Tuesday, January 31, 2012

A.M. Best Places Ratings of Medico Insurance Company Under Review With Positive Implications

Medico Merger News

Hello from the team at Medico,

As you know, Medico is merging with American Enterprises. We view this merger as a positive step and a path to building a stronger company going forward.

One of those positive steps comes from A.M. Best. Medico's annual review with A.M. Best has been postponed until the merger is complete sometime this summer. A.M. Best has put Medico under review with positive implications.

This is great news for Medico, its agents and its policyholders! Going forward we are confident that the Medico experience will continue to exceed your expectations.

Regarding our Medicare Supplement product, we plan to continue with our philosophy of single digit rate increases. We also stress that the focus of the company will remain the same and that we will not interrupt sales or sacrifice our industry leading service as we continue with this merger.

As we've said before, we'll keep you in the loop as we move forward with this new opportunity. Thanks for your dedication and your hard work. We appreciate you!

Below is a link to the A.M. Best press release from January 20th.

Click Here for A.M. Best Press Release


Team Medico

Friday, January 27, 2012

The Medicare Advance Beneficiary Notice of Non-Coverage (ABN): A Tool for Limiting Beneficiary Liability

Medicare's limitation on liability (LOL) protections[1] apply when a provider believes that an otherwise covered Medicare item or service will be denied because the item or service is not reasonable and necessary[2] or is for custodial care.[3] In order to shift liability to the beneficiary, a provider is required to notify a beneficiary in advance when he or she believes that items or services will likely be denied either as not reasonable and necessary or as constituting custodial care.[4] If such notice is not given, providers may not shift financial liability for such items or services to Medicare beneficiaries.[5]

Over the years, the Centers for Medicare & Medicaid Services (CMS) has been refining the notices that must be provided to beneficiaries explaining their rights when a provider believes that Medicare will not pay for an otherwise Medicare-covered item or service. These refinements are reflected in CMS' Beneficiary Notice Initiative.[6]

In March 2011, CMS revised its ABN. On September 20, 2011, CMS extended the date of mandatory use of its revised ABN, form CMS-R-131, to January 1, 2012. Further, CMS states on its website that "all ABNs with the release date of 3/2008 that are issued on or after January 1, 2012 will be considered invalid."[7] Instructions for the use of the revised ABN are available for download on the CMS website.[8] About the revision, CMS states:[9]

[t]he revised Advanced Beneficiary Notice of Non-coverage (ABN), Form CMS-R-131, is issued by providers (including independent laboratories), physicians, practitioners, and suppliers in situations where Medicare payment is expected to be denied. The revised ABN replaces the ABN-G (Form CMS-R-131G), ABN-L (Form CMS-R-131L), and NEMB (Form CMS-20007).

Mandatory Use of the ABN

An ABN must be used to convey to the beneficiary that a provider believes that an item or service will not be covered when:
• The item or service is not reasonable and necessary; or
• The item or service is provided in violation of the prohibition on unsolicited telephone contacts; or
• The item or service is for medical equipment and supplies for which the supplier number is not provided; or
• The item or service is for medical equipment and /or supplies denied in advance;
• The item or service is for custodial care; or
• The item or service is for hospice care provided to a patient who is not terminally ill.[10]

The ABN is not required for items and services that are never covered under the Medicare statute (statutorily excluded) or for items and services that do not meet a technical benefit requirement (such as a required certification by a provider, physician/practitioner).[11]

With respect to hospice services and Comprehensive Outpatient Rehabilitation Services (CORF), if there is a complete cessation of all Medicare covered services, an Expedited Determination notice must be issued by hospice and CORF providers.[12]

Voluntary Use of the ABN

The ABN can be issued voluntarily in place of the Notice of Exclusion from Medicare Benefits (NEMB) for care that is never covered because it does not meet the definition of a Medicare benefit[13] or for care that is explicitly excluded[14] from Medicare coverage.[15]

The Medicare Claims Processing Manual (Chapter 30) lists the following as examples of care that are explicitly excluded from coverage: [16]
• Services for which there is no legal obligation to pay;
• Services paid for by a government entity other than Medicare (this exclusion does not include services paid for by Medicaid on behalf of dual-eligibles);
• Services required as a result of war;
• Personal comfort items;
• Routine physicals and most screening tests;
• Routine eye care;
• Dental care; and
• Routine foot care.

Routine Notice Prohibition

CMS prohibits providers from "routine" use of an ABN, in other words, "giving ABNs to beneficiaries where there is no specific, identifiable reason to believe Medicare will not pay."[17] CMS states that a provider (also called a notifier) "should not give ABNs to beneficiaries unless the notifier has some genuine doubt that Medicare will make payment as evidenced by their stated reasons."[18] Generic ABNs – ones that "do no more than state that Medicare denial of payment is possible, or that the notifier never knows whether Medicare will deny payment" – are also unacceptable (emphasis in original).[19] In addition, giving ABNs for all items or claims or services ("blanket ABNs") is prohibited, as is the practice of obtaining beneficiary signatures on blank ABNs and then completing the ABNs later.[20]

Beneficiary Protections

The requirement to provide an ABN is generally triggered at the initiation (beginning of a new patient encounter, start of a plan of care, or beginning of treatment). If the provider believes that certain otherwise-covered items or services will be non-covered (as not reasonable and necessary) at initiation, an ABN must be issued prior to the beneficiary receiving the non-covered care.[21] In addition, an ABN is to be provided when care is reduced (frequency or duration of a service), or when care in terminated (the discontinuance of certain items or services, for example physical therapy).[22]

Provider Protections

A provider (also called a notifier) who can successfully demonstrate to the Medicare contractor (under contract CMS to administer Medicare claims) that he or she did not know and could not reasonably have been expected to know that Medicare would not make payment will not be held financially liable for failing to give notice. On the other hand, a provider who gives a defective notice may not claim that he or she did not know or could not reasonably have been expected to know that Medicare would not make payment. Medicare considers the delivery of the defective notice as evidence of provider knowledge.[23] The beneficiary, however, is not protected from liability if there is clear evidence that he or she knew that Medicare would not make payment.[24]

The Standard Notice

The ABN, Form CMS-R-131, is the standard notice approved by the Office of Management and Budget (OMB).[25] If a provider does not use the required notice, he or she runs the risk of its notice being invalidated and/or being held liable for the items or services in question.[26]
The ABN is available in English and Spanish on the CMS website. Providers are to provide the ABN in the language the beneficiary best understands.[27] ABNs are effective on the OMB approval date given at the bottom of each notice, and generally approved for a three-year period.[28] When CMS revises its ABNs, it usually allows a 6-month transition period from the date of issuance of its mandatory use instructions.[29]

Delivery of the ABN

Delivery of an ABN is deemed to be effective when the notice is delivered by a provider to a recipient who is capable of receiving and understanding the notice and provided on the appropriate notice form with all required blanks completed.[30] In addition, the burden of proof is on the provider to show that he or she has informed the beneficiary of the purpose and content of the notice to the best of the provider's ability.[31] This requirement is generally satisfied if the provider has used the OMB approved notice with all appropriate blanks completed and it is signed by the beneficiary or by someone capable of understanding the importance of the notice on behalf of the beneficiary.[32]

Providers are to provide the ABN far enough in advance of providing potentially non-covered items so as to allow the beneficiary an opportunity to consider all available options, and should direct the beneficiary to contact 1-800-MEDICARE if the beneficiary has questions the provider cannot answer. If a Medicare contractor learns that a provider has refused to answer a beneficiary's questions or refused to direct the beneficiary to 1-800-MEDICARE, the provider will be liable for non-covered care.[33] With respect to the delivery of a particular ABN addressing specific items or services, it is deemed effective for a period of one year, provided no other triggering event occurs.[34]

When a provider believes that otherwise-Medicare-covered items or services will not be covered, the ABN should be delivered in-person and prior to the delivery of the item or service at issue.[35] When in-person delivery is not possible, providers may deliver an ABN by telephone contact, mail, secure fax machine, or e-mail.[36] A provider must receive a response from the beneficiary or his or her representative in order to validate delivery and note in his or her records the response received. Telephone contacts must be followed immediately by either a hand-delivered, mailed, emailed, or faxed notice which the beneficiary or representative must sign then retain a copy of the signed notice and send one to the provider for retention in the patient's record.[37]

Beneficiary Liability

A beneficiary who has agreed to pay, after having been given a properly written and delivered ABN, may be held liable.[38] Even so, a provider may not issue ABNs to shift financial liability to a beneficiary when full payment is made by Medicare through bundled payments or when the amount of the Medicare payment is otherwise payment in full.[39] Moreover, a provider must make a prompt refund to the beneficiary of any erroneously collected funds.[40]


The ABN protects both the beneficiary and the provider. Advocates should make sure that beneficiaries understand the circumstances under which the use of the ABN is mandatory or voluntary as described above. Similarly, it is important to make sure that ABNs are filled out properly and that they contain sufficient information to inform the beneficiary of the likely basis of non-coverage as well as his or her options upon receipt of an ABN.
In addition, Advocates and beneficiary should frequently review the Beneficiary Notice Initiative page on the CMS website. The website contains information about how the ABN form is to be completed and about how proof of delivery will be reviewed.

For more information, contact attorney Alfred Chiplin (achiplin@medicareadvocacy.org) in the Center for Medicare Advocacy's Washington, DC office at (202) 293-5760.

