Older Consumers Face PPACA Plan Brain Twisters

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Older Americans who are eligible for public exchange plan coverage may face traps. Officials at the Centers for Medicare and Medicaid Services (CMS) write about the complicated financial puzzle facing people with access to both Medicare and to public exchange qualified health plan (QHP) coverage.

CMS officials explain how they think Patient Protection and Affordable Care Act (PPACA) exchange plan rules apply to people who have or are eligible for Medicare. Most of those people are Americans ages 65 and older. Some are people with disabilities or people who are getting kidney dialysis and are eligible for Medicare because of their conditions.

The drafters of PPACA tried to keep exchange QHPs from crowding out other forms of health coverage by discouraging or prohibiting people who have other types of coverage from signing up for QHPs. People who already have Medicare coverage cannot normally sign up for individual QHP coverage, the CMS officials write in the new batch of guidance.

People who have Medicare coverage can keep the coverage and also sign up for group QHP coverage through an employer’s Small Business Health Program (SHOP) exchange plan.

People who have Medicare or are eligible for Medicare can also choose to get individual QHP coverage through an exchange instead.

Many retirees have earned enough “work credits” to get Medicare Part A for free. Consumers who do not qualify for free Medicare Part A may have to pay a premium. This year, the maximum premium is $426 per month. What if John Smith, a man who is paying $426 per month for Medicare Part A premiums, wants to get an individual QHP policy that will cost him just $50 per month out of pocket? He can drop Medicare and sign up for the cheaper QHP coverage, officials say.

CMS officials warn, however, that if John Smith were getting Medicare Part A for free, trading Medicare in for QHP coverage could lead to big, unexpected costs: People who are getting free Medicare Part A coverage, then trade in Medicare Part A coverage for individual QHP coverage, will have to drop any Social Security or railroad retirement benefits they’re getting. They also will be responsible for “paying back all retirement benefits and costs incurred by the Medicare program,” officials warn.

If consumers who have used QHP coverage in place of Medicare early in retirement later want Medicare coverage, they could face another trap: Having to pay Medicare late enrollment penalties. They will have guaranteed access to Medicare Part A and Part B coverage during the regular general enrollment period, but the enrollment delay could increase Medicare Part A premiums by 10 percent.

For consumers who put off enrolling in Medicare Part B, the penalty increases premiums 10 percent for each full 12-month period in which a consumer could have had Part B coverage but failed to sign up for the coverage, officials say.

Consumers who are eligible for Medicare but use an employer’s Small Business Health Options Plan (SHOP) exchange plan coverage instead can sign up for Medicare Part B late without paying the late enrollment penalty, but only if they sign up for the Part B coverage during an eight-month special enrollment period, officials say.

CMS officials also consider a question that could apply to the kinds of older affluent clients: What rules apply to Jane Doe if she is over age 65, has worked enough to be eligible for free Medicare Part A coverage, is not yet collecting Social Security benefits, and has not yet applied for either Medicare Part A or Medicare Part B? Can she buy individual QHP coverage?

In that situation, Jane Doe is not entitled to Medicare Part A benefits, and she can buy individual QHP coverage, according to officials.

Officials also answer questions about people with “end stage renal disease” — people who are getting kidney dialysis. Kidney dialysis is expensive, and people who are receiving it automatically qualify for Medicare coverage. In the past, insurers in most states could use medical underwriting to deny coverage to people who are getting dialysis. Now, insurers cannot use information about dialysis use as a reason to deny coverage. 

What if Jane Doe was 40, had no Medicare coverage, and was getting kidney dialysis? Could she buy individual QHP coverage through an exchange rather than signing up for Medicare?

If Jane Doe did not yet have Medicare coverage, signing up for Medicare coverage would be voluntary, and she could buy individual QHP coverage instead, officials say.

If Jane Doe was already in Medicare, and she stopped needing dialysis because she had a successful transplant or her kidneys recovered, she could sign up for QHP coverage.

If Jane Doe was already in Medicare and still using dialysis, and she wanted to rescind her Medicare application and buy QHP coverage, she would first have to repay all costs covered by Medicare and refund any Social Security benefits, officials say.

