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CMS FACT SHEET: 2020 Medicare Advantage Advance Notice Part I – Risk Adjustment

Posted by www.psmbrokerage.com Admin on Fri, Dec 28, 2018 @ 11:32 AM

CMS FACT SHEET: 2020 Medicare Advantage Advance Notice Part I – Risk Adjustment


Today, the Centers for Medicare & Medicaid Services (CMS) released Part I of the 2020 Advance Notice of Methodological Changes for Medicare Advantage Capitation Rates and Part D Payment Policies (the Advance Notice), which contains key information about proposed updates to the Part C Risk Adjustment Model and the use of encounter data.

The 2020 Advance Notice is being published in two parts again this year due to requirements in the 21st Century Cures Act, which mandated certain changes to the Part C risk adjustment model and a 60 day comment period for these changes. Changes to other payment methodologies proposed for the following calendar year that are typically contained in the Advance Notice only require a 30 day comment period and will be released in accordance with that statutory deadline. The payment policies for 2020, proposed in both Part I and Part II of the Advance Notice, will be finalized in the annual Rate Announcement.

2020 Part C Risk Adjustment Model proposal

The 21st Century Cures Act requires CMS to make adjustments to the risk adjustment model to take into account the number of conditions an individual beneficiary may have, in addition to the additive factors in the existing model.  For 2020, we are proposing to implement the model proposed, but not finalized in the 2019 Rate Announcement. This model adds variables that count the number of conditions a beneficiary may have that are in the risk adjustment model (“payment conditions”). In addition to the proposed model, we are presenting an alternate Payment Condition Count model that is similar, but includes additional condition categories not in the current risk adjustment model for pressure ulcers and dementia. We are soliciting comment on which version of the model to implement beginning with 2020 payments.

Further, the 21st Century Cures Act requires that CMS fully phase in the required changes to the risk adjustment model by 2022. We are therefore proposing to begin the phase in of this new model in 2020, starting with a blend of 50% of the risk adjustment model first used for payment in 2017 and 50% of the new risk adjustment model proposed.

Using Encounter Data

The model we are proposing in Part I of the Advance Notice for 2020 builds upon the model being used for 2019 risk adjustment payments that includes technical updates such as calibrating the model with more recent data, selecting diagnoses with the same method used for encounter data, and including additional condition categories for mental health, substance use disorder, and chronic kidney disease.

CMS calculates risk scores using diagnoses submitted by Medicare FFS providers and by Medicare Advantage organizations. Historically, CMS has used diagnoses submitted into CMS’ Risk Adjustment Processing System (RAPS) by Medicare Advantage organizations. In recent years, CMS began collecting encounter data from Medicare Advantage organizations, which also includes diagnostic information. In 2016, CMS began using diagnoses from encounter data to calculate risk scores, by blending 10% of the encounter data-based risk scores with 90% of the RAPS-based risk scores. CMS continued to use a blend to calculate risk scores, by calculating risk scores with 25% encounter data and 75% RAPS in 2017, 15% encounter data and 85% RAPS in 2018, and 25% encounter data and 75% RAPS in 2019. For 2020, CMS proposes to calculate risk scores by adding 50% of the risk score calculated using diagnoses from encounter data, RAPS inpatient diagnoses, and FFS diagnoses with 50% of the risk score calculated with diagnoses from RAPS and FFS diagnoses. CMS is also proposing to implement the phase-in of the new risk adjustment model by calculating the encounter data-based risk scores exclusively with the new risk adjustment model, while continuing use of the risk adjustment model first implemented for 2017 payment for calculating risk scores with RAPS data.

Report to Congress

The 21st Century Cures Act also requires the Secretary to submit to Congress a report on the Part C risk adjustment model and the ESRD risk adjustment model every three years, starting with a report due no later than December 31, 2018. This first report on risk adjustment in Medicare Advantage required by the 21st Century Cures Act is being released at the same time as Part I of the 2020 Advance Notice.  This report includes information on the performance of these risk adjustment models by providing a wide range of predictive ratios. To view the Report to Congress, please visit: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Risk-Adjustors.html.


To be assured consideration, comments on the proposals announced today should be submitted by February 19, 2019. The final 2020 Rate Announcement will be published by Monday, April 1, 2019.

To submit comments or questions electronically, go to www.regulations.gov, enter the docket number “CMS-2018-0154” in the “search” field , and follow the instructions for ‘‘submitting a comment.’’

