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Job-based health insurance costs are up 4 percent this year, 55 percent in past decade

October 11, 2020 by Kaiser Health News

Job-based health insurance costs are up 4 percent this year, 55 percent in past decade - North Carolina Health News

Insurance cost increases are in the single digits, but they're still more than the increasing rate of inflation, driven, in part, by uncertainty caused by the COVID-19 pandemic.

By Phil Galewitz

Kaiser Health News

Health insurance costs for Americans who get their coverage through work continued a relentless march upward with average family premiums rising 4 percent to $21,342 this year, according to a study published Thursday.

The annual survey by KFF found workers on average are paying nearly $5,600 this year toward family coverage, up from about $4,000 in 2010 and $1,600 in 2000. (KHN is an editorially independent program of KFF.)

While health insurance costs rose a modest amount in 2020, as has been the trend in recent years, they soared 55 percent in the past decade — more than twice the pace of inflation and wages.

About 157 million Americans rely on employer-sponsored coverage — far more than any other type of coverage, including Medicare, Medicaid and individually purchased insurance on the Affordable Care Act exchanges. More than half of employers provide insurance to at least some workers.

“Conducted partly before the pandemic, our survey shows the burden of health costs on workers remains high, though not getting dramatically worse,” Drew Altman, KFF’s CEO, said in a statement. “Things may look different moving forward as employers grapple with the economic and health upheaval sparked by the pandemic.”

The survey was conducted from January to July as the coronavirus pandemic took hold and upended the nation’s economy. Many of the details of the employers’ plans that the researchers examined were set before the virus hit.

Since 2012, the cost of family coverage has increased 3 percent to 5 percent annually. It’s been more than 15 years since these costs were rising at double-digit rates.

Employers help shield workers from much of the cost of their health insurance premiums, though employees often feel the impact via higher deductibles, copayments and lower wages.

On average, workers pay 17 percent of the premium for single coverage and 27 percent for family coverage, the survey found. Workers at smaller companies pay 35 percent of the premium for family coverage, compared with 24 percent for larger companies, the survey found.

The average annual deductible for single coverage is now $1,644, up 25 percent in the past five years and 79 percent in the past decade.

Workers with coverage are exposed to higher costs when using the hospital since 65 percent have coinsurance, which means they are responsible for a fixed share of the charge, and 13 percent contribute a copayment, or fixed fee per visit or service. The average coinsurance for hospital admission is 20 percent and average copayment is $311 per hospital admission.

Workers are protected for catastrophic costs through limits set on their out-of-pocket spending in provider networks, although those amounts vary by employer: 11 percent face a maximum of less than $2,000, while 18 percent are in a plan with a maximum of $6,000 or more.

line graph showing the cost of insurance premiums, compared to inflation and workers earnings over the past two decades — Average annual increases in premiums for family coverage compared to other indicators, 2000-2020.
Sources: KFF Employer Health Benefits Survey, 2018-2020; HRET Survey of Employer-Sponsored Health Benefits, 1999-2017. Bureau of Labor Statistics, Consumer Price Index, US City Average of Annual Inflation, 1999-2020; Bureau of Labor Statistics, Seasonally adjusted data from the Current Employment Statistics Survey, 1999-2020

The study also noted that large employers have made it easier for workers to access care by adopting coverage for telemedicine in recent years. Nearly 9 in 10 companies that have 200 or more workers and offer insurance covered these medical appointments done via telephone or computer this year, up from fewer than 3 in 10 in 2015, according to the research. During the pandemic, telemedicine usage has increased markedly as people sought care from the safety of their home.

The KFF study is based on a telephone survey of 1,765 randomly selected nonfederal public and private employers with three or more workers from January to July.

Shows the computer home page for people to choose a Medicare plan

Medicare’s key means for selecting coverage has grown harder to use, advocates say

September 27, 2019 by Thomas Goldsmith

Medicare’s key means for selecting coverage has grown harder to use, advocates say - North Carolina Health News

Controversy is roiling over the revised Medicare Plan Finder, an online tool for selecting optimal plans. Medicare says it’ll be fine after some tweaking, but some advocates say it has major problems.

By Thomas Goldsmith and Anne Blythe

Advocates for older people contend that the online method many people and advisers use to select Medicare plans has gotten so difficult to navigate that beneficiaries will run into trouble trying to make their choices.

