Monday, December 31, 2012

Putting a Donut Hole Back in Medicare: Proposals to Increase Medigap Costs Put Vulnerable Beneficiaries at Risk

Among proposals aimed at reducing federal spending for Medicare, some are suggesting that Medigap insurance be restructured to increase the cost-sharing burden on beneficiaries and/or add a surcharge for those that choose plans offering "first-dollar" or "near first-dollar" coverage.   These proposals operate under the assumption that charging beneficiaries more in up-front, out-of-pocket costs will deter them from using unnecessary care.  But this assumption ignores the fact that adding costs for Medigap insurance will deter many beneficiaries from seeking medically necessary care. While these proposals might yield limited federal savings in the short term, such savings would lead many to forego needed care until more acute, and costly, treatment is needed.[1]
Two thirds of people with Medigap coverage live on incomes below $40,000. In addition to monthly Part B and Part D premiums, beneficiaries pay Medigap premiums ranging from $178 - $220 per month.[2]  Beneficiaries turn to Medigap policies for greater financial stability and predictability in determining their health spending, especially if they require more health care services to manage chronic conditions.
Proposals that impose co-pays, deductibles, cost-sharing, or eliminate "first-dollar" Medigap coverage would particularly harm people with chronic conditions and people with limited incomes. This is akin to a "sick tax," forcing people who need care to pay more and get less.  For example, under some Medigap restructuring proposals, it is estimated that 37% of beneficiaries in fair or poor health would face higher costs, as would people with more hospitalizations.[3]
The Affordable Care Act closes the Part D Donut Hole, the built-in gap in prescription drug coverage that forces beneficiaries to pay out-of-pocket for all drug costs between an initial coverage limit and higher, catastrophic limit.  Imposing additional up-front Medigap costs for beneficiaries would create a new Donut Hole, just as we close the old one.  It would also encourage people to leave traditional Medicare and join private Medicare Advantage plans, which are more expensive for Medicare and taxpayers.
There are better ways to achieve savings in Medicare without shifting additional costs to beneficiaries; we urge policymakers to explore them.[4]  
For more information, contact policy analyst Xenia Ruiz (xruiz@medicareadvocacy.org) or attorney David Lipschutz (dlipschu@medicareadvocacy.org) in our Washington, DC office at (202) 293-5760.

[1] See Medicare Supplement Insurance First Dollar Coverage and Cost Shares Discussion Paper, National Association of Insurance Commissioners (NAIC), Senior Issues Task Force, Medigap PPCA Subgroup, (October 2011), available at: http://www.naic.org/documents/committees_b_senior_issues_111101_medigap_first_dollar_coverage_discussion_paper.pdf.  Also see, e.g., Leadership Council on Aging (LCAO) issue brief “Reforming Medigap Plans by Shifting Costs onto Beneficiaries: A Flawed Approach to Achieving Medicare Savings” (December 2012), available at: http://www.lcao.org/docs/LCAO-Medigap-Issue-Brief-12-12.pdf
[2] Medigap Reform: Setting the Context, Kaiser Family Foundation, (September 2011), available at http://www.kff.org/medicare/8235.cfm.
[3]Medigap Reform: Potential Effects of Benefit Restrictions on Medicare Spending and Beneficiary Costs, Kaiser Family Foundation, (July 2007), available at http://www.kff.org/medicare/8208.cfm.
[4] See, e.g., previous Weekly Alerts, including finding drug savings in Medicare (November 2011) http://www.medicareadvocacy.org/2012/11/15/deficit-reduction-and-medicare-save-money-without-harming-beneficiaries/ ; Prescription Drug Rebates (July 2011) http://www.medicareadvocacy.org/2011/07/21/debunking-medicare-myths-drug-rebates-for-dual-eligibles/ ; and additional options for achieving Medicare savings (June 2011) http://www.medicareadvocacy.org/2011/06/09/so-what-would-you-do-real-solutions-for-medicare-solvency-and-reducing-the-deficit/.