Part I of the Advance Notice may be viewed through: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.html and selecting “2020 Advance Notices.”

Additional Updates:


Tags: Medicare Advantage, Medicare

LIMRA Secure Retirement Institute: The Single Retiree Market Presents Major Opportunity for Agents

Posted by www.psmbrokerage.com Admin on Wed, Dec 26, 2018 @ 12:43 PM

LIMRA Secure Retirement Institute: The Single Retiree Market Presents Major Opportunity for Agents


The media often depicts retirement as a couple walking down a beach holding hands or sitting on a white beach chair watching wave’s crash down on the shore. For many American retirees, that is simply not a reality.

New LIMRA Secure Retirement (LIMRA SRI) data give insight into an often overlooked market: single pre-retirees and retirees. There are 7.6 million single pre-retiree and retiree households (aged 55 and over) with assets of $100,000 dollars or more. In total, the single pre-retiree and retiree market offers a $6 trillion opportunity.

Agents should cater to this opportunity differently, as single retirees face their own set of unique set of challenges.  These challenges require special attention in retirement planning as their investment preferences and goals may alter based on their situations.  

LIMRA SRI data show that single retirees feel less confident than married retirees.  Less than two thirds (64 percent) of single retirees are confident that they can live the lifestyle they want in retirement, compared with 71 percent of married ones.

Running out of savings in a long retirement is another major concern. Four in ten single retirees believe their savings won’t last if they live to age 90. Just over one third of married or partnered retirees feel the same way. Just 57 percent of single retirees feel their retirement lifestyle is how they pictured it, compared with nearly 7 in 10 married retirees.

Agents must develop a plan to approach and reach the single pre-retiree and retiree market. Only 38 percent of single retiree households work with an advisor, but they have a unique set of needs, expectations and desires in their retirement years. Guidance from an experienced advisor can help them be more confident, properly prepared and more able to live their desired lifestyle.


Related content: Getting Started in Medicare Sales

Additional Updates:


Long-Term Care Providers Drive Growth in Special Medicare Advantage Plans

Posted by www.psmbrokerage.com Admin on Wed, Dec 26, 2018 @ 12:32 PM

Long-Term Care Providers Drive Growth in Special Medicare Advantage Plans

(Image: Freepik)

By SkilledNursingNews – December 19, 2018

Health care providers selling Medicare Advantage (MA) products isn’t a new trend, but typically “providers” refers to hospitals, health systems, or physician groups. Few would expect nursing homes and assisted living operators to be able or willing to manage health care risk for some of the highest-cost Medicare beneficiaries.

And yet, as these charts illustrate, long-term care providers are largely responsible for driving rapid growth (23%) in the number of MA special needs plans enrolling institutionalized Medicare beneficiaries over the last two years. The number of provider-sponsored I-SNPs doubled from 2016 to 2018, and enrollment has more than doubled. Long-term care providers now lead 21 of the 24 provider-led I-SNPs.

Continue reading

Additional Updates:


Tags: Medicare Advantage, Medicare Advantage News

Phone Anxiety Holding You Back? 5 Tips to Overcome It

Posted by www.psmbrokerage.com Admin on Thu, Dec 20, 2018 @ 12:02 PM

Phone Anxiety Holding You Back?
5 Tips to Overcome It

anxious man
(Image: Freepik)

Written by Julie Thomas / Hubspot

Today's salespeople are afraid to pick up the phone. Yes, phone anxiety is real.

At ValueSelling, we recently conducted a survey on B2B sales reps' top prospecting challenges and found that 50% of sales reps surveyed feared making cold calls. Half of the respondents we surveyed had anxiety about this essential part of their jobs.

Perhaps it's generational -- after all, what millennial makes a phone call instead of texting or using social media? However, I believe it all comes down to sales reps not being sure how to initiate a discussion that will add value.

If their prospect answers, the rep is afraid they won't know what to say. If I they get voicemail, they're afraid they don't know how to leave a concise, compelling message. And so, they'd rather not put themselves in the position of getting stuck and sounding irrelevant to the prospect in those situations. They're afraid of looking inept or feeling uncomfortable.

To justify the lack of phone calls, they'll rationalize, "No one answers the phone anymore … so I'm not going to call." But that's a mistake. In this post, I'll discuss my tips for overcoming phone anxiety to get better results prospecting.

