Important New Medicare Part C and D Appeal Rights

Some important changes in appeal rights for Medicare beneficiaries who are in Medicare Advantage (managed care) or in Part D of Medicare go into effect on January 1, 2011. (Because Medicare's contracts with Part C and Part D companies are on a calendar year basis, changes typically occur at the begining of each year.) These changes are:

Part C

2011 brings a substantial expansion in the appeal rights of beneficiaries enrolled in managed care. Specifically, whenever any written plan of care, course of treatment, or arrangement for medical services is drawn up for you, your Plan must give you a written notice before it discontinues the services, or reduces their number, or lowers the intensity of the treatment, or changes the mix or range of sessions or services. You can then make a request for an organization determination to reverse this. This, of course, does not in any way affect your right to request such a determination at any time, it just puts the burden of a prior, written notice on the Plan in these cases and reinforces your right to appeal. Previously, beneficiaries had this right only in four specific provider settings (see page 200 of Managing Your Medicare).

Another expansion is that beneficiaries now have the right to make a request for an organization determination orally, and Plans must have a method to properly record and control these. (This does not apply to request for payment for a service already rendered.)


Part D

Beneficiaries now have the right to make a request for a coverage determination orally, and drug plans must have a method to properly record and control these. (This does not apply to request for payment for a drug already received by the beneficiary.)

If a request for a coverage determination for payment for a drug already received is made, the plan must make a decision in 14 (not three) days, and actually make payment, if any is due, within those 14 days.

In Part D, a plan may now give their response to either a fully favorable or to an adverse expedited coverage determination orally, as long as they follow up with a written notice in three days. And the appeals clock starts from the date of the written notice. This also applies to expedited redetermination requests. In either case, if there are conditions which attach to a fully favorable expedited determination or redetermination, the notice must state them in a “readable and understandable form.”

Medicare Changes Beginning January 1, 2011

Here is a summary of how Medicare beneficiaries will be directly affected by legislation (principally the Health Care Reform bills) and by regulations that go into effect on January 1, 2011. Many other changes will also kick in on that date, but these are the items that directly affect beneficiaries, broken down by the four parts of Medicare. Note that some other changes will come in 2011, but not until later, and I’ll blog about them at the appropriate time. And this posting doesn’t go into the routine changes, such as the change (usually increases) in deductibles, premiums and limits, which typically occur every calendar year.

PART A

No changes in Part A.


PART B

Preventive Services: A New Service and Changes in Cost Sharing

The most significant change in Part B will be the introduction of an annual “wellness exam” and the elimination of applying the annual deductible or paying coinsurance for many preventive services. If your provider accepts assignment for these services, you will pay nothing for them. But not all preventive services are included.

The new Annual Wellness Exam, also called the Annual Wellness Visit (AWV), is a physical exam which includes a “comprehensive health risk assessment” and a “personalized prevention plan.” The personalized prevention plan (also called Personal Prevention Plan Services or PPPS) takes into account the findings of the health risk assessment and include elements such as: a five- to ten-year screening schedule; a list of identified risk factors and conditions and a strategy to address them; health advice and referral to education and preventive counseling community-based interventions to address modifiable risk factors such as physical activity, smoking, and nutrition.

The exam also includes establishing your medical / family history, routine measurements such as weight, height, blood pressure, and body mass index (BMI), detection of any cognitive impairment, screening for depression, a review of your functional ability, and voluntary advanced care planning, that is, giving you information about advanced directives.

No coinsurance or deductible will apply to this newly covered service.

You can get this exam once every 12 months, but not within first 12 months of Part B enrollment (which is the timeframe in which you can get the “Welcome to Medicare” physical exam). And, because is it very similar, you can‘t get it within 12 months of a “Welcome to Medicare” exam.

Most beneficiaries should immediately schedule one of these exams for 2011 with their physician, as, unless they meet either of the two exceptions above, the sooner they get it, the sooner they can get it in subsequent years. Plus my experience is that it often takes a good deal of time to schedule a physical, so call now for your first date in 2011.


These are the preventive services which, beginning in 2011, will not be subject to the Part B deductible or coinsurance:

“Welcome to Medicare” Physical Exam
Annual Wellness Exam
Abdominal Aortic Screening
Bone Mass Measurement
Flexible Sigmoidoscopy
Colonoscopy
Pelvic Exam and Clinical Breast Exam
Screening Mammogram
Hepatitis B Shot

If you have not gotten these and you are otherwise eligible (the criteria are spelled out in Chapter 4 of Managing Your Medicare) you should take this opportunity to make an appointment in 2011 to get the service.


Note that these preventive services already had no cost sharing, and if you need them, get them right way, don’t wait ‘til 2011:

Cardiovascular Disease Screening (lab test)
Fecal Occult Blood Test (lab test)
Diabetes Screening (lab test)
HIV Screening (lab test)
Pap Smear (lab test)
PSA (lab test)
Flu Shot (including the “swine” flu (H1N1) shot)
Pneumococcal Pneumonia Shot

(Note that lab tests have to be assigned and are not subject to the deductible or coinsurance, but you may have to pay part of the cost of the visit to take the specimen or have the results interpreted.)


These preventive services will continue, in 2011 and beyond, to have the deductible and coinsurance apply, as before, so there is no sense in waiting to avail yourself of them:

Barium Enema
Glaucoma Screening
Diabetic Retinopathy Exam
Digital Rectal Exam


And finally, these “preventive” services, which are counseling and educational services, will continue to be available. Again, you should avail yourself of each that apply to you as soon as possible, both for the sake of your health and so that you can repeat them in the future as permitted:

Beginning with January 1, 2011, neither the deductible not the coinsurance wil apply to these two services:

Tobacco Cessation Services
Medical Nutrition Therapy Services

You will continue to be responsible for the deductible and coinsurance for these two services:

Kidney Disease Education (KDE) Services
Diabetes Self-management Training


[The following applies only to beneficiaries in Medicare Advantage Plans, although all other Part C items are covered in the next section.]
Finally, although there is a general rule in Medicare that whatever benefits must be provided under Original Medicare must also be provided by any Medicare Advantage Plan, it, like all Medicare rules, has exceptions. And the new Annual Wellness Exam and the eliminations of co-payments and deductibles from the nine specific services noted above are exceptions. Medicare Advantage Plans, in 2011, do not have to provide the exam or eliminate the co-payments and deductibles. (This is because their payment rates from Medicare were set before the new Health Care Reform law mandated these changes.) So be sure to check with your Plan or your Evidence of Coverage booklet before you get an exam or use one of these services to find out (1), if your plan covers an annual exam, and (2), for all these services, exactly what your liability will be. Many Medicare Advantage Plans have had more generous preventive benefits that Original Medicare, so your liability may be zero or at least reasonable.

Therapy Cap Exception Process – The “therapy cap exception process,” which generally allows beneficiaries to exceed the dollar amount caps or limits on (1) physical and speech therapy and on (2) occupational therapy will no longer be in effect in 2011. The caps in 2011 will each be $1,870.


Power-Driven Wheelchairs - Power-driven wheelchairs will no longer have the purchase with a lump-sum payment option – rental is mandatory for this piece of durable medical equipment. Medicare will pay for these over a 13-month period. Complex rehabilitative wheelchairs are excluded from this mandate – they continue to have the purchase option.


Medicare Competitive Bidding Program on Durable Medical Equipment Because of a special program Medicare will begin in 2011 to get better prices on durable medical equipment and allied supplies, a number of beneficiares will see significant changes in who can supply these items and how much they will cost. This program will apply only to certain parts of California, Florida, Indiana, Kansas, Kentucky, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, and Texas, and then only to certain items of equipment and supplies. So be sure to see my blog posting of 10/11/10 for complete details.

Two cautions: If you don’t reside in the affected areas but visit there and get any of the affected DME items while there, you are subject to this program. And, while this technically involves only those of you in Original Medicare, those of you in Medicare Advantage (Part C) may be affected and you need to carefully check with your Plan before you purchase or rent any of the involved items, but, of course, it’s always wise to do that when you are in Medicare Advantage.)


Renal Dialysis Prospective Payment System – Beginning in 2011 renal dialysis will be paid for under a new payment methodology called a “prospective payment system.” This basically bundles the payment Medicare makes for dialysis into a comprehensive rate. I do not know at this point exactly the effect on beneficiaries, but it appears that some drugs they use will now be paid for under Part B rather than Part D. This may shift some costs to beneficiaries as this service will, of course, be subject to a 20 percent coinsurance, which may be more than what a beneficiary is responsible for under Part D.


Part B Premium Surcharge Incomes Frozen at 2010 Levels – In previous years the income level which subjects a beneficiary to the high income premium surcharge in Part B would automatically rise, but the income levels in effect in 2010 are now frozen for 2011 and future years. Currently about 5 percent of beneficiaries must pay a surcharge, but this will tend to increase as time goes on. Details about the 2010 Part B premium surcharges are in my post of 11/15/10.


PART C

Elimination of the Open Enrollment Period and Inauguration of the Annual Disenrollment Period

In 2011 the Medicare Advantage Open Enrollment Period, which has run from January 1 to March 31 and which allowed you to make a variety of changes to how you got your Medicare, and which Plan you were in, is eliminated. It will no longer be in effect.

In its place is a new Annual Disenrollment Period, which will run only from January 1 to February 14 of 2011 and every year thereafter. During this 45-day period you can make these changes:

You may leave Medicare Advantage (Part C) and go to Original (fee-for-service) Medicare. The change will be effective first day of month following the date you disenroll from your Medicare Advantage Plan.

And, if you do so, you may join a stand-alone Part D drug plan. You will join this drug plan on first day of month following the date the plan gets your enrollment request. Note that you may enroll in a Part D plan whether or not the Medicare Advantage Plan you were in did or did not have Part D drug coverage.

Full information about this change is in my post of 11/28/10.


