A 60 year old man living with a disability and working part-time had enjoyed good health and regular exercise in his life. Yet, in a bout of illness, he visited his primary care physician in his Medicare HMO only to discover he had advanced lung cancer. He was immediately referred to an oncologist and told that he needed chemotherapy as soon as possible in order to survive. Although the man was ready for treatment and determined to gain back his health, he was not prepared for the $500 copayment his oncologist charged him. The copayment for chemo was now 20 percent of the injection cost instead of the affordable flat fee it had been in the past. In previous years, he had received the care he needed in his Medicare HMO at relatively low cost. Although the premiums and copays went up annually, they did not present a barrier to treatment. Now he was forced to pay an amount of money he did not have. When asking to set up a payment plan for his chemo, the doctor refused. Unable to pay up front, this man visited all the other oncologists within the HMO network only to be refused by each of them. After a month of delay, the client called the Health Insurance Counseling & Advocacy Program (HICAP) angry and in great need of help.
This man’s story has unfortunately become common among cancer patients in Medicare HMOs. In the past, many individuals, including cancer patients, joined Medicare HMOs as a means of keeping out-of-pocket costs to a minimum, to an amount below what they would pay in Original fee-for-service Medicare. Yet, this has changed. As a Part B covered service, cancer patients receiving chemotherapy in an HMO pay just as much, if not more than they would in Original Medicare. In fee-for-service Medicare, Medicare pays 80% of the cost and the beneficiary pays no more than the other 20%. In Medicare HMOs, however, while most cancer patients also pay 20 percent, according to advocates in Southern California, some pay as much as 30 percent. In addition, unlike Medicare Part D which has an out-of-pocket threshold beyond which individuals with high drug expenses have 95 percent of their costs covered, Part B has no equivalent. Cancer patients receiving Part B covered chemotherapy have no annual out-of-pocket limit.
A brief history of change in Medicare HMOs…
In the past five years, HMO monthly premiums and copayments have gone up in general, but copayments for services used by people with chronic, serious illness have skyrocketed. This trend appears to reflect a deliberate business strategy of placing the burden of cost increases on the highest users instead of spreading them out across all plan members. Because these dramatic increases only affect a select group, the majority of HMO enrollees are unaware of the dire situation this business decision creates. [Note: this option for private plans to pass cost-sharing burdens on to individuals with chronic conditions seems to also have carried over into Part D. According to the Centers for Medicare and Medicaid Services’ (CMS) rules and regulations, Part D plans can exempt their “very high cost and unique” drugs from any tiered cost-sharing exceptions. This means that while enrollees can file an exception for a drug not on a plan’s formulary or for a lower cost-sharing amount for a covered drug, these appeal rights most likely do not apply for their most expensive drugs. Because cancer patients and others with serious illness often need to use expensive medication, this exemption may well disproportionately affect them. These high drug costs, which can be as much as $10,000 per month, combined with cancer treatment copayments add up to enormous out-of-pocket expenses for a disproportionately small percentage of the HMO enrollees. For more information on exceptions, see the appeals article from last edition.]
The strategy started when an HMO in California petitioned CMS to charge percentage copayments instead of flat-fee copayments for certain services. Beneficiaries with end stage renal disease (ESRD) were the first ones hit. Instead of being charged a $25 copayment for each dialysis treatment (which at three times a week was already a stretch for many patients), plans began charging a 20 percent copayment. Calls flooded the HICAP offices with people saying they would die because they could no longer afford their dialysis.
Soon after, advocates in Orange County noticed that a local HMO began charging the same 20 percent copayment for chemotherapy. Patients, who in December of the previous year paid a $25 copay for an injection, returned in January three weeks later with a copay of $1,000 or more. Patients were shocked. Although they were aware of the general premium and copay increases for the plan, none of them knew about the new chemotherapy copays starting the first of the year. As this information is often not printed in general materials, it was probably only written in the fine print that most people do not read. Because only one HMO was charging a percentage copayment that year, many of the plan’s sickest patients left to join a different plan.
Yet within a few years, most HMOs began charging percentage copayments for chemotherapy, leaving many people financially strapped and/or unable to continue their treatment. Some doctors allowed patients to make small payments over time, but as the number of people requesting this option grew, doctors struggled to have enough money up front to buy the chemotherapy drugs.
This situation contributes to much financial and emotional stress at a time when people may be least able to handle it. While in the past beneficiaries at least had the option to switch to a different plan at any time during the year with more affordable copays and/or doctors accepting payment plans, with the new ‘lock-in’ rules, beneficiaries will not have this option. Starting in 2007, beneficiaries will be able to switch HMO plans or return to Original Medicare once between January and March. After that, they must remain in that plan until the annual enrollment period in November where they can choose a new plan effective the first of the following year.