Federal Medicare representatives maintain there’s real benefit to consumers in changes the agency has made following a critical assessment of the Medicare Plan Finder website by the U.S. Government Accountability Office. Also, national and state officials said, any change of method is hard given the highly complicated public and private health care landscape.

Among those questioning the redesigned finder are Durham’s Senior PharmAssist, the North Carolina Coalition on Aging and national senior-health advocacy groups including the Medicare Rights Center and the Center for Medicare Advocacy. Under discussion is the already complicated web tool — called the Medicare Plan Finder — that beneficiaries and counselors use to select the best and least expensive plans for older people’s health care and prescription drug coverage.

shows a smiling woman against a background of green leaves — Senior PharmAssist head Gina Upchurch. Photo credit: Satsuki “Sunshine” Scoville/ Senior PharmAssist

“People want standardization; they want to be able to understand and make informed choices,” said Gina Upchurch, executive director of Senior PharmAssist. The nonprofit helps beneficiaries choose prescription drug Medicare plan.

“If you keep adding more and more variables or moving parts, you have basically obliterated meaningful choice,” she said. “People are overwhelmed.”

‘They are listening’

The new software also introduces a new self-identification procedure that could open the door to unauthorized investigation of beneficiaries’ private medical records, said Upchurch, who’s been advocating for seniors for 25 years, since founding Senior PharmAssist in 1994, last year she won the North Carolina Institute of Medicine’s Award for Excellence in Health Policy Leadership.

Representatives of the federal Centers for Medicaid and Medicare Services and North Carolina’s Seniors’ Health Insurance Information Program (SHIIP) acknowledge a mixed response to the revised plan finder, but say the plan’s benefits outweigh its problems. SHIIP is a federally mandated service through which staff and volunteers help beneficiaries navigate the complexities of Medicare insurance plans.

State SHIIP director Melinda Munden said CMS told state senior-health agencies last month that previous functions such as determining the overall cost of a drug plan, absent in the new tool, should be reintroduced by the time Medicare’s open enrollment period begins Oct. 15.

“We are very grateful … with CMS’s response,” Munden said. “They are listening. And they are open to our feedback.

“It’s going to take us time. I think we can all exercise some patience and understanding.”

How can changes in software matter so much? For one thing, a significant chunk of North Carolina residents will use the finder plan. More than two million older North Carolinians and those with disabilities have coverage through Medicare, partly financed by lifetimes of payroll deductions. In the 2018 enrollment period, more than 90,000 people on Medicare received counseling from the state’s Seniors’ Health Insurance Information Program.

Private insurers favored?

Complaints have been “loudest,” Munden said, about the 2019 plan finder’s failure to identify a single annual cost for a prescription drug plan. Instead, beneficiaries would have to calculate variables such as a specific pharmacy’s price for a drug and the amount of the person’s copays and deductibles.

“They’ve taken something that worked very well and made it difficult to use,” Upchurch said.

Upchurch and members of national advocacy groups charge that the new plan finder seems to guide users toward Medicare Advantage plans. Medicare Advantage is coverage offered by private insurance companies that can offer a wraparound of health care plus prescription drug coverage and uses such perks as gym memberships to get users to sign on. While Medicare Advantage works well for some consumers, advocates say others may find unwelcome surprises in substantial copays, difficulty finding in-network physicians, and other differences from original Medicare.

What makes up Medicare?

Part A, which covers hospital inpatient care, hospice care, some home health care and some skilled nursing care — though not for long terms. Most people have paid for Part A throughout their lives with payroll deductions.

Part B, which covers doctor’s office care, outpatient care, physical and occupational therapy and some other services. Part B is available through a variety of insurance company offerings, which vary greatly in price, but by statute must cover the same services.

Part D, added during the presidency of George W Bush, covers prescription drug costs for Medicare beneficiaries. It’s also available through many different companies, which offer varying formularies, or lists of drugs, at a wide range of prices.

“The revisions … cater to Medicare private plans and those who sell them, rather than being in the best interest of Medicare beneficiaries, those who assist them, or in furtherance of an equitable Medicare program,” Judith Stein, executive director of the Center for Medicare Advocacy, said in a statement when the new plan was rolled out.