Establishment of a Maximum Out-of-Pocket Limit While many Medicare Advantage Plans have had a cap on how much a Medicare Advantage enrollee has to pay out-of-pocket each year for Part A and B services, Medicare has now imposed such a limit on most types of Plans. For example, for 2011, this “maximum out-of-pocket” (MOOP) limit is $6,700 for Private Fee for Service (PFFS) Plans. This limit will change each year. As this rule is more than a little complicated, a particular Plan may have a much lower limit, a higher one, or none. And certain Plans may have one limit for in-network services, and another, higher one for in- and out-of-network services combined. But you should consider a Plan with a reasonable limit, as this is a valuable protection you do not have in Original Medicare. These limits can be seen in the Medicare Plan Finder (also called Medicare Compare) on Medicare.gov both in summary and in detail.

If you get your Part D prescription drug coverage through your Medicare Advantage Plan, the cost of your drugs do not count toward this limit, just Part A and B services.


Charge Limitations on Three Specific Types of Services – Beginning in 2011, Medicare Advantage Plans can’t charge a beneficiary more than Original Medicare for three specific types of services:

Chemotherapy
Renal Dialysis
Skilled Nursing Facility (SNF) Care

Be advised that as with everything in Medicare this is more complicated than it looks. For example, a Plan may charge you a Skilled Nursing Facility (SNF) co-payment in the first 20 days of your stay (which Original Medicare does not) as long as actuarially their charges for SNF stays don’t exceed those in Original Medicare.


Clinical Trials and Medicare Advantage – New Rules in 2011

For 2011, the Center for Medicare & Medicaid Services has given Medicare Advantage Plans additional direction on the issue of what they must pay when an enrolled beneficiary receives services in an approved clinical trial, specifically:

1. Plans will be required to reimburse enrollees for the difference between fee-for-service cost sharing incurred for covered clinical trial items and services and the Medicare Advantage Plan’s in-network cost sharing for the same category of service. So if the clinical trial people charge you as if you were in fee-for-service Medicare, you are responsible only for what you would pay under the terms of your Plan’s benefit structure.

2. Starting in 2011, your Medicare Advantage Plan, in adding up all the medical costs which count toward your annual out-of-pocket maximum amount, must include in these medical costs not only what you pay out-of-pocket, but also what it must pay under the new rule above.

And be aware that you do not have to get any pre-authorization or permission from your Plan to join a clinical trial.

These new rules are more fully discussed in my posting of 10/16/10, which also gives information about some billing issues that may arise in clinical trials.


Prohibition on Certain Prior Notification Requirements – “Prior Notification,” the requirement that an enrollee tell their Plan that they will receive a particular service in return for getting a lower co-payment or coinsurance rate, is a form of utilization control in the managed care setting. However, beginning in 2011, this practice will no longer be allowable for Private Fee for Service Plans (PFFS), Medicare Savings Account (MSA) Plans and, for out-of-network services only, for Preferred Provider Organization (PPO) Plans. Prior authorization continues to be unallowable.


PART D

Dramatic Narrowing of the Donut Hole The “donut hole” has been the 100% coinsurance band where you pay all of the cost of your prescription drugs, but it is being narrowed rather substantially. In 2011, once you have satisfied your deductible (Never more than $310.) and have gone through the 25% Coinsurance Band, where you pay 25% and Medicare pays 75% of the next $2,240 in drug costs, you hit the donut hole. In this band you are responsible for an additional $3,607.50, while Medicare’s dollar responsibility varies. However, in 2011:

For brand name drugs, the manufacturer has to give a discount of 50% off the price of the drug itself, and you have to pay the remaining 50%, plus any dispensing fee.

For generic drugs, the government will pay 7% of the cost of the drug itself. You pay the other 93%, plus the dispensing fee.

You will remain in the donut hole until all your drug expenses total $4,550. This includes your deductible, anything you spent in the 25% coinsurance band and in the donut hole, plus whatever the dollar amount of the discounts that drug manufacturers had to give you on brand name drugs while you were in the donut hole. (But not the amount the government paid for generics in the donut hole.) While it will be different for every beneficiary, it is likely that a typical beneficiary will actually have to spend perhaps $1,900 or $2,000 out-of-pocket while in the donut hole to get out of it, as the 50% manufacturers' discount will count toward their drug spending.

And once you have reached $4,550 drug expense total (this is called the "out-of-pocket threshold") you go into the catastrophic band. Here you are responsible for 5% of you drug costs, and Medicare, 95%, without any upper limit to the total spending on your drugs. The minimum dollar amount you must pay in the catastrophic phase for a [prescription remains the same as 2010: $2.50 for generics and $6.30 for brand name drugs.


Part D Premium Surcharge Begins – Starting with January 2011 and beyond, high-income beneficiaries will be subject to a Part D premium surcharge of from $12.00 to $69.10 per month. The income thresholds are the same as apply to the Part B premium surcharge. My blog of 10/04/10 explains this in detail.


Widened Definition of “True Out-of-Pocket Costs” (TrOOP) Beginning January 1, 2011, drug costs reimbursed by the Indian Health Service (HIS) and by AIDS Drug Assistance Programs (ADAPs, these are funded under the Ryan White Care Act) WILL count toward the TrOOP threshold.


Mandated Coverage of Certain Types of Drugs Part D must cover, not substantially all, but all drugs in these six categories, called “protected classes:”

Anti-Cancer / Antineoplastics
Anticonvulsants
Antidepressants
Antipsychotics
Antiretrovirals (usually used in HIV/AIDS therapy)
Immunosuppressants used following an organ transplant

CMS can allow exceptions only on a case-to-case basis.

Medicare Preventive Services in 2011: A New Service and Changes in Cost Sharing

You need to start planning your 2011 preventive services now to take full advantage of changes to Medicare which have come about in the health reform legislation.

The most significant change in Part B will be the introduction of an annual “wellness exam” and the elimination of applying the annual deductible or paying coinsurance for many preventive services. If your provider accepts assignment for these services, you will pay nothing for them. But not all preventive services are included.

The new Annual Wellness Exam is a physical exam which includes a “comprehensive health risk assessment” and a “personalized prevention plan.” The personalized prevention plan takes into account the findings of the health risk assessment and include elements such as: a five- to ten-year screening schedule; a list of identified risk factors and conditions and a strategy to address them; health advice and referral to education and preventive counseling community-based interventions to address modifiable risk factors such as physical activity, smoking, and nutrition. No coinsurance or deductible will apply to this newly covered service.

You can get this exam once every 12 months, but not within first 12 months of Part B enrollment (which is the timeframe in which you can get the “Welcome to Medicare” physical exam). And, because is it very similar, you can‘t get it within 12 months of a “Welcome to Medicare” exam.

Most beneficiaries should immediately schedule one of these exams for 2011 with their physician, as, unless they meet either of the two exceptions above, the sooner they get it, the sooner they can get it in subsequent years. Plus my experience is that it often takes a good deal of time to schedule a physical, so call now for your first date in 2011.


These are the preventive services which, beginning in 2011, will not be subject to the Part B deductible or coinsurance:

“Welcome to Medicare” Physical Exam
Annual Wellness Exam
Abdominal Aortic Screening
Bone Mass Measurement
Flexible Sigmoidoscopy
Colonoscopy
Pelvic Exam and Clinical Breast Exam
Screening Mammogram
Tobacco Cessation Services
Medical Nutrition Therapy Services
Hepatitis B Shot

If you have not gotten these and you are otherwise eligible (the criteria are spelled out in Chapter 4 of Managing Your Medicare) you should take this opportunity to make an appointment in 2011 to get the service.


Note that these preventive services already had no cost sharing, and if you need them, get them right way, don’t wait ‘til 2011:

Cardiovascular Disease Screening (lab test)
Fecal Occult Blood Test (lab test)
Diabetes Screening (lab test)
HIV Screening (lab test)
Pap Smear (lab test)
PSA (lab test)
Flu Shot (including the “swine” flu (H1N1) shot)
Pneumococcal Pneumonia Shot

(Note that lab tests have to be assigned and are not subject to the deductible or coinsurance, but you may have to pay part of the cost of the visit to take the specimen or have the results interpreted.)


These preventive services will continue, in 2011 and beyond, to have the deductible and coinsurance apply, as before, so there is no sense in waiting to avail yourself of them:

Barium Enema
Glaucoma Screening
Digital Rectal Exam
Kidney Disease Education (KDE) Services

Elimination of the Open Enrollment Period and Inauguration of the Annual Disenrollment Period

In 2011 the Medicare Advantage Open Enrollment Period, which has run from January 1 to March 31 and which allowed you to make a variety of changes to how you got your Medicare, and which Plan you were in, is eliminated. It will no longer be in effect.

In its place is a new Annual Disenrollment Period, which will run only from January 1 to February 14 of 2011 and every year thereafter. It is important to understand that this new period is less than half as long as the previous one, so you will have to act more quickly to make any permissible changes.

The changes you can make during this 45-day period are these: (Note that they are much more restrictive than what you could do in the now obsolete Medicare Advantage Open Enrollment Period.)

You may leave Medicare Advantage (Part C) and go to Original (fee-for-service) Medicare. The change will be effective first day of month following the date you disenroll from your Medicare Advantage Plan.

And, if you do so, you may join a stand-alone Part D drug plan. You will join this drug plan on first day of month following the date the plan gets your enrollment request. Note that you may enroll in a Part D plan whether or not the Medicare Advantage Plan you were in did or did not have Part D drug coverage.

And you do this either by:

Disenrolling from your Medicare Advantage Plan. This will put you in Original Medicare without any Part D drug coverage.

Or by enrolling in a stand-alone Part D drug plan. This will automatically disenroll you from your Medicare Advantage Plan and put you into Original Medicare and enroll you in the Part D drug plan.

And you may disenroll from your Medicare Advantage Plan and later enroll in a stand-alone Part D drug plan, as long as you enroll by February 14, 2011.

You may NOT join a Medicare Advantage Plan nor switch from one Medicare Advantage Plan to another.

