By Thomas Goldsmith
With a Dec. 7 deadline approaching, North Carolinians older than 65 are dealing with choices for 2023 between health insurance coverage under traditional Medicare or for one of 150 options on a growing list of privately run Medicare Advantage plans statewide.
Readers whose minds reel just from reading those terms likely have plenty of company. More than half of state residents reaching 65 — about 55 percent — have had employer-sponsored health insurance all their lives, where the choices tend to be few. Then, when confronting choices for Medicare, decisions can be daunting.
For the roughly 15 percent of North Carolinians covered by Medicare alone, the many options are often difficult to follow but can have real significance.
Big-picture questions on Medicare Advantage
Medicare Advantage is the federally designated coverage program through which private companies receive taxpayer dollars to provide health care benefits that may differ in significant ways from traditional Medicare. In addition to differences of opinion about the program’s value, Medicare Advantage may also be contributing to the depletion of the entitlement program’s resources, according to testimony before Congress by officials of the Medicare Payment Advisory Commission and the inspector general’s office of the U.S. Department of Health and Human Services.
From the consumer standpoint, making the wrong choice can result in piles of medical debt. For instance, it’s crucial that enrollees understand – or consult someone who understands – the amounts that both types of plans can charge for services or drugs. Those amounts include fees under both the original Medicare or by Medicare Advantage’s in-network providers or from outside providers.
A complete analysis of a person’s choices rests on a number of factors specific to individual health and health care. For many, the first step involves giving an individual’s specifics to a staff member or trained volunteer with North Carolina’s Seniors’ Health Insurance Information Program, or SHIIP. Every state has a similar, federally required agency to help people navigate the labyrinth of choices. A trusted private insurance agent can also help out.
“This is the time to review and compare their coverage for next year, through December 7,” said Melinda Munden, director of SHIIP, which is a division of the state Department of Insurance. Munden and other advisers note that submitting a beneficiary’s list of medications for comparisons between pharmacies can save thousands of dollars annually.
It’s not enough to think that last year’s drug coverage will just carry over to the coming year’s plan. Often, insurance companies change plans and covered drugs from year to year.
With Medicare Advantage plans:
- Make sure that the plan provides you with a network that includes the doctors, hospitals, specialists, therapists, home health aides, and other providers you’d prefer and could easily reach. Keep in mind that these arrangements can change, as in the recent resolution of the contract between Wake Med and United Health Care;
- Check costs for in-patient hospital stays, which under many Medicare Advantage plans can escalate after a few days;
- Check the prescription drug plan’s formulary, or list of prescription drugs and costs, for your specific medications. These lists can change from year to year, or even during the plan year;
- Examine the deductibles for services such as physical therapy, blood tests, radiology and other imaging, in and out of network;
- Check out the maximum out-of-pocket costs which can vary widely from plan to plan; and
- Determine whether perks such as gym membership, basic dental and vision care, and even Social Security rebates would outweigh significant extra expenses that might accrue under Medicare Advantage.
With traditional Medicare:
Potential enrollees also have significant choices to make.
Consumers have to remember that Medicare pays 80 percent of doctor’s office expenses after an annual deductible. To hedge against a big bill, consumers can sign up for a “Medigap” plan to cover the rest of their costs, which also entails a monthly premium.
Unlike Medicare Advantage consumers who typically sign up for a care package covering all the Medicare parts, traditional Medicare enrollees have to enroll separately if they want that Medigap supplement to cover costs beyond Medicare A and B. Plus they can end up paying for a separate Medicare prescription drug benefit, called Medicare Part D.
Elements to watch for the group choosing original Medicare include:
- Deductibles and copayments the patient may owe if not covered by a Medicare supplement plan, or Medigap;
- The choice among Medigap plans, which vary from county to county. These carry an additional initial cost but are strongly advised for those who can afford them to cover coinsurance and deductibles for many services.
- Check online Medigap locator services via SHIIP and Medicare.gov.
- As with Medicare Advantage plans that include drug coverage, consumers should check their current medications against the separately selected prescription drug plan’s formulary, or list of prescription drugs. These lists can change from year to year, or even during the plan year.
Check perks as you decide
Under Medicare Advantage policies, providers such as doctors and hospitals get paid on a per-patient, per-year basis. That’s different from traditional Medicare, which pays on a fee-for-service basis for every test, treatment and office visit separately.
The federal government pays Medicare Advantage companies as much as 4 percent more for equivalent consumers than the costs for traditional Medicare. This adds up to as much as $12 billion extra annually.
Medicare Advantage companies advertise heavily to attract consumers with information about levels of coverage that’s sometimes been found to be misleading. Potential customers are attracted by dental and vision care that may turn out only to offer minimal benefits. One risk with Medicare Advantage is that low- or no-cost premiums may not be a good deal if a patient’s sudden bad health results in significant out-of-pocket costs for ambulance, X-ray and imaging services, advisers say.
The details can be hard to determine because Medicare Advantage premiums, deductibles and coinsurance vary for different plans and can change every year, as can out-of-pocket limits.
‘Too many variables’
State and nonprofit officials work to make sure that consumers realize that the increasing array of perks offered by Medicare Advantage plans won’t always work out to be the most reliable indicator of best-quality health insurance.
“We try to set up the decision that people can make in more meaningful ways because there’s way too many choices and too many variables,” said Gina Upchurch, founder and director of Senior PharmAssist, a Durham nonprofit agency that helps older consumers decide on prescription drug coverage. “The more and more extra benefits these things have, you literally cannot have a meaningful comparison for every little variable. So we try to hit people on what’s most important to them, and bring them back to remember, ‘This is your health insurance.’”