“CMS should rescind these changes, and should ensure that beneficiaries are not hindered by a delayed roll out of a completely new Plan Finder format, with no back-up system in place.”

The new Medicare plan finder software contains some positive changes as well as others that need revision, Munden countered. In any case, new and current beneficiaries can investigate, but not settle on, their choices with both the former and new plan finders until the end of September.

“The new Plan Finder is designed to be simple and intuitive for all users,” a CMS spokesperson in Atlanta told North Carolina Health News in an emailed response.

“Although change is always difficult, especially with something as widely known and used as the Plan Finder, CMS is confident that beneficiaries, SHIIP counselors and others will find it easy to learn and use.”

GAO panned old plan

The Centers for Medicare and Medicaid Services revised the tool extensively this summer after a July Government Accountability Office report said the Medicare Plan Finder, or MPF, is difficult to use and sometimes produces incorrect information.

“For example, MPF requires navigation through multiple pages before displaying plan details, lacks prominent instructions to help beneficiaries find information, and contains complex terms that make it difficult for beneficiaries to understand information,” the GAO report said.

The GAO report found that 73 percent of State Health Insurance Assistance Program directors said beneficiaries found the tool difficult to use, as did 18 percent of SHIIP counselors.

On August 27, CMS Administrator Seema Verma rolled out a redesign of the plan finder, citing President Donald Trump’s pledge to make Medicare stronger.

Another sticking point for advocates is a new process under which beneficiaries will have to set up a separate ID and password to gain access to their detailed Medicare records. And that means that someone working with the older person — an insurance broker, a relative or a volunteer for the NC Seniors’ Health Insurance Information Program — will also have a way to look at the beneficiary’s confidential information.

“I can go to Medicare.gov and start distributing your Medicare card to my neighbors,” Upchurch said hypothetically. “I can look at all of your medical claims.”

Munden said SHIIP counselors are expressly forbidden from looking up any beneficiaries’ private health information.

shows the front of the legislative building in Raleigh, general assembly

Bill to extend health insurance benefits to low-income workers finally gets started

September 19, 2019 by Rose Hoban

Bill to extend health insurance benefits to low-income workers finally gets started - North Carolina Health News

Six years after the state legislature rejected Medicaid expansion and four years after a Republican plan for adding hundreds of thousands of low income workers to insurance rolls was introduced, a bill finally passes committee.

By Rose Hoban

After years of waiting, advocates for extending health insurance to hundreds of thousands of low-income North Carolinians finally saw a bill cross the starting line at the state legislature.

House Bill 655 would allow for people who earn too much to qualify for Medicaid and too little to receive subsidies on the health insurance online marketplace to get access to insurance through the Medicaid program. The Health Care for Working Families Act would charge people who fall into the “coverage gap,” earning between 50 and 133 percent of the federal poverty level (from about $6,200 to $16,611 per year for an individual) to pay small premiums and copays in order to receive coverage.

Rep. Donny Lambeth (R-Winston-Salem), the bill’s main sponsor at the General Assembly, has long argued that this is a way to get more people covered.

“There are certainly aspects of this that look like [Medicaid] expansion,” he said. “I’ve tried to be pretty consistent saying there’s also a lot of aspects of this that are not the traditional expansion.”

Lambeth argues his program is not “traditional Medicaid expansion” because people would have to work and pay a small premium in order to get coverage. In many states, Medicaid expansion simply added more low-income people to the program’s rolls without those requirements.

Rep. Donny Lambeth (R-Winston-Salem) talks about how he’s framed his plan for adding low income workers to the Medicaid program. Video credit: Rose Hoban

North Carolina Medicaid currently covers more than 2.1 million people, mostly low-income children, plus some of their parents. About 19 percent of Medicaid beneficiaries are low-income seniors and people with disabilities whose care comprises close to two-thirds of the program’s expenditures. The federal government usually pays about two-thirds of the $14.8 billion tab for North Carolina Medicaid beneficiaries.

By the third year of Lambeth’s plan, close to 600,000 additional people would have gained health insurance coverage with the federal government picking up 90 percent of the cost. Financing for the program would come via federal Medicaid payments, and the program needs to be approved by the federal Centers for Medicare and Medicaid Services.

