Committee on Ways and Means, Subcommittee on Health, 12-4-01 Testimony

Statement of Stephanie Sue Stein, Director, Milwaukee County Department on Aging,
Area Agency on Aging for Milwaukee County, Wisconsin

Testimony Before the Subcommittee on Health
of the House Committee on Ways and Means

Thank you for the opportunity to appear today to testify about the necessity and urgency of Medicare+Choice consumer protections. I speak today as the Director of the Milwaukee County Department on Aging, the Area Agency on Aging for Milwaukee County, Wisconsin. Our agency has two functions which give us direct contact with Medicare+Choice participants in Milwaukee County. First, we operate an Information and Assistance line for older people, which handles approximately 40,000 phone calls per year. Second, we are the grantee of the Senior Health Insurance Information Program (SHIIP) funds for Milwaukee County. These funds are subcontracted to Legal Action of Wisconsin, which provides in-person and phone consultation for Medicare recipients in need of insurance counseling.

I will begin today by telling you about the fate of 16,000 Medicare+Choice consumers in Milwaukee County who are in dire need of protection. These seniors are not alone, however, and counselors from other parts of the country would like me to remind you of the gravity and universality of this situation. Finally, I will ask you to enact much-needed protections on behalf of seniors in Milwaukee County who are desperate for your help.

In January of 1999, there were five Medicare+Choice plans—three with zero premiums—being offered in Milwaukee County. Unlike plans in other parts of the country, none of these plans ever offered a prescription drug benefit, eyeglasses, or other added benefits. (I am sure that the insurance industry will, and has, told you how the disparity in the AAPCC rates leads to the difference in plans nationwide.) These plans had either $0 or $10 deductibles for physician office visits and $40 deductibles for emergency room visits. In 1999, then-Medicare recipients could shop for a +Choice plan that used their physicians and hospitals and was very affordable.

By 2001, Milwaukee County was left with only two Medicare+Choice plans—Medicare Blue, operated by Blue Cross/Blue Shield of Wisconsin, and PrimeCare Gold, sold by UnitedHealthcare of Wisconsin, located in Minnetonka, Minnesota. Although the monthly premiums and co-payments on these plans had risen ($65 to $70 per month and $20 co-payments), they were still affordable options for senior citizens.

In July of 2001, we learned that Blue Cross/Blue Shield of Wisconsin would withdraw its Medicare+Choice plan offering for 2002. The State of Wisconsin Board on Aging and Long Term Care, which runs our Medigap hotline, the Bureau on Aging and Long Term Care Resources, which oversees the State SHIIP program, and we, planned our educational and informational strategies to deal with this withdrawal. The 10,000 holders of this plan were informed, first by Blue Cross/Blue Shield, and then by us, that they had options. They could return to basic Medicare. They could purchase a Medigap Supplemental plan with “guarantee issue,” or they could join the remaining Medicare+Choice Plan, PrimeCare Gold.

As this was the fourth plan to withdraw, we knew the drill. Ten thousand people would be affected, but we would help them with their protected options. We were prepared. But we did not know what was coming.

During the week of October 15^th, the 16,000 members of PrimeCare Gold received a letter from UnitedHealthcare. This letter was hand-delivered to me by a friend after work on Friday, October 19^th. It begins well—“Dear Customer.” Beginning January 1, 2002, your monthly premium will decrease from $65 to $55. In addition, the name of the plan will be changed to Medicare Complete. Also enclosed is a list of benefit—BENEFIT—changes. If you have questions, you can call customer service, which we later learned was located in Birmingham, Alabama. The letter was signed by Glenn J. Reinhardt, Chief Operating Officer of UnitedHealthcare of Wisconsin.

The benefit changes attached to the letter were, at first, unbelievable—and then horrifying. For instance:

(Service)	PrimeCare Gold 2001	Medicare Complete 2002
Inpatient Hospital Services	You pay $0 per day	You pay $350 per day
Inpatient Psychiatric Services	You pay $0 per day	You pay $150 per day
Skilled Nursing Facility	You pay $0 per day	You pay $150 per day
Renal Dialysis	You pay zero	You pay 20% per outpatient visit
Diabetes Self-Monitoring Training and Supplies	You pay zero	You pay 20%. Syringes and alcohol swabs are not covered.