Check out the 5 Tips for Overcoming Phone Anxiety


Additional Updates:


Tags: phone sales

Aetna Medicare Producer News: Happy holidays | Recertify renewal payments by 12/31 | OEP starts Jan. 1 ― Are you ready?

Posted by www.psmbrokerage.com Admin on Wed, Dec 19, 2018 @ 02:01 PM

Aetna Medicare Producer News:
Recertify renewal payments by 12/31 |  OEP starts Jan. 1

Medicare Producer News

Individual MA/MAPD, PDP:  December 19, 2018

Recertify for renewal payments by Dec. 31
If you’re just looking to maintain your existing book of business without selling any 2019 effective business, don’t forget that you still need to complete the annual certification process by December 31 to receive renewal commissions in January.
If you recertify after December 31, renewal commission payments to you will resume the first month after certification is complete. You will not be eligible for any missed commission payments during your lapse period. For details on requirements to receive renewal commissions, please refer to the Aetna Medicare Producer Guide.

Open Enrollment Period (OEP) starts Jan. 1

The Medicare Advantage OEP runs from January 1 - March 31. During this period, MA/MAPD beneficiaries have a one-time opportunity to change plans. Remember, you’re not allowed to advertise this option, or encourage beneficiaries to switch plans during OEP. But if an MA/MAPD client contacts you and wants to make a change, if eligible, they can. Here are some resources to help you navigate OEP:

• 2019 OEP overview flyer

• OEP Rules of the Road

• OEP Rules of the Road audio

• OEP Rules of the Road transcript

Helping clients who qualify for an SEP

When certain events happen, your Medicare-eligible clients may qualify to change their plan outside of the AEP. These are Special Enrollment Periods (SEPs). CMS determines what events and criteria qualify for an SEP. Each one has different rules for the types of plan changes people can make. Below are a few example scenarios that would make a beneficiary eligible for an SEP:

  • You move out of your plan’s service area.
  • You have (or lose) Medicaid.
  • You qualify for (or lose) Extra Help.
  • You live in an institution (like a nursing home)

When assisting your client with an SEP, make sure you correctly identify your client’s SEP on the enrollment form, in the Confirm Your Enrollment Period section. Download an educational flyer about SEPs.

Is a fitness membership important to your clients? SilverSneakers has on-the-go options 

If your clients enroll in one of our 2019 MA/MAPD plans, they can get a free fitness membership at one of the 15,000+ participating SilverSneakers®  locations nationwide.

PLUS, with the new and free SilverSneakers GO™ app, it’s easy for members to exercise on the go. The app lets you:

  • Find nearby locations and check amenities
  • Schedule a workout
  • Select an adjustable workout program
  • Set reminders and log workouts 

In case you missed it...

December 14: New age-in marketing materials on Studio
December 4: Guidance and deadlines for end of AEP
November 28: Announcing a new day in health care - CVS completes acquisition of Aetna
November 16: Check out the 2019 Journey Handbooks

Quick links

Search for providers
Compare plans and estimate costs
2019 ready-to-sell requirements
Complete Aetna’s 2019 producer certification 
Sign up for 2019 MA/MAPD product training
How to submit enrollments
Get commission reports on Producer World
2019 Aetna Medicare Producer Guide

Need assistance? Here’s who to call (for brokers only)

Filling out enrollment applications

Aetna Medicare Broker Services Department
8 a.m. to 8 p.m. ET, M - F
(Open Saturday, November 17,
9 a.m. to 2 p.m. ET. Closed Saturday, November 25.)

Enrollment options (fax, mail, electronic/Ascend)

Application status

Ready-to-sell status

Getting access to the Ascend app

2019 plan benefits

Select prompt 2 to be directed to 2019 plan benefits

Looking up in-network providers

Before calling the hotline, check our online tools:

• aetnamedicare.com/findprovider 
• coventry-medicare.com/findprovider

Provider Lookup Hotline
7 a.m. to 9 p.m. CT
Monday - Friday 
(Available during AEP only,
for ready-to-sell brokers)

Not appointed with Aetna? Request details here

Additional Updates:

Tags: Medicare Advantage, aetna, AEP

Aetna To Scale Up Medicare Advantage Senior Living Referral Platform

Posted by www.psmbrokerage.com Admin on Tue, Dec 18, 2018 @ 09:47 AM

Aetna To Scale Up Medicare Advantage Senior Living Referral Platform

Chuck Sudo – SeniorHousingNews – December 17, 2018

Picture an 83-year-old woman in Wisconsin who is increasingly prone to falls, researching assisted living communities. Unable to cut through a pool of options, she calls a referral service offered by her Medicare Advantage plan, where a consultant is able to narrow her choices based on select criteria she provides.

