Archive for October, 2011
Breaking Good News for Medicare Beneficiaries
Part B Cost-Sharing Lower Than Expected for 2012
Today the Obama Administration announced that Part B cost-sharing will be less than projected for all beneficiaries in 2012. The Part B deductible will decrease by $22 in 2012, from $162 per year in 2011 to $140 in 2012. Further, monthly Part B premiums will increase only slightly for those beneficiaries who have not had an increase in the last two years. Because there will be a cost-of-living increase for Social Security recipients in 2012, the Part B premium will increase, but only by $3.50 – from $96.40 in 2011 to $99.90 in 2012.[1] For those individuals who did have Part B premium increases in 2010 and 2011, the premium will actually decrease by $15.10 in 2012, from $115 to $99.90.
The Part B premium reductions are a result of slower Part B growth due in part to health care reform. The Affordable Care Act’s lower payment rates, reduced payments to private Medicare plans, and increased efforts to fight fraud and abuse are major factors contributing to this good news for Medicare, beneficiaries, and taxpayers. At the same time, health care reform has increased the value of Medicare – reducing beneficiary costs for prescription drugs, adding preventive care coverage, and eliminating cost-sharing for most preventive services.
In summary, between reduced Part B premiums and increased Social Security payments, the average Social Security recipient will have a net cost-of-living increase of $40 per month in 2012. Good news indeed.
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[1] In 2010 and 2011, most beneficiaries were “held harmless” from the Part B premium increase because they did not have an increase in their Social Security.
Federal Judge Refuses To Dismiss Medicare Beneficiaries’ Challenge To The Medicare “Improvement Standard”
Plaintiffs have overcome a major hurdle in a lawsuit filed by the Center for Medicare Advocacy and Vermont Legal Aid on behalf of Medicare beneficiaries with long-term and chronic conditions. In a comprehensive 35-page decision, Chief Judge Christina Reiss refused the federal government’s request to throw out a lawsuit that seeks to end use of an illegal Improvement Standard to deny Medicare coverage. The Improvement Standard is a “rule of thumb” that Medicare uses to deny or terminate coverage to beneficiaries whose conditions are not improving. Jimmo v. Sebelius, Civil No. 5:11-CV-17 (D. VT. 10/25/20011).
“The Improvement Standard is the most unfair and harmful reason for Medicare denials,” stated Judith Stein, executive director of the Center for Medicare Advocacy. “It has a particularly devastating effect on patients with chronic conditions such as Multiple Sclerosis, Alzheimer’s disease, ALS, Parkinson’s disease, and paralysis.”
The lawsuit, which was filed in January of this year, was brought on behalf of a nationwide class of Medicare beneficiaries by six individual beneficiaries and seven national organizations representing people with chronic conditions.
In asking the court to dismiss the case, the government raised several arguments to contend that the court lacked jurisdiction over the plaintiffs’ claims. The government also argued that the plaintiffs failed to state a claim, namely, that there was no proof that the government was even applying such a policy as the Improvement Standard. Judge Reiss rejected that contention. She did agree, however, that the court lacked jurisdiction over one beneficiary plaintiff and one organizational plaintiff, but the case will go forward with the remaining eleven plaintiffs.
“Judge Reiss understands the core issue plaintiffs in this case seek to address,” stated Michael Benvenuto, attorney for plaintiffs from Vermont Legal Aid. “They are not seeking individual claim reviews; they are challenging a broad secret policy.”
“This is a great first step for these plaintiffs and for Medicare beneficiaries in general,” remarked Gill Deford, the lead attorney for the plaintiffs. “The Improvement Standard has been used for over 30 years to deprive hundreds of thousands of Medicare beneficiaries of coverage they desperately needed. This decision starts the process of ending that illegal policy.”
Medigap – Fact & Fiction
Nearly one in five Medicare beneficiaries rely on Medicare Supplemental insurance policies (Medigap) to fill in the gaps of some of their Medicare coverage. As noted by the Kaiser Family Foundation, “Medigap policies help shield beneficiaries from sudden, relatively high out-of-pocket costs due to an unpredictable medical event, and also allow beneficiaries to more accurately budget their health care expenses, which is important to a population living on a fixed income” (Kaiser Family Foundation, “Medigap Reform: Setting the Context” Sept. 2011; http://www.kff.org/medicare/8235.cfm).
Unfortunately, among the proposals raised to achieve savings for Medicare as part of ongoing debt and deficit reduction talks, some policy-makers have suggested changing the way Medigap policies are structured. Under the assumption that charging beneficiaries more upfront will deter them from using unnecessary medical care, these proposals seek to increase Medigap deductibles and other cost-sharing. Such proposals are found in the Simpson-Bowles Debt Reduction Commission proposal, the President’s Plan for Economic Growth and Deficit Reduction, and have been echoed in the media. (See, e.g., a recent Washington Post editorial “Mind the Medigap” October 1, 2011.)
MYTH: Eliminating First-Dollar Medigap Coverage Will Lead To Beneficiaries Choosing Only Necessary, “Higher Value” Health Care Services
Many of the proposals to reform Medigap coverage aim to achieve Medicare savings by creating “financial incentives for newly eligible beneficiaries to seek high-value health care services.” (See, for example, the President’s Plan for Economic Growth.) However, as discussed in our recent CMA Alert, many so-called cost-saving measures are based on the misguided assumption that greater out-of-pocket expenses will lead to more reasonable decisions about obtaining various types of unnecessary or “low-value” medical care. (See CMA Alert at: http://www.medicareadvocacy.org/2011/09/the-presidents-plan-for-economic-growth-and-deficit-reduction-a-first-look-at-the-impact-on-medicare/.)
On the contrary, these proposals would at best fail to steer people toward high-value services and, at worst, would charge people more for obtaining needed health care, or deter them from seeking care altogether.
FACT: As Cost-Sharing Goes Up, Utilization of Services – Both Necessary and Unnecessary – Goes Down.
Raising cost-sharing for beneficiaries will discourage utilization of health care, including necessary services. The National Association of Insurance Commissioners (NAIC), the organization of state insurance regulators who oversee Medigap plans, recently warned of just such dire consequences:
It is important to note that the proposed changes will impact cost-sharing coverage for “medically necessary” services. By contract, Medigap policies only pay cost-sharing for items and services that Medicare itself has already determined to be medically necessary. The NAIC is concerned that the effects of this proposal will result in many seniors foregoing needed medical care because they cannot afford the care resulting in more costs to the Medicare program later on. Additionally, the proposal will simply shift more costs onto seniors (who by and large are not wealthy) and not address the underlying cause of increased medical costs. (Emphasis added.)
National Association of Insurance Commissioners, Letter to the Joint Committee on Deficit Reduction (September 21, 2011), http://www.naic.org/documents/committees_ex_grlc_
110921_letter_murray_hensarling_medigap_first_dollar.pdf.)
A Modest Medicare Proposal (As Suggested by a Reader)
Instead of raising the age of eligibility for Medicare, why don’t we just use Part D as a model and create a new Eligibility Donut Hole?
People ages 65 – 69 can keep their eligibility. But, between ages 70 and 85: Into the new Donut Hole. Eligibility for Medicare would end during this time – after all it’s these older people that start getting sick, so it’s the perfect time to stop paying for their health care. The new Donut Hole would save the government a ton of money!
Those who do make it through the Eligibility Donut Hole without Medicare, would once again become eligible at age 86. At that point most people only need “comfort measures” and their conditions usually won’t improve, so Medicare wouldn’t pay for their care anyway!
If the goal is to save money, a new Medicare Eligibiity Donut Hole is the way to go.
CMA Health Policy Blog 