How Concierge Medicine Can Help Cut Healthcare Costs

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It is no secret that medical costs in the United States have skyrocketed over the past few decades, and today we spend almost $2 out of every $5 on healthcare (17 percent of our Gross Domestic Product, or GDP). At $2.8 trillion every year, that is enough money to rank as the sixth largest economy in the world in terms of GDP, ahead of:

  • France ($2.6 trillion)
  • United Kingdom ($2.4 trillion)
  • Brazil ($2.2 trillion)
  • Russia ($2 trillion)

While it is true that healthcare costs, like many luxury items, naturally increase as countries become more developed and the demand for advanced care goes up, the U.S. spends significantly more on healthcare for outcomes that are about average, when compared to other developed G20 countries in measures such as life expectancy and infant mortality.

Managing Disease to Lower Costs

People who suffer from chronic disease today have more options than ever to prolong life through medical care, which is why a small portion of people in the U.S. account for a significant amount of healthcare spending annually. Managing current chronic diseases and trying to prevent people from developing disease in the future is an effective method for reducing overall healthcare costs.

There are some individuals who face high healthcare costs for a one-time catastrophic event, such as a severe car accident or the birth of a premature baby. In these cases there is not much prevention that will help avoid the situation. However, there are many other individuals who currently suffer from some type of chronic illness but have not yet experienced the worst of the disease, for whom early intervention could save significant costs by avoiding the need for future treatment.

Concierge doctors have a care model that allows them to spend more time with each patient, identifying areas where they can make changes that will improve the health and wellness of individuals, reducing the need for future treatment, and potentially reducing the chance for future complications with chronic illnesses, which can keep costs down for all patients.

Eliminating Wasteful Administrative Costs

Another significant cost in many doctor’s offices is the administrative costs—interacting with insurance company, filing claims, and obtaining reimbursement for procedures performed. In a typical physician’s office that sees anywhere between 30 to 50 patients a day, this paperwork often requires a large non-physician staff, which increases costs for the patients.

Concierge physicians are able to reduce administrative costs in a few different ways:

  • Fewer patients overall means there is less paperwork, thus reducing overhead costs for the patients that remain with the practice.
  • Many private physicians include some basic costs and procedures in their annual, quarterly, or monthly retainer fees, so there is no need to bill insurance for these procedures, further reducing administrative costs.
  • Some concierge practices choose to forego insurance altogether, operating cash-only practices, which can keep costs down (although many recommend that patients at least retain a high deductible plan for catastrophic events or illnesses).

Increasing Patient Compliance

  • Most people know what they need to do to stay healthy—even chronically ill patients know what to do to manage their condition—the problem is that not all patients follow through with their treatment plan as prescribed. Traditional care providers, already overwhelmed by the high volume of patients they see every year, have difficulty adding in-depth disease management to their plate, and patients do not comply with medication regimens or treatment recommendations.
  • Concierge doctors, on the other hand, make it a priority to spend more time with each patient, getting to know their individual needs and prescribing a treatment plan to ensure optimal health. With fewer patients, they can focus more time and energy on each individual, following up to make sure they comply and scheduling regular wellness check-ups to stay on track.
  • While there is an extra cost associated with belonging to a boutique or private practice, there are many ways that it could actually reduce personal healthcare costs, while also bringing down overall healthcare costs. As healthcare costs continue to rise year after year, it may be a good time to consider whether joining a concierge practice could be the right financial move for you.

See also “Concierge Medicine and Insurance: How It Works”


Concierge Medicine and Insurance: How It Works

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If you’re a patient considering joining a concierge medicine practice, you may have a lot of questions about how insurance works with the private medicine model. The laws and relationships between insurance provider and private doctor can vary from state to state and from practice to practice, but here are answers to some of the most common questions.

Do I Need Insurance to Participate in a Concierge Practice?

For most patients, the answer to this question is no, but many private physicians still recommend that patients carry some level of insurance. The monthly or annual fees for concierge medicine often cover basic and preventive care, so you might discover that you can make some changes to your existing insurance plan. It’s a good idea to still have a major medical plan or a high deductible plan for catastrophic illness or injury, and also a health savings account in case you require hospitalization or other specialty care.

What Do Concierge Fees Cover?

The costs of concierge fees and what they cover varies from doctor to doctor and from state to state, but generally they cover basic preventive care. At a traditional doctor’s office your insurance generally requires that you pay a co-pay to see the doctor for any appointments, then you pay for the full cost of any additional lab tests or procedures until you meet your deductible. Many insurance providers also require that you pay a co-insurance of around 20 to 30 percent until you reach your out-of-pocket maximum for the year.

