Medicare

The Obama Administration announced that, overall, 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 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.  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 some 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.

Every year, people with Medicare get to explore new choices and pick the health and drug plans that work best for them. This year, this Open Enrollment period is starting earlier – on October 15 – and ending sooner – December 7. This gives people with Medicare a full seven weeks to compare and make decisions, and ensures that they will have essential plan materials and membership cards in hand on January 1, 2012 when new coverage starts.

There'll be a wide range of health and drug plan options available across the country, including Original Medicare. Most people with Medicare can choose a "Part D" plan to help them pay for prescription drugs. And people who have chosen to enroll in a "Part C" Medicare Advantage plan for their basic health care services have the option of staying in that plan, choosing a different plan, or going back to the Original Medicare program. Plans can change from year to year, so these are important choices that should be made with care. People can turn to www.medicare.gov, call 1-800-MEDICARE, or consult with a local State Health Insurance Assistance Program (SHIP) for help.

Medicare average prescription drug premiums will not increase in 2012. The recent announcement from the Department of Health and Human Services (HHS) comes as more people with Medicare are receiving discounts on prescription drug costs and no-cost preventive services.

The national and regional premium data in the announcement can be found at http://www.cms.gov/MedicareAdvtgSpecRateStats/RSD/list.asp.

For state-by-state information on the number of Medicare beneficiaries who have seen lower out-of-pocket costs in the donut hole, please go to http://www.cms.gov/newmedia/03_partd.asp

Source: AoA Aging News Update (August 15, 2011)

            The U.S. Department of Health and Human Services is launching a campaign to encourage Medicare recipients to take advantage of preventive services, including mammograms and prostate cancer screenings, in the hopes that early diagnosis and treatment will help save significant costs for the system.

            The Obama administration's healthcare overhaul, passed in early 2010, eliminated out-of-pocket costs for recommended preventive services and annual checkups at the beginning of this year. Healthcare costs are a central point of negotiation between Democrats and Republicans trying to tame spiraling U.S. debt.

            But the uptake of services has been uneven, with one in six Medicare beneficiaries using at least one free service from January 1 through June 10, according to the Centers for Medicare and Medicaid Services (CMS).

            "For some services, utilization is slightly higher than in 2010; for some, it is about the same; and for a few services there is a slight drop," said Ellen Griffith, a CMS spokeswoman. "All of this supports the need for the multi-pronged public awareness campaign we launched today."

            CMS estimates the U.S. could save two-thirds of the $2 trillion it spends on preventable long-term illness by preventing chronic illnesses in Medicare beneficiaries.

Under federal rules, most people with disabilities who are younger than 65 aren't eligible for Medicare until more than two years after they qualify for Social Security disability income. A coalition of more than 65 organizations led by the Medicare Rights Center has been pushing Congress to do away with the waiting period. But the effort has stalled because of the high cost to the federal government – an estimated $113 billion over 10 years, according to the Congressional Budget Office. That takes into account a $32 billion reduction in federal spending on Medicaid, the state-federal program for the poor and the disabled. Many people with disabilities go on Medicaid while they wait to become eligible for Medicare. Discarding the Medicare waiting period "is always going to be an issue in Congress," said Edmund Haislmaier, senior health policy research fellow at the Heritage Foundation. "Some of it is money, some of it is politics, too. For members of Congress, irrespective of party or where they stand on the issue, it's kind of all-or-nothing because if they did it for some diseases, then they're immediately going to be inundated with 'Why didn't you do it for us?'"

Preventive health care is important at any age, but never more so than as we get older. Many of the major cancers that can be screened for - such as breast and colorectal cancer - are typically diagnosed at about age 70. After age 55, people have a 90 percent chance of developing high blood pressure, putting them at higher risk for heart disease and stroke. "The payoff in terms of prevention in geriatrics is more upfront and more immediate," says geriatrician Peter Hollmann, chairman of the public policy committee for the American Geriatrics Society. Starting in January 2011, the new health-care law will make it easier and cheaper for seniors to get preventive care. Medicare beneficiaries will be able to receive for free all preventive services and screenings that receive an A or B recommendation for seniors from the U.S. Preventive Services Task Force. That includes mammograms and colorectal cancer screening, bone mass measurement and nutritional counseling for people at risk for diet-related chronic diseases such as diabetes. Medicare beneficiaries will also get a free annual wellness visit under the new law. The visit will cover a number of services, including a health risk assessment and a review of the person's functional and cognitive abilities.

Seniors will see a modest increase in prescription drug premiums in 2011, but benefits will also improve.  According to Medicare, the average monthly premium charged by Medicare will rise to an estimated $30 in 2011, an increase of $1 over 2011. However, seniors are urged to check their particular plan to determine their exact premium increase. 

Additionally, seniors with high drug costs can look forward to a noticeable improvement in 2011.  The new federal health care laws will begin to close the coverage gap known as the doughnut hole.  Medicare recipients in the gap will get a 50 percent discount on brand name drugs, and 7 percent off of generic drugs.  The discounts will gradually increase until the gap finally closes in 2020.   

A Medicare beneficiary has to choose between two distinct paths of coverage. You can enroll in traditional (original) fee-for-service Medicare, or you can choose to join a federally subsidized private Medicare Advantage (MA) plan. MA plans typically operate like HMO or PPO managed care plans by placing some limitations on your access to health care providers.

The political philosophy underlying the Medicare Modernization Act of 2003 was to try to privatize Medicare by encouraging people to shift from traditional government administered Medicare to private MA Plans. To accomplish this goal, the government has been paying MA plans more per beneficiary than it would cost to cover the same beneficiary under original Medicare program.

Medicare currently pays Medicare Advantage plans an average of 13% more than the cost would be if the same beneficiaries were enrolled in traditional Medicare. These extra payments averaged $1,138 per plan enrollee in 2009. This extra money allows Advantage Plans to cover their higher administrative costs and still be able to offer enrollees some extra benefits, such as health club memberships, not included in traditional Medicare. The extra benefits then lure people to the private plans.  Currently, about 23% of Medicare beneficiaries are enrolled in MA plans nationwide.  

The new Health Reform law (the “Affordable Care Act”) will eventually return the two Medicare coverage pathways to a more level competition by reducing the excess reimbursements to private Advantage Plans. Over the next 10 years, the extra payments to MA plans will be reduced until the average differential reaches 1%.  Actual payments to individual MA plans will vary depending on Medicare costs in the geographic location and the plan’s performance ratings. 

Like many of the Medicare changes, the MA plan cuts and other changes will be phased in over time. In 2010, no cuts will be made. In 2011, payments will be frozen at current levels. Starting in 2012, the cuts will phase in over two to six years.

To encourage quality, MA plans that rate well on certain quality measures will receive bonuses. (MA plan ratings are available on the Medicare.gov website under "Find & Compare Health Plans.") Plans receiving 4 to 5 stars will be rewarded with bonus payments of 1.5 percent in 2012, 3.0 percent in 2013, and 5.0 percent in 2014 and later years. The Affordable Care Act also requires the suspension of MA plan enrollment for 3 years if a plan’s medical loss ratio is less than 85% for 2 consecutive years and the termination of the plan contract if the medical loss ratio is less than 85% for 5 consecutive years. (Effective beginning in 2011.)

The Congressional Budget Office has estimated that the MA plan changes will reduce Medicare payments by $132 billion over the next 10 years.  This reduction in payments to MA plans has raised concerns that MA plans may reduce benefits, raise premiums, or both. However, MA plans must provide mandated benefits. This means that any benefit reductions due to the payment cuts will be to extra, optional benefits such as health club memberships, vision and dental.