This scenario is already coming to pass, thanks to services such as “Resources for Living,” offered by Aetna.

Medicare Advantage plans are growing in popularity with seniors seeking insurance coverage, and private insurers offering MA plans are competing hard for their business by offering additional services. Some MA plans are now adding referral services to their offerings, connecting customers to senior housing as well as meal delivery, adult daycare, housecleaning and community activities.

Hartford, Connecticut-based Aetna may have one of the largest referral programs of any insurance company, and is betting this will be an essential component of its biggest Medicare Advantage expansion in its history next year.

The Resources for Living program began three years ago as a pilot program in Texas and New York markets, Aetna Vice President Alan Roberts told Senior Housing News. The company’s own research determined that 60% of factors that can affect a member’s health happen outside of a doctor’s office or clinical setting.

“This program is a way for us to provide an additional support structure for members that are non-clinical in nature, but still have a direct impact on their quality of care,” Roberts said.

As Aetna saw the impact the pilot program was having on its members’ level of care, it implemented the program across its entire Medicare Advantage platform last January.

“Anyone enrolled in a Medicare Advantage plan has this service available to them,” Roberts said. “As we expand, this will be a tightly integrated component moving forward.”

Aetna’s program is just the latest example of increasing integration between Medicare Advantage and senior living. An MA rule change last April opened the door for senior living providers to be reimbursed directly by MA plans for some services. Even before this rule change was announced, some senior housing providers had already launched their own Medicare Advantage plans, as a way to offer more wrap-around services for their residents and gain greater influence in the overall health care system.

The majority of senior living residents today are not Medicare Advantage beneficiaries, but this could change as MA gains momentum in the years ahead. More than 20 million Medicare beneficiaries — 34% of all beneficiaries — are enrolled in a Medicare Advantage plan, according to an October report from the Kaiser Family Foundation. And 2019 will offer more options than ever: 2,734 Medicare Advantage plans will be available nationwide.

A team of experts at the ready

To determine which members qualify for the Resources for Living program, Aetna employs consultants who are part of the company’s behavioral health organization within a dedicated call center operation.

At a minimum, a consultant must have a bachelor’s degree in the field of early childhood development, geriatrics, education, social work, developmental disabilities, counseling or social services, according to information provided to SHN by Aetna. Many consultants have a master’s degree in their field and licensing in social work. Additionally, consultants have at least three years of experience in a child, elder and/or other counseling field.

Aetna members may be referred to consultants through three ways, Roberts said. The first and most important route is directly, through one of Aetna’s care service programs and clinicians. These clinicians pick up on clues provided by members such as managing chronic or multiple health issues, or financial difficulties, that prevent them from receiving the care they need to maintain their health, and are referred to a consultant.

A member may also call in directly to learn more about the program. The third route Aetna uses is leveraging its member database to identify customers who would most benefit from the Resources for Living program.

“Now that we have a better understanding of the members who have benefited, we can look across our membership and segment those who fit a profile we believe can benefit from the service,” Roberts said.

A detailed vetting process

The interaction between a Resources for Living consultant and a beneficiary is thorough, as is the process of generating a list of possible senior housing options, according to the information provided by Aetna.

Consultants ask the member or caregiver to describe the concern or care need. While the client explains the situation, the consultant will ask for clarity on certain points, what solutions may have been tried so far, and assess financial restrictions or parameters.

When appropriate, the consultant will educate the client about subjects such as different types of elder and adult care, prevailing costs of various services, and other family care topics. Depending on the type of request, there are a series of questions that the consultant will ask as part of this consultative assessment.

With the care needs established, a consultant then begins the search for appropriate solutions starting with Aetna’s provider database, which is tracked to a granular, local level. All providers in the database are licensed, regulated, certified or otherwise accredited.

Resources for Living does extensive database maintenance through private organizations, non-profit organizations, government agencies on the federal, state, county and local level, as well as community organizations in order to populate this information, and completes regular updates on all data to ensure the most current information is available from lead agencies. Consultants are also able to add to and update the database in real time as they research services for a member.

“Resources for Living does not have any financial or contractual relationship with any of the service providers,” Roberts said.