And just to forewarn you, as this is critically important, the “Annual Election Period,” which has run from November 15 to December 31 of each year, will change in the fall of 2011 for enrollments to be effective January 1, 2012. In 2011, this period will begin on October 15 and end on December 7. So be prepared, earlier next fall than you are used to, to figuring out the best Medicare Advantage Plan for you. (This also affects Part D, whether you get it through your Medicare Advantage Plan or a stand-alone Part D plan.)

The Triple (or Quadruple) Whammy!

Some of you are probably getting notices now about how much your Medicare Part B premium will be in 2011. For most beneficiaries, they won’t change because their Social Security payments won’t go up. But for those of you who don’t have it taken out of your Social Security or Railroad Retirement payment, or who are subject to the Part B high income premium surcharge, you will see an increase, to $115.40. And those of you who are subject to that surcharge (it’s between $46.10 and $253.70 per person per month – see the blog I posted 11/15/10), you get the double whammy of the increased rate PLUS the surcharge! But wait, it’s really worse – the increase in the basic Part B premium from $110.50 to $115.40 is partly due to the fact that someone has to make up the difference stemming from the situation that about three-quarters of Part B beneficiaries are paying a reduced rate (most of them $96.40) and SOMEONE has to make up difference, and that someone is you. (And, ironically, state governments who are subsidizing the Part B premiums of less well-to-do beneficiaries.) So if you feel a little burdened, it’s because you are!

Oh, and the quadruple whammy? If you are subject to the Part B high income surcharge and you also have Part D, in 2011 you will also pay a high income surcharge for your Part D prescription drug benefit. But not to worry, the surcharge is much less than Part B’s. It runs from $12.00 to $69.10 per person per month. (My posting of 10/04/10 has the details.)

2011 Extra Help Resource Limits

The Centers for Medicare & Medicaid Services (CMS) has just released the resource limits which will be in effect in 2011 for Medicare beneficiaries to receive “extra help” with their Part D prescription drug benefit. This is also known as the “low-income subsidy” (LIS). The resource limits for 2011 are:

For the full low-income income subsidy, resources may not exceed:
$8,180 for an individual or $13,020 for a married couple.

For the other (partial) low-income income subsidy, resources may not exceed:
$12,640 for an individual or $25,260 for a married couple.

(For 2010, these limits are:

For the full low-income income subsidy, resources may not exceed:
$8,100 for an individual or $12,910 for a married couple.

For the other (partial) low-income income subsidy, resources may not exceed:
$12,510 for an individual or $25,010 for a married couple.)

(Note that all of these limits include the $1,500 per person burial expense “disregard.” That is, these are the limits which apply if the beneficiary intends to use $1,500 ($3,000 for a couple) of their resources toward their burial expenses.)

Also note that at this point the income limits will remain as they have been in effect for 2009 and 2010. They may be changed if there is a change in the federal poverty levels (FPL); typically this is announced in January of each year. Those who have had their extra help determined using the current income limits will NOT have their limits recalculated, rather only new applicants for extra help will be subject to the 2011 income limits, if they change.

2011 Medicare Premiums and Deductibles

Medicare has finally released the rates for 2011; for some reason it waited until after Election Day to do so, even though the increases are relatively modest.

Premiums:

The Part B premium will increase from $110.50 to $115.40, or only 4.4%.

However, most people will not pay this much because there will be no increase in Social Security payments in 2011, and the “savings clause” that prevents, when this situation occurs, any rise in Part B premiums for those who have them deducted from their Social Security payments will continue in effect.

For those of you who are paying $96.40 because this same savings clause prevented an increase to your Part B premium in 2010 will continue to pay the same $96.40 in 2011.

For those of you who began having your Part B premiums deducted from your Social Security in 2010, and who are paying $110.50 a month, you will continue to pay this same $110.50 in 2011.

For those of you who will be going on Medicare in 2011, and for those of you who do not get your Part B premium deducted from your Social Security, you will pay the $115.40. The exception is that if you are subject to the Part B high income premium surcharge, you will pay the $115.40 plus the surcharge. That information is included at the end of this blog.

Note that the savings clause also applies to those who have their premium deducted from their Railroad Retirement payments, but not for those who have it deducted from their Civil Service annuity payments.


For those few beneficiaries who pay a monthly premium for their Part A, your premium will decrease to $450.00 from $461.00 for those of you who have less than 30 quarters of Social Security coverage, and will decrease to $248.00 from $254.00 for those of you who have at least 30 quarters of coverage. I do not recall a time when this decreased!

Deductibles:

The Part B deductible will increase to $162.00 for 2011 from $155.00 in 2010, or $7.00.

The Part A inpatient deductible will increase to $1,132.00. The inpatient coinsurance for days 61-90 of an inpatient stay will go to $283.00 per day (one-quarter of the deductible) and the coinsurance for lifetime reserve days (days 91 to 150 of an inpatient stay) will go to $566 (one-half the deductible). These amounts are, in 2010, $1,100.00, $275.00 and $550.00 respectively.)

For stays in a Skilled Nursing Facility, the coinsurance for days 21 to 100 will go to $141.50 per day (one-eighth the deductible). (This is $137.50 in 2010.)


The Part B high income premium surcharges will be as follows. Note that “MAGI” is your “modified adjusted gross income” reported on your 2009 federal income tax return. It is the sum of your adjusted gross income plus any interest-free income. Page 20 of Managing Your Medicare explains this in depth. (Medicare calls these "income related monthly adjustment amounts" or "IRMAAs.")

If you were single and had a MAGI over $85,000 but less than $107,000, or if you were a couple filing jointly with an MAGI of over $170,000 but less than $214,000, your monthly Part B premium will be $161.50 a month, or a surcharge of $46.10 a month.

If you were single and had a MAGI over $107,000 but less than $160,000, or if you were a couple filing jointly with an MAGI of over $214,000 but less than $320,000, your monthly Part B premium will be $230.70 a month, or a surcharge of $115.30 a month.

If you were single and had a MAGI over $160,000 but less than $214,000, or if you were a couple filing jointly with an MAGI of over $320,000 but less than $428,000, your monthly Part B premium will be $299.90 a month, or a surcharge of $184.50 a month.

If you were single and had a MAGI over $214,000, or if you were a couple filing jointly with an MAGI of over $428,000, your monthly Part B premium will be $369.10 a month, or a surcharge of $253.70 a month.

If you were married and living together, but file separately, and had a MAGI of over $85,000 but less than 129,000, your monthly Part B premium will be $299.90 a month, or a surcharge of $184.50 a month.

If you were married and living together, but file separately, and had a MAGI of over $129,000, your monthly Part B premium will be $369.10 a month, or a surcharge of $253.70 a month.

Note that the surcharges are calculated as if you would normally be paying $115.40 a month, the standard Part B premium for 2011, but, of course, you may have otherwise qualified for the $96.40 or the $110.50 under the “savings clause” provision discussed above, in which case your true monthly surcharge is either $19.00 or $4.90, respectively, more than shown above.

Pages 20-21 of Managing Your Medicare explains how to appeal to Social Security if they use the wrong income, or if your circumstances have changed significantly since you filed your 2009 income tax (perhaps you retired, your business burned down, you divorced, or your spouse died, etc.).

My blog of 10/04/10, “2011 High Income Part D Premium Surcharges,” tells you what your surcharges will be if you are in Part D in 2011.

If Your Medicare Advantage Plan Is Leaving You

A number of Medicare beneficiaries have received a notice from their Medicare Advantage Plan that their current Plan is leaving the Medicare program on January 1, or that it will no longer serve the area the beneficiary lives in, effective with that date. (These are called, respectively, a “nonrenewal” and a “service area reduction.”)

As I point out on page 126 (“Nonrenewals”) of Managing Your Medicare, a special election period (these are also called “special enrollment periods” and are often abbreviated SEP) exists for members of Medicare Advantage (MA) plans that are affected by a nonrenewal or service area reduction effective January 1.

For beneficiaries currently affected by this, your special election period began October 1, 2010, and ends next year, on January 31, 2011.

As noted in the book, your current Medicare Advantage Plan must send you a detailed notice about what your options are, and the deadlines imposed on you. The Centers for Medicare & Medicaid Services (CMS) supervises these notices quite closely, and they are fairly comprehensible, but it’s important to clearly understand them and to know what your several options are.

These are your options:

You may choose to go into another Medicare Advantage Plan with Part D drug coverage. Or you may join one without drug coverage AND also join a stand-alone Part D drug plan. Or you may join one without drug coverage and NOT join a stand-alone Part D drug plan.

You may take any of the three options above whether or not you currently have any Part D drug coverage.

OR

You can go into Original (fee-for-service) Medicare, and, if you wish, join a stand-alone Part D drug plan. And you can do this whether or not you were ever in Original Medicare, or whether you do or don’t currently have Part D drug coverage.

The effective date will depend on what choice you make. If you enroll in another Medicare Advantage Plan, your enrollment will be effective January 1 if the Plan you choose receives your request before that date. If it receives your request in January, it will be effective February 1, 2011.

The same is true if you enroll in a stand-alone Part D drug plan. If you enroll in one of these, your enrollment will be effective January 1 if they receive the request before that date. If they receive your request in January, it will be effective February 1, 2011.

If you do not sign up for another Medicare Advantage Plan, you will automatically be put in Original Medicare effective January 1. If you had drug coverage with your Medicare Advantage Plan, you will no longer have drug coverage unless you sign up for a stand-alone Part D plan. The exception to this is that if you have extra help (the low income subsidy, sometimes abbreviated LIS), and you don’t sign up with a drug plan, Medicare will automatically enroll you in one.

For those beneficiaries who are 65 years of age or older, and decide to go back to Original Medicare, you will get a special federal right to buy a Medigap policy. These special rights are sometimes called “Medigap protections” or “guarantee issue rights.” (And for those of you who are not 65 years of age or older, your state may require Medigap insurers to sell you a policy; check with your state insurance commissioner.)

