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What’s going on with the Medicare Part B premium?

The “Doc Fix” bill that passed this spring includes a provision to level the portion of Medicare Part B costs paid for by beneficiaries. This means the premium has to go up to cover the unfunded portion. According to an analysis by the Center for Retirement Research, quoted in this Fiscal Times article, up to 15 million beneficiaries could see their Part B premium increase from $104.90 to $159.30 a month. Couples could be paying more.

Click here to view the 2015 Annual Report from the boards that manage Medicare’s trust funds, and jump to pages 201-203 to view rate tables.

70 percent of the Medicare population gets their Part B premium taken out of their Social Security check. There is a “hold harmless” provision of the Social Security Act that does not allow Medicare beneficiaries to have any costs passed on to them if there is no Cost of Living Adjustment (COLA) to cover that increased premium. So, most beneficiaries’ premiums will remain stable at $104.90 this year.

Unfortunately for the 30 percent of Medicare beneficiaries who do not have their premium taken out of their Social Security check, it just so happens that if there is no COLA increase they are responsible for covering the entire amount of their premiums, which will be raised more than 50 percent to $159.30.

This also includes all of those on Medicaid that have their premium paid by the state as well as all individuals who have either chosen to delay taking Social Security or are not full retirement age yet (age 65-67).

Agents need to be proactive this AEP let their prospects and clients know what could happen to their medical costs so they’re prepared. My 82-year-old mother heard on the news that her premium was going to $159 and she was very worried about what was going to happen.

Most seniors do not know the details of the situation. As their agent, you can be the first one to educate them and earn their trust.

Don’t miss a thing this AEP. Subscribe to The Agent’s Advantage for more Medicare policy news that can affect your book of business. Call RB Insurance at (800) 997 3107 or email me to learn more about how Medicare Part B premiums may be changing for your prospects and clients this AEP.

Editor’s note: This post has been updated to include more sources and to clarify the premium increase.

Medicare Part B deductible will no longer be covered by Med Supps

The bipartisan Medicare reform that repealed the “Doc Fix” also calls for changes to Medicare Supplement plans, which can be sold year-round and under less regulation compared to Medicare Advantage plans. Per the reform, Medicare Supplements can no longer cover the Part B deductible.

Language in the Medicare Access and CHIP Reauthorization Act gives a January 1, 2020, effective date for the plans to drop Part B deductible coverage, including the popular standardized Plan C and Plan F. Any Medicare member who already has a Supplement that covers the Part B deductible or enrolls before this date will be grandfathered in, meaning they will not see the change as long as they continue to pay the premium.

What’s happening now is similar to what happened when Medicare Part D was signed into law in 2003 — some Agents recall Plans I and J covered prescription costs before it made prescription coverage a major part of the senior health program.

States that currently do not approve standardized Medicare Supplement policies, which range from Plan A-N, will be prohibited from selling riders that cover the Part B deductible under the new reform.

The goal of the changes is to make seniors more conscious of the care they receive, which some have argued would lower costs by making patients think twice about their care because they now have to pay something. Research presented by the Congressional Budget Office confirms that higher out-of-pocket expense will reduce utilization, but that doesn’t necessarily mean the reform will actually save Medicare any money. The reasoning is short-term savings can be accomplished for Medicare if seniors utilize fewer medical services because of the deductible. But if some put off medical care they truly need because the Part B deductible is no longer covered, the change could potentially drive the costs up for Medicare in the long term due to lack of preventative care and an increase in more complex or serious medical conditions.

Congress has also decided to do away with first-dollar coverage starting in 2020, so it may take some time to find out if overall Medicare costs are overall reduced by using this strategy.

Editor’s note: The post has been updated to correctly report the reform’s changes to Medicare Supplements’ Part B deductible coverage. Eligibility criteria were not restructured; first-dollar coverage will be eliminated for all new Medicare Supplements members starting in 2020.

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What you need to know now about the “Doc Fix” repeal

President Obama recently signed the Medicare Access and CHIP Reauthorization Act, one of the most significant pieces of  Medicare legislation in years, into law. Here’s the short list of how the permanent fix to the “Doc Fix” will affect Medicare providers and members:

Doc pay: The reform package will give doctors a 0.5 percent payment increase in each of the next five years as Medicare transitions to a system that rewards physicians on qualify of care rather than quantity of procedures performed.