The consultant calls every potential provider and asks about the specifics of the provider’s services, costs, availability of service when the client needs it, and any other questions tailored to the individual needs of the member. The member name is never given.

When a provider’s qualifications meet the member’s needs, the consultant completes a detailed profile of essential provider characteristics. Each profile follows the same format (provider’s name, address, fees, services, etc.) so that when members receive several profiles, they will find it easy to compare and contrast them.

The consultant researches and calls providers to find the best 3-5 matches for the member’s needs, and often makes 50 or more phone calls to narrow the field.

A growth market

The Resources for Life program is not unique as a Medicare Advantage offering. There has been an uptick in family caregiving benefits in Medicare Advantage plans, Anne Tumlinson Innovations founder Anne Tumlinson told SHN. An example is UnitedHealthCare Group, whose “Solutions for Caregivers” program connects members with care managers and support services.

Resources for Living also allows Aetna to compete with innovative state supplemental Medicare programs offering long-term caregiver support, such as TennCare and South Carolina Healthy Connections Prime.

The program may one day emerge to be a competitor to longstanding caregiver referral groups, such as Caring.org and A Place for Mom. Caring.com CEO Jim Rosenthal, however, views Aetna’s entry into the referral game as part of the evolving care spectrum.

“It’s about finding the right solution for a person’s needs, and we can help people find the right solution,” Rosenthal said. “Where we can help is to understand the choices and cost benefits, and develop a plan moving forward.”

In a statement to SHN, A Place for Mom VP of Brand Marketing Charlie Severn said the company’s referral service is “best in class” and the largest resource of its kind, with over 18,500 senior living community partners across the country.

What other referral services may need to concern themselves with, regarding Resources for Living, is the scale at which Aetna is implementing the program. And senior living providers should be aware that Medicare Advantage plans may become a more important referral source.

“This is a huge opportunity for Aetna,” Tumlinson said. “If they’re serious about adding value, they’ll start to form actual partnerships and meaningful relationships with providers in those markets.”


Additional Updates:


Tags: Medicare Advantage, Medicare, aetna

How to Optimize Your LinkedIn Profile For Sales

Posted by www.psmbrokerage.com Admin on Mon, Dec 17, 2018 @ 03:34 PM

How to Optimize Your LinkedIn Profile For Sales

(Image: Freepik)

Written by Emma Brudner / Hubspot

Social selling is part activity and part reputation. If you're writing insightful comments on your prospects' blogs, responding to their tweets, and liking their shared content, you've got the activity bit down pat. But if your LinkedIn profile is three jobs behind and features a picture of you from prom, you can't really call yourself a social seller.

If you'd like to start a social selling initiative in earnest, you should begin by revamping your LinkedIn profile. Just as you're finding prospects on LinkedIn and learning more about them, they're looking at your profile to judge if they'd like to do business with you. Don't ruin great messaging and positive interactions with an outdated, sparse, or mistake-riddled LinkedIn profile.

So what should your LinkedIn profile look like? I put together an infographic that breaks down the ideal social selling LinkedIn profile, section by section. More of a visual learner? Skip straight to the infographic here.

In social selling, you want your LinkedIn profile to be about your buyer's achievements and how you enabled them, instead of about you and your achievements. Here's how to optimize your LinkedIn profile for prospects.

Check out details on all 9 tips here

Related article - Social Media Marketing for Insurance Agents

Additional Updates:


Tags: LinkedIn, social media marketing for isnruance agents

What's New? Medicare in 2019

Posted by www.psmbrokerage.com Admin on Mon, Dec 17, 2018 @ 02:33 PM

What's New? Medicare in 2019

Medicare Advantage Open Enrollment Period

During the Medicare Advantage Open Enrollment Period (MA OEP), beneficiaries can switch from their current Medicare Advantage Plan (excluding Medical Savings Accounts, cost plans, and PACE) to another Medicare Advantage Plan or to Original Medicare with or without a stand-alone prescription drug plan.

Medicare Advantage Open Enrollment Period

You can only use this enrollment period if you have a Medicare Advantage Plan. Changes made during this period are effective the first of the following month.

More details on the Medicare OEP here

Extra Help Special Enrollment Period

Extra Help is a federal program that helps pay for out-of-pocket costs of Medicare prescription drug coverage. If you have Extra Help in 2019, you have a Special Enrollment Period (SEP) to enroll in a Part D plan or switch between plans. This SEP is available once per calendar quarter for the first three quarters of the year (January-March, April-June, and July-September). If you use the Extra Help SEP to change your coverage, the change will become effective the first of the month following the month that you make the change.

