Medicare Advantage vs Original Medicare + Medigap

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medicare-advantage-choiceAs health insurers struggle with shifting government policies and considerable uncertainty, one market remains remarkably stable: Medicare Advantage plans. 

However, this may or may not be good news for seniors as they select coverage for the year ahead during Medicare’s annual open enrollment period, October 15 to December 7, 2017.

For 2018, 2,317 Medicare Advantage plans will be available across the country.

Medicare Advantage is an alternative to traditional Medicare. Administered by private insurance companies, the plans — mostly health maintenance organizations (HMOs) and preferred provider organizations (PPOs) — are expected to serve a record 20.4 million people next year, or slightly more than one-third of Medicare’s 59 million members.

Despite Medicare Advantage plans’ increasing popularity, several features — notably, the costs that older adults face in these plans and the extent to which members’ choice of doctors and hospitals is restricted — remain poorly understood.

Here are some essential facts to consider:

The Basics

Medicare Advantage plans must provide the same benefits offered through traditional Medicare (services from hospitals, physicians, home health care agencies, laboratories, medical equipment companies and rehabilitation facilities, among others). Nearly 90 percent of plans also supply drug coverage.

In general, HMOs require members to seek care from a specific network of hospitals and doctors while PPOs allow members to obtain care from providers outside the network, at a significantly higher cost.

Pros And Cons

Here’s a summarized list of the pros and cons for Medicare Advantage plans.

On the plus side, it cited they:

  • Put an emphasis on preventive care with in-network providers.
  • Provide benefits, such as vision care, dental care and hearing exams with, or sometimes without, an extra monthly premium.
  • Tout an all-in-one approach to coverage with in-network providers.
  • Have maximum annual out-of-pocket costs (HMO and PPO in-network $6,700) and (PPO out-of-network up to $10,000).

On the minus side, it cited they:

  • Have limited access to physicians and hospitals within plan networks.
  • Must get prior approval from a primary care physician before seeing a specialist.
  • Receive a set per-member monthly fee from the government and risk losing money if medical expenses exceed payments.
  • Have limits on care for members when traveling. Only emergency and urgent care is covered. 
  • Charge more than Original Medicare for short hospital stays, home health care or medical equipment.
  • Are locked in annually for a member with two exceptions: a special disenrollment period from January 1 to February 14 when a member can choose to return to Original Medicare; and an option to make changes during the annual enrollment period each year from October 15 to December 7.
  • Do not generally provide coverage for HMO out-of-network services.
  • Generally provide PPO out-of-network services with higher costs.
  • Portray the perception of costing less than Original Medicare. Actual costs depend on individual circumstances that are not easily calculated.
  • May not be effectively and consistently transparent [beyond zero or low premiums] in evaluating drug expenses, deductibles, co-insurance, hospitals, skilled nursing facilities and home health care.
  • Cannot easily determine which providers are in-network. Information is not on the Medicare website and directories are not accurate. Patients must call all their doctors about specific plans.

Notably, if someone enrolls in a Medicare Advantage plan when newly eligible for Medicare and stays with a plan past the Medicare Part B enrollment date, they may or may not health qualify for the other choice, a Medigap supplement plan.

Medigap policies cover charges such as deductibles, coinsurance and copayments that seniors with Original Medicare coverage are expected to pay out-of-pocket. 

Cost Perceptions

Seniors often first consider what they will pay in monthly premiums. In 2017, the average monthly premium for Medicare Advantage plans is $30. But nearly half of Medicare Advantage members are enrolled in plans that do not charge a monthly premium — so-called zero premium plans. 

To get a full picture of plan costs, which can vary annually and are in-network, seniors should look beyond premiums to drug expenses (including which drugs are covered by their plan, at what level and with what restrictions); deductibles (plans can charge deductibles for both medical services and drugs); what plans charge for hospital care (some have daily co-payments for the first week or so); and coinsurance rates for services such as home health care or skilled nursing care.

It’s really critical that people dig deep and find out about all possible costs they may incur in a Medicare Advantage plan before they sign. Part of the equation has to be what a person will have to pay [often more than expected] if they need extensive care.

Since 2011, Medicare Advantage plans have limited members’ annual out-of-pocket costs,  a form of financial protection. There is no similar limit in traditional Medicare. Yet, protection is not complete since out-of-pocket limits do not apply to drug costs, which can be considerable. 

Finding A Doctor

One way that Medicare Advantage plans try to control costs and coordinate care is by working with a limited group of physicians and hospitals. 

It’s not easy to determine who’s in-network for a Medicare Advantage plan. There’s no  streamlined way to search for information about provider networks across plans. Members must call all their doctors to ask if they are contracted in a plan [and refer to the plan number as well] because each insurance company may offer multiple plans in a market area.

Making matters even more difficult: Medicare Advantage plans can drop physicians or hospitals from their networks during the year, leaving members without access to trusted sources of care.

A new report discloses data about the size of Medicare Advantage plans’ physician networks for the first time. It finds that, on average, Medicare Advantage HMOs included 42 percent of physicians in a county in their networks while PPOs included 57 percent. Altogether, 35 percent of Medicare Advantage members are in plans with narrow physician networks, which tend to be the least expensive plans.


