Companies or persons that sell the wrong plans to the wrong
people could go to prison for five years.
Congress wants users of Medicare
supplement insurance policies, or “Medigap” policies, to feel at least a small
financial pinch when they get care.
A federal law — the Medicare Access and CHIP
Reauthorization Act of 2015 (MACRA) — is pushing state insurance
regulators to set a minimum deductible requirement for Medigap policies
starting in 2020.
State insurance regulators will talk about the
new Medigap deductible requirements Thursday, during a conference call
organized by the National Association of Insurance Commissioners’ Senior Issues
Task Force.
One message the task force is trying to
communicate is that, under current federal law, states that fail to adopt the
new minimum Medigap deductible requirements by 2020 may lose the right to
regulate Medigap coverage.
The task force has posted three new documents
about the MACRA Medigap changes: a collection of answers to frequently asked
questions, or FAQs, aimed at insurance regulators; a sample MACRA consumer
alert; and a sample MACRA alert aimed at insurance agents and insurance
brokers.
The First-Dollar
Coverage Fight
The traditional Medicare insurance program
includes many coverage gaps, both to hold down direct spending and to encourage
patients to avoid unnecessary use of care.
Many people who use traditional Medicare
coverage, or “Original Medicare,” buy Medigap policies to fill in most or all
of the gaps.
Congress passed a law creating standardized
Medigap plan types, or “letter plans,” in 1990.
The richest and most popular “letter plan,”
Plan F pays all of the Original Medicare “cost-sharing amounts,” such
as the Medicare Part A hospitalization program deductible and the Medicare Part
B physician and outpatient services deductible.
Another, less common letter plan, Plan C, also
pays the Medicare Part A and Medicare Part B deductibles.
The Skin-in-the-Game
Fight
Over the years, many health policy specialists
have argued that Medigap Plan C and Plan F ”first dollar” coverage
encouraged waste, fraud and abuse, by making Plan F users feel as if their care
was free.
First-dollar coverage opponents fought for
years to require all Medigap users to pay something out-of-pocket for their
care.
Health policy specialists often refer to the
idea of requiring patients pay something for their care as giving patients
“skin in the game,” or a financial stake in controlling health care spending.
Critics of the skin-in-the-game philosophy
argue that even small out-of-pocket charges may discourage patients from
getting necessary care. Skin-in-the-game critics say delays in getting what
appears to be routine care could let minor health problems turn into major
health problems.
MACRA Medigap Letter
Plan Rules
In 2015, critics of first-dollar coverage won
out over the critics of the skin-in-the-game philosophy. Congress included
a provision in MACRA that bans the sale of new first-dollar coverage Medigap
plans, starting in 2020.
Consumers who become eligible for Medicare
before Jan. 1, 2020, can continue to buy Medigap Plan C or Medigap Plan F
coverage.
Consumers who become eligible for Medicare on
Jan. 1, 2020, or later will have to take responsibility for paying the Medicare
Part B physician and outpatient services deductible themselves.
For 2019, the Medicare Part B deductible is
$185.
Regulators and insurers have responded to
the new requirements by creating two new Medigap letter plans, for people who
will become eligible for Medicare on or after Jan. 1, 2020: Medigap Plan D and
Medigap Plan G.
Medicare Plan D will be the same as Medigap
Plan C, except that the user will have to pay the Medicare Part B deductible.
Medigap Plan G will be the same as Medigap
Plan F, except that the user will have to pay the Medicare Part B deductible.
What the Senior Issues
Task Force Is Saying
Here are five things the task force is saying
about the MACRA changes.
1, The federal government is on top here.
The federal government usually leaves
regulation of the business of insurance to the states.
Normally, states can decide for themselves
whether adopt NAIC “model laws” and “model regulations,” or formal examples of
what state insurance laws or state insurance regulations might look like.
But Medicare is a federal program, and the
federal government is taking an aggressive approach to pushing states to adopt
Medigap deductible rules that are at least as strict as the requirements in the
NAIC’s own MACRA Revisions to Medigap Model Regulation, which were adopted
by NAIC members in 2016.
“States that fail to adopt the changes risk
losing their regulatory authority over the MACRA provisions contained in the
NAIC Medigap Model Regulation that is now the federal standard,” NAIC officials
warn in the Senior Issues Task Force guidance.
2. Congress eliminated some Medigap program
flexibility.
Regulators in Massachusetts, Minnesota and
Wisconsin have special waivers in place that let them manage their states’
Medigap programs under state rules that were already in place before 1990.
The waiver states will now have to comply with
the MACRA minimum deductible requirements, even if those requirements conflict
with the pre-1990 state rules, according to the task force guidance.
3. Issuers that sell Medigap Plan C or Medigap
Plan F after Jan. 1, 2020, could face compliance nightmares.
The federal government could impose a fine of
up to $25,000 per prohibited act, and the person or company responsible for the
prohibited Medigap letter plan sales could end up going to prison for five
years.
That means what states do or don’t do could
have major repercussions for the companies or persons responsible for complying
with the MACRA requirements.
4. The MACRA Medigap deductible requirements
have holes
For regulators, one challenge is that Congress
included exclusions in the minimum-deductible requirements.
Consumers who buy Medigap Plan C or Medigap
Plan F policies before Jan. 1, 2020, can keep their policies, and they can buy
renewal policies. That means regulators will have to take care to know which
sales of first-dollar coverage are illegal and which are legal.
Congress also created an exclusion for
employer-sponsored group Medicare coverage.
But there’s an exclusion in the exclusion for
association-sponsored group Medicare coverage.
Regulators say in the Senior Issues Task Force
guidance that an employer can still after first-dollar Medigap coverage after
Jan. 1, 2020, but AARP cannot.
5. Many agents are confused.
NAIC officials write in the model agent alert
that many agents are giving consumers incorrect information.
“For example,” officials write, “some
insurance agents are telling their policyholders that Plans C and F will no
longer be available after December 31, 2019, and must therefore purchase new
coverage in order to not lose their Medicare supplement coverage. This
is a false statement.”
Under federal law, insurers that sell any
Medigap letter plan policies other than the relatively uncommon Plan A policies
must continue sell Plan C and Plan F policies, officials say.
“Some agents are telling their
policyholders that premiums for coverage under Plans C or F will be increasing
to such an extent that they should purchase other coverage,” officials write.
“These are misleading statements to induce policyholders to improperly switch
coverage using marketing and sales techniques that are in clear violation of
the Medicare supplement insurance laws and a states’ unfair trade practices
laws. If a state finds such activity, the state can take
appropriate administrative action.”
Resources
Links to information about the Medicare
supplement insurance regulation shift and other topics of interest to the
Senior Issues Task Force are available here.
The new MACRA “frequently asked questions”
document for regulator, and the new MACRA consumer bulletin, and the new MACRA
producer bulletin are posted under the “Related Documents” tab.
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