[1] See §1879 of the Social Security Act, 42 U.S.C. §1395pp. In addition, compliance with the LOL protections is a condition of participation (CoP) for providers and the failure to comply can lead to the imposition of sanctions. See Medicare Claims Processing Manual Chapter 30 - Financial Liability Protections, §50.2.2(Compliance with Limitation On Liability Provisions).
[2] See §1862(a)(1) of the Social Security Act, 42 U.S.C. §1395y(a)(1).
[3] See §1862(a)(9) of the Social Security Act, 42 U.S.C. §1395y(a)(9).
[4] See §1879 of the Social Security Act, 42 U.S.C. §1395pp. The ABN is used in Fee-for-Service Medicare. Medicare Advantage plans must use the Notice of Medicare Non-Coverage (CMS Form 10095) See http://www.cms.gov/MMCAG/Downloads/NOMNC.pdf. In Medicare Part D (prescription drug coverage), a plan must issue a coverage determination in response to a request from a beneficiary or prescriber. See 42 U.S.C. §1395w-104(g)-(h). For a discussion of Part D notice received at the point of sale in the pharmacy, see CMA Alert, New Pharmacy Notice Rule in Effect: Stay Tuned for Final Model Notice: http://www.medicareadvocacy.org
[5] See §1879 of the Social Security Act, 42 U.S.C. §1395pp.
[6] https://www.cms.gov/BNI/
[7] See www.cms.gov/BNI/02_ABN.asp#TopOfPage.
[8] https://www.cms.gov/BNI/Downloads/ABNFormInstructions.zip.
[9] www.cms.gov/BNI/02_ABN.asp#TopOfPage. See Form CMS-R-131 (03/11) Form Approved OMB No. 0938-0566. The ABN was formerly known as the Advance Beneficiary Notice. See Medicare Claims Processing Manual Chapter 30, §50.1. The replaced ABNs are: ABN-G (Form CMS-R-131G)(general ABN), ABN-L (Form CMS-R-131L)(laboratory ABN) and NEMB (Form CMS-20007)(Notice of Exclusion from Medicare Benefits). Note: Skilled nursing facilities (SNFs) must use the revised ABN for items/services expected to be denied under Medicare Part B only. Ibid. Advocates and others should visit the CMS “Beneficiary Notice Initiative” page regularly for updates.
[10] See Medicare Claims Processing Manual Chapter 30 - Financial Liability Protections, §50.3.1 (Mandatory Use), available at: http://www.cms.gov/manuals/downloads/clm104c30.pdf.
[11] Ibid. §50 .3. 2.
[12] See §50.14.5 (for detailed instructions on issuing Expedited Determination notices).
[13] Medicare’s definitions of services are found in §1861 of the Social Security Act, 42 U.S.C. §1395x.
[14] Explicitly excluded services are defined in §1862 of the Social Security Act, 42 U.S.C. §1395y.
[15] See Medicare Claims Processing Manual Chapter 30 - Financial Liability Protections, §50.3.2 (Voluntary Use).
[16] Ibid. §50.3.2. Advocates should be careful to note the expanded array of preventive services that the Medicare program currently covers, many of which have been added in the last several years. See for example, the Center for Medicare Advocacy’s Alert, “Affordable Care Act Expands Medicare Coverage for Prevention and Wellness,”http://www.medicareadvocacy.org/InfoByTopic/
PartB/10_09.09.WellnessVisit.htm. Likewise, CMS now covers therapeutic shoes for patients with severe diabetic foot disease. See 42 U.S.C. §1395l(o). The coverage of additional preventive services (including screening tests) stands in contrast to the old general prohibition against Medicare payment for routine preventive services. See, for example, Chapter 12 of the Claims Processing Manual, § 30.6.2 (Billing for Medically Necessary Visit on Same Occasion as Preventive Medicine Service), https://www.cms.gov/manuals/downloads/clm104c12.pdf. In addition, Medicare provides coverage for influenza, pneumococcal, and hepatitis B vaccines. See 42 C.F.R. §410.57.
[17] See Medicare Claims Processing Manual Chapter 30 - Financial Liability Protections, §40.3.6; but see § for exceptions to the prohibition against routine ABNs.
[18] Ibid.
[19] Ibid §
[20] Ibid § and §
[21] Ibid. §50.5.
[22] Ibid §50.5.
[23] Medicare Claims Processing Manual Chapter 30 - Financial Liability Protections, §50.3.2
[24] Ibid §50.12.
[25] Ibid. §50.6.1.
[26] Ibid.
[27] Ibid.
[28] Ibid.
[29] Ibid.
[30] Ibid. §50.7.1.
[31] Ibid.
[32] Ibid.
[33] Ibid.
[34] Ibid. See §50.5 (triggering events).
[35] Ibid. See §50.7.2.
[36] Ibid.
[37] Ibid.
[38] Ibid. §50.7.3.
[39] Ibid.
[40] Ibid.

Aetna Goes For New Look, Focus in Quest to Enhance Consumer Appeal

By Jonathan Block - January 24, 2012

“Madison Avenue” is not a term you might expect to be associated with health insurers, but an increasing number of carriers have boosted their marketing and advertising efforts lately. Just last week, Aetna launched a new look, rebranding its logo into all lowercase, purple letters with an eye toward being known not as an insurer but as a “health solutions company.” The aim of the campaign, according to Aetna, is to be known as a consumer-friendly brand.

Insurers seem to be more focused on seeing members as discerning consumers, and it’s easy to understand why. With an increasing number of employers engaged in private exchanges letting employees have more choice over their coverage, as well the impending influx of individual members come 2014 with state-run exchanges, insurers have started to view the health insurance industry as more of a marketplace where they will have to use traditional business methods to woo new customers their way.

And what methods of persuasion are they electing to use? For Aetna, the company wants customers to be more connected to their health care. “The message is clear — consumer empowerment is coming to health care,” Robert M. Mead, senior vice president of Aetna Marketing, Product and Communications, said in a statement underscoring how health insurance will be marketed in the future.

As part of the rebranding, Aetna says it is reframing its offering into four benefit categories: quality health plans and benefits, healthier living (wellness), financial well-being (managing health care expenses) and intelligent solutions (to enhance productivity and results).

Aetna is following in the footsteps of Cigna, which in September embarked on its own makeover, investing $25 million on corporate rebranding and new marketing efforts with the catchphrase “GO YOU.” Given that these two industry heavyweights have bolstered their marketing efforts, do you think other insurers will follow suit?

Thursday, January 26, 2012

Volumes May Improve, but Medicaid and Medicare Could Pressure Hospitals in 2012

Reprinted from HEALTH PLAN WEEK, the most reliable source of objective business, financial and regulatory news of the health insurance industry.

By Steve Davis, Managing Editor
January 16, 2012 Volume 22 Issue 2

Despite the still sluggish economy and low admission rates, publicly traded hospitals maintained their profitability in 2011. But continued low patient volume, combined with growing enrollment in low-paying government programs, could give hospitals more incentive to pressure insurers for higher reimbursements during contract negotiations.

Michael Waterhouse, an equity analyst at Morningstar, Inc., says patient volume among the hospitals he tracks is improving, but says it isn’t likely to surge this year. And despite improved patient volumes, he predicts hospitals will need to overcome considerable headwinds in 2012.

In mid-2011, commercial insurance enrollment increased, while Medicaid enrollment growth declined considerably but remained positive, he says. “While there appears to be a lag from insurance trends to hospital volumes — since Medicare and Medicaid admissions continue to provide a large portion of admissions growth — these trends should begin to improve the hospital patient mix in 2012,” Waterhouse tells HPW.

Despite an increase in commercially insured members, “there still seems to be a hesitation for actual health care utilization,” likely due to continued economic uncertainty and higher cost-sharing provisions in their health plans, Waterhouse says. But while low patient volume overall is a threat to the bottom line, low “Medicare and Medicaid reimbursements are the biggest incentive for hospitals to pressure the insurers” at the negotiating table, Waterhouse says.

Some hospitals might see a reason to forge new relationships with insurers. According to a December report from consulting firm Booz & Co., health systems “are preparing for a world where access — to doctors and diagnostics, primarily — care management, and cost control will matter more to their overall success and financial health than having a hospital in every part of the market.” And an increased emphasis on improved care management and better cost control will increase the need to “forge new relationships” with health plans.

“New state-of-the-art ambulatory care centers are likely to supplant inpatient facilities as the preferred strategy for market access and penetration,” Booz predicts. The report also suggests that the momentum toward more coordinated and patient-focused accountable care will continue among providers.

Despite continued low patient volumes, low inflation for labor and supply costs combined with cost-control measures will help hospitals and health systems maintain profitability in 2012, according to a report released Jan. 9 by Fitch Ratings.

For investors, publicly traded hospitals could become a more attractive option in 2012 as utilization increases among commercially insured patients. “Hospitals are much more sensitive to a modest rise in commercial utilization” than are health insurers, given that commercial medical loss ratio (MLR) averages are expected to increase between 0.5% and 1.5% in 2012, Cowen & Co. analyst Christine Arnold wrote in a Jan. 6 note to investors.

An increase in the labor force also bodes well for providers. The nation’s unemployment rate stood at 8.5% in December, down from 8.7% a month earlier and 9.4% a year ago. However, long-term unemployment and the number of part-time workers as a percentage of the work force remains elevated, which could help hold down utilization levels, Arnold wrote. Waterhouse agrees and says the long-term unemployed and involuntary part-time workers will likely continue to be a drag on utilization. And as overall utilization improves, hospital acuity levels will decline as previously deferred, less critical patient procedures return to the market.

In her note, Arnold suggests that once unemployment peaks, an increase in medical cost trends typically occurs between three and five years later, typically when unemployment falls to 6% or less. For example, unemployment peaked in 2003, and medical trends rose in 2008. If history were to repeat itself, medical trends would accelerate in late 2012 and continue until 2015. For health insurers, “This is no time to be complacent with respect to medical cost trends,” she warned.

Cost-Containment Efforts Have Impact

In a recent update to its 2011 guidance, hospital chain Hospital Corporation of America (HCA) suggested an improved outlook driven largely by continued volume growth in the fourth quarter, “despite Medicaid rate pressure and lower acuity levels,” Oppenheimer analyst Michael Wiederhorn wrote in a Jan. 10 note to investors. He added that company’s cost-containment initiatives seen in the third quarter have been effective.

To counter pressures, including a rapidly increasing Medicare payer mix, hospital systems will need “long-term” cost reductions of 20% to 25%, according to the Booz report. “As scary as this number may be, leading players will get there and will be rewarded.”

Fitch expects that hospitals will “apply strong cash generation” to acquisitions to help counter flat organic growth. Some hospital systems, according to the ratings firm, have taken advantage of favorable conditions in the bond market and have renegotiated credit agreements “to refinance debt and extend maturities.”

But even with available cash, hospital systems might be reluctant to pursue acquisition targets due to uncertainty surrounding the Supreme Court’s ruling on key provisions of the reform law and the November elections. Entities considering a transaction “will want clarity on government policy and reimbursement protocol, and the hurly-burly of election-year promises will not give them clarity,” says Sandy Steever, editor of the Health Care M&A Monthly published by Irving Levin Associates, Inc. Former Massachusetts Gov. Mitt Romney (R) has said he will repeal the reform law, while Obama would keep it. “The net effect of this on the market is to lengthen due diligence and slow down deal volume,” he tells HPW. A Supreme Court ruling that keeps the reform law intact, however, could spur an uptick in M&A activity “because the potential partners in a deal would have a clearer road map,” he adds. If the court strikes down key provisions, however, such as the development of ACOs, the purchase of physician practices by hospitals would likely slow, says Steever. “But underlying causes for consolidation, such as to capture market share, generate synergies, improve access to capital, improve one’s bond rating, find new efficiencies, etc., all remain in place.”