Cost to seniors: Currently, beneficiaries with incomes starting at $85,000 (or $170,000 for joint filers) pay a higher monthly premium for Medicare Part B as well as an additional premium for Medicare Part D plans. Beginning in 2018, the new plan will move a higher percentage of program costs to wealthier seniors. Those with an income of $133,000-$160,000 (twice that for couples) will pay 65 percent of total premium costs of the program rather than the 50 percent paid today. Those with incomes of $160,000 -$214,000 will pay 80 percent rather than the 65% under current law. About 2 percent  of beneficiaries are expected to be impacted by these changes.

Medicare Supplement changes: Starting in 2020, “first dollar” Medigap policies will not be able to cover the Part B deductible, currently at $147 per year, for new beneficiaries. First-dollar Medigap coverage afforded by standardized Plans C and F is disputed to cause overuse of Medicare services.

The legislation will also impact the Federal CHIP program, the Qualifying Individual (“Q-I”) program that pays Part B premiums for lower-income beneficiaries as well as payments to post-acute providers such as long-term care facilities, rehab hospitals, skilled nursing facilities and home health and hospice facilities.

For a more detailed examination of the new legislation, check out Associate Editor Jennifer Gunther’s coverage here on The Agent’s Advantage. Sales Manager Charlie Ferrel goes more in depth about Medicare Supplement changes tomorrow.

“Doc Fix” is no more: Senate approves Medicare reform

The bipartisan Medicare reform passed by the House on March 31 was approved by the Senate Tuesday in a 92-8 vote. The reform puts and end to the unpopular Sustainable Growth Rate (SGR) and nearly two decades of Medicare provider pay cut procrastination that came to be known as the “Doc Fix.” Congress put off a 21 percent cut to Medicare providers’ pay one more time as the reform awaited Senate approval with little or no change — cuts originally scheduled for April 1 will not go into effect on April 15, the Senate’s deadline for acting. President Obama has said he is eager to sign the bill into law.

The Medicare Access and CHIP Reauthorization Act, the reform’s official name, replaces the SGR with a new payment system and new financial incentives for physicians to see Medicare patients in a more quality-based arrangement, the Associated Press reports. It also funds the Children’s Health Insurance Program (CHIP) for the next two years and makes changes to Medicare Member payments and Medicare Supplement plans.

The Agent’s advantage recommends USA Today, The New York Times and The Hill for further reading about the Senate’s discussion of its vote.

 

Thank bipartisanship for long-awaited end to “Doc Fix”

House Speaker John Boehner (R–Ohio) and Minority Leader Nancy Pelosi (D–Calif.) are claiming passage of a bill that does away with the Medicare Sustainable Growth Rate (SGR) as victory for their respective parties. The Republican-controlled House passed HR2, The Medicare Access and CHIP Reauthorization Act, which will be voted on by the GOP-led Senate after spring recess.

Congress’ 18-year delay of Medicare provider payment cuts — otherwise known as the “Doc Fix” — is being replaced by a 0.5 percent provider payment increase over the next five years and changes to member premiums thanks to a bipartisan effort that is by no means the norm in today’s polarized political climate. The reform also calls for restructuring payment models to be based more on quality of care.

The Associated Press (AP) reports the reform will cost $210 billion over the next 10 years, with two-thirds of it being financed by other federal deficits. Medicare members and providers are expected to cover the other third, which comes out to about $70 billion.

According to AP, Medicare Beneficiaries whose incomes are $134,000 or higher will see increased premiums for medical services and prescription drugs starting in 2018. By 2020, the proposed law will require seniors who purchase Medicare Supplements to pay a minimum out-of-pocket cost of $147. Currently, the popular Plan C and Plan F Supplements usually have a $0 out-of-pocket cost.

Concern over increases in higher-income member’s monthly premiums and increased out-of-pocket costs has been expressed by Democrats as well as AARP and other senior interest groups.

The New York Times reports Judith A. Stein, executive of director of Center for Medicare Advocacy, said the reform package “Asks too much from beneficiaries and nothing from the pharmaceutical or insurance industry.”

A Kaiser Family Foundation FAQ says the bill permanently extends the Qualifying Individual or QI program, which provides premium payment assistance to low-income seniors.