Premium could be burden

Lambeth said that the way he’s designed the program gives low-income workers more “skin in the game;” they would pay about 2 percent of their annual income in premiums, in addition to small copays.

He said that’s okay with many of the low-income workers he’s spoken to.

“[They’ve] said to me, they want to pay something,” Lambeth told reporters after Wednesday’s meeting of the House Health Committee, which passed the bill by a unanimous vote. “They just … can’t afford to pay six or $700 a month for health insurance.”

Beneficiaries would also be required to participate in wellness activities, such as getting an annual checkup, routine screenings such as mammograms and colonoscopies, weight management programs and immunizations.

“I’m really not happy with the premium at all,” said Democratic Rep. Verla Insko (Chapel Hill), who proposed an amendment to the bill to remove the annual premium. “To think that people might end up with bill collectors coming to their house … I mean, these are really poor people.”

“Two hundred dollars is a lot of money for a family like that,” Insko said, referring to a theoretical mother with two children earning poverty wages. “I think they’re already choosing between food and gas, things like that.”

Nonetheless, Insko said she is likely to vote for the bill when it comes to the floor of the House in the coming weeks.

“It would be sinful, in my view, for me to vote against the bill,” she said. “It would be really dumb of us to lose this opportunity … We would be denying 500,000 people health care.”

No new funding

To pay for the 10 percent of the cost required of North Carolina, HB 655 adds a new assessment on the state’s hospitals, which have long said they’d be willing to pick up most of the state’s costs. Another portion of the price would be covered by a new tax levied on managed care companies that will start running big portions of Medicaid starting early next year.

The most recent version of the bill, which was first introduced in April, contains so-called “poison pills,” requirements that need to be met or else the program comes to a hard stop. For instance, if the money collected from the hospitals and managed care companies doesn’t cover the costs, the program would terminate. Another stumbling block would be if Congress cuts federal reimbursement down from 90 percent or if CMS doesn’t approve the premiums or work requirements.

Already working

To be eligible, beneficiaries would have to work or perform volunteer service at least 80 hours each month, except if they are caregivers for a relative, are in school, are in a substance use treatment program, or are pregnant. Native American tribe members who receive care from the Indian Health Service are also exempted from the employment requirement.

In guidance sent to state Medicaid directors in early 2018, the federal Centers for Medicare and Medicaid Services, which regulates both programs wrote: “CMS will support state efforts to test incentives that make participation in work or other community engagement a requirement for continued Medicaid eligibility or coverage for certain adult Medicaid beneficiaries,” in expansion populations.

“Some states are interested in pursuing demonstration projects to test the hypothesis that requiring work or community engagement as a condition of eligibility, as a condition of coverage, as a condition of receiving additional or enhanced benefits, or as a condition of paying reduced premiums or cost sharing, will result in more beneficiaries being employed or engaging in other productive community engagement, thus producing improved health and well-being,” wrote Brian Neale, director of the program.

If other states’ experience serves as an example, many of the potential beneficiaries are likely already working. In Montana, about two-thirds of that state’s Medicaid expansion population was already working, with another 29 percent in school, drug treatment or performing caregiving.

A number of states including Arkansas, Kentucky, New Hampshire, Indiana and others added work requirements similar to HB 655’s into their Medicaid expansion programs, but they’ve been controversial.

And the work requirements have run into trouble in court. Earlier this year, DC District Court Judge James Boasberg rejected the work mandates in Arkansas’ and Kentucky’s programs.

In a ruling handed down in March, Boasberg noted that in Arkansas, since the work requirement went into effect in 2017, more than 16,900 beneficiaries had lost their coverage, mostly because the reporting requirement was too cumbersome. He criticized that state for creating work requirements that were “both arbitrary and capricious.”

“In both of those cases, the judge simply found that CMS had exceeded its authority in approving those requirements and had not properly considered things such as coverage losses,” said Elizabeth Edwards, a lawyer in the North Carolina office of the National Health Law Program which represented the plaintiffs in those cases.

However, another one of the “poison pills,” contained in HB 655 stipulates that if a judge blocks the premiums or the work requirement, then all work on North Carolina’s program needs to grind to a halt.

Edwards said people in her organization would consider their options if North Carolina’s bill merits final approval.

Rocky road ahead

But that’s a long way off.

