Statement of Vicki Gottlich, Center for Medicare Advocacy, Inc.

The Center for Medicare Advocacy, Inc., (the Center) submits these written comments to be included in the record of the hearing set for December 4, 2001, on the "Status of the Medicare+Choice Program." The Center is a non-profit organization which provides education, legal advice and representation to elders and people with disabilities who are unfairly denied Medicare and other health care coverage. Center staff provide legal advice, self help materials, and representation for elders and people with disabilities. We also provide training, support, and technical assistance to Connecticut CHOICES, the state’s health insurance counseling program, and to Medicare advocates across the nation. We thank the Subcommittee on Health of the Committee on Ways and Means and its Chairman, Nancy Johnson, for holding this important hearing on how recent changes in the Medicare+Choice (M+C) program have adversely affected older people and people with disabilities.

This is the fourth year in a row that M+C plans have announced withdrawals from Connecticut.

ConnectiCare and MedSpan will withdraw from Medicare as of January 1, 2002. Only two Medicare HMOs will remain, PHS/HealthNet and Oxford. This will leave Medicare HMOs only in Fairfield, Hartford and New Haven counties. The Medicare managed care terminations affect approximately 39,000 Connecticut Medicare beneficiaries. In 2000, 52,000 Connecticut Medicare beneficiaries were affected when CIGNA, Aetna US Healthcare, and Antehm Blue Cross terminated their coverage. Health Net (then PHS) pulled out of two counties.

But plan withdrawals are only part of the problem. I would like to focus on one of the two remaining Connecticut plans, Health Net, formerly known as Physician Health Services, or PHS, to demonstrate the impact of changes made by existing HMOs on those beneficiaries who are enrolled in the plans or who would like to enroll.

A. Enrollment caps

In announcing that Health Net would remain in Connecticut, the plan also announced that the number of new members able to enroll in the plan would be limited. Oxford, the other remaining Connecticut plan, has already reached its enrollment cap and is not accepting new enrollment.

This year, open enrollment (the annual coordinated enrollment period) for M+C plans runs from November 1 through December 31. Older people and people with disabilities in Connecticut who did not act immediately upon learning that their plans were leaving may have been foreclosed from joining another Medicare+Choice plan. One older woman explained to a Center staff attorney in mid-November that she reviewed the written material describing her M+C choices in Connecticut that the Centers for Medicare & Medicaid Services (CMS) sent, but by the time she called the remaining plan in her area the plan was only able to put people on a waiting list.

B. Changes in provider networks

The Medicare Health Net plan for 2002 also announced that three hospitals previously in its network will NOT be participating in 2002. These are Hartford Hospital, Danbury Hospital, and Greenwich Hospital, three of the major hospitals in the area. Thus, unless the individual needs emergency or urgent care, services provided at any of these hospitals will not be covered in 2002. Further, physicians who have admitting practices only at these hospitals will not be able to participate in Health Net in 2002. Thus Health Net members who use these doctors, as a primary care physician or specialist, may have to seek new doctors, resulting in a disruption of care. Some enrollees who need hospital services will also have to travel longer distances to get those services.

C. Changes in benefit structure

Health Net’s Premiums for 2002 will increase by $20 per month, from $79/month to $99/month; co-payments for doctor visits will increase by $5 per visit, from $15/visit to $20/visit.

Health Net also is adding co-payments for services for which the plan previously did not charge a co-payment. For example, the plan is going from a zero co-payment for dialysis services to a 20% co-payment. Inpatient hospital care and outpatient surgery were previously covered in full. In 2002, this will change dramatically. Enrollees will be responsible for a $500 co-payment per admission for inpatient hospital care and inpatient mental health care, and a $100 co-payment per surgery for outpatient surgery.

The co-payment for generic prescription drugs will increase $3 per prescription, from $7/prescription to $10/prescription. Insulin will no longer be covered.

D. Effect on Medicare beneficiaries

The following inquiry received by a Center staff member demonstrates the adverse impact of the new cost-sharing requirements on Medicare beneficiaries.