Beneficiaries who are 65 years of age or older and go back to Original Medicare have only until March 4, 2011, to purchase a Medigap policy using their guarantee issue rights. (This is the standard 63 days from when you loose your coverage from your Medicare Advantage Plan) Specifically, any company that offers a Medigap policy of type A, B, C, F-High, F-Low, K or L in your area has to sell you one. That is, the company (1) must sell you a policy, (2) it must cover your pre-existing conditions, and (3) it cannot charge you more because any past or current health problems you may have had or have.

And remember that if you go into Original Medicare effective January 1, your SEP continues until the end of that month. You still have the option of signing up with a Medicare Advantage Plan with or without drug coverage. And if you decide to stay in Original Medicare, or if you sign you with a Medicare Advantage Plan that does NOT have drug coverage, you may still use your SEP to join a stand-alone Part D drug plan. The effective dates for these actions will be February 1, 2011. And remember that, if you decide to stay in Original Medicare, your deadline to get a Medigap policy continues to be March 4.

You notice from your Plan will also tell you that there are some other special Medigap protections which apply to you (1) if you are age 65 or older and got Part B within the last six months, or (2) if in the last 12 months (sometimes up to 24 months) you dropped a Medigap policy to join a Medicare Advantage Plan for the very first time; or, (3) if in the last 12 months (sometimes up to 24 months) you joined a Plan when you were first eligible for Part A at age 65. (These are covered in detail in items 8.1, 8.2.4 and 8.2.5 of the book.) These may permit you to buy a policy other than type A, B, C, F-High, F-Low, K or L, that is, type D, M or N.

There is also one other special right that comes if you are affected by your Medicare Advantage Plan’s nonrenewal or service area reduction. If you are one of the few beneficiaries who have End Stage Renal Disease and are in one of these Medicare Advantage Plans, you get a one-time right to join a Medicare Advantage Plan. You may exercise this right at this point in time, or you may hold it and use it in the future. But you have only a ONE-time right, and remember that otherwise, in general, beneficiaries of any age with this disease cannot join a Medicare Advantage Plan, so use this special right carefully.

By the way, there is some confusion as to the proper effective date. This is simply because in the past CMS has allowed the effective date, at the beneficiary’s choice, to be the first of the month immediately following the month the beneficiary files their enrollment request. (So, for example, if you filed it in November, you could choose December 1.) This, however, has changed for this year; the effective date can only be January 1 or February 1, depending only on when the request is received by the Medicare Advantage Plan and/or stand-alone drug plan you are joining. This probably makes more sense as if you went into Original Medicare or a new Plan on December 1, you would again have to meet all the applicable deductibles for calendar year 2010, and then have to do this all over again beginning in 2011.

Clinical Trials and Medicare Advantage Beneficiaries – New Rules in 2011

Not too long ago, Medicare began covering certain of the costs of those clinical trials which meet very specific approval requirements. Prior to that time, clinical trials were considered to be “experimental,” and nothing was covered under Medicare. The information on this is in section 2.13 of Managing Your Medicare, on page 57.

This section of the book also mentions that even beneficiaries in Medicare Advantage must have these costs covered, and that this is true even if they use out-of-network services, which is normally the case with clinical trials. For 2011, the Center for Medicare & Medicaid Services has given Medicare Advantage Plans additional direction on this issue, specifically:


1. Plans will be required to reimburse enrollees for the difference between fee-for-service cost sharing incurred for covered clinical trial items and services and the Medicare Advantage Plan’s in-network cost sharing for the same category of service. What this means is that if you get a clinical trial service that is Medicare covered, let’s say a specialist’s consultation, and that Original Medicare would approve $100 for the consult, and pay $80, and you are billed for the 20 percent coinsurance, or $20, but for this same type of consult your Plan’s in-network rule is that you are responsible for a co-payment of $15, then you are responsible for only this $15, and your Plan is responsible for the remaining $5.

What is basically going on here is that the clinical trial people are charging you as if you were in fee-for-service Medicare, but you are responsible only for what you would pay under the terms of your Plan’s benefit structure. One of the issues here is that because the clinical trial people have no contractual relationship with your Plan, they may bill you the standard Medicare coinsurance. If this happens, you may submit the bill to your Plan, and it must pay the provider any difference between what you owe under their rules and the Medicare fee-for-service amount.

(And it’s quite possible that the clinical trial people may send you a bill for the whole service because they don’t understand that you are in a Plan. If this happens, send the whole bill to your Plan, and make sure, when they process it, that they pay everything except what you would owe for an in-network service.)

So you get the nice benefit of getting a covered clinical trial service out-of-network, but you pay only what you pay if you had gone in-network. Not bad. But it gets better!


2. Starting in 2011, your Medicare Advantage Plan, in adding up all the medical costs which count toward your annual out-of-pocket maximum amount, must include in these medical costs not only what you pay out-of-pocket, but also what it must pay under the new rule just discussed. So in the example given, your Plan has to count toward your yearly maximum not only the $15 you were responsible for, but also the $5 it had to pay. That is, $20 will go to count for your annual out-of-pocket maximum, not just $15.

And be aware that you do not have to get any pre-authorization or permission from your Plan to join a clinical trial, or even advise them that you are in such a trial. However, best advice seems to be that, if you are in a coordinated care Plan of any type, letting your Plan’s health care providers know what is going on with all of your health care is very important. And, as it has no other way of knowing, your Plan may ask you for information it needs to properly process claims relating to the clinical trial.

The Limited Income Newly Eligible Transition Program

Starting January 1, 2010, a special program began to make sure that those newly eligible for Part D because they become eligible for extra help would get their prescription medicines. These persons are automatically enrolled in the Limited Income Newly Eligible Transition Program, also called the Limited Income NET Program, and sometimes known as LI NET or LI-NET. They are immediately permitted to use this special Part D drug plan to get their prescriptions at their pharmacy. After they are in the program for two months, they are automatically enrolled in a regular Part D drug plan; in this way, beneficiaries will typically get advance notice of what their regular Part D plan will be. And beneficiaries in this new program can also use it to get retroactive reimbursement for drugs they already paid for if they were entitled to Part D in certain past periods.

The program is a little difficult to explain, but if you keep in mind that it has these diverse aims, you can see how it really eases a beneficiary’s transition into extra help status and Part D.

Smooth Bumps in the Enrollment Process - If there is delay or confusion in the extra help enrollment process, or if the beneficiary has not received timely notice of their enrollment, these beneficiaries can still get their prescriptions filled as pharmacists (and others, such as SHIP counselors) can deal directly with the program to have this happen.

Facilitate Transition into Part D and Extra Help - These beneficiaries are initially and temporarily put in drug plan which will, almost without exception, cover whatever prescription medicines they are taking. This will give these beneficiaries a little time, as they transition to a regular drug plan, to have their prescriptions adjusted or use the exceptions process to help ensure their prescriptions will continue to be covered to the maximum extent possible.

Ease Retroactive Reimbursement - Beneficiaries who qualify for extra help because of Medicaid or SSI are sometimes retroactively entitled to extra help, and thus eligible for reimbursement for prescriptions they already paid for. This program is designed to facilitate compensating them for drugs they paid for out-of-pocket during the period of their retroactive entitlement.

Notify Beneficiaries of Ineligibility - Some beneficiaries who believe they may be entitled to Part D or extra help may be told by their pharmacy that they are not. This program will notify beneficiaries in writing of this result and indicate what they may do to overcome it.

Some special features should be noted about this program. One rationale for the program is to overcome the problem of making sure that beneficiaries can get their prescriptions while the various eligibility systems at both state and federal levels process the many data streams to show that these beneficiaries are indeed eligible for Part D and extra help. In effect, they become eligible for Part D before they get notification or proper proof of this. For this reason a beneficiary can bring documentation of their dual eligible or extra help (low income subsidy) status to a drug store, have the pharmacist enter certain information into their systems, and get an immediate OK to dispense medicine. These are sometimes called “point-of-service” or “POS” beneficiaries. The Centers for Medicare & Medicaid Services believes that about 60,000 beneficiaries fall into this category each year.

And if it later turns out that the individual was not in fact eligible, the Medicare program holds that person, and not the pharmacy, liable for the cost of prescriptions. Also, if it later turns out that the beneficiary’s co-payment level changes up or down, any refund, or any bill for additional charges, will go directly to the beneficiary, and not to the pharmacy. This feature helps to insure that pharmacies will cooperate with the program.

While in this transition program, beneficiaries will not have to pay any monthly premium, nor meet any deductible, but they will be responsible for any applicable co-payment. There is no specific formulary, so any drug which can properly be dispensed under Medicare Part D will qualify. Presumably, the eligible beneficiary, when actually enrolling in a regular Part D plan, will get into one which is best suited for their particular prescriptions. But in the interim while the beneficiary is in the Limited Income NET program, this “no formulary” approach allows them to get whatever specific drug has been prescribed for them. In addition, other than some safely limits, there are no prior authorization requirements or other similar utilization controls. Nor are there any restrictions on what pharmacy they can use.

The program also has generous dispensing rules. When a beneficiary goes to fill a prescription, and they are shown as eligible by the Limited Income NET system, the pharmacist may dispense up to a 90-day supply. If they are not in the system but it appears they are eligible for the program, the pharmacist may dispense up to a 34-day supply.

It should be clearly understood that, under Medicare’s general policy of beneficiary choice, if a beneficiary proactively enrolls in a regular Part D drug plan (or a Medicare Advantage Plan with Part D drug benefit) before or in their very first month of their coverage in the Limited Income NET program, then their enrollment choice will trump the Limited Income NET program’s POS option. That is, on the first day of the month following their enrollment, they will be switched to the regular Part D plan they chose. Because of the liberality of the Limited Income NET program’s rules, they should avoid this.