Increased Medicare Advantage Plan Flexibility

Beginning in 2019, Medicare Advantage Plans have increased flexibility in their plan offerings. This means that plans may be able to reduce costsharing for certain covered benefits, offer specific extra benefits, or charge different deductibles for some enrollees who meet specific medical criteria. Plans now also have the ability to offer new supplemental benefits that are not directly considered medical treatment. Some services that plans can begin offering include nutrition services, non-skilled in-home supports, and home modifications.

Medicare Advantage Private Health Plans

In a Medicare Advantage Plan (private health plan) you generally must pay the Medicare Part B premium. Some Medicare Advantage Plans may also charge you an additional premium. In some cases, the plan may pay part of your Part B premium. Medicare Advantage Plans may have a deductible for hospital visits, doctor visits, or prescription drugs, but some do not. Plans usually charge you a fixed copayment when you visit a doctor, instead of the 20% coinsurance you pay under Original Medicare. All plans must include a limit on the amount of money you spend out-of-pocket during the year.

They also cannot charge higher copayments than Original Medicare for certain care. This includes chemotherapy, dialysis, and skilled nursing facility (SNF) care. They can charge you more than Original Medicare for others services, including home health, durable medical equipment, and inpatient hospital services.

Medicare Interactive (MI) and MI Pro are products of the Medicare Rights Center, a national, nonprofit consumer service organization and the largest and most reliable independent source of Medicare information and assistance in the United States. For more information, visit www.medicarerights.org.

Additional Updates:


Tags: Medicare Advantage, Medicare, Medicare Supplement, Medicare Part D

How to Make the Best Follow-Up Sales Call in 2019

Posted by www.psmbrokerage.com Admin on Fri, Dec 14, 2018 @ 11:03 AM

How to Make the Best Follow-Up Sales Call in 2019

(Image: Pexels)

Written by Meg Prater / Hubspot

If you're in sales, you've likely seen the 2011 "Lead Response Management Study." It analyzed three year's worth of data,100,000 call attempts, six companies, and 15,000 leads and synthesized findings to bring salespeople scientific answers to age-old questions like "What are the best days to call my prospects?" and "What time should I contact my leads?"

This kind of research is invaluable to reps. It helps them plan their weeks, maximize the impact of each call they make, and become more efficient, successful salespeople.

Best Times to Make Sales Calls

These days, many reps are more comfortable sending an automated email than picking up the phone. But, before moving forward, it's worth identifying whether the phone is even the best way to follow up with leads today.

That answer is "Yes.A recent study by sales pro Marc Wayshak shows the phone is still the best tool in selling, with 41.2% of respondents naming their phone as their most effective sales tool.


Continue reading to identify the best days and times to make a follow-up call


Additional Updates:


Tags: sales follow-up, Sales Tips, prospecting

Guide: Medicare in 2019

Posted by www.psmbrokerage.com Admin on Fri, Dec 14, 2018 @ 10:31 AM

Guide: Medicare in 2019

Each year, there are changes to Medicare costs and coverage options. Starting in 2019, there are also several important changes to Medicare that will affect enrollment, Medicare Advantage Plans, and prescription drug coverage.

Visit Medicare Interactive to download the “Medicare in 2019” guide, and find out what you can expect for Medicare Parts A, B, D, and Medicare Advantage in 2019.

 Download the guide.

Additional Updates:

Leveling the Medigap Playing Field

Most people with Medicare have two major options when choosing how to receive their Medicare coverage: Original Medicare or Medicare Advantage. While this decision is complicated, those who choose Original Medicare may have another decision to make as well—whether to add Medigap coverage.

Read more

Tags: Medicare Advantage, Medicare, Medicare Supplement, Medicare Part D

The 100 Most Famous Quotes of All Time

Posted by www.psmbrokerage.com Admin on Mon, Dec 10, 2018 @ 01:45 PM

The 100 Most Famous Quotes of All Time

(Image: Freepik)

The insight and experience of others is a valuable source of inspiration and motivation. And learning from successful leaders and entrepreneurs is a fantastic way to grow.

Life throws curveballs. And while there might be blockers to success, it's imperative to keep pushing with the knowledge mistakes will be made and failure is inevitable.