Lambeth said on Wednesday he would consider some of the concerns raised by Democrats during the morning’s committee meeting. They proposed amendments around counting unpaid job training programs in the work requirement, streamlining the collection of premiums, and exempting veterans, people experiencing natural disasters, and those in domestic violence shelters from the work requirements.

Both the House and the Senate are taking breaks until Sept.30, and Lambeth said he’d take that time to make tweaks to the bill.

Advocates, for their part, said they’ll be using the coming two weeks to gather up all the votes they need for passage through the House, which would be a milestone.

“There are a lot of conversations that continue to need to be had,” said Erica Palmer Smith, who heads Care4Carolina, which was created several years ago to push for some kind of Medicaid expansion. “But I think that we’re seeing a lot of positive momentum.”

After that, the bill would have to make its way through the Senate, where the environment for passage is less favorable.

“I have had a lot of discussions with Speaker (Tim) Moore about this,” Lambeth said. “Basically what Speaker Moore has said to me was, ‘You know, don’t worry about the Senate, do what you believe is right for the House, and we’ll deal with the Senate.’

“If we get to that point.”

Clarification: North Carolina’s annual Medicaid budget is a total of $14.8 billion of which the federal government pays two-thirds of the cost of medical care and various other matching funds. North Carolina’s total budgeted cost for 2019-20 is $3.9 billion. The story originally only noted North Carolina’s share as the cost for Medicaid.

Also, we have included an additional phrase in the citation from a CMS guidance letter which clarifies the point. At the time, Brian Neale was the Director of Medicaid and CHIP Services at CMS.

shows a young man standing in front of a window, looking at the camera. He tells his story of being on PrEP.

Even when HIV prevention drug is covered, other costs block treatment

August 2, 2019 by Kaiser Health News

Even when HIV prevention drug is covered, other costs block treatment - North Carolina Health News

Pre-exposure prophylaxis, or PrEP, makes it possible to almost completely stop transmission of HIV, but it costs thousands of dollars each month.

By Michelle Andrews

Kaiser Health News

Three years ago, Corey Walsh, who was in a relationship with a man who was HIV-positive, got a prescription for Truvada, a drug approved by the Food and Drug Administration to prevent infection with the virus that causes AIDS.

Walsh, then 23, was covered by his parents’ health insurance policy, which picked up the cost of the drug. But the price tag for the quarterly lab tests and doctor visits he needed as part of the prevention regimen cost him roughly $400, more than he could afford.

“I went back to my physician and said, ‘I can’t take this anymore because all these ancillary services aren’t covered,’” Walsh recalled. He ended up joining a clinical trial that covered all his costs.

Walsh’s experience with high out-of-pocket costs, whether for medication or related services, is common, advocates say. In June, the U.S. Preventive Services Task Force recommended that clinicians offer prescription pre-exposure prophylaxis, or PrEP, to people at high risk of contracting HIV. The decision by the independent group of experts means that starting in 2021 most health plans are required to cover drugs that are recommended to prevent HIV, and patients can’t be charged anything out-of-pocket for the medication.

But the recommendation doesn’t apply to the other clinical and lab services people need if they’re on PrEP, according to task force officials.

In addition to the ancillary charges, other roadblocks persist for people who need PrEP from getting it.

“Eliminating cost sharing will undoubtedly expand access to individuals for whom affordability has been a significant barrier,” said Amy Killelea, senior director of health systems integration at NASTAD, an organization representing public health officials nationwide. “However, scaling up access to PrEP to individuals who need it most — including young, gay, black and Latino men — will require addressing other major systemic and structural challenges, such as stigma and provider awareness and willingness to prescribe PrEP to their patients.”

President Donald Trump has emphasized the need for more efforts to fight the HIV epidemic. In his State of the Union address in February, the president vowed to eliminate HIV transmission by 2030.

Currently, Truvada for PrEP, made by Gilead, is the only drug approved to prevent HIV. The once-a-day pill is at least 90 percent effective in some high-risk groups, including men who have sex with men as well as heterosexual men and women who have sex with HIV-positive partners, and 70 percent effective in people who inject illicit drugs.

Gilead estimated that 200,000 people now receive Truvada. The Centers for Disease Control and Prevention estimated that in 2015 there were 1.1 million people in the United States who could benefit from PrEP.