When a beneficiary is enrolled in this Limited Income NET program, they are automatically and prospectively enrolled in a regular Part D plan. The effective date of this will be the second month after being enrolled in the Limited Income NET program. For example, if a beneficiary is enrolled in the Limited Income NET program on April 20, he or she will be enrolled in a regular Part D plan effective on June 1. These automatic enrollments will always be into a plan with a monthly premium at or below the “benchmark.” But, as indicated above, a beneficiary has the right to choose any regular Part D plan.

One of the special features of this program is to simplify retroactive reimbursement to beneficiaries who have already paid for prescription drugs. When a decision is made that an individual is a full dually-entitled Medicare and Medicaid beneficiary, or entitled to both Medicare and SSI, it is also often determined that a period of retroactive entitlement exists. The Limited Income NET program will enroll these beneficiaries retroactively, with certain limits. This retroactivity will go back to either the start of their dual Medicare and Medicaid eligibility or, if later, their last enrollment in a Part D plan. If they have SSI and then get Medicare, it will go back to the start of their Medicare eligibility. Other beneficiaries will be limited to 30 days or even shorter periods of retroactivity.

This is particularly important to beneficiaries because it enables them to more easily get reimbursement for prescription drugs they purchased with their own, often very limited, funds during this retroactive period.

Beneficiaries who are enrolled in this program will get the YELLOW letter from the Centers for Medicare & Medicaid Services. There are two versions. Version one, “CMS Product No. 11429,” will indicate that the beneficiary has retroactive enrollment, and will state how far back it goes. Version two, “CMS Product No. 11154,” will be sent to those without any retroactive enrollment. Both will also show which regular Part D drug plan the beneficiary has been automatically enrolled into, and the effective date of that enrollment.

Those who receive version one will also get a letter from the Limited Income NET program, run by Humana, explaining how to get reimbursement for retroactive prescriptions. Beneficiaries should be certain to make these requests timely, as they cannot do so after they have been disenrolled from this program for over 180 days. But they should also clearly understand that even if they are currently enrolled in a regular Part D plan, this reimbursement feature is available to them for those 180 days. And this is true even if they never actually got a prescription dispensed by the Limited Income NET program before they went into their regular Part D plan.

Beneficiaries who believe they have become eligible for extra help but don’t get either of these YELLOW letters can take any of the following documents to their pharmacy and ask the pharmacist to verify their eligibility:

Any of these letters issued by the Social Security Administration:
“Notice of Award”
“Notice of Change” indicating an award increase
“Notice of Planned Action” indicating an award reduction
“Notice of Important Information” indicating no change to an award
a letter showing the beneficiary receives SSI

Any of the following state issued documentation that shows any Medicaid eligibility or enrollment after June of the previous calendar year:
a Medicaid card
any state document confirming active Medicaid status
a printout from the state Medicaid enrollment or eligibility file
any other appropriate documentation from the state Medicaid office

Beneficiaries who try to use this program but cannot be confirmed as eligible (this typically happens when a pharmacist tries to get the program to OK the dispensing of a prescription) will be sent a special letter the “Beneficiary Evidence of Eligibility Letter” – indicating what proof the can submit if they believe they are eligible. Humana has a help line, 1-800-783-1307, which is open 8 AM to 8 PM in each time zone. While this is a general help line for the program, beneficiaries, Medicaid staff, SHIP counselors and so forth may call it for help with eligibility issues.

Humana also has a web site www.humana.com/pharmacists/pharmacy_resources/information.aspx which is of particular help to pharmacists.

The web site also has a “Prescription Drug Claim Form” which can be used to make a claim for retroactive reimbursement for a prescription drug from the Limited Income NET program. However, the program has noted that many such requests are invalid because (1) the claim is for a drug dispensed when the beneficiary was not both Medicare AND Medicaid or SSI eligible; (2) the beneficiary was actually enrolled in another Part D plan when the drug was dispensed; or (3) the drug is not covered by the Part D program (such as an over-the-counter (OTC) drug or vitamin.

Medicare Competitive Bidding Program on Durable Medical Equipment

The Medicare program is continuing an effort to get better prices on Durable Medical Equipment and allied supplies through a bidding process that competes the prices that Medicare pays for these rather than establishing the prices by the current method of using a fee schedule set by the program. Medicare tried this on a pilot basis in Florida and Texas a number of years ago and it appeared to be successful in helping beneficiaries by lowering prices and improving customer service. The entire issue of using competition or direct federal negotiation rather than the current regulatory processes to lower health care costs for Medicare beneficiaries is a hugely controversial and rather politicized issue, but my guess is that in the future we will see these new processes used to deal with the relentless rise in health care costs.

Note that this competitive bidding program is will go into effect on January 1, 2011, but only in selected areas of the nation, and it will apply only to certain , items of equipment and supplies. (And while this technically only involves those of you in Original Medicare, those of you in Medicare Advantage may be affected and you need to carefully check with your Plan before you purchase or rent any of the involved items, but, of course, it’s always wise to do that when you are in Medicare Advantage.)

These are the metropolitan areas it will apply to; note that some cover more than one state. If you live in these areas, or if you visit one and get one of the involved items while you are there, you need to get them from a “contract” supplier. And all contract suppliers must take assignment, an important protection for beneficiaries. Medicare is publicizing its competitive activities in these areas as they proceed, and this will help let you know if you are affected and how.

California: Riverside – San Bernadino – Ontario
Florida: Miami – Fort Lauderdale – Pompano Beach
Florida: Orlando Kissimmee
Missouri and Kansas: Kansas City
North and South Carolina: Charlotte – Gastonia – Concord
Ohio, Kentucky and Indiana: Cincinnati – Middletown
Ohio: Cleveland – Elyria – Mentor
Pennsylvania: Pittsburgh
Texas: Dallas – Fort Worth – Arlington

You can find a contract supplier by calling 1-800-MEDICARE or by going to www.Medicare.gov, clicking on “Resource Locator,” and then on “Medical Equipment Suppliers,” and entering your zip.

These are the items, that is, the equipment and supplies which will be included in the competition:

Oxygen, oxygen equipment and supplies
Standard power wheelchairs and scooters
Certain complex rehabilitative wheelchairs
Mail-order diabetic supplies
Enteral nutrients, equipment and supplies
Certain respiratory devices, specifically:
Continuous positive airway pressure devices
Respiratory assist devices
Hospital beds and related accessories
Walkers and related accessories
Certain support surfaces (mattresses, overlays), but only in the
Florida: Miami – Fort Lauderdale – Pompano Beach area

Basically, beginning on January 1, 2011, anytime you rent or purchase an item or supply on this list while you reside in or visit the areas mentioned, you will have to get it from a supplier which has a contract with Medicare under the competitive bidding program. If you do not, Medicare will not pay anything. As with any Medicare activity, exceptions to this rule can apply. Note that doctors, treating practitioners (such as physical therapists) and hospitals may supply certain items. A skilled nursing facility or nursing home can’t, however, unless it becomes a contract supplier. And if you are renting one of the affected pieces of equipment from a supplier when the program goes into effect on January 1, 2011, and that supplier elects to be “grandfathered in,” you can continue to rent that item from your supplier. But if they are not, you need to change suppliers as Medicare will not pay anything on your equipment.

Kidney Disease Patient Education Services

Kidney Disease Patient Education (KDE) Services

In Managing Your Medicare we mentioned earlier that Medicare has a special relationship with those with severe kidney disease as it covers over 90 percent of people with end stage renal disease. I want to make sure that everyone knows that Medicare has further extended this relationship, as it provides for an entirely new service called “Kidney Disease Patient Education Services.” The basic aim of this service is to intervene with those beneficiaries who have severe but not yet end stage kidney disease with the hope of either preventing or delaying the onset of end stage renal disease (which will require dialysis or a transplant) and of preparing beneficiaries for that eventuality. The benefit specifically takes into account that many beneficiaries with chronic kidney disease or CKD are elderly and have other chronic diseases, especially hypertension, diabetes and cardiovascular disease.

It is available to those with stage 4 chronic kidney disease (stage 5 is end stage renal disease), which is technically defined as a specific glomerular filtration rate (or GFR, a measure of how quickly blood is filtered through the kidney). The beneficiary’s physician that is managing the kidney disease must make a referral for this service.

Generally, this service is available only from a physician, nurse practitioner, clinical nurse specialist or a physician assistant, except in rural areas, where a variety of institutional providers, including hospitals, may also give it. However, note that renal dialysis facilities may not provide this service.

The service is limited to face-to-face sessions, of one hour duration, and these may be either individual or group sessions, or a combination. No more than six sessions are covered.

The sessions, which must be tailored to meet the needs of the beneficiary, must cover these general areas:

managing comorbidities and delaying the need for dialysis;
prevention of uremic consequences;
options for renal replacement (the various types and locales of dialysis, as well as transplants); and,
ensuring beneficiary participation in their choice of therapy.

A wide variety of specific topics should be covered, including conveying information about these items:

overview of kidney functions and disease,
prolonging kidney function,
survival rates, quality of life,
comorbidity treatment and management,
psychosocial arrangements,
renal replacement treatments and options, including transplantation,
vocational rehabilitation,
diet and exercise,
sexuality and fertility issues,
financial support and insurance, and
medication management.

The sessions should be patient-centered, encourage collaboration, and offer support to the patient.

In addition, it is expected that the beneficiary be assessed during one of the sessions for their understanding of CKD and its treatment, and their understanding of and the ability to make informed decisions about their healthcare and treatment options.

This is a Part B service; after you meet the Part B deductible, Medicare pays 80% of the cost, and the beneficiary is responsible for 20%. (For those few of you who get this in a hospital setting, you will have a copayment.)

New Cardiac and Pulmonary Rehabilitation Programs

Cardiac and Pulmonary Rehabilitation Programs

The Medicare Program has just issued final instructions on these two types of programs, although they technically have been in effect for some time.