Drug Coverage Denied by Medicare and Fighting Back

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Man ConcernedKenneth Buss had taken a blood thinner, for over a year when his mail-order pharmacy refused a request to refill his prescription. He immediately contacted his physician who urged his Medicare plan insurer to approve the medication. 

The request was denied. But Buss, 79, did not let the matter drop. Without coverage, a 90-day supply of Xarelto costs about $1,300 at a local pharmacy — more than 10 times what Buss had been paying.

“That killed me,” said Buss, who remembers phoning his Medicare plan and saying, “Excuse me, are you saying my doctor is wrong and you know better?”

With his physician’s help, this determined Arizona resident persuaded his plan to renew his prescription. But many similarly frustrated older adults are not sure how to appeal Medicare drug plan denials.

“A lot of cases fall through the cracks,” said David Lipschutz, senior policy attorney at the Center for Medicare Advocacy. “People simply do not know exactly how to proceed or they try to go through the process; but it’s complicated, time-consuming and people just give up.”

Concerns about Medicare drug coverage are common: More seniors call the Medicare Rights Center’s national hotline (800-333-4114) about this topic each year than any other Medicare organization.

Here is some essential information about the appeals process:

The Basics

Nearly 41 million Medicare beneficiaries receive drug coverage through stand-alone drug plans or privately run Medicare Advantage plans — Kenneth’s type of coverage.

Some rules apply across the board. Notably, plans must cover substantially all drugs in six categories: HIV/AIDS treatments, antidepressants, antipsychotic medications, anti-convulsive treatments for seizures, immunosuppressive medications and treatments for cancer. In other categories, at least two medications from each class must be offered.

Plans are not allowed to cover such drugs as those for weight loss, coughs and colds, fertility, cosmetic purposes, sexual difficulties and non-prescription medications, among others.

Beyond these generalities, Medicare drug plans have considerable flexibility in choosing which drugs to cover (their formularies), capping the amount filled per prescription (quantity limits), requiring preapproval before a medication is supplied (prior authorization), asking people to try other lower-cost treatments first (step therapy) and assigning medications to different classes with different costs attached (cost-sharing tiers).

A failure to meet any of these requirements may result in a denial. In Buss’ case, his plan requires annual prior authorization of Xarelto. Although his doctor submitted the proper request, as he did in 2016, this time the plan deemed his rationale for prescribing the medication as insufficient.

Persistent Problems

The latest government audit of Medicare’s drug program confirms that plans often impose limits on drug coverage without advance approval from the Centers for Medicare & Medicaid Services (CMS), as required.

Notably, 64 percent of plans applied quantity limits that had not been approved by CMS, while 41 percent improperly dealt with requests for prior authorization or exceptions to plan requirements.

Also, insurance plan representatives were deficient in communicating with members and providers: 70 percent of denial notices did not offer adequate explanations for the actions taken, were incorrect or were written in a manner that was difficult for most people to understand.

About 45 percent of the insurance plans did not reach out to Medicare members or physicians to acquire the necessary additional information to make a coverage decision.

The takeaway for seniors: You must take the initiative in supplying relevant materials. Your chances are best if your physician clearly and comprehensively states, in writing, why you must take a particular medication and the likely harm of not doing so while referring to your particular medical circumstances.

Appeals Process

Seniors tend to think that when they are unable to get a medication at a pharmacy, they have grounds to appeal. But that is not true.

Another step awaits: An individual needs to request a formal “coverage determination” from the Medicare drug plan before the appeals process can start. Included should be an “exceptions request” asking that a plan’s rules be waived so a senior can obtain a medication or pay less for a drug.

Once a coverage determination is issued, there are five steps to the appeals process: a “redetermination” by the drug plan; a “reconsideration” by an independent review entity (MAXIMUS Federal Services serves this purpose across the U.S.); a hearing before an administrative law judge; a review by the Medicare Appeals Council; and a review by a federal district court.

Breakdowns in the process can occur right at the start: Individuals are supposed to get a notice from the pharmacy informing them of their right to appeal when a prescription cannot be filled, but much of the time this does not happen, said Casey Schwarz, senior counsel at the Medicare Rights Center.

Appeals can be processed on an expedited, fast-track timetable or at the standard, slower pace. But even expedited appeals can drag on, as plans and other entities miss decision-making deadlines.

Tips For Seniors

Older adults can become discouraged as they go through the early steps of this process, but “we encourage them not to give up — people are often successful at higher levels of appeal,” Schwarz said.

In 2015, the latest year for which data are available, independent reviewer MAXIMUS reversed drug plan decisions 30 percent of the time. That year, appeals to MAXIMUS climbed 47 percent over 2014 levels.

Some other tips from advocates: Keep careful records of every person you have spoken with and what they told you. Work closely with your physician’s office. Keep a record of any out-of-pocket drug expenses; these can be recovered later if your appeal is successful. Be persistent.

For help, call the Medicare Rights Center national hotline (800-333-4114).

“The complexity is awful, but hang in there if you can,” said Buss, who hopes he will not face similar difficulties when it’s time to renew his Xarelto prescription next year.