You Can Leave the Nursing Home: Home for the Holidays (Winter 2012 Update)

December is a time for gatherings with family and friends.  Nursing home residents often want to participate in these gatherings but may be under the impression that they will lose Medicare coverage if they leave the facility to do so. This is not true.
The Medicare Benefit Policy Manual recognizes that although most beneficiaries are unable to leave their facility,
an outside pass or short leave of absence for the purpose of attending a special religious service, holiday meal, family occasion, going on a car ride, or for a trial visit home, is not, by itself evidence that the individual no longer needs to be in a SNF for the receipt of required skilled care.[1]
A facility should NOT notify patients that leaving the facility will lead to loss of Medicare coverage. The Medicare Benefit Policy Manual says that such a notice is "not appropriate."[2]
If the resident begins a leave of absence and returns to the facility by midnight, the facility can bill Medicare for the day's stay.[3]
If the resident is gone overnight (i.e., past midnight) and returns to the facility the next day, the day the resident leaves is considered a leave of absence day. Clarifying what seemed to be conflicting provisions in the Manuals, the Centers for Medicare & Medicaid Services confirms that the facility can bill a beneficiary for bed-hold days during a SNF absence.[4]
Chapter 6 of the Medicare Claims Processing Manual provides that the facility cannot bill a beneficiary during a leave of absence, "except as provided in Chapter 1 of the manual at §30.1.1.1."[5] That section authorizes skilled nursing facilities (SNFs) to bill a beneficiary for bed-hold during a temporary "SNF Absence" if the SNF informs the resident in advance of the option to make bed-hold payments and of the amount of the charge and if the resident "affirmatively elect[s]" to make bed-hold payments prior to being billed.[6] Charges to hold a bed and maintain the resident’s "person effects in a particular living space . . . are calculated on the basis of a per diem bed-hold payment rate multiplied by however many days the resident is absent, as opposed to assessing the resident a fixed sum at the time of departure from the facility."[7] MS distinguishes bed-hold payments from payments for admission or readmission, which are "not allowed."[8]
Residents can leave their SNFs for short periods, such as a day or two, to enjoy the holidays with their families and friends without losing Medicare coverage.  Their SNFs, nonetheless, are allowed to bill them to hold their beds under Medicare rules.
For more information, contact attorney Toby S. Edelman (tedelman@medicareadvocacy.org) in the Center for Medicare Advocacy's Washington, DC office at (202) 293-5760.
 

[1] Medicare Benefit Policy Manual, Pub. 100-02, Ch. 8, §30.7.3. (Example, second paragraph) (http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c08.pdf).  Scroll down to page 35.[2] Medicare Benefit Policy Manual, Pub. 100-02, Ch. 8, §30.7.3. (Example, third paragraph) (http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c08.pdf).  Scroll down to page 35.[3] Medicare Benefit Policy Manual, Pub. 100-02, Ch. 3, §20.1.2. (http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c03.pdf).  Scroll down to page 4.[4] Medicare Claims Processing Manual, Pub. 100-04, Ch. 6, §40.3.5.2. (http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c06.pdf).  Scroll down to page 45.  Note, unlike Medicaid in some states, the Medicare program does not provide a payment for "bed-hold."
[5] Medicare Claims Processing Manual, Pub. 100-04, Ch. 6, §40.3.5.2. (http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c06.pdf).  Scroll down to page 45.
[6] Medicare Claims Processing Manual, Pub. 100-04, Ch. 1, §30.1.1.1 (http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c01.pdf).  Scroll down to pages 56-57.  CMS cites, as authority for this payment option, the Nursing Home Reform Law, 42 U.S.C. §1395i-3(c)(1)(B)(iii), and 42 C.F.R. §483.10(b)(5)-(6).
[7] Medicare Claims Processing Manual, Pub. 100-04, Ch. 1, §30.1.1.1 (http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c01.pdf), scroll down to page 57.
[8] Medicare Claims Processing Manual, Pub. 100-04, Ch. 1, §30.1.1.1 (http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c01.pdf).  Scroll down to page 56.
 

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