While Medicare has long covered cardiac rehabilitation services, the MIPPA law established two types of cardiac rehabilitation services programs, a “regular” cardiac rehabilitation services program, and a brand new intensive cardiac rehabilitation services program. In addition, it called for an also brand new program of pulmonary rehabilitation services; all of these are effective with January 1, 2010. These are all outpatient services, and, as such, are covered under Part B. These programs have somewhat similar requirements, but are different enough so it helps to discuss them separately.

The cardiac rehabilitation programs must be:

1. physician supervised;

2. delivered only in hospitals and doctors’ offices and always with a physician immediately available;

3. given under a physician’s plan individualized for the beneficiary and specifying the “type, amount, frequency, and duration” of the services to be rendered to or performed by the beneficiary. This plan must be renewed every 30 days.

The programs’ specific services must consist of exercise(including aerobic exercise), both psychosocial and outcomes assessments, and a “cardiac risk factor modification” component, which includes education, counseling, and behavior intervention. Depending on the individual, these may include smoking cessation counseling, nutritional education, meal planning, stress management, drug education, and so forth.

To qualify for cardiac rehabilitation, the beneficiary must have or have had a specific coronary-related diagnosis or procedure. These are (1) an acute myocardial infarction (AMI) within the last 12 months, (2) coronary by-pass surgery, (3) stable angina pectoris, (4) a heart valve repair or replacement, (5) a percutaneous transluminal coronary angioplasty (PTCA) or coronary stenting, or (6) a heart or heart lung-transplant.

One way the two cardiac rehabilitation programs differ is that the “regular” program must conform to standards of frequency and duration of services that are prescribed in regulation, while this has been done in the statue for the “intensive“ program. Specifically, beneficiaries in the regular program are limited to a total of 36 sessions, each one hour in duration, over a period of 36 weeks. Because of the severity of the qualifying conditions, the sessions are limited to two per day. Under some conditions the program may be expanded up to an additional 36 sessions over an extended period of time.

The intensive program calls for up to 72 one-hour sessions, not exceeding six per day, and not exceeding 18 weeks in length. Finally, any intensive program has to be specifically qualified as such by the Centers for Medicare & Medicaid Services through its national coverage determination process. To date, both the Ornish and the Pritkin programs have been so approved.


The pulmonary rehabilitation program for beneficiaries must meet the same requirements (1) through (3) shown above.

Its specific services must comprise exercise (including aerobic exercise), both psychosocial and outcomes assessments, and an educational component. This latter must be designed to enable beneficiaries to adapt to their limitations and improve the quality of their life. It may include instruction in the use of home respiratory equipment, prevention and treatment of exacerbating conditions, respiratory techniques for physical energy conservation, work simplification, relaxation techniques, medication training, nutrition counseling, and smoking cessation.

To qualify, beneficiaries must have “moderate to very severe” chronic obstructive pulmonary disease or COPD. (These are technically defined in terms of a GOLD classification of II, III, and IV; GOLD, in turn, is a standardized measure of airflow limitation.) COPD is typically associated with chronic bronchitis, emphysema, persistent asthma, bronchiectasis, primary pulmonary hypertension, obesity-related respiratory disease and ventilator dependency.

As established in regulations, the program is limited to a total of 36 sessions, each one hour in duration. Because of the severity of the qualifying conditions, the sessions are limited to two per day. If medically necessary, the program may be extended up to an additional 36 sessions.

These are all Part B services; after you meet the Part B deductible, Medicare pays 80% of the cost, and the beneficiary is responsible for 20%. If you get them in a hospital, you will have a copayment.

Medicare Compare 2011 Up and Running

Medicare's Compare for 2011 Medicare Advantage Plans and stand-alone drug plans is up and running today, October 7, thus beating their advertised deadline of October 8.
Beneficiaries should go ahead and start studying what is available for them now, although actual changes to their plans can't be made until beginning November 15. The program appears significantly improved from the previous versions, and more user-friendly.

Also available is a new facility which allows beneficiaries to download their "My Medicare" information to a file on their home computer. Previously the only way to "save" it was to print it out. When you have signed into your "My Medicare" account, look for the Blue Button "Download My Data" logo to download your informtion. You get choices of what types of information you want to download (eg, claims data, drug data, etc.) And there is an important warning there about downloading only to a personal, not a public (eg library), computer.

2011 High Income Part D Premium Surcharges

Section 3308 of the Health Care Reform Bill extended high income premium surcharges to Part D, parallel to those in Part B. So basically, those of you who are paying a surcharge on your Part B premium will now, if you have Part D, will pay a surcharge on your premium there as well, beginning in 2011. (For those few of you who do not have Part B, you are subject to this if you have Part D and exceed the income limits we discuss.) Another section of the statute froze the income levels which determine if you are subject to the surcharge, and if so, how much it is. Basically, an individual with a “modified adjusted gross income” (MAGI) of over $85,000 in 2009, or a couple filing jointly with such an income of over $170,000 in 2009, will be subject to these. (Page 20 of Managing Your Medicare explains how your MAGI is calculated; basically it is your Federal adjusted gross income plus any tax-exempt interest you earned.)

Perhaps because this will be the first tax imposed as a result of the new legislation, little information seems to be available about it yet, and so far nothing is on the government websites. But I have used the statue to figure out what the surcharges will be. And remember that your 2009 income and marital status is the determiner. And if both of a couple have Part D, each has to pay this.

If you were single and had a MAGI over $85,000 but less than $107,000, or if you were a couple filing jointly with an MAGI of over $170,000 but less than $214,000, your monthly premium surcharge will be $12.00 a month, or $144.00 a year.

If you were single and had a MAGI over $107,000 but less than $160,000, or if you were a couple filing jointly with an MAGI of over $214,000 but less than $320,000, your monthly premium surcharge will be $31.10 a month, or $373.20 a year.

If you were single and had a MAGI over $160,000 but less than $214,000, or if you were a couple filing jointly with an MAGI of over $320,000 but less than $428,000, your monthly premium surcharge will be $50.10 a month, or $601.20 a year.

If you were single and had a MAGI over $214,000, or if you were a couple filing jointly with an MAGI of over $428,000, your monthly premium surcharge will be $69.10 a month, or $829.20 a year.

If you were married and living together, but file separately, and had a MAGI of over $85,000 but less than 129,000, your monthly premium surcharge will be $50.10 a month, or $601.20 a year.

If you were married and living together, but file separately, and had a MAGI of over $129,000, your monthly premium surcharge will be $69.10 a month, or $829.20 a year.

You will not be paying these surcharges to your drug plan (or Medicare Advantage Plan, if you get your Part D from them) with your monthly Part D premium. Rather, for those of you on Social Security, they will be deducted from your monthly payment. Rather, for those of you on Social Security or Railroad Retirement, or who receive a federal pension from the Office of Personnel Management, they will be deducted from your monthly payment; all others will be billed directly by Medicare, just like they are for Part B. Note that the amount of your surcharge does not vary by the size of your plan’s premium; and, for those of you who do not pay any Part D premium (because your Medicare Advantage plan does not charge one) will still have to pay this surcharge.

Pages 20-21 of Managing Your Medicare explains how to appeal to Social Security if they use the wrong income, or if your circumstances have changed significantly since you filed your 2009 income tax (perhaps you retired, your business burned down, you divorced, or your spouse died, etc.).

Finally, I have learned that the Medicare website’s Compare function, which allows you to find the best drug plan or Medicare Advantage Plan, does not take this surcharge into account, so you will not get the full story on how much you will pay, as the surcharge you are responbible for won't be included. But at least it will still be able to help you pick out the best plan for you. And for those of you who are thinking that you might wish to forego Part D if you are subject to a surcharge, especially a high one, remember, that if you don’t have other creditable coverage, and you do not take Part D, if you latter sign up, you will be penalized $0.32 per month for each month that you could have had Part D but did not. (This amount may change each year.)

Medicare Part D in 2011

In “Managing Your Medicare” beneficiaries are urged to review their options every year to make sure that they have the best Medicare deal going for them.

But this is especially true as we transition into 2011.

In Part D, we know that the number of available Medicare Prescription Drug plans has been cut back drastically; there will be about a third fewer plans available in 2011 as opposed to 2010. Some see this as good as a deliberate effort was made to not allow any plans that differed only little bit from each other, thus simplifying things for beneficiaries. Others are not so sure, as the decrease is also due to some companies dropping out of Part D, and thus fewer competitive consumer choices are available to beneficiaries. But it’s done.

And you are likely to see a premium increase for 2011 over 2010. There are many different ways to calculate this, and, depending on how it is done, it’s an average of 10% or 15%. But a beneficiary should be more concerned with what particular situation they as an individual are facing. It’s entirely possible that your current plan’s premium will go down.

And finally, as already blogged here, beginning in 2011 there is a big change to how much you have to pay when you are in the “donut hole.” Basically, in 2011, for everyone of you who do NOT get “extra help,” when you hit the donut hole you will get a 50% discount on your name brand drugs, and a 7% discount on your generics. Plus, in addition to this, a number of plans, in fact, more plans in 2011 than 2010, will be offering additional benefits in the donut hole.

What all this says is that you really need to go ahead and make sure you get into the right Part D drug plan for 2011. As we point out in the book (on pages 88-89), this can be done by going on the Medicare website, www.Medicare.gov, and by clicking on “Health Plans” and then “Compare Drug and Health Plans.” You can do this beginning in mid-October, and actually enroll in a different plan beginning November 15 through December 31, effective with January 1, 2011.

And some of you will be automatically switched from your current plan to a different one offered by the same drug plan sponsor. (A “sponsor” is the actual company that offers a plan, but the same company or sponsor may offer several different plans in the same state.) This is because with the cutback in plans, yours will no longer be available, but there is a similar one offered by your sponsor. You should clearly understand that the government has NOT made the best choice for you; it’s merely put you in the closest thing that you had. You definitely need to take action to make sure you get the best deal available to you.