The full report, For-Profit Hospital Quarterly Diagnosis: Third-Quarter 2011, is available at www.fitchratings.com.

Quote of the Day

The health reform law “will create major winners for those willing to be nimble and take calculated risks. Already-large organizations will become larger, new entrants providing supportive services to individual market players will emerge and highly risk-adverse organizations will grow reserves and margins for the next year or two, but will gradually pay a growing market-share penalty.”

— Willian TenHoor, president of TenHoor & Associates, told AIS’s Health Plan Week.

Sunday, January 22, 2012

Medicare Cost-Sharing for Qualified Medicare Beneficiaries:

New Guidance released jointly by the Center for Medicaid and CHIP Services (CMCS) and the Medicare-Medicaid Coordination Office (MMCO) once again highlights and advises about an issue that has created hardships for low-income people using Medicare and challenges for advocates trying to help them. The jointly-issued Guidance includes a link to an additional source of guidance. Both documents address the same issue: the statutory prohibition on provider balance billing of Qualified Medicare Beneficiaries (QMBs) for deductibles and co-insurance or copayments for Medicare Parts A and B services.

For details on the Guidance see the MMCO-CMCS Information Bulletin of January 6, 2012, "Billing for Services Provided to Qualified Medicare Beneficiaries (QMBs)" and the companion document from the Centers for Medicare & Medicaid Services' (CMS) Medicare Learning Network (MLN) Matters titled "Prohibition on Balance Billing Qualified Medicare Beneficiaries (QMBs)." This is the first formal Guidance from the federal government on this issue since 2008.

Who are Qualified Medicare Beneficiaries? Qualified Medicare Beneficiaries (QMBs) are people with Medicare who have incomes at or below 100% of the Federal Poverty Level, or a higher level set by their state, and very few resources.[1] The QMB benefit is administered by State Medicaid programs. QMBs can be eligible for Medicare cost-sharing protections only, or they can be eligible for those cost-sharing protections and for full Medicaid services under their State's Medicaid plan.

What is the QMB benefit? People with QMB are excused, by law, from paying Medicare cost-sharing, and providers are prohibited from charging them.[2]
All cost-sharing (premiums, deductibles, co-insurance and copayments) related to Parts A and B is excused, meaning that the individual has no liability. The state has responsibility for these payments for QMBs regardless of whether the particular service is also a Medicaid-covered service. States can, but are not required to, pay premiums for Medicare Advantage plans' basic and supplemental benefits; states do have responsibility for MA co-payments for Part A and B services.

The State's responsibility, however, is limited. It need only pay cost-sharing up to the amount it would pay under its state plan for the same service. If the service is not covered under the State plan, it must create a rate at which it will pay. In situations where the state's rate is less than Medicare's, this limited responsibility can result in the state paying nothing for cost-sharing. For example, if Medicare allows $100 for a visit to a physician's office, Medicare will pay 80% of that amount, or $80. If the state Medicaid program pays only $70 for the same service, it would make no payment for that service delivered to a QMB.

The authority (but not a requirement) for states to limit their QMB cost-sharing obligations to their Medicaid payment for the same service (or if Medicaid did not cover the service, to a payment level they adopted in their state plan) was added to Medicaid law in 1997.[3] After this change in the law, many states that had been paying at the full Medicare rate changed their payment policies to pay at their lower Medicaid rate.[4] A congressionally-mandated study of the effects of this provision of the law concluded that the reduced rates resulted in fewer doctor visits and mental health services, but did not examine the effect on health of such reductions and recommended further study of the issue.[5] No such further study or other federal action has been undertaken.[6]

People with QMB coverage encounter difficulties using their benefit when they seek services from a provider who participates in Medicare but not Medicaid. Providers sometimes do not know that they are serving a QMB-qualified person, that they are prohibited from billing that individual and that they must bill the state instead. Moreover, it is not clear that states have easy-to-use processes for such billing.

The Guidance
The Guidance addresses some, though not all, of the issues above.
The joint CMCS/MMCO Guidance was distributed widely – to a list of about 35,000 offices, including State Medicaid agencies, Governors' offices, state associations, CMS Regional Offices and advocates. The MLN Guidance is available on the CMS website at www.cms.gov/MLNMattersArticles/Downloads/SE1128.pdf and is sent to a self-subscribed list, including providers, provider associations, and others.

Both documents make clear that billing people with QMB for any Medicare cost-sharing is prohibited by federal law and that providers who bill QMBs are violating their provider agreements and are subject to federal sanctions. The documents focus explicitly on Medicare cost-sharing, "including deductible, coinsurance, and copayments."[7]
Both documents remind the reader that a section of the State Medicaid Manual, 3490.14, that says a provider can choose to serve a QMB as a private patient and thus bill him or her has been superseded by the statutory change to Medicaid in 1997 that includes the clear prohibition on billing people with QMB.

Both documents make clear that a Medicare-only provider must become a Medicaid provider to submit claims to Medicaid and acknowledge that the provider enrollment process will vary from state to state. They direct the provider to contact the state to learn about its provider registration process.

The MLN piece reminds providers that most states have "cross-over" billing agreements with Medicare whereby any Medicare claim for a person also receiving Medicaid is sent to the state for the state's share of payment.

It suggests the particular QMBs might just need to be added to the state's cross-over billing records.

The joint CMCS/MMCO Informational Bulletin suggests ways States can improve communication with QMB providers and reinforce the provider prohibition on QMB balance-billing:
1. Offer separate enrollment forms for QMB-only providers. This suggestion implies, but does not say, that such forms might be simpler than those used for providers billing for full Medicaid services.
2. Include mention of the prohibition on balance billing in all communications with providers serving people with QMB.
3. Provide clear Guidance for QMB providers on enrollment and billing processes.

The Bulletin also directs providers to recognize that they must complete the State's enrollment process to be included in the state billing system and to contact the State to determine the exact process for submitting claims for people with QMB.

The Guidance does not address the issue of how providers know a patient is a QMB. Some states are creating Medicaid cards that specifically identify those individuals but advocates believe that many states do not yet have a clear way for their QMBs to let providers know of that status.

Unfortunately, the Guidance also does not strongly encourage states to create a streamlined process for Medicare-only providers to submit claims for QMBs. The superseded portion of the State Medicaid Manual, §3490.14, suggested that the actual submission of a bill by a Medicare-only provider to the State Medicaid agency could be considered sufficient to make the provider a Medicaid provider, these two Guidance documents focus more attention on directing the provider to contact the state to learn of the state's process for enrollment or registration as a Medicaid provider.

The Guidance also does not address the complexities of QMB billing for individuals enrolled in Medicare Advantage programs, although it does make clear that MA co-payments are included in the prohibition. Those issues, however, have been addressed by CMS in earlier Guidance.[8] Little is known about the extent to which this Guidance is followed. In a 1999 survey of state practices with respect to paying Medicare cost-sharing, only 19 states reported paying some copayments for their Medicare beneficiaries in Medicare managed care.[9] To the knowledge of the Center for Medicare Advocacy, no follow-up survey has been done.
Finally, the Guidance does not address issues of billing for Medicare cost-sharing for individuals who are not Qualified Medicare Beneficiaries. Again, previous Guidance from CMS has addressed that issue.[10]

What Can Be Done?
Advocates report that people with QMB are frequently charged improper cost-sharing. To the extent that providers are merely confused about their responsibilities, it will be helpful to provide them with the recent CMS Guidance. The Center for Medicare Advocacy also has a letter sent by CMS to a provider that was billing improperly.[11] Advocates report that they have successfully used this letter to educate other providers about their responsibilities and the consequences of billing QMBs.

To the extent that providers are unwilling to serve people with QMB if there is a small or no cost-sharing payment from their state, QMBs will have greater difficulty getting access to needed health care. Advocates can work with their states to increase the state's cost-sharing payment to the full Medicare rate. Perhaps it is time for Congress to revisit the question of whether limited cost-sharing payments adversely impact beneficiaries.

For more information, contact attorney Patricia Nemore in the Center for Medicare Advocacy's Washington, DC office at (202) 293-5760 or pnemore@medicareadvocacy.org).

[1] 100% of federal poverty level is currently $927.50/month for an individual; $1245.83 per month for a couple. This amount includes an across-the-board $20 income disregard available to all applicants (but only one $20 to couple applicants). See http://aspe.hhs.gov/poverty/11poverty.shtml for current federal income poverty guidelines; these will increase in a week or two when the 2012 poverty guidelines are released. States must use at least the federal level of 100% of poverty, but may use methods to determine eligibility that effectively increase the level to a higher percentage. 42 U.S.C. § 1396a(r)(2).
[2] 42 U.S.C. §1396a(n); Memorandum of February 27, 2008 from Gale P. Arden, Director, Disabled and Elderly Health Programs Group to All Associate Regional Administrators, Division of Medicaid and Children's Health, Subject: Medicare Cost-Sharing for Medicaid Beneficiaries, available at http://medicareadvocacy.org/InfoByTopic
/MedicareSavingsPrograms/MedSavProg_08_04.24.ARACostShare.pdf (February 27, 2008 memo). Attachment: Balance Billing of Qualified Medicare Beneficiaries (QMB) Q&A, available at http://medicareadvocacy.org/InfoByTopic/MedicareSavingsPrograms
/MedSavProg_08_04.24.ARABalanceBilling.pdf. (February 27, 2008 memo - attachment)
[3] BBA-97, §4714, codified at 42 U.S.C. § 1396a(n)..
[4] See, e.g. Patricia B. Nemore, "Variations in State Medicaid Buy-In Practices for Low-Income Medicare Beneficiaries – a 1999 Update," prepared for the Henry J. Kaiser Family Foundation, (December 1999), available at http://www.kff.org/medicaid/1566-index.cfm. From 1997 to 1999, at least 15 states reduced their payments to their Medicaid rates. (Variations in State Medicaid Practices)
[5] Janet B. Mitchell, Ph.D. and Susan G. Haber, Sc.D., "State Payment Limitations on Medicare Cost-Sharing: Impacts on Dually Eligible Beneficiaries and their Providers." July 31, 2003, available at http://www.rti.org/abstract.cfm?pid=1203 (site visited April 18, 2008).
[6] Some years ago, the authors received a copy of a letter from a Tennessee oncologist declaring that he was withdrawing cancer drug treatments for several of his patients because Tennessee's Medicaid program, TennCare, refused to pay the 20% Medicare cost-sharing for the treatment.
[7] QMBs as well as other people with Medicare and Medicaid are also protected from any charges above the Medicare-approved amount, that is, charges beyond cost-sharing. (For example, the doctor charges $125, Medicare approves $100 and pays $80, the cost-sharing is $20, but even when that is paid, the doctor has not received the full $125 that she or he billed. For a QMB, the doctor is prohibited from billing for both the $20 cost-sharing and the $25 amount above the Medicare-approved amount.) Two sections of the law require this result. The first is 42 U.S.C. § 1396a(n)(3)(A), which says that the amount paid by Medicare and the amount, if any, paid by the state shall be considered payment in full. The second is 42 U.S.C. § 1395w-4(g)(3) which requires physicians to bill anyone receiving Medical Assistance, including QMBs, on an assignment-related basis which is to say without billing above the Medicare-approved amount. Further discussion that these provisions preclude billing QMBs any amount are included in the February 27, 2008 memo - attachment, note ii.
[8] Specific references to payments related to Medicare HMOs and Medicare Advantage plans are found in State Medicaid Manual §3490.12, and appeared as early as 1991. See also, Memorandum of June 30, 2000 from Director, Disabled and Elderly Health Programs Group to Associate Regional Administrators, Division of Medicaid and State Operations, Subject: Policy Memorandum on Medicaid Obligations to Pay Medicare Cost-sharing Expenses for Qualified Medicare Beneficiaries in Medicare Health Maintenance Organizations or Competitive Medicare Plans or Medicare Plus Choice Organizations – INFORMATION; June 11, 2000 memo; February 27, 2008 memo. All documents are available from the authors. Contact pnemore@medicareadvocacy.org.
[9] Variations in State Medicaid Practices.
[10] February 27, 2008 Memo and attachments.
[11] Letter is available at http://www.medicareadvocacy.org/wp-content/uploads/