With a monthly price tag approaching $2,000, many private health plans have put the drug in a specialty drug tier with high copayments or coinsurance. Those payments will disappear when the task force recommendations take effect in 2021.

Truvada is generally covered in state Medicaid programs, as is the required clinical and lab work. But in the southern part of the country, where many states have not expanded Medicaid under the Affordable Care Act and HIV infection rates are high, there may be less access to the medication and other services.

Gilead offers a medication assistance program for uninsured people and a copay assistance program for those with private coverage that can fill gaps.

Gilead has submitted another HIV drug, Descovy, for FDA approval for PrEP, and a generic version of Truvada is expected next year.

It’s unclear how these options might affect people’s access to and ability to afford PrEP.

“Often it takes more than one generic for the price of a drug to drop,” said Jennifer Kates, a senior vice president at the Kaiser Family Foundation. (KHN is an editorially independent program of the foundation.)

The new preventive coverage requirement may lead to private insurers or Medicaid programs trying to limit access by imposing prior authorization requirements, some advocates worry. Insurers might, for example, require doctors to show that the patient is HIV-negative and meets the risk criteria before approving the prescription. That can have serious repercussions.

“Anytime there’s a delay at the pharmacy or on the provider’s end, patients will give up,” said John Peller, president and CEO of the AIDS Foundation of Chicago.

shows a woman's hand holding pill bottle, with SHIIP client in the background

No Gaps In Understanding: Here’s Your Primer On Medigap Coverage

August 21, 2018 by Kaiser Health News

No Gaps In Understanding: Here’s Your Primer On Medigap Coverage - North Carolina Health News

Medicare during open enrollment season begins on Oct. 15, so it's important for seniors to know their options.

By Judith Graham

Kaiser Health News

Every year, older adults can opt out of a Medicare Advantage plan and opt in to original Medicare during open enrollment season, which begins on Oct. 15. But unexpected problems can arise with this change. Notably, seniors who want to return to original Medicare might not be able to purchase Medicare supplemental insurance, also known as Medigap coverage.

Medigap covers some or all of the out-of-pocket costs associated with Medicare (deductibles, copayments and coinsurance), minimizing the financial risk to seniors. Under original Medicare, there is no limit to an individual’s out-of-pocket liability. (By contrast, Medicare Advantage plans limit out-of-pocket costs to a maximum $6,700 a year.)

Yet private insurers are required to offer Medigap policies only when people first enroll in Medicare and under a few special circumstances. Otherwise, insurers can refuse to cover people with preexisting conditions, such as diabetes and heart disease.

“People think they can choose Medicare Advantage one year and traditional Medicare another year, and go back and forth without difficulty,” said Tricia Neuman, senior vice president at the Kaiser Family Foundation and a co-author of a new report on consumer protections in Medigap. “But in states that don’t guarantee supplemental coverage, this might not be a realistic option.” (Kaiser Health News is an editorially independent program of the foundation.)

Only four states require insurers to issue Medicare supplemental policies to adults age 65 and older, regardless of their health status: Connecticut, Massachusetts, Maine and New York. Dozens of other states have more limited protections.

Craig Boyle, 69, learned about uncertainties surrounding Medigap the hard way three years ago, after he ran over a fire hose while biking to work in Denver and landed on his head.

Rushed to the emergency room, Boyle was told that he’d broken a couple of vertebrae but had a much bigger problem: Scans revealed two tumors at the top of his spine, compressing his spinal cord.

Surgery was in order, and doctor friends recommended two local surgeons with significant experience in this rare procedure. But neither worked with Kaiser Permanente of Colorado, the Medicare Advantage plan Boyle had chosen when he turned 65.

Boyle thought he could switch to original Medicare and be treated by a specialist at the University of Colorado’s Anschutz Medical Campus. But two large Medigap insurers declined to cover him because the spinal surgery was a disqualifying preexisting condition.

“I have to say, I’m fairly knowledgeable about insurance, but I had no idea that this was a possibility,” Boyle said.

He ended up getting lucky: A Medicare Advantage plan offered by Aetna in Colorado had in its network the University of Colorado surgeon he wanted to see. Boyle joined that plan (Medicare Advantage plans are required to accept all applicants), had the procedure and experienced no significant complications afterward.