There is a $4,800 out-of-pocket limit on inpatient and most outpatient services.

Since my friend’s mother receives dialysis three times a week, he and his family were stunned by this letter. They were sure there was a mistake. They were sure that “Medicare” would not allow this to happen. They were sure that, if this were the real plan being offered, that someone—I, the State, or the Congress—would be able to do something about it.

On Monday, October 22^nd, our phones began ringing and they have not stopped. All of our local and State benefit systems learned of this situation and began to try and deal with it. The Medigap Hotline, our toll free insurance counseling number operated by the Board on Aging and Long Term Care, reports an average of 350 to 400 calls per day, up from the usual 150. George Potaracke, the Board’s Director, reports that more callers are trying to get through, but that the system can only accommodate so many calls and that the Board’s voice mail system completely backs up and shuts down every day. Callers are now waiting six to seven business days for a counseling session, up from a normal one to two day wait. The Board on Aging is mailing 1,200 to 1,500 pieces of printed material a week to recipients and their families, up from 400. Any callers, other than those facing Medicare+Choice issues, are being deferred.

Our Benefit Specialists at SeniorLaw of Wisconsin report 50 to 200 calls per day. They have had to set aside all non-emergency work and to pull all staff from every other project to deal with what they call the “Blue/Gold” issue.

In order to reach people in a more efficient manner, our Department, Legal Action, and the State of Wisconsin held joint information sessions on November 13^th in Milwaukee and Waukesha Counties. On that rainy, cold, and nasty day, 1,800 seniors showed up—1,200 in the morning at Serb Hall on Milwaukee’s South Side and 600 in the afternoon at Luther Manor on Milwaukee’s Northwest Side. No one knows how many people tried to get into the sessions as people were parking a mile and more away. Three more sessions are planned.

But we have a dilemma. What are we to tell the holders of the UnitedHealthcare policy? What choice do they have? They have no guaranteed issue of a Medigap Policy. They have no other +Choice option. In many cases, traditional Medicare will leave them with unaffordable out-of-pocket expenses. What are we to counsel them to do? Where are their options and protections?

We, the Milwaukee County Department on Aging, legal services, the State of Wisconsin Bureau on Aging and Long Term Care Resources, and the Coalition of Wisconsin Aging Groups have agreed that this plan does not offer benefit to seniors and, if possible, they should get out.

But seniors expect more from us than individual counseling. They expect that we will advocate on their behalf to find solutions to their problems.

Senior advocacy groups in Wisconsin have petitioned our Congressional delegation to intervene with CMS, asking that they use their regulatory powers to assure that this plan is drastically revised or rejected as any choice for Medicare beneficiaries. I am honored that my Representative, Congressman Jerry Kleczka, immediately understood the plight of his constituents and tried to halt the approval of this plan.

We, together with State officials, wrote directly to Secretary Thompson and to Administrator Scully to urge them to re-examine and re-negotiate this plan. We also asked them not to approve it.

We wrote to UnitedHealthcare of Wisconsin and its parent company, the United Health Group, and asked that they withdraw their plan so that our seniors would have guaranteed issue.

Both Richard Jones, President of Medicare services for United Health Group and William McGuire, Chairman and Chief Executive Officer of United Health Group, wrote to inform me that they were working with the Federal government and the Congress to enact changes that will offer better benefits. In other words, they want more money. It is unfortunate that 16,000 older people find themselves in the middle of these negotiations.

We understand that the UnitedHealthcare plan is now approved by CMS with the only change being a $295 per day hospital co-payment rather than $350. Beneficiaries will still be expected to pay up to $4,800 out-of-pocket in addition to the $55 monthly premium for United’s coverage and the $54 monthly premium for Medicare Part B. The excessive cost-sharing proposed by United raises questions about the value of this so-called insurance. It is now clear that many of the 16,000 seniors who have previously relied on UnitedHealthcare to provide access to affordable health care can no longer do so. It looks to us as though the benefit changes for 2002 are designed to discourage enrollment of beneficiaries who have health needs.

