Medicare Advantage shifts fret members

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Kathy Slosky of the South Side learned last fall that she would pay $24 more per month for her Medicare Advantage plan beginning Jan. 1, while her monthly Social Security benefit was to increase $20.

What’s $4 less to a retiree living on “a very fixed” income of just over $1,000 a month?

“It’s a half-gallon of milk. It’s a vegetable. It’s a head of cauliflower,” she says, her expression conveying that this was no trivial loss.

About half of the Medicare beneficiaries in Allegheny County are in Medicare Advantage plans, which typically feature private HMO or PPO insurance with lower premiums and other extras in exchange for a narrower provider network and varying copayment and other out-of-pocket costs.

But, like Ms. Slosky, many Medicare Advantage beneficiaries have been seeing increased premiums and copayments in recent years, sometimes coupled with diminishing benefits.

The news is not likely to get better.

On April 7, the Centers for Medicare and Medicaid Services, or CMS, will announce the Medicare Advantage rates that it will pay insurers beginning in 2015. Last month, the Obama administration proposed a 1.9 percent cut in those payments as it moves to more closely align them with standard Medicare rates. Medicare Advantage is an alternative to traditional Medicare, the federal health insurance program for those 65 and older.

Insurers, and the insurance industry, have been quick to criticize the proposed cuts. America’s Health Insurance Plans, a national trade association for insurers, said the actual cut is closer to 6 percent when combined with the ongoing 2 percent across-the-board sequestration cuts mandated by Congress last year, the new health insurance tax and other costs.

“We’re talking about some pretty significant impact in terms of the amount of reimbursement that companies like Highmark are getting from CMS,” said Tim Lightner, Highmark’s vice president of senior markets. He estimates the cumulative cost of the cuts to insurers could range from $35 to $75 a month for each of the 340,000 beneficiaries it covers.

An estimated 2.4 million Pennsylvanians are enrolled in Medicare, including about 900,000 in Medicare Advantage plans.

“It ultimately is going to flow through to the beneficiaries in the form of higher premiums or most cost sharing,” Mr. Lightner said. “The cuts would have a real impact on tens of thousands of seniors in Western Pennsylvania.”

The cuts do have supporters, including the nonpartisan Center for Medicare Advocacy in Washington, D.C.

“Our take is that Medicare Advantage plans have been overpaid in relation to treatment of Medicare patients for a number of years, and it’s our position that payments to Medicare Advantage plans should be more in line with traditional Medicare,” said David Lipschutz, policy attorney for the center.

“As a matter of public policy, they should be reduced.”

By paying Medicare Advantage plans on average 114 percent of what Medicare pays, those on traditional Medicare are in effect partially — and unfairly — subsidizing the Medicare Advantage beneficiaries, he said.

“Will people see cost increases? Will they see reduced provider benefits? Will some plans pull out? It’s quite possible, but — at the end of the day — these are business decisions made by private entities trying to make a profit.”

The fallout, though, will land directly on people like Ms. Slosky.

Bill McKendree is lead counselor for Apprise, an Allegheny County program that provides free counseling to seniors as they make their Medicare plan choices. He said call volume is up 20-30 percent since the 2010 passage of the Affordable Care Act, which plans to reduce $716 billion in Medicare spending over the next 10 years.

The majority of calls typically start in the fall each year, when seniors start comparing plans for the following year. “They were amazed at the increases,” which in some cases ranged upward of 20-30 percent this year, he said. “They found increases either in their premiums, or deductibles, or copayments, or some combination with all the plans.”

While the Affordable Care Act may have been a catalyst, Mr. McKendree said the underlying cause for the rising costs is much broader.

The bigger issue, he said, is “the escalating cost of health care, the need to pay for it and the increasing number of people going into the Medicare system.

“It’s going to be an ongoing battle.”


Steve Twedt: stwedt@post-gazette.com or 412-263-1963.

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