Because your health needs can change after you first sign up for Medicare, it’s important to understand the ins and outs of supplemental coverage, said Fred Riccardi, vice president of client services at the Medicare Rights Center. Your local chapter of SHIIP (which often stands for Senior Health Insurance Information Program) is a good place to start.

Here’s some essential information about Medigap coverage:

Medigap basics. Medicare supplemental policies help fill gaps in traditional Medicare coverage. There are 10 types of plans, each with standard benefits.

All plans cover coinsurance and copayments for Medicare Part A (hospital services), Medicare Part B (physician services and outpatient care), and hospice care, either in full or in part. All but one plan pays in full or in part for Medicare’s hospital deductible — this year, $1,350 per hospital stay. Some plans pick up coinsurance costs for skilled nursing facilities ($167.50 per day after the first 20 days); some do not. Drug costs are not included among other benefits.

About 13 million people — over 95 percent of them older adults — had Medigap coverage in 2016, the most recent year for which data are available.

Premiums vary depending on someone’s age, gender, geographic location and, in some states, smoking status. Monthly costs range from under $100 on the low end to over $250 on the high end, said Katie Haug, an insurance broker at Caravus in St. Louis.

Medigap open enrollment. Once you’ve enrolled in Medicare Part B, insurers are required to offer you a Medigap policy, regardless of your health status, over the next six months.

If you’ve chosen original Medicare, your automatic right to buy Medigap ends after this six-month period. Insurers can then exclude you from coverage or charge you more for a policy if you’ve been recommended for surgery or if you have a preexisting condition, such as chronic bronchitis, asthma or rheumatoid arthritis.

If you’ve chosen a Medicare Advantage plan, you have 12 months to change your mind, select original Medicare and qualify for a Medigap policy regardless of your health status. This ends after you’ve been enrolled in Medicare Advantage for a year. From this point on, Medigap insurers can take your medical status into account in deciding whether to offer you coverage.

Rebates May Help Some, But Are No Silver Bullet for High Drug Costs

April 20, 2018 by Mark Tosczak

Rebates May Help Some, But Are No Silver Bullet for High Drug Costs - North Carolina Health News

Aetna and UnitedHealthcare announce they'll pass along pharmaceutical company rebates on drugs. But how much will that benefit consumers?

By Mark Tosczak

If you get your health insurance from Aetna or UnitedHealthcare, you might — with an emphasis on “might” — find some of your prescriptions are cheaper at the drug store next year.

Both companies have announced in the last few weeks that in 2019 they will pass on any rebates they receive from drug manufacturers directly to consumers. But the new policy won’t benefit all patients.

For starters, if you’re covered by a Blue Cross and Blue Shield of North Carolina plan, you’re out of luck. Blue Cross, which last year received $227.4 million in rebates from drug companies, said it already uses those funds to reduce the costs of premiums and plans to continue to do so.

“We pass along 100 percent of our drug rebates to all customers in the form of lower premiums, the same way all customers share the costs of those expensive drugs,” Blue Cross spokesman Austin Vevurka said in a statement.

But even if UnitedHealthcare or Aetna is your insurer, there’s no guarantee you’ll see a rebate.

First, the policy change only applies to what insurance companies call fully insured plans; these plans cover millions of people in North Carolina, but not everyone.

UnitedHealthcare said it covers about 1.4 million North Carolinians in fully insured plans. Blue Cross covers another 1.5 million. An Aetna spokesperson said he couldn’t provide state-specific numbers, but the company has a smaller market share in North Carolina than UnitedHealthcare and Blue Cross Blue Shield.

The rebate policies also don’t apply to plans run by large employers nor do they apply to government-sponsored plans, such as Medicare or Medicaid.

On top of that, how much the drug rebates are worth might vary widely. Rebates are often negotiated for individual drugs between drug makers and all the middlemen between them and the patient.

‘Devil in the details’

A 2016 Kaiser Family Foundation study found that average annual out-of-pocket prescription drug costs were $144 in 2014 — just $12 a month. But the same study found that the proportion of people spending more than $1,000 per year at the pharmacy grew from 1 percent in 2004 to 2.8 percent in 2014.