We, in Wisconsin and Milwaukee County, are furious at this outcome. We have spent thousands of dollars and thousands of hours trying to help people for whom there is today no consumer protection.

We have met with and asked Wisconsin’s Commissioner of Insurance to intervene, using emergency powers to order guarantee issue, but we have been told she has no legal standing to do so.

My friend’s mother has threatened to stop her dialysis. How many other people—alone and poor—will have no choice but to do so?

How will our hospitals collect the $295 daily deductibles, and will they then re-admit people with outstanding bills?

There is no way for seniors to budget for this lack of benefit—any flare-up of a chronic illness, any sudden onset of disease, or need for rehabilitation will mean the need for large sums of cash. Isn’t insurance supposed to protect people from exactly that? Isn’t insurance supposed to provide peace of mind when dealing with illness? UnitedHealthcare and Medicare Complete have wreaked havoc in the lives of 16,000 people and their families.

We in Wisconsin are not alone. The Medicare+Choice promise—more health insurance options and benefits, better-controlled health care costs—has never been fulfilled in Wisconsin. But what about elsewhere? According to Weiss ratings, 536,000 seniors will be dropped from HMOs this year, on top of the 1.6 million who have been dropped since 1998. Those plans that drop coverage entirely leave seniors confused and betrayed, but those seniors are able to re-enter the Medigap market with the protection of guaranteed issue.

This is not the case with beneficiaries in plans that are drastically altered. In Connecticut, four companies terminated their coverage in 2000, dropping 52,000 beneficiaries. This year, two more plans, ConnectiCare and MedSpan, will terminate, affecting 39,000 beneficiaries. Only two managed care plans will remain, and they will cover only three counties.

Health Net, formerly known as Physician Health Services, will remain. Their plan will drop the use of the three main hospitals in the area. Inpatient hospital co-payments will rise from $0 to $500 per admission. Co-payments will be added for outpatient and inpatient surgery, radiology, diabetic, and dialysis benefits. And the co-payment for prescription drugs will increase $3 per prescription.

The California Health Advocates report that seven HMOs will drop their Medicare+Choice plans. In addition, there will be twelve service area reductions in parts of eleven counties. And, in the plans that will remain, premiums and co-payments are increasing and prescription drug coverage is decreasing.

One hundred thousand Medicare recipients in California will be affected by plans dropping coverage areas, raising premiums and co-payments and reducing drug benefits. The premium charged by Kaiser in Santa Clara County is going from $30 to $80 per month. PacifiCare’s Secure Horizons is reducing the amount and type of prescription drugs covered and will only cover generic drugs. In other PacifiCare plans, patients will be charged $400 for each hospital admission and a $50 co-payment for dialysis. Health Net will have a hospital deductible of $750 and has dropped all prescription drug coverage.

Claire Smith of California Health Advocates related to me many stories. One involves a Medicare cancer patient enrolled in Secure Horizons. She has been on chemotherapy since 1998. She is on her fifty-first treatment, but is alive, active, and a vital member of her community. Secure Horizons informed her that her chemo treatments, now free, will cost $250 per visit in 2002. In addition, they will charge $250 per radiation visit. She does not have the money to continue these treatments and cannot buy a Medigap policy. Another participant in Secure Horizons HMO of Pacific Health Care reports that his new 2002, $8,000 co-payment for dialysis, as opposed to a zero payment in 2001, is a “slow death sentence” for dialysis patients on fixed incomes.

Medicare beneficiaries in Wisconsin, Connecticut, California, and many other states are asking the same questions. How can this new benefit package charge me more deductibles and co-payments than traditional Medicare? Why do I have such a short time to make a new choice, and why must I live with that choice for a year if it turns out to be wrong, or I didn’t understand it? Why can’t I be guaranteed the sale of a Medigap policy that I can afford and that will cover my health care needs when my plan changes so drastically?

