Key Group Rejects Calls To Limit
Seniors' Medigap Policies to Shrink Spending
Insurance Commissioners examine if seniors would use
less Medicare if the most popular Medigap plans were less generous
By Susan Jaffee, Kaiser Health News
30, 2012 - A key group of state insurance commissioners dealt a blow
Friday to proposals that would shrink Medicare spending by asking
seniors to pay more for Medicare supplemental coverage.
The health law requires the
National Association of Insurance Commissioners to examine whether
seniors would use less Medicare services if the most popular Medigap
plans were less generous.
“Everything we’ve looked at has
shown that increasing cost-sharing does stop people from seeking medical
care,” said Bonnie Burns, training and policy specialist at California
Health Advocates who serves on an NAIC committee that has studied the
issue for more than a year. “The problem is they stop using both
necessary and unnecessary care.”
About 9 million Medicare
beneficiaries – or one out of five – bought a Medigap policy in 2010, to
cover a portion of medical expenses not covered by Medicare. And
two-thirds of them purchased the most comprehensive plans that offer
“first dollar” coverage, which protects them from having to pay almost
anything out of pocket.
In a draft letter approved by the
NAIC Senior Issues Task Force Friday, the commissioners said the idea
could backfire and raise Medicare costs when seniors don’t receive the
medical care they need. The letter, to Secretary of Health and Human
Services Kathleen Sebelius, was approved by the task force during the
association’s annual meeting near Washington, D.C. Two more committees
are expected to approve the letter before it is sent to Sebelius.
“Once the letter has cleared the
Senior Issues Task Force, it’s probably a done deal,” said Guenther
Ruch, a former administrator of the Wisconsin insurance department who,
until March, chaired the Medigap subgroup that prepared the letter.
The Obama administration and
congressional leaders are considering such
proposals as part of their effort
to trim federal spending. The Congressional Budget Office has estimated
that cost-sharing changes could save the Medicare program as much as $53
billion over 10 years.
Medigap policies are popular with
seniors because Medicare does not cap seniors’ out-of-pocket expenses.
The C and F Medigap plans cover nearly all of the out-of-pocket costs
that beneficiaries would usually pay, including deductibles and their 20
percent share of doctor visits and other outpatient services.
“People are buying Medigap because
they need the [medical] treatment, said Dotti Outland, director of
regulatory affairs for UnitedHealthcare and a member of the Medigap
subgroup. “And they are paying something out of their pocket now, they
are paying premiums.”
Advocates of increased cost-sharing
point to studies showing that seniors with Medigap coverage tend to use
more Medicare services than those without it, and they likely get
unneeded care for which the government pays a large share.
The insurance commissioners were
supposed to recommend specific cost-sharing changes for these Medigap
plans to reduce Medicare spending for unnecessary medical treatment and,
as the law says, “encourage the use of appropriate physicians’
services.” The law requires their recommendations to be based on
peer-reviewed studies or current successful managed care practices.
But after a year and a half of
research and discussion, they came up empty handed.
“None of the studies provided a
basis for the design of nominal cost sharing that would encourage the
use of appropriate physicians’ services,” the letter says. “Many of the
studies caution that added cost sharing would result in delayed
treatments that could increase Medicare program costs later
(e.g., increased expenditures for emergency room visits and
hospitalizations) and result in adverse health outcomes for vulnerable
populations (i.e., elderly, chronically ill and low-income).”
The letter acknowledges that
Sebelius may disagree with the NAIC and seek cost-sharing changes
regardless. “If that is your decision, please know that the NAIC stands
ready to continue its regulatory role in developing Medicare supplement
Nevada state insurance
commissionerScott Kipper, who chairs the Senior Issues Task
Force, said the letter conveys “without any doubt that we want to
continue to be the organization that HHS turns to on Medigap.”
An earlier version of the letter
had rejected cost-sharing overall, but recommended $25 co-payments for
advanced diagnostic imaging tests and $50 co-payments for scooters as a
way to reduce fraudulent charges. But the group’s consumer
representatives argued strongly against including that option. Three
days before the Senior Issues Task Force vote, 15 national consumer and
patient advocacy groups, along with eight NAIC consumer representatives,
wrote Kipper urging that the
co-pay recommendations be dropped.
“The Centers for Medicare and
Medicaid Services has the ability, and obligation, to discourage
improper use of these services by all Medicare beneficiaries, not only
those who purchase Medigap plans,” they said, adding that increasing
Medigap cost-sharing is the wrong tool for reducing Medicare spending.
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