With concierge medicine, most offices include things like general appointments, annual physicals, and consultation for wellness and preventive care in their monthly or annual fees. The concierge doctor will not bill your insurance, and you won’t be required to pay the co-pay, meet the deductible, or pay co-insurance for these basic checkups. Every concierge office is different, though, so it’s a good idea to talk to the doctor to clarify how their cost structures work.

What About Lab Fees and Other Costs?

At a traditional doctor’s office the cost of lab work or other procedures would be part of the cost you pay toward a deductible or out-of-pocket maximum. Many concierge doctors offer patients the opportunity to get lab work, imaging, medication, and basic procedures at a very reduced rate so they can pay with cash. By eliminating the need to involve insurance providers in this process, providers can often offer better prices. In addition it eliminates the need to get approval from an arbitrary third-party provider before offering services. This model is also helpful for patients that have very high deductible insurance plans or insurance that is intended for catastrophic illness or injury.

Can I Participate in Concierge Medicine if I have Medicare?

Medicare participants can definitely join a private physician’s practice, but it does require that the doctor not bill Medicare for services that are provided under the concierge medicine fees. Medicare can still help cover the cost of things like laboratory testing, medications, specialty care, and hospitalization if necessary.

What Should Concierge Doctors Know About Insurance?

Private doctors need to be aware of the laws regarding insurance and concierge medicine. If your office chooses to implement a hybrid model and bill insurance for some procedures that are not covered by your concierge fees, then your staff must be careful not to double-bill for items that are covered under the monthly or annual retainer fees. Doctors’ offices must also be careful not to double-bill Medicare for patients over 65 that have the government-provided health plan.

While it may seem like joining a concierge practice would increase costs, many patients find that they can purchase a high-deductible insurance plan and/or invest in a health savings account, pay the monthly concierge fees, and still end up breaking even or saving money by avoiding the hefty co-pays or higher premiums that come with traditional care.

Also see “How Concierge Medicine Can Help Cut Healthcare Costs”





Seniors Need To Know About Life Settlements

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A popular narrative in mainstream news media coverage is that the lack of planning for individuals approaching retirement is pointing the way to a serious national problem. Health care and other costs are on the rise and many seniors are in a state of uncertainty. For many, a state of panic sets in when they realize their resources may not be enough to pay for the comfortable retirement years they once envisioned.

As one of the most overlooked assets in an individual’s investment portfolio, a life insurance policy is often not utilized to its full potential. Why? Because many individuals do not know this asset creates liquidity options. People more generally make the decision to surrender the policy, allow it to lapse, roll it into a paid-up policy, or reduce the death benefit to save premiums.

But what about a life settlement?

Many seniors are not aware that a life insurance policy is personal property and may be sold as a life settlement for a value substantially greater than its cash surrender value. As a result, billions of dollars (face value) of policies that are no longer needed, wanted or affordable are lapsed and surrendered back to life insurance carriers by seniors who might have sold them for a cash payment. According to the Government Accountability Office (GAO) study on life settlements, the number of policyholders who “life settled” their policies received up to seven times the value of a lapsed or surrendered policy. This represents hundreds of millions of dollars in value not given back to insurance carriers.

Studies show that nearly 80 percent of baby boomers and seniors are interested in life settlements as a means to supplement retirement finances. 

So, let’s talk about a senior’s right to know about life settlements. Specifically, they should have a right to know there are other options to consider before lapsing or surrendering a policy.  Six states – Kentucky, Maine, New Hampshire, Oregon, Washington and Wisconsin – have already passed various versions of a life insurance disclosure requirement, thereby requiring insurance carriers to notify seniors, in certain circumstances, of the alternatives to lapse or surrender their policy. These alternatives may include options such as:

– accelerated death benefit or available riders

– assignment of policy as a gift

– life settlement

– policy replacement

– maintenance pursuant to terms or riders

– maintenance of policy through a loan

– conversion of term to a permanent policy

– conversion of long-term care insurance or a long-term care benefit plan

A reasonable question may be: who has this obligation to inform? All those, in some capacity, serving as insurance advisors to seniors need to know about the options available for policies that may be used as a financial resource. It is about educating and informing to help people evaluate their options.

Life insurance companies should also join in the effort to inform and educate policyholders of their rights and options for the policies they sold to a consumer in the first place.