For patients spending thousands of dollars a year out of pocket on medicine, rebates might represent substantial savings — but other changes to pharmacy benefits could increase costs for some patients. And any benefits from rebates will depend on the details in the secret contracts pharmaceutical companies and those middlemen negotiate.

People who need very expensive drugs, such as multiple sclerosis patients with medicines costing as much as $85,000 per year, have a lot at stake when it comes to drug prices.

“Just getting that rebate pass-through, is that going to make a drug magically affordable?” asked Bari Talente, executive vice president of advocacy at the National Multiple Sclerosis Society. “Probably not for drugs that are this expensive, but every bit helps.”

Experts on drug pricing say our current prescription drug pricing system, which usually involves multiple companies that stand between patients and drug makers, is opaque, difficult to understand, and governed by secret contracts.

“If ever there were ever a devil-in-the-details thing, this is it,” said Professor Norman V. Carroll, a pharmacoeconomics professor at Virginia Commonwealth University’s School of Pharmacy.

“Because of the way contracts are written, how much of what you and I would call a rebate is recognized as a rebate, and how much is labeled as something other than a rebate and kept by the [pharmacy benefit manager]” is unclear.

It’s complicated

Drug purchasing can flow through several companies, Carroll said. “I think it’s probably a pretty good bet that everywhere a rebate stops, someone’s taking a percentage of it.”

Drug manufacturers negotiate prices with both insurers and companies known as pharmacy benefit managers. PBMs act as middlemen, getting paid to manage payments and negotiate drug prices so insurance companies can provide drug benefits to patients. PBMs may negotiate discounts off their drugs’ “list prices,” but not all of those discounts are labeled as “rebates” that then get passed on to consumers. Some PBMs are owned by the insurance companies they serve.

The PBMs also negotiate their prices and fees with networks of pharmacies. Finally, patients pay the final price at the pharmacy based on their insurance plans.

Sometimes that price is a co-pay, typically set by what coverage “tier” a drug is placed on in a health insurance plan.

Sometimes what comes out of a patient’s pocket is labeled “co-insurance” — usually a percentage of the cost of the drug. So-called specialty drugs, including expensive medicines used to treat multiple sclerosis, rheumatoid arthritis and cancer, often require a co-insurance payment from patients, often much more than a flat co-pay.

“Insurance is supposed to spread the cost so that people with extreme expenses don’t get penalized,” Carroll says. “In this case, they’re putting the big burden of payment on people who have the worst health.”

Other changes

Other details in a drug benefits plan can be devilish, too. For example, drug makers sometimes make coupons available to patients that lower the out-of-pocket cost of a drug. These coupons are intended to induce patients to use expensive drugs they might otherwise avoid because of the cost. Even after co-pays and co-insurance, insurers still often pay the bulk of a drug’s cost. But by giving patients those coupons, drug makers can boost their overall revenues.

For many UnitedHealthcare patients, though, another recent policy change means coupons will no longer count toward a patient’s deductible, which means that patients could end up with higher out-of-pocket costs when it’s all said and done.

“Right now, I think what we see is there are a lot of perverse incentives in the system for higher prices,” Talente said. “A lot of stakeholders across the system benefit from higher prices, but we know the patient is hurt by that.”

Insurers point to pharmaceutical companies, saying the problem comes from the high prices they are charging for drugs. And insurers also say those prices have increased dramatically in recent years.

“Adjusting for membership changes, over the past three years drug manufacturers have increased costs for our customers by $360 million, but only increased rebates by $130 million – pocketing $230 million of their costs increases,” said Blue Cross’ Vevurka.

MS drugs — even those that have been around for many years — have seen some big increases.

Betaseron, for example, first went on the market in 1993 at an annual cost of $11,532, according to researchers at the Oregon Health & Science University. By 2016, its price had climbed to $82,884.

Blue Cross NC says that when it negotiates discounts off drug list prices, those savings go to patients in the form of lower co-insurance. It’s uncertain, though, if that’s true for all insurers.

“Very few, if any [patients] are paying $80,000 for a medication, but we don’t know what the insurance is paying because that’s all private contract negotiations,” Talente said. “The person with MS is paying a co-insurance based off something which is probably the list price, and so at that point they’re not benefiting from the negotiated price.”

There is no simple answer, Talente said.

Additional Thanks

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