Even the world's most successful individuals have experienced their fair share of setbacks and hardships. And there's much to learn from their challenges as well as their success. So, let's take a look at some of their quotes to get energized and inspired.

Best Quotes of All Time

  1. "Spread love everywhere you go. Let no one ever come to you without leaving happier." -Mother Teresa

  2. "When you reach the end of your rope, tie a knot in it and hang on." -Franklin D. Roosevelt

  3. "Always remember that you are absolutely unique. Just like everyone else." -Margaret Mead

  4. "Don't judge each day by the harvest you reap but by the seeds that you plant." -Robert Louis Stevenson

  5. "The future belongs to those who believe in the beauty of their dreams." -Eleanor Roosevelt

  6. "Tell me and I forget. Teach me and I remember. Involve me and I learn." -Benjamin Franklin

  7. "The best and most beautiful things in the world cannot be seen or even touched - they must be felt with the heart." -Helen Keller

  8. "It is during our darkest moments that we must focus to see the light." -Aristotle

  9. "Whoever is happy will make others happy too." -Anne Frank

  10. "Do not go where the path may lead, go instead where there is no path and leave a trail." -Ralph Waldo Emerson

See all 100 here

Additional Updates:

How seniors are being steered toward private Medicare plans

Posted by www.psmbrokerage.com Admin on Mon, Dec 10, 2018 @ 10:44 AM

How seniors are being steered toward private Medicare plans


(Image: Freepik)

By Bob Herman – Axios – December 7, 2018

Today is the final day when seniors and people with disabilities can sign up for Medicare plans for 2019, and consumer groups are concerned the Trump administration is steering people into privately run Medicare Advantage plans while giving short shrift to their limitations.

Between the lines: Medicare Advantage has been growing like gangbusters for years, and has garnered bipartisan support. But the Center for Medicare Advocacy says the Trump administration is tilting the scales by broadcasting information that "is incomplete and continues to promote certain options over others."

The big picture: The government has talked up the benefits of Medicare Advantage plans in emails to prospective enrollees during the past several weeks, the New York Times recently reported. Enrollment is approaching 22 million people, and there are reasons for its popularity.

  • Many MA plans offer $0 premiums and extra perks that don't exist in standard Medicare, like vision and hearing coverage and gym memberships. MA plans also cap enrollees' out-of-pocket expenses.
  • Traditional Medicare, by contrast, has higher out-of-pocket costs that usually require people to buy supplemental medical policies, called Medigap plans, as well as separate drug plans.

Yes, but: Federal marketing materials rarely mention MA's tradeoffs.

  • MA plans limit which doctors and hospitals people can see, and they require prior approval for certain procedures. Provider directories also are loaded with errors.
  • MA plans spend less on care, yet continue to cost taxpayers more than traditional Medicare. Coding is a major problem.
  • People who enroll in MA often can't buy a Medigap plan if they later decide to switch to traditional Medicare. And others, especially retirees leaving their jobs, may not even realize their employers are enrolling them in Medicare Advantage.

Where it stands: The Affordable Care Act slashed payments to MA insurers, but other Obama administration policies bolstered the industry. And now the Trump administration is helping it even more.

  • Obama officials built the chassis for today's bonus system, which has been lucrative for plans (and likely wasteful, according to federal auditors).
  • A bipartisan 2015 law that adjusted Medicare payments to doctors killed the most popular Medigap plans, starting in 2020 — a move experts say could indirectly drive more people to MA.
  • HHS championed MA in a new policy document this week, on the heels of positive marketing.

What we're hearing: Wall Street is beyond bullish on the major MA insurers like UnitedHealth Group and Humana. Supporters of MA like the idea of treating Medicare more like a marketplace, where people have to shop for a plan every year, but experts are worried about how it will affect the average enrollee.

"We know people don't" actively engage in health insurance shopping, said Tricia Neuman, a Medicare expert at the Kaiser Family Foundation who recently wrote about MA. "It's just too hard."

Go deeper:

Feds are ready to claw back billions from Medicare insurers

The legal clouds hovering over Medicare Advantage

Feds approve big pay raise for Medicare insurers


Additional Updates:

Tags: Medicare Advantage, Medicare

Things to Consider when Purchasing a Medicare Advantage Plan

Posted by www.psmbrokerage.com Admin on Mon, Dec 10, 2018 @ 10:18 AM

Things to Consider when Purchasing a Medicare Advantage Plan


(Image: Freepik)

This is a great reminder for both agents and consumers alike.