And there is one fly in this ointment. Based on a provision in the Health Care Reform bill, for those of you who are already paying a high income premium surcharge for your Part B benefits, you will also in 2011 be hit with a high income premium surcharge for your Part D benefits. This will increase the cost of your Part D plan by, for a married couple earning more than $170,000 and a single person earning more than $85,000, anywhere from about $150 to $1,000 more per year. I will blog the details of this shortly.

And, for those of you who are in a Medicare Advantage Plan (Part C of Medicare), or are thinking of going into one, I'll blog about what you should be doing as we transition into 2011.

Medicare Coverage of HIV Screening

I just posted information about changes to the tobacco cessation counseling preventive service, and in the interests of completeness should also post info on this rather new screening service.

Medicare will cover, as a preventive screening service, an annual test for HIV (human immunodeficiency virus). While this test is targeted at those at high risk for HIV, it is available to any beneficiary who asks for it. This was done so that beneficiaries do not have to respond to questions about their sex life or drug use to get the test.

In addition, as it is strongly recommended that all pregnant women be routinely screened, more frequent HIV testing is available for pregnant beneficiaries. Specifically, this test is covered when they are first found to be pregnant, during their third trimester, and at labor.

As with any lab test, the Part B deductible and coinsurance do not apply.

Interestingly, unlike a most other screening services, this test is covered under both Part A and Part B, so if you have it as a hospital inpatient, for example, you are a woman in labor and have been admitted to a hospital, it is covered under your Part A stay.

Tobacco Cessation Counseling

A Centers for Medicare & Medicaid Services decision has just expanded Medicare coverage of Tobacco Cessation Counseling.

Specifically, Medicare will now cover tobacco cessation counseling for Medicare beneficiaries who use tobacco, regardless of whether the patient has signs or symptoms of tobacco-related disease. The counseling may be provided by a physician or other Medicare-recognized practitioner. Medicare's decision to expand this coverage is based on evidence showing that stopping the use of tobacco, at any age, is highly beneficial.

This coverage decision expands not only (1) what is covered (it used to be “smoking cessation,” now it is “tobacco cessation,” which includes smoking, chewing, and so forth); and, (2) which beneficiaries are covered (it used to be that you had to have a disease that is caused or complicated by tobacco use, or took a medicine that is affected by tobacco usage; now any beneficiary who uses tobacco may receive the service).

This benefit will cover two individual tobacco cessation counseling “attempts” per 12-month period. Each attempt may include up to four “sessions,” with a total annual benefit thus covering up to eight sessions. The sessions in each attempt may be either intermediate (more than three minutes) or intensive (more than ten minutes). This is identical to the old benefit.

It will be subject to the Part B deductible and coinsurance this year, but will fall under the Health Care Reform rule that preventive services will be paid 100% by Medicare effective January 1, 2011.

The 2011 Medicare Part D Benefit Structure

The good news is that the Centers for Medicare & Medicaid has announced that based on their review of the Part D drug plans proposed “bids” for 2011, that the monthly premiums that beneficiaries will have to pay will rise only by about $1 a month. And while it won’t be until next month that the specifics on what plans will be available, what their formularies will be, and what their premium and benefit structure will be, we now know what the Part D benefit will look like in 2011. And while much of the structure (and even the dollar amounts associated with it) will look very much like 2010’s, the Health Care Reform legislation has radically changed one “band” of the benefit – the 100% coinsurance band where the beneficiary pays all of the cost of their drugs, also known as “the donut hole.” It is being partly plugged in a way which will delight beneficiaries who ever have fallen into it. Here is the 2011 structure:

Recommended Part D Benefit Structure for 2011


Annual Deductible Band (from $0 to $310) The beneficiary pays $310.00 and Medicare, nothing. Many plans have no or a lower deductible

25% Coinsurance Band (from the deductible to $2,240 add’l) The beneficiary pays $632.50 (25%) and Medicare pays $1,897.50 (75%) of the next $2,240.

Total Spending to this point is $2,840.00, of which the beneficiary has paid $942.50 and Medicare, $1,897.50. This $2,840 is called the "initial coverage limit”

Donut Hole – the beneficiary is responsible for an additional $3,607.50, while the Medicare responsibility varies.

At this point, the beneficiary goes into the “donut hole,” but it is very different from 2010 and previous years. Once a total of $2,840 has been spent on drugs, Health Care Reform legislation provides that:

For brand name drugs, the manufacturer has to give a discount of 50% off the price of the drug itself, and the beneficiary has to pay the remaining 50%, plus any dispensing fee.

For generic drugs, the government will pay 7 percent of the cost of the drug itself. The beneficiary pays the other 93 percent, plus the dispensing fee.

The beneficiary will remain in the donut hole until all their drug expenses total $4,550. This includes their deductible, anything they spent in the 25% coinsurance band and in the donut hole, plus whatever the dollar amount of the discounts that drug manufacturers had to give them on brand name drugs while they were in the donut hole. (But not the amount the government paid for generics in the donut hole.)

While it will be different for every beneficiary, it is likely that a beneficiary will actually have to spend perhaps $1,900 or $2,000 out-of-pocket while in the donut hole to get out of it, as the 50% manufacturers' discount will count toward their spending.

And once the beneficiary has reached their $4,550 drug expense total (this is called the "out-of-pocket threshold") the beneficiary goes into the:

Catastrophic Band and is responsible for 5% of their drug costs, and Medicare, 95%.

That is, in the catastrophic band, the beneficiary will be responsible for 5% for the total cost of each drug they receive, and Medicare, 95%, without any upper limit to the total spending on their drugs. In addition, the minimum amount a beneficiary must pay in catastrophic phase remains the same as 2010: $2.50 for generics and $6.30for brand name drugs.

And you may note that the deductible and the “out-of-pocket” threshold are the same as they were in 2010, and the initial coverage limit is only $10 more. Finally, the "base beneficiary premium" will be $32.34 in 2011 (compared to $31.94 in 2010); this means that the monthly penalty amount will stay at $0.32. That is, you will have to pay a penalty of 32 cents for each month you were not in Part D that you could have been.

$250 Rebate Checks

Back in May, I blogged about the $250 rebate check that Part D Medicare beneficiaries will get when they hit the “donut hole” (the Part D “coverage gap”) with their prescription drug expenses this year, 2010. This is the first step in plugging the donut hole, which will eventually be fully accomplished in 2020 by the Health Care Reform legislation.

The Centers for Medicare & Medicaid has just released some information on how this rebate program is going. As of the end of July, almost 400,000 of these checks have gone out, and they project about 670,000 more will go out in August. Up ‘til now they have released checks on a monthly basis, but this will be stepped up to a twice-a-month basis this month, August, and be kept at this level until the end of the year. And don’t worry, if you don’t hit the donut hole until late this year, or you check was delayed for some reason, they will still be mailing the checks out next year for those who hit the donut hole in 2010.

The Centers has further indicated that if you expected this check but haven’t received it, you should call your Part D Drug Plan (or your Medicare Advantage Plan, if you get your Part D prescriptions through it) as most issues can be resolved at this level. For example, you may have thought you reached the donut hole, but have not actually done so as of yet. It further advises that if you are in fact due the check, and your Plan has told you that they have transmitted this information to Medicare, and your correct mailing address is on file with the Social Security Administration, that you should wait four months after you actually hit the donut hole to contact 1-800-MEDICARE to resolve the problem. However, Medicare indicates that the program seems to be working pretty smoothly; you just may need to be a bit patient.

And, as was inevitable, scamsters and con artists have gotten into the act, and have been calling Medicare beneficiaries promising to get them their rebate check if they give them their bank account, Social Security, Medicare and other personal information. Do not do this under any circumstances; if someone calls you telling you they can get you your rebate check, slam your phone down and report this immediately to 1-800-MEDICARE.

Again, I would appreciate hearing from anyone about their experiences getting their rebate. I will soon blog about the next step in plugging the donut hole, which will take place in 2011.

Changes to the January - March Open Enrollment

I was recently talking with some SHIP counselors where I do volunteer counseling for Medicare, and learned that a significant change will take place early next year, 2011, to the so-called “Open Enrollment Period.” (See page 121, section 2.5.) The current rule allows a beneficiary, in the first three calendar months of a year, to go from Original Medicare into Medicare Advantage, or vice-versa, or even change their Medicare Advantage Plan, AS LONG AS THEY DO NOT CHANGE THEIR PART D STATUS. (It’s a little complicated, but Table 14 on page 122 simplifies all the details. And don’t confuse it with the Annual Coordinated Election Period (also called the Annual Coordinated Enrollment Period), which runs from November 15 to December 31 of each year.)

I understand that beginning in 2011, the only changes which beneficiaries will be allowed to make are to go from a Medicare Advantage Plan to Original Medicare. And if a beneficiary does this, they may also join a Part D stand-alone prescription drug plan, and they can do this even if the Medicare Advantage plan they left did not have Part D coverage.

On the one hand, this takes away some of the complexity of the Open Enrollment Period. But also negates a beneficiary’s ability, if they quickly find out that they do not like their Medicare Advantage Plan, to switch to another. For example, they may have been in a Plan, but used the Annual Election Period to go to a new Plan. Maybe to help avoid a big premium hike. But in January they found their new Plan very much not to their liking. Their only choice is to go back to Original Medicare, not back to their old Plan.

But at least they will have the opporunity to enroll in Part D if they had not done so.

What’s worse is that the new Open Enrollment Period will last only until February 14, 2011. You won’t have three months to make a change, only six weeks or so. And so your opportunity to decide if you like your new situation is extremely limited. In fact, it will no longer be called the “Open Enrollment Period,” but the “Annual Disenrollment Period.”

Stay tuned on this as the details are announced. But it seems to me that the clear implication is, that when beneficiaries do their yearly Medicare plan review toward the end of the calendar year, they will have to take extra care in choosing a new Medicare Advantage Plan, and perhaps pay more attention to the quality ratings shown on the Medicare website

Medicare Preventive Services and Health Care Reform

Last week the Obama administration announced which “preventive” services are to have no co-payments or deductibles applied under the recent health care reform legislation. You should note that this announcement does NOT apply to Medicare, but only to new insurance plans which are effective beginning in September.