Language related to the Hyde amendment, a 1979 provision annually renewed by Congress to restrict federal funding of most abortion services, cast doubt over the bill’s passage last week, just as it delayed passage of an anti-trafficking measure debated in the Senate earlier this month.

President Obama has endorsed the reform, which also includes provisions for the Children’s Health Insurance Program, Medicaid, funding for community health centers and funding for rural hospitals. The Senate is expected to pass the reform after it returns from a two-week-long-spring recess.

RB Insurance specializes in selling Special Needs Plans for individuals eligible for Medicare and Medicaid, including those eligible for the QI program. Learn more about QI and expanding your Book of Business by assisting low-income Medicare members by clicking here.

 

Could this finally be the year “Doc Fix” is repealed?

2015 could be the year the Medicare Sustainable Growth Rate (SGR) problem, more commonly referred to as the “Doc Fix,” is permanently taken care of by Congress. A bipartisan endgame to the unpopular cost-saving formula both parties have been hesitant to deal with has Medicare providers anxious about payment changes, and Medicare members are concerned about possible increases to their premiums or deductibles in light of a repeal.

McClatchyDC, an online newspaper covering politics, reported Friday that a bipartisan bill that would replace the SGR and create a 0.5 percent pay increase for the next five years was unveiled. The bill would adopt a payment model based more on quality of care than volume of care, and it would also require physicians to receive a minimum amount of payment through the Alternative Payment Models by 2020, McClatchy reports.

News outlets have noted how unusual it is for House Speaker John Boehner (R–Ohio) and Minority Leader Nancy Pelosi (D–Calif.), oftentimes each others’ political adversary, to be working together to repeal the “Doc Fix.” The Associated Press reported earlier this week that the two leaders have been meeting to form a strategy to block a 21 percent cut in Medicare provider payments that would go into effect on April 1 if no action is taken. They are also interested in continuing funding for the Children’s Health Insurance Program, which works with state Medicaid programs to assist low-income children nationwide.

In addition to seeing a 21 percent pay cut, many Medicare Advantage providers who have their reimbursement level tied to rates under Original Medicare could also see cuts if an agreement is not reached.

Year after year, addressing the issues posed by the Medicare Sustainable Growth Rate (SGR) has proven to be a tough pill for Congress to swallow. There’s a possibility it could be repealed this year in a new bipartisan effort.

For the past 18 years, lawmakers have delayed the SGR from taking effect to incentivize doctors to continue providing services to Medicare members. SGR was formulated by Congress in 1997 to reduce the federal deficit by basing Medicare provider payments on economic growth, the Kaiser Family Foundation notes in a special FAQ about the “Doc Fix.”

“In 2002, doctors were furious when they came in for a 4.8 percent pay cut [under SGR],” Kaiser says in the FAQ. “Every year since, Congress has staved off the scheduled cuts. But each deferral just increased the size of the fix needed the next time.”

According to Kaiser, the Republican-controlled House and Senate would need to find a way to pay for up to $70 billion of a $200 billion reform package. One possibility is increasing Medicare Part B premiums for higher-income beneficiaries ($80,000 or more per year for an individual) and requiring all Medicare Supplement members to pay a $250 minimum deductible on an annual basis.

Repealing the “Doc” Fix is explicitly mentioned in President Obama’s budget proposal for the next fiscal year and may be alluded to in the Republican proposal.

This is not the first time hopes have been high to fix the “Doc Fix” once and for all. NPR reported in 2013 that multiple bills were passed by the Democrat-controlled Senate and Republican-run House to repeal it. Interest groups representing the medical industry and Medicare members voiced opposition to them, though, because they did not want to see doctors and seniors pay for the issue Congress brought on itself by continuously putting off the SGR from going into effect.

In a press release dated January 22, 2015, AARP, the nation’s largest senior interest group, expressed its position on current efforts to end the SGR:

“[A]ny SGR proposals should not include shifting costs onto Medicare beneficiaries through higher cost-sharing or reduced benefits,” the release said.

According to the press release, AARP president-elect Eric Schneidewind has testified before Congress on behalf of seniors, saying the group “firmly believes that any discussion of offsets to pay for Medicare reimbursement reform must include savings from prescription drugs.”

 Our Director of Sales, Training and Compliance, Rob Bever, contributed to this post. If you have further questions about the “Doc Fix” and how it may affect you and your clients, give us a call at (800) 997 3107. Subscribe to our blog for more updates!