New Medicare Part D Pharmacy Notice Rule In Effect; Stay Tuned for Final Model Notice

Effective January 1, 2012, Medicare Part D plan enrollees who are unable to obtain a prescription drug at the pharmacy are now, in most instances, entitled to a written notice explaining how they can contact their Part D plan in order to initiate an appeal. As of the date of this Alert, however, the final model notice that is to be distributed at the pharmacy has not been issued.

Under current Medicare Part D rules, if a Part D plan enrollee cannot obtain a prescription drug at the pharmacy, the appeals process is not triggered. Rather, enrollees or their representatives must affirmatively contact the Part D plan in order to request a coverage determination (including an "exception request"). Only once an adverse coverage determination is issued can the appeals process be initiated.[1]

Until this year, a Part D plan and its contracting pharmacies could satisfy their obligations to provide notice about appeal rights to plan enrollees by handing out written notices to each person so affected or by simply posting a notice at the pharmacy. Section 3312 of the Affordable Care Act requires Part D sponsors, effective January 1, 2012, to "use a single, uniform exceptions and appeals process (including, to the extent the Secretary determines feasible, a single, uniform model form for use under such process) with respect to the determination of prescription drug coverage for an enrollee under the plan".[2] As discussed below, this statutory requirement has been interpreted to include distribution of the written notice at the pharmacy.

Regulation & Guidance
Final rules on Medicare Part C and Part D published on April 15, 2011 amended Part D regulations to implement this new requirement.[3] The regulations require Part D sponsors to "arrange with their network pharmacies to distribute notices instructing enrollees how to contact their plans to obtain a coverage determination or request an exception if they disagree with the information provided by the pharmacist."[4] In addition, the regulations note that the "printed point-of-sale (POS) notice will explain how the enrollee can request a coverage determination by contacting the plan sponsor's toll free customer service line or by accessing the sponsor's web site".[5]

On October 14, 2011, CMS issued a memorandum to plan sponsors entitled "Revised Standardized Pharmacy Notice (CMS-10147)."[6] Among other guidance, the memo states that notice must be provided if a pharmacy that contracts with a Part D plan receives a transaction response indicating the claim is not covered by Part D (even if it is covered by a secondary payer). It also notes that electronic distribution of a notice is permitted if the enrollee (or appointed representative) has provided an e-mail address and has indicated a preference for that method of communication. Under the "Q&A" section of the memo, it notes that "[n]otice should not be provided if a drug is covered, but at a non-preferred price."

Final Model Notice (Not Yet Issued)
Although a draft model notice was published in the federal register for public comment,[7] the Part D point-of-sale notice informing plan enrollees how to request a coverage determination is not yet available online or, presumably, to Part D plans sponsors and their contracting pharmacies.[8] The "old" notice and accompanying instructions (which permit notice to be provided by a posting on the wall) were still on the CMS website as of the date of this Alert. Once finalized, the notice and accompanying instructions should be available at: https://www.cms.gov/MedPrescriptDrugApplGriev/

Implementation Concerns
Practical problems, remain regarding implementation of this new rule, including how CMS, Part D plan sponsors, and pharmacists interpret the regulatory language requiring issuance of a notice if the beneficiary "disagree[s] with the information provided by the pharmacist."[9] In addition, since notice about appeal rights is not required when a drug is covered, but at a non-preferred price, many enrollees will remain unaware that they have a right to request a "tiering exception" that could allow them to obtain a covered drug at a more favorable cost-sharing level.[10]

Many advocates assert that when a drug is denied at the pharmacy, for any reason, an individually-tailored, electronically-generated, written notice should be provided to any Medicare and Medicaid enrollee at the point-of-sale.[11] The model generic notice required by this new rule falls short of this goal. Even so, the new notice, to be given to each beneficiary whose drug is not covered, will be a significant improvement over the simple posting of Part D appeal rights on the pharmacy's wall, often not easily visible to the public, which had satisfied the notice requirement in the past.

For more information contact Attorney David Lipschutz (dlipschu@medicareadvocacy.org) in the Center for Medicare Advocacy's Washington, DC office at (202) 293-5760.

[1] See, generally, Medicare Prescription Drug Benefit Manual, Ch. 18, at: https://www.cms.gov
[2] As referenced in previous Alerts, Health Care Reform consists of two separate laws, the Patient Protection and Affordability Care Act of 2010 (PPACA), Pub.L. 111-148 (March 23, 2010), and the Health Care and Education Reconciliation Act of 2010 (HCERA), Pub. L. 111-152 (March 30, 2010). The laws often are collectively referred to as the Affordable Care Act (ACA).
[3] 76 Fed Reg 21471 (April 15, 2011).
[4] 42 CFR §423.562(a)(3).
[5] 42 CFR §423.128(b)(7)(iii).
[6] See 10/14/11 CMS Memo re: Revised Standardized Pharmacy Notice (CMS-10147), available at: http://mcoaonline.com/content/pdf/20111014-RevStdPharmNotice.pdf.
[7] The new 2012 Revised Standardized Pharmacy Notice (CMS-10147) see: http://mcoaonline.com/content
/pdf/20111014-RevStdPharmNotice.pdf for information on the notice as proposed.
[8] For citations to the draft model notice, see, e.g., the October 14, 2011 CMS memo, referenced above.
[9] 42 CFR §423.562(a)(3).
[10] See, e.g, 42 CFR §423.578(a).
[11] See, e.g., 11/22/10 Letter and Memorandum to former CMS Administrator Dr. Berwick by Sheldon Toubman, New Haven Legal Assistance Association, Inc, on file with the authors.

Maximize Your Clients’ Social Security

By Michael Ham
DECEMBER 4, 2011

The Dalai Lama was asked what surprised him in life the most. He replied, “Man, because he sacrifices his health in order to make money. Then he sacrifices money to recuperate his health.” Why do we fret so much and make ourselves sick? Simple answer: money or the lack of it. Struggling and striving to get paid just may be the root of all evil. But, hey, baby has to eat and get new shoes.

Social Security may be broke and busted but it’s still writing checks; make sure your clients get all they can before it changes. Here are three super secrets for married folks:

1. Pick which retirement you want, yours or your spouse’s. Obviously, it’s best to select the one that pays you the most. Usually in a marriage there is a huge difference in wages. But even if the lower wage earner has her own Social Security benefit, she may elect to receive an amount equal to half of her spouse’s instead. This is called your “Spousal Benefit.”

2. Double dip. A person who has reached full retirement age could elect to take his Spousal Benefit and delay taking his own benefit. Working or not, you can take your Spousal Benefit and delay your own and let it grow until you’re age 70. It doesn’t matter if your spouse is taking her Social Security benefit or not. And upon age 70, if your own benefit is higher than the Spousal Benefit you’ve been receiving, just swap and take your own. That’s more money for you now and potentially more money for you later.

3. Getting paid to wait. Typically when one spouse hasn’t worked outside of the home as much as her mate, she won’t have much if any Social Security benefit and will default to receiving her payments when her higher-earning spouse retires and decides to start taking payments. Do not wait. Once both spouses reach full retirement age, the higher earner should go ahead and file for his Social Security benefits, while the lower-earning wife files for her Spousal Benefit. Then, the husband can immediately suspend his benefit request, and his benefit amount will continue to increase (by about 8 percent per year, too). Then, when he reaches age 70, he can re-file to start taking his benefit.

This will give the wife a monthly benefit. She does not need to wait until her spouse fully retires and starts taking his benefit before she can. Very cool idea!

Michael Ham is a financial planning expert and personal budget coach. He is the founder and president of My Money Track and founder of J. Michaels Advisors in Dallas. For more information, go to www.mymoneytrack.com.

Gym Offers May Give Medicare Advantage Plans an Advantage

By Emily P. Walker, Washington Correspondent, MedPage Today
Published: January 12, 2012

Insurance plans that include gym memberships as part of the package -- as some Medicare Advantage plans do -- attract healthier people, which may be a form of covert cherry-picking, researchers charged.

In an analysis of Medicare Advantage plans that began offering gym memberships in 2004 or 2005, the proportion of new enrollees who reported having excellent or very good health was 6.1 percentage points higher than before the fitness plan was offered (35.3% vs. 29.1%), according to a study published in the Jan. 12 issue of the New England Journal of Medicine.

Those who joined a plan after it added a gym benefit were also less likely to report a limitation on daily physical activities and limitations on walking than the early enrollees, according to Alicia Cooper, MPH, of Brown University, and Amal Trivedi, MD, MPH, of the Providence (R.I.) Veteran's Affairs Medical Center.

Packages with gym memberships are increasingly common among Medicare Advantage plans. In a subset of 102 such plans, 14 offered a gym membership in 2002; by 2008, 58 of them did, suggesting that doing so is "an attractive business strategy," for insurers, Trivedi told MedPage Today.

