Health Care Reform Brings Changes to Medicare

Several beneficial changes to Medicare benefits, Medicare Advantage (MA) plans and Part D begin as of January 1, 2011 due to health care reform. Below is review of these changes, including changes in cost-sharing for preventive services, the newly covered annual wellness visit, changes in a new maximum out-of-pocket limit for Medicare Advantage plan enrollees, the new MA Annual Disenrollment Period, and the higher Part D premiums being charged for people with high incomes. See our article on Part D for more info on the new 50% discount on brand name drugs when in the donut hole coverage gap.

Expanded Preventive Services 2011

The health reform legislation eliminates out-of-pocket cost-sharing for most Medicare-covered preventive and screening services. It applies to services that are both appropriate for an individual and are recommended by the United States Preventive Services Task Force (USPSTF) for any indication or population. The services with no cost-sharing (copays, coinsurance and/or deductibles) for beneficiaries include:

• Mammograms every 12 months for eligible beneficiaries age 40 and older;
• Colorectal cancer screening, including flexible sigmoidoscopy or colonoscopy;
• Cervical cancer screening, including a Pap smear test and pelvic exam;
• Cholesterol and other cardiovascular screenings;
• Diabetes screening;
• Medical nutrition therapy to help people manage diabetes or kidney disease;
• Prostate cancer screening (for most codes);
• Annual flu shot, pneumonia vaccine, and the hepatitis B vaccine;
• Bone mass measurement;
• Abdominal aortic aneurysm screening to check for a bulging blood vessel;
• Smoking cessation counseling services; and
• HIV screening for people who are at increased risk or who ask for the test.

Cost-sharing is also eliminated for the new annual wellness visit and personal prevention plan discussed below.
Cost-sharing will continue for the following services, as the USPSTF does not recommend these services with a grade of A or B for any indication or population:

• Digital rectal exam (part of prostate cancer screening);
• Glaucoma screening;
• Diabetes self-management training services; and
• Barium enema (part of colorectal cancer screening.

Note: regardless of the change in cost-sharing requirements, current coverage policies continue to apply for all services. For example, Medicare only covers glaucoma tests once every 12 months for qualified high-risk individuals. Beneficiaries who meet the eligibility criteria within that time frame will not have to pay a deductible or copayment. Beneficiaries who are not high risk individuals, however, will not have these tests covered, even with the change in cost-sharing requirements.

Health care reform also establishes an Annual Wellness Visit. This visit happens every 12 months after the first 12 months of Medicare coverage during which beneficiaries are entitled to the “Welcome to Medicare Exam.” This visit will:

• Have no cost-sharing.
• Cover a range of personal risk assessment and prevention plan services, such as:
  • Examination for height, weight, body mass index, blood pressure and other routine measurements;
  • Detection of cognitive impairment;
  • Updates to medical and family history, a beneficiary’s list of providers and medications; and
  • Personalized health advice and referral to preventive and educational programs.

Part C Medicare Advantage (2011)

For 2011 and beyond, CMS has set maximum allowable cost-sharing amounts for specified Medicare Part A and B services as a way to protect beneficiaries from high cost-sharing liabilities under some MA plans. For example, the Patient Protection and Affordability Care Act of 2010 (PPACA) specifically limits the cost-sharing for chemotherapy, kidney dialysis, and skilled nursing facility (SNF) stays to be no more than that in Original Medicare. CMS has interpreted this provision, however, to allow plans to charge copayments for the first 20 days of a SNF stay, even though traditional Medicare has no cost-sharing during this time. This is deemed ‘okay’ as long as the overall cost-sharing does not exceed traditional Medicare levels for a 100-day SNF stay.

PPACA gives the Secretary of Health and Human Services the authority to extend this cost-sharing protection to other services. It also gives CMS the authority to set: 1) annual Part A and B service cost-sharing limits (above which would be considered discriminatory) for all MA plans, including special needs plans (SNPs); and 2) annual Part D cost-sharing limits for prescription drug plans.

Changes to Part C and Part D Plan Nonrenewal Notice Requirements

Plans that are not renewing their Medicare contracts for the following year must send a CMS-approved letter to their enrollees 90 days before their plan terminates. In the past, plans only had to provide 60 days notice. The letters must tell beneficiaries about all of their options, including enrolling in a stand-alone prescription drug plan for enrollees in an MA plan. Plans no longer have to provide public notice about their changes, such as through newspaper articles. They do, however, have to call effected enrollees to ensure they know who to contact for more info on their options. CMS is requiring this call despite advocates concerns that such calls could be misused to steer beneficiaries to choose other plans offered by the same plan sponsor, regardless of whether those plans are their best option.

Elimination of the MA Open Enrollment Period (OEP) – New Medicare Advantage Disenrollment Period (MADP)

The Open Enrollment Period (OEP), which has been January 1 to March 31 since 2006, has been eliminated. In its place, starting 2011, the Medicare Advantage Disenrollment Period (MADP), which will be from January 1 to February 14, will allow beneficiaries to disenroll from a Medicare Advantage plan and return to Original Medicare. The MADP does not allow people in an MA plan to switch to another MA plan or people in Original Medicare to join an MA plan. Those beneficiaries who want to disenroll from an MA plan and return to Original Medicare during the MADP starting 2011 will have a special election period (SEP) to join a Part D plan.

For the SEP, beneficiaries in an:

• MA-PD, can either 1) submit a disenrollment request to their MA-PD plan and then enroll in a Part D plan, or 2) enroll in a Part D plan first, which then automatically disenrolls them from their MA-PD.
• MA only plan, must first request disenrollment from their MA plan to trigger their SEP to join a Part D plan.

Beneficiaries can only enroll into one Part D plan during their SEP, and their SEP is only available during the MADP, January 1 – February 14. Their enrollment into their new Part D plan is effective the first of the following month.

Higher Part B and D Premiums for Higher Income Individuals – 2011

Since 2007, Medicare beneficiaries with higher incomes have paid higher monthly premiums for Part B, known as the Income Related Monthly Adjustment Amount (IRMAA). Currently, an individual beneficiary with an income of >$85,000 pays more. The threshold of $85,000 will be frozen between 2011 and 2019 and will not be adjusted for inflation. This means that more people will reach the threshold and pay a higher amount for their Part B premium.

Effective January 1, 2011, people with higher incomes ($85,000/individual and $170,000/couple) will also have to pay a higher portion of their Part D premium under the same formula. People’s income levels will be based on income reported to the IRS. IRMAA-related premiums will be either deducted from a person’s Social Security check or they will be billed separately from the premium paid to their Part D plan.

Below is a chart of the higher Part D premiums for higher income individuals and couples in 2011.

For more information on health care reform in general, see HealthCare.gov. Also see our article on the Part D 50% discount on brand name drugs for beneficiaries in the donut hole starting in 2011.