These Medicare+Choice policies are not the same ones people bought when they took advantage of what they perceived to be the value-added benefits sold to them as Medicare+Choice. In fact, they are left with Medicare minus protection, Medicare minus the ability to buy a Medigap policy, Medicare minus the ability to choose different insurance.

I am pleased that Representatives Kleczka, Stark, Cardin, and Thurman on the Subcommittee and others have immediately recognized these real problems facing beneficiaries and introduced a simple, small bill – the Medicare+Choice Consumer Protection Act of 2001 (H.R. 3267) – that would cost the government nothing but provide real protections for Medicare beneficiaries stuck in positions like seniors in Milwaukee.

This legislation would: 1) Eliminate the Medicare “lock-in” provision that forbids seniors to enroll and disenroll from Medicare+Choice plans on their own timetable in 2002; 2) Extend the existing Medigap guarantee issue protections that apply to people whose Medicare+Choice plan withdraws from the program to anyone whose Medicare+Choice plan changes benefits, increases cost-sharing, or whose doctor or hospital leaves the plan; and, 3) Prohibit Medicare+Choice plans from charging higher cost-sharing for a service than Medicare charges in the fee-for-service program.

I hope that this Committee will seek to enact H.R. 3267 -- or something similar to it – quickly so beneficiaries would have some protections when caught in these traps.

These plans now call themselves new things—complete and secure and healthy—but they are not complete or secure or healthy. They are radically different, reminiscent of illegal bait and switch products offered in retail sales. The hundreds of thousands of Medicare recipients affected by these changes need guaranteed issue protections so that they can get out and buy an affordable Medigap plan. And, the new lock-in rules are a real recipe for disaster. We, in Wisconsin, cannot possibly counsel and find help for the 16,000 UnitedHealthcare enrollees and also warn other seniors of the lock-in provisions.

It is still not possible to get accurate and complete information on the CMS website about all of the plan choices. We have heard only through the press that UnitedHealthcare will change its hospital co-pay from $350 to $295, but beneficiaries have yet to be notified.

In a recent study conducted by the Medicare Rights Center (MRC), 80 percent of Medicare HMOs contacted (16 out of 20) gave incorrect information about the rights of people with Medicare to enroll and disenroll from a Medicare HMO in 2002. How will we in Wisconsin possibly provide counseling and help?

How can we expect older people to be wise consumers when the product they are buying can change dramatically every twelve months? How can we expect older people living on fixed incomes to meet the co-payments imposed by these plans? How can we lock them in with inaccurate and incomplete information?

The people from Wisconsin would like answers to these questions, and remedy from you in the form of consumer protections. Our Medigap Hotline, benefit specialists, and Information and Assistance operators share stories daily about our seniors who need help.

My mother’s friend, Dolly, thought she had an answer because she knew me. Of course, I would have a solution for her. Dolly is 75 but appears to be 55. A hairdresser all her life, she lives on a Social Security income of $700 per month. She lives in subsidized housing, gets energy assistance and some help with Medicare Part B. Of course, the wise health care decision for her was PrimeCare Gold—a $0 premium plus $10 deductibles for physicians’ visits when she enrolled. Dolly has severe and crippling arthritis. She has had two strokes. She spends $150 per month on prescription drugs. With the new co-payments of UnitedHealthcare’s Medicare Complete, she cannot afford to get sick—ever again. Without guaranteed issue it is doubtful we can find her an affordable Medigap policy.

What is she to do? I am supposed to have answers for people like Dolly. I am here today because there are no answers. I am here today to ask for your support for consumer protections for Medicare+Choice. It cannot be possible that the promise of Medicare will be reduced to the horror of health care uncertainty every year when the new plans are announced. It cannot be possible that we will abandon our seniors when they ask for help. It cannot be possible that we will leave our Medicare+Choice seniors without protection. They deserve better than that.