Senior Insurance Blog

Reminder: This week you have no doubt heard of the new Forethought Medicare Supplement, of which we are an exclusive distributor. To read more about the product, click here.

Avalere Health, a well respected research firm in the medical industry, published a study that estimates over 3 million Medicare beneficiaries will have their current drug plan terminated. This will most likely create an unpleasant inconvenience for these seniors who will see unexpected changes in their premiums and copayments according to the analysis.

The reason for the termination of certain drug plans stems from the Center of Medicare and Medicaid Services’ (CMS) decision to reduce perplexing and identical coverage. By doing this, CMS hopes this will provide seniors with more significant options, while still offering a good selection of about 30 plans or so in each state (down from 40). It should be noted that the change by CMS does contradict President Obama’s promise that people happy with their current health plans can keep them.

Deputy Administrator for Medicare, Jonathan Blum, spoke out against the study saying such studies would be based on guesswork and lead to highly inaccurate results. Insurance industry representatives remain mum on the issue. Consumer advocate groups are praising the changes, as such groups have long held that there are too options right now. According to AP, this year there are nearly 1,600 plans offering a numerous array of options, many of which are identical. As insurance agents, what do you think? Will the simplification of drug plan options make your lives and the lives of your clients easier, or will it reduce your opportunities?

Medicare Expands Smoker Counseling Coverage

On Wednesday, the Department of Health and Human Services (HHS) expanded coverage for smoker counseling. Now, any smoker on Medicare can receive counseling to stop smoking from an authorized professional. Before, Medicare only covered such counseling for those beneficiaries who were diagnosed with or showed symptoms of tobacco-caused disease. By expanding such coverage, HHS hopes to reduce the burden tobacco-related diseases place on the Medicare system. According to Seniorjournal.com, it is estimated that between 1995 and 2015, tobacco-related diseases will cost Medicare about $800 billion.

AARP Study Says Popular Drug Prices Soared in 2009

AARP released a report titled The AARP Rx Price Watch Report that found retail prices of prescription drugs soared, rising more than eight percent in 2009. According to the study, 211 of 217 brand name prescription drugs increased in price, significantly exceeding general inflation last year. All top 25 selling brand name drugs saw price increases. The largest increase was Flomax, which increased 24.8%. Furthermore, the study found brand name manufacturers Boehringer Ingelheim and BTA Pharmaceuticals had average price increases of more than 15%. To read the report in its entirety, click here.

Sources: AP, Seniorjournal.com

On August 23, 2010 Forethought Financial Group announced its new Medicare supplement product will be available this fall in eleven states, including Illinois, Iowa, Indiana, Louisiana, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Texas, and Virginia. The Forethought Medicare Supplement (Medigap) comes at a very good time when millions of baby boomers are now turning 65 and becoming eligible for Medicare. These newly minted seniors will be seeking Medicare supplement products from companies such as Forethought that offer competitive premiums, an excellent financial strength rating, and highly regarded customer service. The Forethought Medigap offers all of the aforementioned and more.

Precision Senior Marketing (PSM), a full-service, national insurance marketing organization, is an exclusive distributor of the Forethought Medicare supplement, and is currently offering direct contracts to independent senior insurance agents who wish to add the Forethought Medigap product to their portfolios. PSM experienced tremendous success last year with the release of several new Medicare supplement products. Exploding demand for these Medigap products exceeded the expectations of the carriers, requiring them to hire additional staff. PSM expects the same level of demand and success for the release of the Forethought Medicare supplement.

In addition to offering a new Medicare supplement product, Forethought is also offering a new final expense. The two new products will be a part of a “combo-app” process whereby agents can sign up consumers for both products in one application. This combo-app will simplify and speed-up the application process for independent senior insurance agents. The new Forethought final expense product offers superior features compared to competing final expense products, and even Forethought’s older final expense product. For more information about either product, agents are encouraged to contact Precision Senior Marketing at 1-800-998-7715 or at info@psmbrokerage.com.

Forethought Financial Group has serviced more than 2 million policyholders since its humble beginnings in 1985. Forethought’s financial strength stems from the fact that it has over $4 billion in assets, more than $5.6 billion of life insurance and annuity business in force, and nearly $1 billion in annual revenue. Unlike many other companies during this Great Recession, Forethought continues to grow and prosper. And though the Forethought Medicare supplement is released in ten states initially, the company expects to expand its offering to other states, as the company is licensed to sell in 49 states, the District of Columbia, and Puerto Rico.