Nonetheless, it gives us a good indication of exactly which services in Medicare will be wholly paid for by the Medicare program beginning next year, 2011. As you know, preventive services in Medicare currently have a hodgepodge of payment rules: some have neither any coinsurance nor a deductible, some have deductibles but no coinsurance, some have coinsurance and no deductibles, and some have both. (The details are in Chapter 4 of the book.) So what is good is first, that this hodgepodge will be simplified, and, second, that you will be incentivized to keep up with your preventive services as you won’t have to pay anything out-of-pocket for them. And as far as I can tell with the new law, this will be true whether you are in Original Medicare or in Medicare Advantage (Part C). The details on all this will be coming out in the fall as Medicare publishes the official regulations on preventive services.

And did you note that I used parentheses around “preventive” services? This is because some of the services so classified are, in my judgment, more “intervention” services than merely preventive ones. For example, the recently issued rules mandate “free” tobacco cessation services, that is, active counseling to get you to stop smoking, chewing or snuffing, and we can expect Medicare will do the same. So “stay tuned” to see exactly what Medicare will and won’t define as “preventive” services.

"Enrolled" Physicians and Practitioners and DMEPOS

Beginning this year, note that only certain kinds of physicians and non-physician practitioners can order or refer a Medicare beneficiary for durable medical equipment (DME), prosthetics, orthotics, and supplies. (Sometimes the acronym DMEPOS is used to describe all these items). These kinds include:

Physicians (doctors of medicine or osteopathy—all specialties,
and doctors of dental medicine, dental surgery, podiatric medicine, optometry, and chiropractic medicine),
Physician Assistants,
Certified Clinical Nurse Specialists,
Nurse Practitioners,
Clinical Psychologists,
Certified Nurse Midwives, and
Clinical Social Workers.

In addition, each ordering / referring practitioner must be currently enrolled as a Medicare approved physician or practitioner. For example, a Department of Veterans Affairs’ doctor can order DME for a veteran that for some reason the VA will not pay for, but that physician must be enrolled in the Medicare system even though they would have no occasion to submit a claim to Medicare.

It is inappropriate for a DMEPOS supplier to use the Advance Beneficiary Notice of Noncoverage (ABN) if a claim is rejected because the ordering / referring physician or practitioner is not enrolled in Medicare. An ABN is appropriate only when a supplier expects Medicare to deny coverage for an item or service under the Limitation on Liability provisions of Section 1879 of the Social Security Act.

Medicare made this change to tighten up on who can OK DMEPOS, as these items have been beset by fraud and abuse.

Roth Conversions and Medicare Premium Surcharges

Many people who currently have “traditional” IRAs but not Roth IRAs are thinking about converting them into Roth IRAs under special rules that will permit this during 2010. One thing about these conversions is that whatever gains you had on your original IRA investments will be taxed as ordinary income. And there are many complications about this feature of the conversion process that are cause for concern even though, after you have made your conversion, your Roth IRAs live happily “tax free ever after.” One is that if you go through the conversion, your tax bracket may increase, and you may even get into an Alternative Minimum Tax situation. I am not a CPA and can’t give any advice about this process, other than there is a Medicare angle which I have not seen mentioned in the press and which you need to discuss with your CPA. When you convert, the gains you have made will count as income, and it is possible that they will so increase your income that you will have to pay a surcharge on your Part B Medicare premium, or that, if you are already doing so, it might raise it still higher. (The government euphemistically refers to these high-income surcharges as “subsidy reductions.”) While this is covered in some detail in section 9 in the very first chapter of my book, an individual with an income over $85K (this includes married persons filing separately), or a couple (filing jointly) with an income over $171K, will have their premiums boosted by up to $243.10 a month. (Of course, each of the couple, if they have both have Part B of Medicare, must pay this.) If the income from your conversion is the only reason you go above these thresholds, you will only have to pay this surcharge for one year (typically the year two years after the tax year involved). Again, as you can spread out your conversion income to two years (to 2011 and 2012, instead of 2010, I believe), this could be longer. Again, these conversions are quite complex and you undoubtedly need an accountant to guide you, but for a couple it’s possible to increase your Part B premiums by up to almost $6,000 in one year! That might make anyone think twice about doing this, or perhaps how they go about doing it.

And, just so you know, the Health Care Reform legislation added two kickers to this. One is that it froze the income levels mentioned above to the amounts shown above. This means that even if you are not subject to a Part B premium surcharge now, this could change, even if your income goes up only a little. (Previously, the income thresholds would go up somewhat every year.)

But the second kicker is more important. Not only will your Part B premium be subject to high income surcharges, but so too will your Part D premium, beginning in 2011. So if your income increases a lot in 2010, your 2012 Part D premium may get hit with a surcharge. (Again, the legislation euphemistically refers to these high-income surcharges as Part D “subsidy reductions.”). A double-whammy! Again, I have not seen this mentioned in the Roth conversion literature, and I am still trying to calculate just how much money this would cost a Part D beneficiary. But again, discuss this with your accountant if you are or plan to be a Part D beneficiary in the next few years.

Medicare Advantage under Health Care Reform

In my last posting I talked about the fact that the new Patient Protection and Affordable Care Act will significantly reduce payments to Medicare Advantage plans (Part C) over the next several years. And fewer beneficiaries will use this approach to getting their Medicare benefits. A recent (June 11) Wall Street Journal editorial was entitled “Farewell, Medicare Advantage,” and I even heard someone on the radio say that Medicare Advantage will disappear. Again, I don’t think that will happen; nor do we need to say “”Farewell” to Medicare Advantage. However, the editorial did point me to the Centers for Medicare & Medicaid Services (CMS) website, where its actuary has posted his estimates of what will happen to Medicare Advantage, and these estimates are significantly more pessimistic than the Congressional Budget Office numbers I used in that blog posting. The CMS actuary believes that only about seven and a half million beneficiaries will be in this option by 2017, half of what he estimated would have been the case if the Act had not passed. So again, it’s NOT going to disappear or go away, contrary to what some may be saying, but it does certainly appear that many beneficiaries will, in the years ahead, no longer find that Medicare Advantage is the substantial help to them that this part of the Medicare program has been to so many.

Medicare Advantage and Health Care Reform

A senior asked me the other day if Medicare Advantage was going to leave her state. I am not sure exactly what precipitated her question, but it is indicative of the great concern Medicare beneficiaries have that the Health Care Reform bill contains many cuts to the Medicare program to “pay for,” in terms of budget neutrality, the huge costs of that bill. And the single largest cut is in payments to Medicare Advantage plans. A Congressional Budget Office paper estimates the projected ten year reduction in dollars to Medicare Advantage (Part C) plans will be some $132,000,000,000 ($132 billion, that’s a lot of zeros!).

In fact, what surprised me is that the same paper projects that fewer Medicare beneficiaries will be enrolled in Medicare Advantage as the years go by. Again, the gurus at CBO project that enrollment will decrease from the current almost ten and a half million beneficiaries to just over nine million beneficiaries in 2019!

I told the senior that I wasn’t very good at predicting the future, but in the last big reduction in Medicare Advantage payments, which occurred in the very late 1990s, some states were indeed left bereft of any Medicare Part C Plans. In fact, I recall vividly at a meeting in New Hampshire in 1999 where a beneficiary complained bitterly that this was the third year in a row that his Medicare Advantage plan left Medicare program, and now the very last one in the state was leaving. And whether that will happen in this cycle of reduction I just don’t know. One of the big thrusts of the Health Care Reform bill is to better coordinate care and improve its quality, and managed care is a natural setting for this. So I doubt that in the long haul Congress will allow Medicare managed care plans to completely disappear from any state.

But what will clearly happen is that fewer managed care plans will stay in the Medicare business. And I find this unfortunate because I have counseled many beneficiaries to join Medicare Advantage plans. And particularly so where the beneficiary is in tight economic circumstances, but not so tight as to be able to qualify for a Medicare Savings Program which would pay their coinsurance and deductibles. Many of these beneficiaries simply can’t afford a Medigap policy, and they get pretty good protection with certain Medicare Advantage plans. This is especially true as their co-payments are generally limited and they get annual catastrophic protection, which you don’t get in regular Medicare.

As Plans drop out from year to year, these beneficiaries will have to become adept at searching for a new one that gives them a good deal with their medical expenses and yet one which their doctors and providers will accept. It will be really important for them to do their homework and to talk to a SHIP (State Health Insurance Assistance Program) counselor in the Fall to make sure they are in the best Plan come each January.

Medicare Beneficiaries Defraud the Program – With No Penalty!

The U.S. Departments of Justice and of Health and Human Services have recently released their joint report on what they accomplished in 2009 to combat fraud against the Medicare, Medicaid and various other federal healthcare programs. (Goggle “Annual Report for FY 2009 on the Health Care and Abuse Control Program.”) It gives page after page of disheartening detail on how the Medicare program is mercilessly and shamelessly ripped off and defrauded with scheme after scam after plot, many of these frauds going on for years, with amounts totaling billions of dollars stolen from the program. And these are the ones we know about!

But what I found even more appalling was that in many of these scams Medicare beneficiaries were willing participants! The very people who have most to gain by protecting the program were full engaged in the rip offs!! Over and over you can read how beneficiaries were offered – and accepted – bribes, kickbacks and payola to conspire in these crimes. But what is even worse, and which belies the government’s promise of “zero tolerance on fraud” is that NOTHING was done to any of these beneficiaries to either punish them for their frauds or to take away or restrict their Medicare entitlement. It’s like giving out “Get Out of Jail Free” cards. And in my experience, I have never known of a beneficiary being prosecuted or having their Medicare card revoked or suspended for defrauding Medicare. Perhaps it’s time this changed.

Again, beneficiaries, this is YOUR program, and YOU need to protect it!