Other options: looking beyond HMOs
With prescription drugs now covered under Medicare Part D and with HMOs’ skyrocketing percentage copayments for certain services, HMOs are no longer the attractive option for supplementing Medicare that they used to be. Before Part D when Medigap policies offered limited to no drug coverage, many people with serious chronic illnesses faired better with the drug coverage and other additional benefits offered in most Medicare HMOs. Now, although monthly premiums in HMOs may still be lower than Medigaps, the annual amount of out-of-pocket expenses can be far greater in an HMO than they would be with Original Medicare and a Medigap policy. For example, as discussed above, in most HMOs cancer patients must pay 20 to 30 percent of their chemotherapy injection costs; with Original Medicare and a Medigap policy they would have no out-of-pocket costs. Medicare would pay 80 percent of the bill and the Medigap would pick up the other 20 percent. Also, with a Medigap policy, beneficiaries can choose to see any doctor or specialist, and go to any hospital that accepts Medicare. In an HMO, beneficiaries can only use the network of doctors and hospitals contracted with that plan. Although they can appeal to see a specialist or other doctor outside of the plan’s network, the appeal may be denied. In terms of Medicare Part D, with a Medigap policy, people can choose their own stand-alone Part D plan, whereas in an HMO they must use the Part D plan associated with the HMO plan.
Counselors and advocates helping beneficiaries understand their options for supplementing Medicare must be aware of the various open enrollment and guarantee issue rights for buying Medigap policies without a health screening. These open enrollment and guarantee issue rights are particularly important for people with cancer or any other serious illness who would otherwise be unable to buy a policy because of their health condition. Beneficiaries who are just becoming eligible for Medicare have a six-month Open Enrollment Period to buy a Medigap policy without a health screening. People who are 65 years of age or older can purchase any Medigap policy within their first six months of having Medicare Part B; people who are younger than 65 with a disability can purchase policies A, B, C, F or one of H, I, or J. Those who already have Medicare because of a disability are also entitled to the same six-month open enrollment period when they turn 65. If they already have a Medigap plan, they can keep it and get a lower premium, or they can choose a new Medigap plan. Also, when first becoming eligible for Medicare, if a person enrolls in a Medicare Advantage plan (such as an HMO or PPO) and disenrolls within the first 12 months, s/he has the right to buy a Medigap policy without a health screening. For more information on other open enrollment and guarantee issue rights for Medigaps, visit the Calmedicare.org site.
Another option for cancer patients or others with chronic illness who cannot buy a Medigap policy is to join a Preferred Provider Organization (PPO). Like an HMO, PPOs also have a network of providers (called ‘preferred providers’). Yet unlike an HMO, enrollees are not restricted to stay within this network. They can also see outside providers but will have a higher cost sharing amount than those who use the preferred providers. In addition, while PPO plans may still have high percentage copayment amounts for certain services, unlike HMOs, most PPOs have annual out-of-pocket limits. These limits can be up to $4,000 – $5,000 or more. They also often have annual deductibles that may or may not be counted towards the out-of-pocket limit. Again, while PPO monthly premiums may be less than a Medigap policy, beneficiaries who have the opportunity to buy a Medigap without a health screening must closely compare their total out-of-pocket costs and factor in the value of being able to choose any doctor or hospital that accepts Medicare when deciding whether to go with a Medigap policy or PPO.
If neither a Medigap nor a PPO plan are an option for a cancer patient or other beneficiary with chronic illness and/or in need of certain durable medical equipment (such as wheelchairs or oxygen), they can enroll in an HMO. In this situation, they must carefully compare the available Medicare HMO plans and find out each plan’s copayment amounts for the services needed. Because information for certain services is not always printed on comparison materials, beneficiaries and/or advocates may need to call the plans directly. Yet, as some advocates have been given wrong information, it may be best to call several times. For example, a HICAP counselor in Southern California reports that when she called a plan about the charge per day for radiation treatment, a member services representative quoted the x-ray copay of $20 instead of the actual copay which was 20 percent of a several thousand dollars.
Resources for help
Many cancer patients face difficult decisions of either paying their rent or mortgage for the month or paying for their chemotherapy. Several small non-profit organizations have formed throughout the country and state to help people in this situation get the treatment they need without loosing everything they have. Although these organizations are increasingly financially strapped now that they are also helping people who reach the Medicare Part D donut hole (or coverage gap), they may still offer some financial assistance to cancer patients in need. The American Cancer Society (ACS) can provide a list of such organizations in one’s local area as well as a wealth of informational resources. People can contact ACS online at their website (www.cancer.org), or by phone at (800) ACS-2345. (Note that ACS itself does not offer financial assistance.) A couple additional organizations to contact for other serious chronic illnesses include:
- Multiple Sclerosis Association of America (MSAA) (800) 532-7667
- National Organization for Rare Diseases (NORD) (203) 704-0100 or (800) 999-6673
Advocates, beneficiaries and family members can also contact their local HICAP office for information and/or counseling on health insurance options, rights to Medigap policies, and comparing plans in one’s area. Find your local HICAP office online or call 1-800-434-0222 for assistance.