Prior studies have shown that elderly people who are enrolled in a fitness program are healthier and cost less to insure than those who aren't in fitness programs.

For their analysis, Cooper and Trivedi identified 11 Medicare Advantage
Plans that offered new fitness club memberships in 2004 or 2005 and matched those to 11 control Medicare Advantage plans that didn't offer fitness memberships. They also compared the health status of 755 people who picked a Medicare Advantage plan after it had added a fitness benefit ("new enrollees") to more than 4,000 people who were already enrolled in a plan at the time it added a fitness benefit ("early enrollees").

Compared with the group that didn't have any fitness benefits in their Medicare Advantage plan, people enrolled in the fitness-benefit plans ranked their general health 4.7 percentage points higher; scored 9.2 percentage points lower for having a limitation on physical activity; and scored 7.4 percentage points lower for having a difficulty walking.

"Medicare Advantage plans offering coverage for fitness memberships may attract and retain a healthier subgroup of the Medicare population," the study authors concluded.

So, what's the problem with insurers attracting healthier people?

"The main problem is that policy makers envisioned insurers in the Medicare Advantage program to compete with their ability to improve quality and costs, and not their ability to attract the healthiest enrollees," Trivedi told MedPage Today.

The study didn't assess the motivation behind insurers offering gym memberships and Trivedi acknowledged that they may well be offering the fitness benefits to improve the health or reduce spending on current beneficiaries.

However, the study's findings "are consistent with the notion that Medicare managed-care plans have continued to selectively market their benefits to healthier beneficiaries, even after the improved risk-adjustment program was instituted," Trivedi and Cooper wrote, referring to a risk-adjusted payment system that Medicare now uses.

The newer model, implemented in 2004, is designed to reduce incentives for plans to avoid high-cost patients. But Trivedi and Cooper said the model over-predicts costs for healthy people and under-predicts costs for unhealthy people so there is still an incentive for insurers to target healthier enrollees.

Medicare Advantage plans are explicitly prohibited from cherry-picking healthy patients. However, "favorable selection" likely does happen in Medicare Advantage plans when insurers create plans with specific benefits -- such as a gym membership, coverage of sports medicine, or dental coverage -- in order to attract more health-conscious people, Trivedi and Cooper argue.

How insurance companies market those health-conscious plans also can lead to favorable selection, they wrote. For instance, when an insurer advertises such plans at community-based events, they are targeting mobile seniors and thereby avoiding people who are home-bound, and may be less healthy.

It works the other way, too: an earlier study found that when Medicare Advantage plans offer prescription drug benefits and vision benefits, they attract less healthy people.

Trivedi said the findings of their study should at least raise awareness that favorable selection may be happening and that "there are unintended consequence of creating benefit that appeal to healthy people."

This article was funded by the National Institute on Aging.

Cooper reported having not relevant financial conflicts of interest.

Trivedi reported receiving money from the RAND Cooperation for serving on a expert panel on outcome measure for quality assessment of Medicare Advantage plans.

Primary source: New England Journal of Medicine
Source reference:
Cooper AL, Trivedi AN. "Fitness memberships and favorable selection in medicare advantage plans" N Engl J Med 2012; 366: 150-157.

Lawmakers Get Emotional About CLASS

Members of the House Ways and Means Committee agreed Thursday at a markup on H.R. 1173 -- a bill that's supposed to kill off the Community Living Assistance Services and Supports (CLASS) program -- that they have to do something else about long-term care (LTC).

The lawmakers voted 23-13 to approve the H.R. 1173, the Fiscal Responsibility and Retirement Security Act bill. The only committee member who crossed party lines was Rep. Ron Kind, D-Wis., who voted for the bill.

Many other Democrats at the markup said that they believe the CLASS program law has problems, but they expressed sadness at the idea of officially repealing the CLASS law without creating an alternative.

Rep. Sander Levin, D-Mich., the highest-raking Democrat, said private long-term care insurance (LTCI) now pays for only about 7% of U.S. long-term care services, while Medicaid is spending more than $100 billion per year on LTC services.

Levin and other Democrats suggested that repealing CLASS without providing an alternative seems to be a cynical, partisan action.

"I can see the headlines coming," said Rep. Jim McDermott, D-Wash. "I can see what this is about. It's another PR stunt. I'm sure Jon Stewart, Stephen Colbert and the other news reporters will have great fun with this stunt."

Republicans argued that officially repealing the CLASS Act is more than a partisan ploy, and that leaving the program in a state of unimplemented limbo could lead to complications, such as the possibility that a lawsuit could force HHS to implement the program.

Some Republicans talked about their own parents' experiences with LTC and said they care deeply about developing an alternative to the CLASS program.

Rep. Charles Boustany, R-La., the sponsor of H.R. 1173 and a medical doctor, said that he had treated hundreds of patients who needed LTC and that he had had to help get LTC for two of his own family members.

One solution to reforming the system would be to change the laws governing private LTCI, Boustany said.

"We should work together in a bipartisan way to make this easier to purchase and more affordable," Boustany said.

Rep. Charles Rangel, D-N.Y., said he wishes lawmakers could add an amendment to the bill stating that they have agreed to address the LTC crisis.

"Sometimes," Rangel said, "no matter how much we try to work together, the politics of the majority, and the minority, overwhelms our ability work together."

The CLASS Act, part of the Patient Protection and Affordable Care Act of 2010 (PPACA), was supposed to create a voluntary LTC program for most working Americans. U.S. Department of Health and Human Services (HHS) actuaries agreed with Republican critics of the CLASS Act that there appears to be no way to implement the program without creating a "death spiral" that would lead to ever dwindling enrollment and ever escalating rates.

HHS officials said they had suspended efforts to implement the program.
Ways and Means is one of several committees looking at H.R. 1173, and Ways and Means Chairman Dave Camp, R-Mich., said the committee had to act by Feb. 1 to keep its referral for the bill.

American Enterprise Group ups the ante in the senior market

Des Moines-based American Enterprise Group announced Thursday it will acquire Medico Insurance Company by July 1, 2012 for an undisclosed amount. While the deal is pending the approval of Medico's policyholders and government regulators, it represents the latest investment (by carriers) in the senior market.

If approved, American Enterprise’s new business in the senior market will more than double, and total business in the senior market will increase by one-third.

Friday, January 20, 2012

50 Year Olds Get New Knees in Record Numbers

By Nancy Walsh, Staff Writer, MedPage Today
Published: January 17, 2012
Reviewed by Robert Jasmer, MD; Associate Clinical Professor of Medicine, University of California, San Francisco and
Dorothy Caputo, MA, RN, BC-ADM, CDE, Nurse Planner

During the past three decades there has been a dramatic, 130-fold increase in knee replacement surgeries, particularly among individuals in their 50s, a Finnish study found.

The incidence of total knee arthroplasty rose from 0.5 per 100,000 in 1980 to 65 per 100,000 in 2006, for an incidence rate ratio (IRR) of 1.19 (95% CI 1.19 to 1.20, P<0.001), according to Jarkko Leskinen, MD, of Helsinki University Central Hospital, and colleagues.

And among those ages 50 to 59, the incidence increased from 1.5 to 160 per 100,000, with an IRR of 16.8 (95% CI 12.2 to 23.2, P<0.001), the researchers reported online in Arthritis & Rheumatism.

Action Points
 Explain that during the past three decades there has been a dramatic, 130-fold increase in knee replacement surgeries, particularly among individuals in their 50s.
 Point out that throughout the study period, women were the recipients more often than men, reaching a 1.6 to 2.4-fold higher incidence during the last ten years.

Knee arthroplasty is a common and effective treatment for patients with severe osteoarthritis who are not responsive to medical therapy. In the U.S., demand for the procedure is expected to increase by almost 675% by the year 2030.

Most long-term data are for patients who were 60 and older at the time of the surgery, but younger patients increasingly have been undergoing total or partial knee replacements.

To explore trends in incidence over time among younger patients, Leskinen and colleagues analyzed data from the national Finnish arthroplasty register, which now includes 98% of patients with these implants.

Among the 95,577 primary knee arthroplasties done in the country between 1980 and 2006, 8,961 were for osteoarthritis in individuals younger than 60.

A total of 65% of these were in women, and mean age at implantation was 55.

The most rapid increase overall for total knee replacement was between 2001 and 2006, when the rate rose from 18 to 65 per 100,000.

The incidence of partial, or unicondylar, arthroplasty also rose, though less than for the total knee procedure, increasing from 0.2 to 10 per 100,000 (IRR 1.19, 95% CI 1.19 to 1.20, P<0.001).

Throughout the study period, women were the recipients more often than men, reaching a 1.6 to 2.4-fold higher incidence during the last ten years.

When the researchers looked at the data according to age groups, they found only minor increases for both total and partial arthroplasties in patients ages 30 to 39 and those 40 to 49.

As with total knee arthroplasty, the incidence of partial replacement rose most rapidly among patients ages 50 to 59, with an IRR of 147.2 (95% CI 66 to 328.5, P<0.001) when that group was compared with those ages 30 to 39, according to Leskinen and colleagues.

The researchers also looked at trends in incidence according to the volume of procedures by hospital, and found that low- and intermediate-volume centers had the greatest increases.

The IRR between intermediate- and high-volume centers was 1.23 (95% CI 1.16 to 1.31, P<0.001) and 1.23 (95% CI 1.13 to 1.34, P<0.001) for low- versus high-volume centers.

Despite the significant increases in these procedures since 1980, the researchers noted that the incidence of osteoarthritis has actually fallen in Finland in that time.

"Possible explanations for this phenomenon include the high functional and quality of life demands of younger patients," they observed.

Greater awareness of treatment options among Baby Boomers and ongoing refinements of surgical technique also are likely to have contributed.

Leskinen and colleagues cautioned that long-term data are needed on the use of knee arthroplasty among younger patients, because their outcomes and risks may be different than older patients.

That concern was echoed in an editorial by Elena Losina, PhD, and Jeffrey N. Katz, MD, of Harvard University in Boston.

"Since younger patients are likely to have more strenuous physical demands and to make treatment choices that support an active lifestyle, the longevity or 'survival' of knee implants in this group may be lower than in older patients," Losina and Katz wrote.

"In fact, as data on this issue emerge, it appears that rates of failure leading to revision in younger patients are two-fold higher than in older patients," they observed.

The editorialists called for further "intensive study" before even wider adoption of knee arthroplasty for younger patients.

"We would be wise to heed the time-honored investment advice that past performance may not guarantee future success," they warned.

The authors had no financial disclosures, while the editorialists were supported by the National Institutes of Health.

