & Brokers”. Additional information regarding this requirement, and the form, can be found by following the link here or by typing “background change” in the search box on CDI’s homepage.

All Admitted Insurers, Insurance Producers, Bail Agents, Independent and Public Adjusters and Other Interested Parties Reporting of Administrative Actions and Criminal Convictions

You may also submit background changes electronically to the National Insurance Producer Registry (NIPR) Attachment Warehouse Reporting of Actions (ROA) at http://www.nipr.com/ by selecting “Reporting of Actions” under “Attachments Warehouse”. The documents submitted through the ROA service fully satisfy the Background Reporting requirements of Section 1729.2 of the California Insurance Code.

What documents to provide?
Please include supporting documents such as a statement regarding the background change; certified court documents; administrative or disciplinary documents; or any other information relative to the change.

Specific Requirements for Employees of Organizational Licenses
If any of the changes in the background information involves an applicant or licensee who is listed as an endorsee on a business entity license, the licensee or applicant must also provide the notice of background change to any officer, director, or partner listed on that business entity license or application pursuant to Section 1729.2(a) of the California Insurance Code.

You may contact the Licensing Background Bureau at (916) 492-3650 if you have further questions about these background reporting requirements.

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Whether or not you agree with Dr. Carson’s political views, I think his speech is worth a listen.  Dr. Carson is an amazing inspiration to me personally having read his book (Gifted Hands) and watched the movie based on his life (same title).  He pioneered many revolutionary techniques in pediatric neurosurgery (and neurosurgery, generally) and was hired as the Directory of pediatric neurosurgery at John’s Hopkins at the age of 33.  By revolutionizing techniques in neurosurgery, he’s saved countless lives and improved the quality of life for countless more.  Dr. Carson was raised in abject poverty by a single mom in Detroit.  Her passion for raising her kids with a love of learning and expectations of excellence was instrumental in his amazing life story.

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Sequestration Cuts to Medicare Looming

It seems like the possibility that sequestration cuts will occur (due March 1st) is growing recently.  Nancy Pelosi appeared on Fox News Sunday today and argued for higher taxes on Gas and Oil and reductions in “loopholes” for high income earners as the way to replace sequestration.  Ms. Pelosi argued that there were plenty of spending cuts in the budget control act and that the Federal Government doesn’t have a spending problem, but a growth problem.

The $85 Billion in sequestration cuts were postponed to March 1st with the “Fiscal Cliff” deal (last time I want to use that term) in order to give time for the Senate time to pass a budget.  It appears that the Senate (and the Administration) prefer tax increases and do not want to see the sequestration cuts occur.  Republicans don’t particularly care for sequestration, however, this may be their only opportunity to government spending.

If sequestration cuts DO occur, it would mean a 2% cut to Medicare providers.

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The dual eligible population in the United States is one of the most vulnerable, frail and the most costly for which to provide care.  Dual eligible individuals are those who are receiving both Medicare and Medicaid.  Since Medicare/Medicaid are delivered on a “Fee for Service” basis, it’s difficult (and expensive) to coordinate the myriad points of contact for those who are dual eligible.  Their can can involve nursing homes, mental health, clinics, emergency rooms and they frequently take a good deal of prescription medications.  This creates a complex web of coordination to properly care for these individuals and to provide care efficiently without duplication.

To resolve this issue, CMS is starting Demonstration Projects in 15 states in 2013-14 to provide Managed Care for this population.  The program is described by the Medicare News Group in a recent article.  In the article, Susan D. Fleischman, M.D., vice president for Medicaid at Kaiser Permanente is quoted.  Kaiser is a leading provider of Medicare advantage products and has experience in the Medicaid market as well.  Even so, Dr. Fleischman is quoted in the article as saying, “We’re nervous.  We have limited experience in delivering the full scope of services to the dual eligibles,” she said, adding, “If we are nervous, then other plans ought to be really nervous.”

These demonstration projects will provide the private health insurance market an opportunity to prove their value, but the challenges will be extraordinary in providing quality outcomes at lower cost.

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Here is the story for the Tampa Bay Business Journal.

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Another happening in a busy week at Universal Health Care Group!  Tampa Bay Business Journal is reporting that Universal Health Care Group has agreed to be acquired by Freedom Health Care/Optimum Health Care Group which are owned by Dr. Kiran Patel.

The acquisition is pending regulatory approval.

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This past Wednesday, Kaiser Family Foundation hosted 3 former directors of Health and Human Services (formerly called Health Care Financing Administration) to discuss Medicare.  They were asked, “If you could change one thing about Medicare, what would it be?

Their answers are in this article from KHN.

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Interesting article from Uwe Reinhard, an economics professor at Princeton University.  Historically, I looked at the average bid prices of MA plans generally (98% in 2012) and HMO’s more specifically (95% in 2012).  There is a table near the end of the article which illustrates the bid prices both overall and by plan (HMO, PPO, PFFS, etc).  These numbers indicate that MA plans do, in fact, deliver Part A and Part B benefits at a lower cost than traditional Medicare (especially HMO’s).