Senior PharmAssist works with the state SHIIP program. SHIIP advisers and more than 900 trained volunteers statewide assist people who want to start or renew Medicare-backed coverage or combine it with supplements that pick up where the government programs leave off.
SHIIP director Munden reports that companies are offering 2023 enrollees a total of 150 Medicare Advantage plans to the 2.1 million beneficiaries in North Carolina, an increase from 142 plans in 2022. However, that doesn’t mean that such an array is available to everyone, because plans are offered on a county-by-county basis.
Note to diabetics: Check insulin cost reduction
Munden offered a specific note of caution. The widely used Medicare Plan Finder does not accurately reflect the recently enacted benefit of the federal Inflation Reduction Act, a provision under which people with diabetes will pay no more than $35 a month for insulin.
“So that’s presented some additional time as you get people’s information for them,” Munden said.
County plans in more rural areas will have fewer choices of in-network providers than those in, say, Charlotte or Asheville. Someone who’s just read or heard a Medicare Advantage pitch can benefit from talking to an adviser, either someone from SHIIP or a private agent, who can provide a fuller picture of what plans cover, Munden said.
“A lot of times we’re grateful that we are getting these calls where people are inquiring about commercials that they’ve seen and or flyers that have come in the mail that are offering benefits, like putting money back into Social Security check, or dental coverage, or additional benefits and that’s enticing for sure,” Munden said. “When they’re contacting us we can have those discussions to talk about the differences between original Medicare and a Medicare Advantage plan.”
Spelling out the Medicare Alphabet
What are the different parts of Medicare?
Medicare Part A consists of hospitalization insurance that pays for inpatient hospital care, limited stays in skilled nursing facilities, hospice care, lab tests, surgery, and some home health care.
Medicare Part B is medical insurance coverage that includes services and outpatient care doctors, as well as “durable medical equipment, home health care, and some preventive services.”
Medicare Part C, a term used to describe Medicare Advantage, under which private companies are paid to provide the same coverage as original Medicare Part A and Part B. The Center for Medicare has to approve and set rules for private companies in this program. Such plans often include prescription drug coverage, or Medicare Part D.
Medicare Part D, prescription drug coverage. Medicare says: “All plans must cover a wide range of prescription drugs that people with Medicare take, including most drugs in certain protected classes, like drugs to treat cancer or HIV/AIDS. A plan’s list of covered drugs is called a ‘formulary,’ and each plan has its own formulary.”
Medigap policies, an important related product, are offered by private companies to pay for costs not covered by Parts A and B, including copays, coinsurance and deductibles. For beneficiaries who can afford one, a Medigap policy can relieve much of the uncertainty of unexpected medical bills.
An offer of healthy groceries
A positive part of Medicare Advantage coverage is the companies are paid per insured per year by the Centers for Medicare and Medicaid Services. That means that they have an incentive to keep people healthy and away from using expensive medical services that erode the companies’ profits.
For low-income people especially, advertised perks such as a food allowance or cash in hand have a powerful pull, Upchurch said.
“They’re like, ‘Let me go to Medicare Advantage — I want the food,” she said. “And especially for people who haven’t had dental care forever, that’s very attractive.”
A Medicare Advantage plan offered by BlueCrossBlueShield North Carolina describes its accompanying card: “A combined $185 monthly allowance on a benefits prepaid card to help members with purchases towards healthy groceries and OTC items.”
Said Upchurch: “If I’m struggling financially and somebody tells me they’ll give me a debit card, that’s money back in my pocket.”
Consumers who pick a Medicare Advantage plan when they are relatively young and healthy should be aware of pitfalls that can result later in life, advisers say.
Because the Medicare Advantage plans incorporate Medicare Part A and B coverage, the enrollee in most cases has only the first year under the private plan to change his or her mind for the second year and choose a Medigap plan along with original Medicare. The patient who starts incurring higher costs after several years in Medicare Advantage may have to undergo an assessment of their physical condition and potentially a higher-cost Medigap supplement.
Congress hears of problems with Medicare Advantage
Controversy has long swirled around Medicare Advantage, the roots of which go back to 1980s legislation that allowed private health insurers to receive payments from Medicare for providing coverage. The goals were to save money and make room for innovations that would improve care. But critics point out its higher costs to taxpayers — billions annually, as well as inconclusive studies over the quality of coverage.
James E. Matthews, executive director of the Medicare Payment Advisory Commission, told a U.S. House Committee in June that the higher costs of Medicare Advantage could contribute to a near-term exhaustion of the program’s Part A trust fund.
“We estimate that in 2022 Medicare payments to MA plans equal about 104 percent of what Medicare would have spent on those same beneficiaries in traditional FFS,” Matthews told the energy and commerce committee’s Subcommittee on Oversight and Investigations.
“The higher payments for beneficiaries in private plans, combined with growing enrollment in [Medicaid Advantage], are major factors driving growth in Medicare spending and putting financial pressure on the Medicare program. Medicare’s trustees estimate that without changes to current law, the Part A trust fund—which accounts for about 39 percent of total Medicare spending—will become insolvent in 2028.”
In additional testimony, Erin Bliss, of the U.S. Department of Health and Human Services’ inspector general’s office, told the committee that Medicare Advantage organizations deny millions of prior authorization requests, in which enrollees must ask for coverage in a procedure that isn’t part of original plans. Overall, she said the companies denied 1.5 million requests, 5 percent of all prior authorization requests, and 56.2 million payment requests overall which account for 9.5 percent of all payment requests.
The companies accepted three in four appeals to the denials, but only about one percent of beneficiaries and providers even made an appeal in the first place, Bliss said.