Primary source: Arthritis & Rheumatism
Source reference:
Leskinen J, et al. "The incidence of knee arthroplasty for primary osteoarthritis grows rapidly among baby boomers -- A population based study" Arthritis Rheum 2012; DOI: 10.1002/art.33367.

Additional source: Arthritis & Rheumatism
Source reference:
Losina E, Katz J. "Total knee arthroplasty on the rise in younger patients: Are we sure that past performance will guarantee future success?" Arthritis Rheum 2012; DOI: 10.1002/art.33371.

Brain Teasers Make Seniors More Open to New Ventures

By Shalmali Pal, Contributing Editor, MedPage Today
Published: January 19, 2012
Reviewed by Zalman S. Agus, MD; Emeritus Professor
University of Pennsylvania School of Medicine and
Dorothy Caputo, MA, RN, BC-ADM, CDE, Nurse Planner

A cognitive training program that included Sudoku and crossword puzzles made older adults more open to new experiences, according to a preliminary study.

After 16-weeks of training in inductive reasoning, participants demonstrated more willingness to try new activities than a control group (P<0.05), reported Joshua Jackson, PhD, from Washington University in St. Louis, and colleagues in Psychology and Aging.

Older adults undergo changes in personality, including shifts in openness or willingness to seek out new and cognitively challenging experiences. A number of interventions have been designed to enrich cognitive functioning in older adults, but little has been done to develop openness, the authors explained.

Action Points
 In addition to declines in cognitive abilities, including working memory and inductive reasoning, aging is associated with changes in personality such as the trait of openness to new and challenging experiences.
 This study shows that changes in openness to experience in older adults can change with interventions aimed to increase cognitive ability.

"We hypothesized that an intervention aimed at improving cognitive functioning would change the personality trait of openness," they wrote.

Participants were recruited from an ongoing community-based cognitive intervention program. The mean age of the seniors was 72.9 and the majority were white (94%). On average, participants had completed 15.5 years of education.

Seniors could not be involved in the study if they were engaged in more than 15 hours of work or volunteer activities per week. Other exclusion criteria included stroke in the past three years, active cancer treatment, or a scores of less than 24 on the Mini-Mental State Examination.

Participants were randomized into an intervention group or a waitlist control group. They were paid by the researchers for finishing all of the study assessments. The intervention group saw a 92% completion rate among 85 enrollees; the control group had an 89% completion rate among 98 enrollees.

The intervention consisted of a classroom-based inductive reasoning training program that focused on novel pattern recognition. Participants also did home-based Sudoku and crossword puzzles. Puzzle sets were matched to each person's skill level based on his performance during the previous week, and increased in difficulty when appropriate.

Participants underwent personality trait and inductive reasoning tests before, during, and after the study. Second-order latent growth models were used to analyze the effect of training on openness to experience.

At pretest, there were no differences between the two groups for openness to experience or a composite measure of inductive reasoning skill. The training led to increases in inductive reasoning in the study arm compared with controls (P<0.05).

The authors reported that post-test openness scores were higher for the training group than for the control group.

They also noted that changes in inductive reasoning did not mediate the effect on changes in openness, based on a Sobel test (z=1.47). This suggested that cognitive intervention influenced openness above and beyond increases in inductive reasoning.

The 'use it or lost it' tag is often attributed to these types of studies, they pointed out, and "the current results suggest that 'using it' also can lead people to view themselves as more open ... openness to experience is linked to better health and decreased mortality risk."

The study had some limitations. It did not examine the mechanisms by which changes in openness occurred. The authors also could not determine if the intervention effect was because of the inductive reasoning training, the puzzles, or both.

Finally, the participants were not actively involved in other activities so the results may not have general application.

However, the authors stressed that their study is one of the first to demonstrate that personality traits can be altered with nonpyschopharmocological interventions. Future research should look at the range of cognitive activities that could lead to personality changes.

The study was funded by a grant from the National Institute on Aging.
No conflicts of interest were disclosed.

Quote of the Day

“Copay offset programs [offered by brand-name drugmakers to compete with generics] mitigate the effectiveness of our tiered benefit design programs and [are] going against what we’re trying to accomplish for our members’ health and for employers.”
— Peter Clagett, vice president of pharmaceutical strategies and PBM oversight for WellPoint, Inc., told AIS’s Drug Benefit News.

Selling to Seniors

There is often a big difference in the mindset and life experiences of a 60-year-old “senior” and an 80-year-old, and advisors need to take them into consideration when making recommendations.

By Diana Scheel, Clu, Chfc, Flmi, Flhc
JANUARY 18, 2012

What we call “seniors” actually includes multiple generations with a vast spectrum of historical experiences. The senior in her 80s will have lived through the Great Depression, which likely instilled in her frugal behavior. Meanwhile, the recently retired senior may be more optimistic and less likely to have experienced severe financial hardship.

What does this mean for the financial advisor? Simply, we can’t advise all seniors in the same way. People who lived through the Great Depression and those who did not require different guidance.

Memories of the Great Depression
Take the client in her 80s who was afraid to eat out, even though she could afford it. She could remember what it was like not to have money for food, and she was concerned the economy would get worse. She was pessimistic and wanted to save every penny, just in case.

Meanwhile, she had a five-figure sum in a money market account that she was afraid to move because she didn’t want anything to happen to the principal. Her solution was to keep the money safe and not spend it.

My solution centered on gently making my recommendations:
1. My primary goal was to help her get better returns. I offered her guaranteed interest rates in a fixed annuity that were higher than those offered by her local bank. I then added some other investments with low volatility. This gave her growth plus liquidity, which was of comfort to her.
2. I created a budget for her, gently showing her how she could afford to transfer a certain sum each month to a checking account for her to spend. This way, she felt she had permission to enjoy the fruits of her labor and savings. She didn’t realize what her true financial situation was — she just feared running out of money.
3. I connected with her children. This made her feel confident in the strategy, getting a second opinion from someone she could trust. Also, the elderly are often vulnerable to unscrupulous advisors. By getting the children to buy in, I covered myself as an advisor. It also allowed me to build relationships with them for the future.

The takeaway: With this age group, decision-making is not going to happen right away. A relationship needed to be built, and trust needed to grow. Also, this age group likes to read documentation and educational material to support your recommendation and provide evidence that what you’re saying is a good decision for them. The main thing is to take it slow. Don’t go in and try to take over all their assets because you feel you could manage them better. Deal first with what they need right now, and as the relationship develops, make further recommendations that would be helpful to them.

Baby boomer optimism
On the other hand, consider a client in his 60s with a money market account that had about the same amount. He was optimistic overall and felt things had already hit bottom. But he had hoped his money market account would have grown more than it had. He was concerned that at the current rates, he was behind on his retirement savings plan and would eventually run out of money. He wanted to put the money in a financial instrument with higher risk and higher returns. At the same time, he had never been truly without and was continuing to spend as he had in the past.

In a nutshell, he said he was afraid, but he wasn’t acting it. He wasn’t factoring in the possible impact of inflation, taxes and health care costs in 20 years time. He wanted his lump sum to last a lifetime, but he wanted to maintain his income of $8,000 a month, since that provided his current lifestyle.

My overall approach was that of tough love:
1. In this situation, you have to show the client projections in black and white, so that he understands that things could get worse economically. Share with him that with the lump sum available, he wouldn’t be able to withdraw $8,000 a month and keep up with inflation, increased taxes and increased health care costs. You have to show the client the reality of his decisions — in this case, project the year his money will run out and ask what he will plan to do then.
2. In addition, I had my client prepare a retirement budget to determine how much he really needed to live on, versus what he’d like to have. The effort clearly showed where his excess spending occurred and the need to restructure his income to pay down some heavy debt.
3. Finally, we broke his retirement needs into three phases — his 60s, 70s, and 80-plus. This would include guaranteed income to cover fixed expenses and financial tools that provide an opportunity for growth to cover discretionary expenses.

The takeaway: This age group has lived in a world of easy credit, often with poor financial discipline. The client may have put off financial concerns until later in life. You need to be tough and show the reality that he could run out of money in a few years should he continue with his current spending. Don’t be afraid of hurting feelings. You are helping them say no to inappropriate spending. If they don’t like what you say and prefer to listen to the advisor who’s painting the best-case scenario, don’t worry. That advisor will deal with an upset client in a few years when he runs out of money.

Universal fears
There are similarities between these types of seniors — their fears are typically the same — but how they respond to those fears varies. Here is how to address two of those fears.

The fear: You may hear a client in his 60s or 70s express concern about financial stability if his spouse passes away. Social Security is lost, as well as pension in some cases, if there is no survivorship.

The solution: Life insurance may be the answer to replace the Social Security and, if necessary, the pension. While clients older than 60 might think the premiums on life insurance at their age are prohibitive, often guaranteed universal life insurance can work because it is cost effective and the coverage lasts a lifetime (unlike term insurance). Also, the premiums don’t increase (unlike term insurance).

The fear: Concern may be expressed that no one will care for the senior in her old age. This is a very real fear for those in their 80s — they have seen friends and family go into full-time nursing care. If clients of this age do not have a financial strategy in place to fund such care, this can be a source of worry and perhaps financial hardship for them or their children later on.

The solution: Work through the client’s financial situation and work out what they could afford to pay toward their care. If they do not have sufficient assets to cover cost out of pocket, consider other financial tools to cover full or partial payment for at least a three-year stay in a full-time nursing care facility (which is the typical length of stay). In some cases, siblings work together to fund such a strategy.

The takeaway: All in all, when you are serving an elder client, you have to keep in mind his age and the experiences of his generation. There is a big difference between the 60-year-old who hasn’t retired and someone 20 years his senior. Consider your client’s historical perspective as well as his financial health. That will help give your advice direction.

Thursday, January 19, 2012

Quote of the Day

A low-cost, all-inclusive benefit package is just “happy talk. You can’t have it both ways. The idea of a low-cost essential-benefits package is like a unicorn. It doesn’t exist….Everybody’s complaining about the cost, so the goal was to develop an essential plan: only the things that people need. [But] it’s impossible to do that, because everybody thinks their claim is the most important.”
— John Sheils, senior vice president of the research firm The Lewin Group, a unit of UnitedHealth Group, told AIS’s Health Reform Week.

Wednesday, January 18, 2012

Today's Datapoint

$10 billion … in federal funds were appropriated to CMS’s Center for Medicare and Medicaid Innovation to test new payment and service delivery models, but Senate Republicans are now calling for an examination of the center’s activities since it has not yet produced any recommendations or implemented any systematic changes.