The article looks at the Ryan plan of competitive bidding and based on the way that MA plans bid A & B, it appears that there would be some savings to taxpayers to competitively bid the traditional Medicare services.  The authors of the study did not enthusiastically endores the Ryan plan, however.  The study implied a 9% savings in Medicare costs (the Ryan plan would select the 2nd lowest bid as the benchmark for each county in the United States) over the hypothetical bid from Traditional Medicare.  The difference in cost could be attributable to (1) efficiencies in the private system, (2) better risk selection (which would not a sustainable competitive advantage or (3) differences with respect to Indirect Medical Education payments which Traditional Medicare explicitly makes.  Therefore, it’s open to debate why the private bids are lower, but they are most certainly lower than traditional Medicare.

In the existing MA payment system, the benefits of a lower bid accrue mostly to the Medicare beneficiary.  In fact, 75% of the difference between the MA plans A/B bid goes to the MEDICARE BENEFICIARY and only 25% accrues to the tax payer.  In the Ryan plan, the difference almost entirely accrues to the taxpayer and the Medicare beneficiary would pay the difference between the 2nd lowest bid and the plan which the Medicare beneficiary chooses.  In all cases, traditional Medicare is a much higher cost to the beneficiary.


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While the House is still set to vote on the Senate Bill to avoid the “Fiscal Cliff”, it seems clear that all Americans with a job will pay higher taxes in 2013.

For starters, the “Payroll Tax Holiday” looks like it will expire which will cost all workers an additional 2% on their payroll taxes.  The Social Security tax rate will increase from 4.2% in 2012 to 6.2% in 2013, costing a typical household earning $50,000/year an additional $1,000 in taxes and up to $2,202 for a household earning the maximum $110,100 which is subject to Social Security tax.  The “Making Work Pay” tax credit (which the payroll tax holiday supposedly replaced) will not come back, however.  This is a major hit to low and middle income families when considered as a percentage of total household income.

Some additional taxes going into effect in 2013 include some of the taxes included in the Affordable Care Act.

  • A 2.3% tax is being applied to Medical Device makers, so those individuals who need these devices (things like artificial hips, bedpans, stents, wheelchairs and defibrillators) will see higher costs.
  • The threshold for deducting Medical expenses will increase from 7.5% to 10%.
  • The cap on the deduction for Flexible Spending Accounts will be reduced from $5,000 to $2,500
  • A new Medicare Part A surtax on unearned income for individuals earning more than $200,000 and couples earning more than $250,000 of 3.8% begins in 2013.
  • Additionally, for those earning over $200,000 ($250,000 for Married), there will be an increase of 0.9% in the Medicare tax on earned income.

As a part of the “Fiscal Cliff” deal (assuming the house passes the Senate bill) the following tax rates occur (2013 versus 2012):

  • The top income tax rate for those earning $400,000 ($450,000 for Married) will go from 35% to 39.6%.
  • The tax on Capital Gains and Dividends for those very high earners will increase from 15% to 20% (plus the 3.8% Medicare Part A sur-tax)
  • There will be a phase out of deductions for individuals earning $200,000 ($250,000 for Married) couples.  Although somewhat hidden, this is projected to increase taxes by $152 billion over 10 years.
  • The estate tax increases from 35% to 40%, but there is still a $5 million exemption.

The good news on the tax side is as follows:

  • Bush Tax cuts for those with incomes under $400,000 ($450,000 for Married) are extended for 5 years.  However, those with incomes of $200,000 ($250,000 for Married) may pay higher taxes do to the phase out of the Personal Exemption and Itemized Deductions.
  • The Alternate Minimum Tax fix was made permanent AND retro to tax year 2012.  This fix is PERMANENT.
  • There will also a number of tax benefits for business such as accelerated depreciation that were extended one year.

On the spending side, the Senate bill will extend the unemployment benefits another year and fix the Sustainable Growth Rate cut to the Medicare Physician’s Fee Schedule for 1 year.  There were no major spending cuts included in the Senate bill.

All in all, it seems like the weight of the country’s $16.4 trillion dollar debt is just starting to be felt (even though the borrowing rate for the country’s debt is incredibly low at 1.68% for a 10 year note and a small 1% increase in borrowing costs would easily dwarf any debt reduction being proposed with higher taxes and reduced spending).  Additionally, there are invisible “taxes” to the middle classes and poor which destroys their purchasing power (due to the vast inflation of the money supply due to the Fed’s Quantitative Easing programs of purchasing debt).

Amazingly, even with these new taxes, it appears that we will still run a $1+ trillion deficit, which means our country’s debt will be increasing faster than our GDP growth rate which cannot be sustained in the long run (6+% increase in debt versus a 2% or maybe 3% growth in GDP).  Given an increased GDP growth rate would likely mean higher interest rates (and higher interest payments on the debt), it seems to me that meaningful spending cuts need to be on the table and MUCH higher taxes as well. . .

Oops, I forgot, Happy New Year!


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