Health plans say many will need to
switch from Medicare Cost coverage.
By Christopher Snowbeck Star Tribune
JUNE 23, 2018 — 10:04PM
More than 300,000 Minnesotans will
be changing Medicare health plans next year, state officials said, when a
federal law eliminates certain health insurance options in the Twin Cities and
across much of the state.
For more than a year, insurers have
been sizing up the coming shift with Medicare Cost plans, a specific type of
coverage that’s distinct from Medicare Advantage plans that are more common
outside Minnesota.
This summer, insurers that sell
Medicare Cost plans are sending several hundred thousand letters to consumers
about the transition. There’s no change to coverage in 2018, they point out,
while stressing that details about 2019 options aren’t yet available.
“Stay calm. Check your mail,” said
Jim Schowalter, chief executive of the Minnesota Council of Health Plans, a
trade group. “Set aside some time this fall to look at your options.”
In the 1970s, the federal Medicare
health insurance program for people age 65 and older started signing contracts
with managed care plans on a cost-reimbursement basis, creating a private
health plan option for some benefits.
Health plans in Minnesota were among
the carriers that opted to introduce Medicare Cost health plans, and they
maintained the coverage even after the federal government in the 1980s launched
a different program that’s now Medicare Advantage (MA).
In MA plans, private insurers also
manage care for enrollees. But as the U.S. Government Accountability Office
(GAO) explained in a 2009 report: “Unlike cost plans, MA plans assume financial
risk if payments from [the federal government] do not cover their costs.”
A federal law passed in 2003 created
a “competition” requirement for Medicare Cost plans, which stipulated the plans
could not be offered in service areas where there was significant competition
from Medicare Advantage plans. Congress delayed implementation of the
requirement several times until a law passed in 2015 that called for the rule
to take effect in 2019.
Minnesota is one of the few places
where this is a big deal.
Whereas roughly 20 million people
are covered through Medicare Advantage plans, the federal Centers for Medicare
and Medicaid Services (CMS) estimates 630,587 people across the country were
enrolled in Medicare Cost plans this spring. The agency said Minnesotans
account for more than half of the Cost plan total — about 400,000 people.
“To minimize confusion and ensure
that seniors have the resources they need to make informed choices in a timely
manner, we urge CMS to provide ... critical information about this transition
as soon as possible,” U.S. Sens. Amy Klobuchar and Tina Smith wrote in a letter
to CMS officials last week.
Only three insurers sell Medicare
Cost plans in the state — Blue Cross and Blue Shield of Minnesota,
HealthPartners and Medica. For several years, Minneapolis-based UCare and
Kentucky-based Humana have been the primary sellers of MA plans in Minnesota.
Allan Baumgarten, an independent
health care analyst in St. Louis Park, said Cost plans have been a more
profitable line of business for carriers than Medicare Advantage. Collectively,
insurers earned more than $280 million in operating income from Cost plans over
a three-year period, he said.
Companies that run Cost plans said
the program has let them provide higher-quality coverage for enrollees,
particularly in rural areas. In a statement, Eagan-based Blue Cross said the
plans have saved the government money while also sparing health care providers
from historically low Medicare rates in Minnesota.
Final decisions haven’t been made on
exactly which counties in Minnesota will lose Cost plans next year, the
government said. But based on current figures, insurance companies expect that
Cost plans are going away in 66 counties across the state including those in
the Twin Cities metro. They are expected to continue in 21 counties, carriers
said, plus North Dakota, South Dakota and Wisconsin.
Blue Cross plans on sending letters
in early July notifying about 200,000 subscribers who stand to lose their
Medicare Cost plans. Minnetonka-based Medica, which started sending letters
last week, expects that about 66,000 members will need to select a new plan.
Officials with Bloomington-based HealthPartners say the insurer sent letters to
about 34,000 enrollees this month explaining the change.
While the transition will affect a
lot of people, it won’t directly affect most of the nearly 1 million Medicare
beneficiaries in the state, said Ross Corson, a Commerce Department spokesman.
There’s no change for people who already are enrolled in MA plans, Corson said,
or for those with original Medicare coverage.
Of the more than 300,000 people
losing their Cost plans in Minnesota, it’s likely that roughly 100,000 people
will be automatically enrolled into a comparable plan with their current
insurer, Corson said, unless they make another selection. Details haven’t been
finalized, he said. That likely will leave another 200,000 people, he said, who
will need to be proactive to obtain new replacement Medicare coverage.
The details that people need for
making decisions about 2019 coverage aren’t yet available, said Kelli Jo
Greiner, health policy analyst with the Minnesota Board on Aging.
“You don’t need to do anything right
now,” Greiner said. “Enjoy your summer. In the fall, you will receive letters
from either your plan or Medicare. That is going to tell you what you need to
do.”
Once full details from all carriers
are available on Oct. 1, seniors can decide whether to go with original
Medicare plus a supplement, which is sometimes called a “Medigap” policy, or
join an MA plan.
MA plans feature a network of
doctors and hospitals that enrollees must use to get the maximum payment,
whereas supplements tend to provide access to a broader set of health care
providers, said Shawnee Christenson, an insurance agent with Crosstown
Insurance in New Hope. While that might sound good to beneficiaries,
supplements can come with significantly higher premiums, Christenson said.
MA plans often include dental,
vision and health-club benefits that aren’t part of many supplements. Yet
people who buy a supplement have the option of buying “stand-alone” Part D
prescription drug coverage from any one of several insurers — a feature touted
as one of the selling points for Cost plans, too. People in MA plans, by
contrast, are limited to Part D plans sold by their MA carrier, Christenson
said.
“Cost plans kind of gave them the
best of both worlds,” Christenson said. “Now, they’re not going to get that —
they’re going to have to choose.”
Another wrinkle is that people who
want a supplement might have a better chance of getting into the coverage
during the transition out of their Medicare Cost plan, when the supplement is
provided on a “guaranteed issue” basis. Later, insurance companies can ask
questions about a senior’s health status and deny coverage depending on the
answers, said Greiner of the Minnesota Board on Aging.
The coming change provides an
opening for new competitors like Minnetonka-based UnitedHealthcare and a joint
venture between Allina Health System and Connecticut-based Aetna to potentially
sell more coverage for seniors in Minnesota. But Greiner said there’s no
information yet about which insurers might be selling coverage next year.
It all adds up to a busy fall for
Medicare beneficiaries. At Twin Cities Underwriters, an insurance agency based
in Roseville, Tom Peterson said he’s already making plans.
“We’re setting appointments for
October now,” Peterson said.
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