Miami-Area Resident Pleads Guilty to Participating in $200 Million Medicare Fraud Scheme

WASHINGTON – A Miami-area resident pleaded guilty today in U.S. District Court in Miami for her role in a Medicare fraud scheme that resulted in the submission of more than $200 million in fraudulent claims to Medicare, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).

Sandra Jimenez, 38, admitted to participating in a fraud scheme that was orchestrated by the owners and operators of American Therapeutic Corporation (ATC); its management company, Medlink Professional Management Group Inc.; and the American Sleep Institute (ASI). ATC, Medlink and ASI were all Florida corporations headquartered in Miami. ATC operated purported partial hospitalization programs (PHPs) – a form of intensive treatment for severe mental illness – in seven different locations throughout South Florida and Orlando. ASI purported to provide diagnostic sleep disorder testing.

Jimenez pleaded guilty to one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States and to pay and receive illegal health care kickbacks. Jimenez was charged in an indictment unsealed on Feb. 15, 2011, in the Southern District of Florida.

According to court filings, ATC’s owners and operators paid kickbacks to owners and operators of assisted living facilities (ALFs) and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI. In some cases, the patients received a portion of those kickbacks. Throughout the course of the ATC and ASI conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries, who did not qualify for PHP services, to attend treatment programs that were not legitimate PHPs. ATC and ASI then billed Medicare for the medically unnecessary services. According to court filings, to obtain the cash required to support the kickbacks, the co-conspirators laundered millions of dollars of payments from Medicare.

In pleading guilty, Jimenez admitted that she served as a marketer for ATC and ASI.& In this role, Jimenez solicited beneficiaries and paid kickbacks to assisted living facility owners in exchange for the beneficiaries. The amount of the kickback was based on the number of days each patient spent at ATC.

Jimenez also admitted that she participated in a separate Medicare fraud scheme through Priority Home Health, a Miami home health agency that submitted fraudulent claims to Medicare for home health services . Jimenez and her co-conspirators recruited Medicare beneficiaries to Priority Home Health who did not qualify for home health services.

According to the plea agreement, Jimenez’s participation in the ATC fraud and the Priority Home Health fraud resulted in $46 million in fraudulent billings to the Medicare program.&

Sentencing for Jimenez is scheduled for June 27, 2012, at 8:30 a.m. Jimenez faces a maximum penalty of 15 years in prison and a $250,000 fine.

ATC, Medlink, and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, Medlink and ASI, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011. ATC, Medlink and nine of the individual defendants have pleaded guilty or have been convicted at trial. Other defendants are scheduled for trial on April 9, 2012, before U.S. District Judge Patricia A. Seitz. A defendant is presumed innocent unless proven guilty beyond a reasonable doubt in a court of law.

Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.

The criminal case is being prosecuted by Trial Attorneys Jennifer L. Saulino and Steven Kim of the Criminal Division’s Fraud Section. A related civil action is being handled by Vanessa I. Reed and Carolyn B. Tapie of the Civil Division and Assistant U.S. Attorney Ted L. Radway of the Southern District of Florida. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.

Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,160 defendants that collectively have billed the Medicare program for more than $2.9 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

Tuesday, January 17, 2012

Five health reform dates to watch in 2012

Posted by Sarah Kliff

Health reform had a big year in 2010, when it passed Congress and a slew of consumer-friendly provisions came online. And it’ll have another big year in 2014. That’s when the individual mandate kicks in, pre-existing conditions end and Medicaid expands to cover 16 million more Americans. But 2012 won’t be all quiet on the health-care front: The Obama administration is laying a policy foundation for 2014, while health reform opponents try to stop the law altogether. Here are five key dates to mark on your health reform calendar (you do have one of those, don’t you?):

Jan. 1: The ACOs go live. We’ve written a decent amount here at Wonkblog about the Accountable Care Organization regulations, health reform’s big attempt to bring down the cost of health care by paying for quality of care, rather than just quantity. On Jan. 1, 32 health-care systems went live as Accountable Care Organization “pioneers,” and will begin accepting a flat fee for all care related to a small group of their Medicare patients. Their experiment could end fee-for-service medicine — or, if it fails, send lawmakers back to the drawing board.

March 26: The Supreme Court hears oral arguments on the Affordable Care Act. The crucial debate will be over whether the mandated purchase of health insurance is constitutional and, if it isn’t, whether or not the rest of the law can still stand. After the Supreme Court hears the case in March, expect a decision by early summer.

Oct. 1: Reforming Medicare payments — again. ACOs will probably get the most attention this year, but two other regulations go live in the fall that also stand to reform how health-care providers get paid. New “value-based purchasing” policies start tying hospitals’ Medicare payments to performance metrics. Another regulation will ding hospitals for patients that are readmitted for a complication that could have been prevented, a bid to reduce unnecessary medical errors that lead to higher costs.

Nov. 3: The 2012 election. As Harvard’s David Blumenthal wrote recently in the New England Journal of Medicine, 2012 will be a “watershed election for health care.” Republican control of the presidency and Congress could clear the way to repealing big parts of the health reform law (albeit not as easily as some Republican candidates have suggested). Democratic retention of the White House, meanwhile, essentially ensures that much of the law will be implemented.

Dec. 31: The big health exchange deadline. States have had about three years to lay the foundation for health insurance exchanges, the new marketplaces that will go live in 2014. States must have the Obama administration certify, by the end of this year, that they’ve made enough progress to launch in 2014. If not, the feds will come in and do it themselves.

Private Carriers Cover More Nursing and LTC Costs

By Allison Bell
JANUARY 13, 2012

Commercial carriers’ share of the longer-term care (LTC) and skilled nursing tab was up from 8.9% in 2009 and up from 8.8% in 2000.

Commercial carriers’ share of the tab has increased every year since 2004.
Researchers at the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) have reported those findings in the latest Government researchers reported those findings in the latest National Health Expenditure Accounts report.

The researchers use the North American Industry Classification System for health care services to create the report, and the classification system does not clearly distinguish between the kinds of spending that private long-term care insurance (LTCI) carriers define as LTC and related types of care, such as skilled nursing services.

When private LTCI plans, private disability plans and other types of health plans other than major medical plans pay providers directly, the researchers usually include those payments in the private health insurance category. In other cases, when the plans may cash benefits directly to the insureds, the researchers put the cash the insureds use to pay for their care in the out-of-pocket expense column.

But the researchers found that total expenditures in their nursing care and continuing care retirement expenditure category increased 3.2% between 2009 and 2010, to $143 billion.

Private carrier spending on that category of services increased 8.2%, to about $13 billion.

Commercial carriers’ share of the longer-term care (LTC) and skilled nursing tab was up from 8.9% in 2009 and up from 8.8% in 2000.

Commercial carriers’ share of the tab has increased every year since 2004.
Researchers at the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) have reported those findings in the latest Government researchers reported those findings in the latest National Health Expenditure Accounts.

The researchers use the North American Industry Classification System for health care services to create the report, and the researchers do not clearly distinguish between the kinds of spending that private long-term care insurance (LTCI) carriers define as LTC and related types of care, such as skilled nursing services.

Similarly, the researchers do not clearly distinguish between amounts paid by major medical plans, private LTCI plans, private disability insurance plans, and plans that pay cash benefits directly to the insureds, such as critical illness insurance plans.

The researchers do try to include any payments made by LTCI carriers and disability insurers directly to health care providers in the private health insurance payment total.

The researchers found that total expenditures in their nursing care and continuing care retirement expenditure category increased 3.2% between 2009 and 2010, to $143 billion.

Private carriers spending on that category of services increased 8.2%, to about $13 billion.

Monday, January 16, 2012

5% of patients account for half of health care spending

By Kelly Kennedy, USA TODAY

WASHINGTON – Just 1% of Americans accounted for 22% of health care costs in 2009, according to a federal report released Wednesday.

That's about $90,000 per person, according to the Agency for Healthcare Research and Quality. U.S. residents spent $1.26 trillion that year on health care.

Five percent accounted for 50% of health care costs, about $36,000 each, the report said.

The report's findings can be used to predict which consumers are most likely to drive up health care costs and determine the best ways to save money, said Steven Cohen, the report's lead author.

While the report showed how a tiny segment of the population can drive health care spending, the findings included good news. In 1996, the top 1% of the population accounted for 28% of health care spending.

"The actual concentration has dropped," Cohen said. "That's a big change."

About one in five health care consumers remained in the top 1% of spenders for at least two consecutive years, the report showed. They tended to be white, non-

Hispanic women in poor health; the elderly; and users of publicly funded health care.

The report also showed these characteristics of patients in the top 10% of health care spenders in 2008 and 2009:

•Sixty percent were women
•Forty percent were 65 or older.
•Only 3% were ages 18 to 29.
•Eighty percent were white.
•Only 2% were Asian.

The study also found that Hispanics, 16% of the population in 2009, spent less on health care. Twenty-five percent of Hispanics were in the bottom half of health care spenders, the report showed, while only 7% of Hispanics were in the top 10% of spenders.

Next, Cohen plans to look at whether cost-cutting measures make a difference.

Beginning in October 2012, the government has told hospitals with Medicare patients that it will no longer pay for patients who are readmitted to hospitals for the same condition soon after being released. Cohen said he'll look at whether that will change the spending averages for people in the top health care cost brackets.

Quote of the Day

“I think one of the benefits of [the Medicare Shared Savings Program] and even the Pioneer is these are efforts to turn the battleship of Medicare in a way that’s feasible. You can’t just stop the Medicare program and say, ‘we’re going to do it differently beginning tomorrow.’ The culture’s got to change, provider shifts have to evolve, and the CMS program itself, the staff, their assistants, all of that is going to require a complex change. And I think one of the benefits of the ACO strategy is just that: trying to evolve instead of just slamming on the brakes.”

— Bruce Merlin Fried, a partner in the D.C. office of SNR Denton US LLP, told AIS’s ACO Business News.

Friday, January 13, 2012

Myth of the $247 Medicare Part B Premium

by: Patricia Barry | from: AARP Bulletin | Updated December 12, 2011

Q. I just received an email saying that under "Obamacare" our Medicare Part B premiums will rise to $247 a month by 2014. Is this true?
A. No, it isn't true. A mass email making this claim has been circulating since before the 2010 elections. But it's just another attempt to scare older Americans and has no basis in fact.

The official formula for determining Part B premiums was established by Congress decades ago. The standard premium amount for each year is always calculated on the level of Medicare health care costs in the previous year — and reflects the fact that the government pays 75 percent of Part B costs and beneficiaries pay 25 percent.