On Wednesday, the Centers for Medicare and Medicaid Services (CMS) announced that Medicare prescription premiums will increase by a small amount next year, and that benefits will improve as well. More specifically, the average monthly premium for standard coverage will rise to $30 in 2011. This represents an increase of $1 over 2010, or a 3% increase, according to Don Berwick the Medicare administrator. The estimate is based on the assumption that seniors will enroll in lower cost plans. Those seniors who stay in their current plans and don’t look for cheaper plans will see a higher average premium of around $32.34 a month, according to Paul Spitalnic, a representative of Medicare’s costs estimates office.

Starting next year Medicare beneficiaries who experience the doughnut hole will get a 50% discount on brand name drugs and 7% off generics. These discounts will continue to increase until there is no gap which is expected to occur in 2020. As you may know, Medicare drug plans vary dramatically in terms of cost and coverage, so we recommend that you check your clients’ plans and inform them of the changes to avoid unpleasant phone calls from surprised individuals.

HP Gets $200 Million Medicare Contract

Medicare has awarded HP Enterprise Services with a $200 million contract to improve claims processing and also the delivery of health care services for Medicare Part B coverage. The contract has a one-year base period, plus seven one-year renewal options.

Medicare Scam Deflated

In a bit of comical news, two men in South Florida running two companies called Charlie Rx and Happy Trips submitted $63,000 in bills to Medicare for male vacuum erection systems (a.k.a. “penis pumps") and collected over $28,000 in Medicare payments. The government also found the two companies billed Medicare for nearly $2 million overall for other medical equipment, receiving a total of $735,000. As usual, the criminals’ arrogance, laziness, and/or stupidity are what led to their capture. Authorities realized something wasn’t right when they received a claim for four male vacuum erection systems for a single female patient.

Third Round of Doughnut Hole Checks Mailed

Last week, a third round of $250 rebate checks was mailed to eligible Medicare beneficiaries who fell into the Medicare Part D doughnut hole. Before this third round was sent out, CMS says that more than 750,000 have already received their checks. Secretary of Health and Human Services Kathleen Sebelius stated that these checks continue to demonstrate the benefits of the Affordable Care Act. This may also be a good time to remind your seniors that they will receive these checks automatically when they reach the doughnut hole. Anyone calling or any website requesting information to receive the checks is a scam.

Sources: AP, BusinessWeek, Senior Journal, CNN

This year Social Security will pay more in benefits than it receives in payroll taxes. We all knew the day was coming, and that day will happen sometime this year and throughout next year according to an announcement by Social Security officials, including Treasury Secretary Tim Geithner, on Thursday. This is the first time in 30 years Social Security will pay out more than it collects, but it surely will become more common place in the near future. According to the same officials, Social Security will be in the red for the foreseeable future beginning in 2015.

Several factors contributed to this year’s dip into the red. First and foremost is our currently high 9.5% unemployment rate. Basically, there are a lot fewer employees paying into the system. Then combine this with 50% of baby boomers taking their Social Security benefits at 62, rather than the full retirement age of 66, and you have a deadly tonic for the Social Security system.

Is this a major cause for concern? Yes and no depending on how you look at it. This isn’t the first time Social Security has been in the red. When America experienced stagflation, Social Security was in the red from 1970 to 1983. Social Security recovered and has been fine until now. So this may very well be a bump in the road. However, as baby boomers continue to inflate the number of Social Security beneficiaries, and with a painfully slow recovery, the future outlook doesn’t look too rosy. Either way, Social Security officials project the system will be exhausted in 2037.

Medicare: Extending its Lease on Life

The same officials that made the Social Security announcement also stated that the new health care law (PP&AC Act) will extend the life of the Medicare Trust Fund 12 more years to 2029 from 2017. Of course this announcement has caused much debate. One doubter is the Medicare program’s independent actuary who said the extra 12 years projection isn’t based on “reasonable” expectations, according to the Wall Street Journal.

One of the unreasonable expectations is Medicare officials’ belief that since employers will save money on health insurance due to the new health reform law, they will transfer those savings to paying higher wages. These higher wages mean more tax collected to pay for Social Security and Medicare. Do you think this expectation is reasonable? Let us know in the comments below.

Medicare Advantage Outlook Not as Dire?

KHN has a good article that explains the consequences of Medicare Advantage cuts by the government may not be the universal doom and gloom that many news outlets are reporting. Check it out here.

Sources: CNN, Wall Street Journal, KHN, The Washington Post

The Wall Street Journal reported on a story involving a 44-year old uninsured diabetic, Mark Baumann, and his mother Mary Baumann. According to the report Humana plans to reduce Mary’s Medicare Advantage plan to compensate for smaller government payments under the PP & AC Act, which stipulates that 15% of the new health care law will be funded by Medicare payment cuts beginning in 2012. The report cites the Congressional Budget Office in stating that Medicare Advantage enrollees will get $68 less a month in benefits by 2019.