A woman who is enrolled in PHS/Health Net has been going to the hospital every month for a series of immune globulin shots. She has not had to pay anything towards the cost of this treatment. PHS has informed the woman that the treatments involve inpatient hospital care and that, starting January 1, the woman will need to pay the $500 co-payment each month. The woman was concerned about the accuracy of this information and her alternatives for obtaining treatment. She cannot afford this new and substantial cost for her health care.

Assuming for purposes of this statement that the plan’s characterization of the immune globulin shots as an inpatient hospital service is correct,¹ the plan, under its new co-payment schedule, is indeed entitled to charge a $500 co-payment each month, as each month is a new hospital admission. The cost for the treatment through the M+C plan, therefore, clearly exceeds the cost to a beneficiary in traditional Medicare. If the woman disenrolled from the plan and returned to traditional Medicare, she would be responsible for a $812 hospital deductible in January at the start of her new benefit period. Because she would be within the same benefit period for each subsequent month’s hospitalization, and because she would not exceed 60 days of hospital care within this benefit period, she would not have to pay another co-payment for the treatment.² Furthermore, if the woman were in traditional Medicare, she may have a Medicare supplemental (Medigap) policy that pays for the part A hospital deductible.³ Thus, she would be able to receive the treatment she needs without any out-of-pocket costs, just as she received the treatment cost-free in 2001 from the M+C plan.

The simple answer seems to be that the woman should disenroll from her M+C plan, return to traditional Medicare, and purchase a Medigap policy. She is returning to traditional Medicare not because her M+C plan terminated its contract with Medicare, but because the change in her plan’s benefit package makes the plan in appropriate for her health care needs.⁴ This will be possible in Connecticut because any insurance company which sells Medigap plans A through G must sell them to any Medicare beneficiary over age 65 at any time, regardless of age, gender, medical condition or previous health insurance claims history. This means that insurance companies are not allowed to medically underwrite plans A through G for any Medicare beneficiary over the age of 65. This, however, in other states that do not have such protective legislation, this would not be possible.

Older people and people with disabilities who live in Connecticut are not the only Medicare beneficiaries to be adversely affected by changes in M+C plan benefit structures and plan networks. Similar problems are occurring around the country.

In Boston, a major provider, the Leahy Clinic, pulled out of the Tufts Secure Horizons plan, effective November 1, 2001. Affected beneficiaries who wanted to remain with their providers associated with the Leahy Clinic were able to change plans effective November 1. However, they will not have the same opportunity to change plans to continue care with their provider next year after the "lock-in" takes effect. Also in Massachusetts, Blue Cross& Blue Shield of Massachusetts will impose a $25 per day co-pay for days 1-20 of a skilled nursing facility stay starting January 1. No co-payment for those days is charged in traditional Medicare.⁵

The Kaiser M+C plan serving Central Maryland, including counties in the Washington, D.C. - Baltimore corridor, has also increased its premiums by $20-$30, depending on the plan, and increased per-provider co-payments. Like the Connecticut Health Net plans, Kaiser will be imposing a per hospital stay co-payment - in this case $300 per stay. Again, a beneficiary who requires several hospital stays in what would be one spell of illness under traditional Medicare will end up paying more out-of-pocket than if she were in traditional Medicare.

The California Council of the Alzheimer’s Association reports that many M+C plans in that state have sent letters to enrollees saying the plans no longer have to provide beneficiaries with brand name prescriptions and will only make generic drugs available to them. Although some of the plans imply that the change in policy comes from CMS, CMS staff have assured the Alzheimer’s Association that they have no such policy. The decision to limit prescription drug coverage to generic drugs is a decision made independently by each plan.

The shift to coverage of generic drugs only has a pernicious effect for people with Alzheimer’s disease, certain cardiac conditions, and to people who rely on insulin. There are no generic equivalents for the name brand medicines they take. As a result, these beneficiaries are losing prescription drug coverage, often while paying increased premiums to the same plan.