This process is in no way affected by the new health care law, officially known as the Affordable Care Act. The law does, however, contain provisions to reduce the rate of Medicare costs over time (without reducing guaranteed benefits), and if this plays out as planned, it could hold Part B premiums down or possibly even lower them.

The standard Part B premium for 2012, announced in October 2011, will be $99.90 a month. But there is no way of accurately predicting what it will be in 2013, 2014 or any future years.
Part B premiums affected by Social Security COLA

However, another much older law did affect Part B premiums in 2010 and 2011 in an unprecedented way. That law prohibits a premium increase in any year when there is no Social Security cost-of-living adjustment (COLA). So in the past two years when — for the first time in more than 30 years — there was no COLA, most people's premiums were frozen at the 2009 level, $96.40 a month.

But this "hold harmless" provision did not apply to about 25 percent of Medicare beneficiaries. They include people who did not have their premiums deducted from Social Security benefits (but paid Medicare directly), those who were new to Medicare, and those who paid higher premiums because their incomes were above a certain level.
These people bore the brunt of rising Medicare costs. Therefore, their standard Part B premiums were $110.50 a month in 2010 and $115.40 in 2011 (or more if they paid the higher-income surcharge) — whereas everybody else still paid $96.40.

However, there will be a Social Security COLA in 2012 and this changes the situation. The standard 2012 Medicare Part B premium will once again be a single dollar amount—$99.90 a month. For people who’ve been paying $96.40 for the past three years, this means an increase of $3.50 a month. But for those who have been paying $110.50 or $115.40, the new premium is a lot lower—dropping by $10.60 and $15.50 a month respectively.

Higher income-related premiums

While the email makes bogus predictions about future increases in the standard Part B premium, the new law does make two changes that affect Medicare premiums.

Ever since 2007, under a law passed in 2003, people with Medicare have paid a surcharge on their standard Part B premiums if their modified adjusted gross income, as shown on their latest tax return, is higher than $85,000 for a single person or $170,000 for a married couple filing joint returns.

Currently, fewer than 1 in 20 beneficiaries pays higher-income premiums. But that percentage is likely to grow in coming years — and this development is the result of the new health care law. The law froze the income brackets at 2010 levels through 2019, which means that more older Americans will become liable for the surcharge — up from 5 percent now to 14 percent by 2019, according to an estimate from the Kaiser Family Foundation.

The new law also required the same wealthier beneficiaries to pay a premium surcharge for Medicare Part D prescription drug coverage for the first time, starting in January 2011.

Everybody subject to the higher-income surcharges will see somewhat lower costs in 2012. That’s because they are charged in addition to the standard Part B premium, which will fall from $115.40 in 2011 to $99.90 in 2012.

For details of these surcharges, see the Social Security publication "Rules for Higher-Income Beneficiaries."
Patricia Barry is a senior editor with the AARP Bulletin.

2012 Outlook: Dual-Eligible Market Beckons MA, Medicaid Plans, but New Initiatives Pose Questions

Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and business strategies about Medicare Advantage plans, product design, marketing, enrollment, market expansions, CMS audits, and countless federal initiatives in MA and Medicaid managed care.

By James Gutman, Managing Editor
January 5, 2012 Volume 18 Issue 1

If there is one key market segment that Medicare plans — and Medicaid ones — will focus on in 2012, it is Medicare-Medicaid dual eligibles.

After years of discussion, it looks as though both the federal government and states will accelerate dramatically implementation of programs to improve quality and reduce costs in care for duals, and the result will be big opportunities for plans. Those opportunities are likely to manifest themselves in requests for proposals (RFPs) or other forms of procurements from at least three big states — California, Massachusetts and Michigan — this year (see table, p. 3).

But there are lots of unanswered questions as the duals’ move to managed care unfolds: How mandatory will enrollment in plans be for duals? Which type of plan will get the majority of the enrolling duals? And how secure is the funding for these initiatives?

The overall U.S. duals population now is about 9.2 million and accounts for more than $300 billion in annual health care spending. Fewer than 1 million of the beneficiaries are in private health plans, according to several estimates.

Duals’ costs are higher on the Medicaid side, observers suggest, because that is the side paying for long-term care. Therefore, “the real opportunity is keeping duals out of nursing homes,” securities analyst Carl McDonald of Citigroup Global Markets said in a Dec. 19 conference call on opportunities for health plans related to duals.

With this in mind, the year-old CMS Medicare-Medicaid Coordination Office last July unveiled two large-scale demonstration programs to help states improve quality of care and share in cost savings for duals. And partly as a result of that initiative, to which 38 states responded with letters of intent to participate, several states are developing initiatives and getting “bids” from health plans in 2012 to manage care for duals starting either late this year or in 2013. Moreover, a couple of states that already have managed care programs for duals are looking to expand those efforts in 2012.

Specific initiatives include the following:

• Massachusetts has Senior Care Options, a fully integrated program that now enrolls about 17,000 duals through four managed care plans — Commonwealth Care Alliance Senior Care Options, NaviCare, Senior Whole Health and UnitedHealth Group’s Evercare. Last March, the state issued a request for information (RFI) to serve duals aged 22 to 64 that drew responses from 50 organizations, including providers. The state’s timetable, according to McDonald, is to issue an RFP this month and award in fall contracts that ultimately will cover all 115,000 of its full duals.

• New York, which has 709,000 duals and two current programs for them, plans to expand its initiatives in not-yet-determined ways via contracting to be completed by October, McDonald noted.

• Michigan, which has 220,000 duals, put out an RFI last September and plans to issue an RFP within the next six months, McDonald said. He added that the state intends to combine the Medicare and Medicaid funding streams and capitate health plans and/or “accountable care organizations” in an arrangement that involves risk sharing with Michigan initially but full risk later. The program, like the approach the CMS duals office has supported, would have mandatory enrollment of duals but with a right to “opt out.”

• California, home to 1.1 million duals, has proposed a four-county pilot program that initially would enroll 150,000 duals, with implementation starting at the end of this year. McDonald pointed out that the state hopes to avoid a formal RFP process and instead allow any plans meeting yet-to-be-designated minimum standards in its Medi-Cal program to participate. The state put out a “request for solutions” Dec. 22 and intends to pick demonstration sites this spring and summer. While enrollment would be mandatory, the duals would have the right to opt out and go back into a fee-for-service (FFS) program.

• Ohio, separate from the CMS initiatives, released an RFI in October for a managed care program for 113,000 duals now residing in nursing homes, McDonald recalled. The state seeks to waive “actuarial soundness” criteria for payments, he explained, since it is unknown what impact care management will have on costs, and instead adjust payments quarterly.

A big question as these kinds of initiatives unfold is what kind of health plans will benefit the most. “The key answer is everybody wins,” replied McDonald. That said, he added, Medicaid-based plans figure to get the biggest proportional benefit. “Medicare-focused plans,” according to McDonald, “will not be shut out” but won’t benefit as much because “they’re bigger already and not as well positioned.”

Joe Moser, director of government affairs for Medicaid Health Plans of America (MHPA), makes a similar point, telling MAN that the CMS duals office’s efforts to date have focused on state-based efforts that furnish big new opportunities for Medicaid plans. Dual-eligible Medicare Advantage (MA) Special Needs Plans (SNPs), he acknowledges, already have some capabilities to combine funding streams and do get paid on the Medicaid side. But he asserts that they would need to improve products to be more appealing for the new initiatives.

Of state efforts now underway, he says, Ohio’s is especially “encouraging” since the response to its RFI was “weighted toward Medicaid plans.” And Moser says the upcoming Massachusetts RFP may be for just “non-senior duals,” which also would be favorable for Medicaid plans.

While MHPA has been “impressed” by the duals office’s grants, he continues, it doesn’t think the overall federal duals effort “has been aggressive enough.” He explains that “we’re not positive mandatory [enrollment] with opt out will work,” especially since it apparently would require the state to submit a waiver request that CMS would aim to “expedite.” The resulting delay means the new programs “wouldn’t happen easily,” especially since it isn’t clear what “expedite” means, he contends.

MHPA therefore, according to Moser, would like to see Congress adopt pure mandatory enrollment in managed care for duals, which also would mean that the duals office’s programs won’t be as necessary — an advantage given funding uncertainties surrounding the reform law.

Tim Engelhardt, director, models and demonstrations for the CMS duals office, declines to discuss funding aspects, but he says the office is continuing to receive proposals (some using capitation and some FFS) for its existing initiatives. It expects to decide on many of them by summer, and hopes to start implementation by the end of 2012, he says. Moreover, the office will have a new demonstration project with the CMS Center for Medicare and Medicaid Innovation to reduce preventable hospitalizations in long-term care facilities, he tells MAN. His office has found that about 45% of hospital admissions for duals in nursing facilities may have been avoidable.

While he won’t critique individual state approaches to duals, Engelhardt does say, “Our endgame is to go ahead where we have infrastructure to do so,” and “every state needs to think of people living in nursing facilities.” In states using capitation for payment, he adds, the duals office will need to be sure the plans selected for duals projects are “qualified” to do them. But if that suggests doubts about California’s approach, Engelhardt also praises the state’s “tremendous participatory” outreach to get stakeholders involved in formulating strategies.

The way states are approaching projects for duals — including preferring to partner with organizations they’re familiar with — does make it harder for MA sponsors than for Medicaid plans, Gary Jacobs, senior vice president, corporate development for MA firm Universal American Corp., tells MAN. But duals have characteristics of populations served by each of those kinds of plans, Jacobs stresses, and he would like to see more recognition than is evident so far that MA plans have had success with them.

He says the CMS duals office should “convey that,” terming this a “sensitive issue” in 2012 as the government’s duals policy evolves. “We want parity in getting to the table for MA plans,” Jacobs adds.

There are obstacles, though, for MA plans wanting to get involved in dual-integration programs, notes consultant Stephen Wood, senior vice president of Optum¬Insight. More than 50% of duals are eligible because of disabilities, including mental-health problems, he says, and MA plans may not be used to managing those kinds of issues.

Greg Scott, a principal in Deloitte Consulting LLP, makes somewhat similar points. SNPs have good opportunities in the new dual programs, which his firm is spending a lot of time on, but it is largely working with Medicaid rather than Medicare plans, he tells MAN. The duals initiatives are “an incredible opportunity, but not for the faint of heart. You have to manage,” he says.

Note: TBD = to be determined; ACO = accountable care organization; PACE = Program of All-inclusive Care for the Elderly.

Source: CMS data and Carl McDonald, Citi Investment Research and Analysis, Dec. 19, 2011