The reduced Medicare Advantage plans for Mary and other seniors will result in either higher costs or less benefits. The report also states that dozens of private insurers that offer Medicare Advantage plans are now preparing to reduce dental, vision, and certain prescription-drug coverage beginning next year. Interestingly, the report states that by 2035, if both Medicare and Social Security see no changes, they will comprise 50% of all federal spending. The report goes on to discuss the larger issue of how this represents a shift of how the government applies our social safety net to cover younger people. What do you think of this? Let the PSM community know in the comments below (view the full article here).

Seniors Know Very Little About New Health Care Law

Several news outlets are reporting on a new poll that shows just how little seniors know about the new health law. Politicians, especially Democrats, are concerned since seniors represent a large voting bloc, especially in mid-term elections. The poll, conducted by the National Council on Aging, showed that only 17% of seniors knew the correct answers to more than half of the questions, and only 9% correctly answered two-thirds of the questions.

CMS Issues Final Rule Tying Renal Services to Performance

MordernHealthcare.com reports that the Centers for Medicare and Medicaid Services (CMS) proposed a new rule to tie Medicare payment for end-stage renal disease services with performance on quality measures. Two of these measures include anemia management and hemodialysis adequacy. Providers who don’t meet these standards will have their payments reduced up to 2% beginning January 2012. CMS also issued a final rule regarding a new ESRD payment system that includes adjustments for home dialysis training when clinically appropriate.

Happy Anniversary Medicare!

Yesterday marked 45 years of Medicare.

Sources: Wall Street Journal, NPR, Modernhealthcare.com

On Thursday, President Obama signed a bill that mandates federal departments and agencies to reduce misspending. In fiscal year 2009, the federal government doled out nearly $110 billion in improper payments, mostly due to Medicare and Medicaid fraud. The Improper Payments Elimination and Recovery Act also stipulates agencies to invest at least $1 million in audits to identify likely overpayments, and to create processes to reduce such improper payments and establish penalties for government organizations that fail to comply with the new law.

Denials of Insurance Claims Easier to Fight

The Obama administration issued new rules regarding health care reform. The new rules guarantee the right for all Americans to appeal denials of insurance claims, first with their insurance company, and then to a third-party review board if required. Many states already have similar laws in place, however the rules differ greatly. Now the rules will be standard across the United States. The new rules aim to empower consumers when appealing insurance claims that are denied. America’s Health Insurance Plans (AHIP) spokesman Robert Zirkelbach said that his organization supports the standardization of the appeals process. The Obama administration is also providing $30 million in grants to improve state consumer assistance offices. States have until July 2011 to comply.

$251 Million Medicare Fraud Ring in 5 Cities Busted

Last Friday, Federal law enforcement officials announced the arrests of dozens of suspects in five states for defrauding Medicare of $251 million. The suspects, including several doctors and nurses, were apprehended in Miami, New York, Detroit, Houston, and Baton Rouge. 94 suspects were indicted, with 36 being arrested for billing Medicare for unnecessary equipment, and H.I.V and physical therapy treatments that were never conducted. The New York Times reported that violent criminals and mobster were getting into the action, as they viewed Medicare fraud as more lucrative and less risky than dealing drugs and fire arms.

Part D Increases Use of Heart Failure Medication

Reuters reported on a recent study of 7,000 older heart failure patients in one large insurance plan released by the American Heart Journal. The study found that the number of filled prescriptions for heart failure drugs soared after Part D took effect in 2006. Low-income seniors who never had previous drug coverage saw the biggest increase in filled prescriptions. Reuters states that the findings, among other cited in the article, substantiate arguments the goal of the law is being met.

Sources: Washington Post, Reuters, New York Times, KHN

As many of you already know, beneficiaries classified as under observation incur 20% co-payments that aren’t required under admitted status.  In addition to his eight day stay, Larry also needed three months of rehabilitation.  Medicare didn’t cover this aftercare because the hospital didn’t classify him as inpatient. 

The reason the hospital didn’t admit Larry is because it extended the use of the observation status to avoid being challenged by Medicare auditors on whether Larry should be classified as an inpatient or outpatient.  Since inpatients are more costly to Medicare, auditors watch these cases very closely.  If these cases are deemed inappropriate by the auditor, Medicare doesn’t pay the hospital.  According to a representative for the Centers for Medicare and Medicaid Services, this extended use of the observation status should not be occurring, as it is meant for only the first 24-48 hours. 

The article cites Nora Super, director of government relations for AARP, as saying “Certainly, hospitals will have an incentive not to admit people if they’re going to be penalized.”  She also goes on to say the extended use of the observation classification may lead to higher costs, lower quality, and reduced access to aftercare for Medicare beneficiaries.

For the full article follow this link