The Center for Medicare Advocacy, Inc. supports enactment of HR 3267, the Medicare+Choice Consumer Protection Act. The bill addresses problems being encountered by beneficiaries by:

1) eliminating the M+C lock-in scheduled to phase in starting in January 2002;

2) extending the existing Medigap protections that apply to people whose M+C plan withdraws from the program to anyone whose M+C plan changes benefits or whose doctor or hospital leaves the plan; and

3) prohibiting M+C plans from charging higher cost-sharing for a service than Medicare charges in the fee-for-service program.

A. Lock-in

When the lock-in provisions were enacted as part of the Balanced Budget Act of 1997, Congress assumed that the M+C market would be more stable than it is today. Congress wanted to insure that beneficiaries would be able to continue the care they were receiving in a plan, and to protect them if a plan wanted to discharge them because the care they needed was too much or too costly.

Instead, plans are choosing to enter and leave M+C markets more frequently than anticipated. Doctors and other providers, both individually and in networks, also are choosing to join and leave M+C plans with unexpected frequency. Medicare beneficiaries therefore need to retain the choice they currently have to leave one M+C plan and join another, or to leave and return to traditional Medicare, in order to continue care under a provider or to seek other care if their current plan no longer meets their needs.

B. Extending Medigap protections

One of the major purposes of the M+C program is to provide a beneficiary with the choice of how she wants to receive her Medicare. When a provider leaves a network, or a plan changes its benefit structure dramatically, the plan no longer meets the needs of the beneficiary in the same way as a plan that leaves the Medicare market no longer meets the beneficiary’s needs. In theory, the beneficiary has the choice of returning to traditional Medicare and purchasing a Medigap policy. In practice, however, the beneficiary may not be able to exercise this choice because she may not be able to find a Medigap insurer that will issue her a policy. By extending the Medigap protections to beneficiaries who lose their M+C plans in the above situation, Congress will make the choice a reality.

C. Prohibiting higher cost-sharing than in traditional Medicare

Many plans have imposed higher cost-sharing than traditional Medicare for services needed by the sickest and neediest beneficiaries - inpatient hospital stays, skilled nursing facility stays, home health care, and durable medical equipment. The effect of these co-payments is to make the plans less desirable for these beneficiaries, and to discourage their enrollment in the plans. As a result, plans can keep costs down by either not having to provide services to people with acute and chronic conditions, or by shifting a larger portion of the cost of these services onto the beneficiaries. Though M+C plans are prohibited from discriminating against beneficiaries on the basis of medical condition, claims experience, receipt of health care, or medical history,⁶ the plans in effect have achieved the same result as if they refused up front to enrollment beneficiaries who need these expensive services.

Furthermore, unlike the woman in Connecticut who contacted the Center for Medicare Advocacy, most beneficiaries do not know in advance that they will need extensive hospital care, skilled nursing care, or home health services. They may not review plan benefit packages for hospital co-payments, focusing instead on doctor co-payments and prescription drug coverage. Thus, if a need for such extensive care arises suddenly, they may be unprepared to make the co-payments. Further, unlike in traditional Medicare, there is no supplemental insurance to cover the large out-of-pocket expenses. Beneficiaries who are not wealthy enough to self-insure will be stuck with large bills, at a time when they are already in a crisis dealing with an unexpected health care problem. And, unfortunately, most beneficiaries do not have access to attorneys or other proficient Medicare advocates.

D. Universal prescription drug coverage

The California example of the shift from inclusive prescription drug coverage to generic coverage only underscores the need for a universal prescription drug benefit that is part of the Medicare program.

The decision by the private M+C plans to further restrict their drug benefit is based on their needs and not on the needs of their enrollees. As pointed out, the change has the effect of discriminating against people with chronic conditions for which there are no generic equivalents. These people are paying for a prescription drug benefit that is not available to them.

Medicare beneficiaries need a uniform, affordable, accessible benefit that is part of the Medicare program to assure that their health care needs are met.