An ongoing case in California, Larry Grill, et al. v. Lincoln National Life Insurance Company, illustrates an example of the potential liability for a life carrier who did not inform the policyholder of all the options available for a policy that was no longer affordable. While the outcome of the case is pending, the primary message is that a policyholder who buys a life insurance policy should be informed by that carrier about the options available to them if there comes a time when the policy is no longer needed, wanted or affordable.

It’s understandable why insurance carriers are concerned about the impact of lapse rates on their profitability, but they have a moral obligation to do what is in the best interest of those who invest significant amounts of their life resources in their life insurance products. Seniors do have a right to know; it’s a collective obligation to inform and educate policyholders about the potential value available to them and the alternatives to lapsing a policy.

This article is for informational purposes only.




Medicare To Settle Hospital Short-Term Observation Bills

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Sharply criticized by Congress and others, Medicare quietly announced on Friday, August 29 that it would settle hundreds of thousands of hospital appeals over bills for short-term observation care, by offering deals that could add up to several hundred million dollars.

The decision is an effort by the government agency to end a protracted battle with thousands of hospitals over the amount they should receive for treating patients who stay just a day or two. So many hospitals have filed appeals with Medicare that a backlog now stretches for 18 months or more before the disputes are being resolved.

The proposed settlement, which was quietly posted on the agency’s website late Friday afternoon before the holiday weekend, represents a considerable concession by Medicare. However, the financial payout that it is offering to individual hospitals would be a little more than two-thirds of the amounts they have insisted they are owed.

Medicare “is offering an administrative agreement to eligible hospitals willing to resolve their pending appeals in exchange for timely partial payment,” said Aaron Albright, a Medicare spokesman. Mr. Albright described the offer as an opportunity for the hospitals “to alleviate the administrative burden of current appeals on both the hospital and Medicare system.”

The settlement offer received a lukewarm reception from the American Hospital Association, the leading industry trade group, which is engaged in a court battle against Medicare over the delays. While it said the proposal would “provide some temporary relief,” the organization criticized the settlement offer for being narrow and for failing to address the fundamental dispute between the parties.

Medicare and its contractors say many hospitals have overbilled the government for treating patients who underwent simple procedures or were in the emergency room for a lengthy evaluation. They say that under Medicare rules, a hospital should receive a lower outpatient rate for that type of care rather than the much higher reimbursement for a full hospital stay, a difference that can add up to thousands of dollars for each patient.

Contractors, who conduct audits of the hospitals’ claims, assert that hundreds of millions of dollars have been assessed inappropriately for that type of care.

But the hospitals have resisted, arguing they are billing correctly for these stays. The contract auditors, which are private companies hired by Medicare to do such reviews, are tantamount to bounty hunters reaping contingency fees for finding overbilling, the hospitals contend.

The impasse between hospitals and Medicare has resulted in lengthy waits before cases can be heard by administrative law judges. Congress and industry leaders have denounced the delays leading to Medicare’s decision to suspend the audit process. The settlement may allow Medicare to renew those audits.

Under the proposed settlement, hospital claims involving inpatient stays that are now under appeal would be paid 68 cents for every dollar billed. The hospitals have two months to decide whether to accept the settlement, and Medicare says it will pay them within 60 days of when they reach an agreement. How the agreement will affect patients is unclear.

The proposed settlement, which would apply only to hospital bills before Oct. 1, 2013, that are now under appeal, would address the lengthy wait time. Medicare officials have recently tried to clarify the rules so that hospitals have a clearer understanding of which stays qualify for the higher inpatient rate.

Hospitals that might otherwise gamble on getting paid in full once their case was heard may find the prospect of getting at least some of their money for services they have already provided attractive.

Medicare “is taking a big step forward to get rid of a major problem,” said Mark D. Polston, a partner in the health care practice at King & Spalding, which represents some hospitals that have sought to appeal their rejected claims. While he applauded the agency for finding a creative way to address the backlog, estimated as high as 800,000 cases, he said hospitals “will have to consider whether this is a good deal for them.”

The question for hospitals, he said, is how quickly they will receive the money under the settlement. “I would hate to see hospitals sign up expecting a check right away only to find more delay,” he said.

The American Coalition for Healthcare Claims Integrity, which represents the audit contractors, said it could not comment on the proposal without studying it.