When choosing a Medicare Advantage (MA) plan, be aware of the different cost-sharing you may face. Costs in MA Plans are often different from in Original Medicare, and may come with additional rules. Consider each plan carefully before enrolling. 

  • Medicare Part B premium: In an MA Plan, you generally must pay the Part B premium. Plans may also charge you an additional premium. In some cases, the plan may pay part of your Part B premium.
  • Deductible: MA Plans may charge you a deductible for services, including inpatient, outpatient, and prescription drugs. Deductibles will vary by plan.
  • Copayment: MA Plans usually charge a copayment (copay) for doctor’s visits, instead of the 20% coinsurance you pay under Original Medicare. Keep in mind that MA Plans cannot charge higher copays than Original Medicare for certain care, including chemotherapy, dialysis, and skilled nursing facility (SNF) care.
  • Maximum out-of-pocket (MOOP) limit: All plans must include a maximum out-of-pocket limit. This means the amount you pay out of pocket is capped for the year, which protects you from excessive costs if you need a lot of care or expensive services. These limits are typically high, and they include copays and deductibles.

In addition to the above, remember that MA Plans have different coverage rules.

  • Many plans cover services only if you receive them from doctors, hospitals, and pharmacies that are in the plan’s network. Before you join an MA Plan, make sure your doctors (or other providers you may want to use in the future) are in the network and that they are accepting new patients from the plan. Keep in mind that doctors and hospitals may leave the plan at any time, but you can only leave an MA Plan during an enrollment period if you want to avoid incurring a penalty.
  • Though MA Plans must cover the same health services that Original Medicare covers, they may ask you to pay more for certain services or require that you take certain steps before they will pay for your care. For example, a plan may require your provider to ask the plan’s permission before giving you certain services, or require more formal referrals to see specialists or prior authorization for certain services.

Remember: you cannot buy a Medigap policy to supplement an MA Plan and cover cost-sharing. Medigap policies only work with Original Medicare.


Additional Updates:

Tags: Medicare Advantage, Medicare

Facebook Ads For Insurance Agents

Posted by www.psmbrokerage.com Admin on Fri, Dec 07, 2018 @ 09:25 AM

Facebook Ads for Insurance Agents



For starters, if you haven’t read it yet, we recommend you take a look at “Social Marketing for Insurance Agents” for a general overview of social media marketing before diving deeper into Facebook Advertising.

Remember, this is just one channel in your marketing strategy. Your marketing efforts will be much more successful when used in combination with other channels.

Giving your prospects multiple points of communication will increase your ability to connect to your prospects and to create a long term relationship with them.

In this article we are going to continue, in detail, to describe how to create Insurance Facebook  Ads.






Getting Started with Facebook Ads Manager

There are a lot of options within the Facebook Ads Manager. We will run through the basics of creating an Ad and point out some key points to keep in mind when creating an Ad.



Let's get started by navigating to the Ads Manager within your Facebook business page. This is where you will create new ad campaigns or get an overview of your current ads. If you haven't created your Facebook Business Page yet, what are you waiting for?

From your Facebook business page, click on Pages in the top left menu and select Ads Manager.

 [ Click screenshot to open larger image ]



Clicking Ads Manager will take you to the page below. To create an Ad Campaign, click Create.



On the next page, ensure you are in the "Create New Campaign" tab at the top, (Underlined in blue) and review the options under marketing objective.




Before we select a Marketing Objective, let's review the Ads Manager screen and get familiar with the different sections.



Red Section:

In the upper left corner you see your ad account id#.  If you have access to business manager or access to other ad accounts you would see them listed here in the drop-down menu.

Blue Section:

The column on the left is the work flow for creating your ads.  Each step must be completed before you ad is ready to be published.

Green Section:

At the very top, and the beginning of the ad creation process is the Campaign level.  This is where you choose your Objective.  What do you want this ad to accomplish?

Yellow Section:

Next you have the Ad Set Level.  This is the Who, Where, When, & How Much

Pink Section:

At the lowest level of the ad process you have your creative.  This is what the target audience sees when you ad is displayed.  Images, text, links, and call to action.


Marketing Objective

So, lets start by selecting a marketing objective. When you choose a marketing objective Facebook will optimize your campaign for that selected goal. Facebook will then deliver your ad to people that have proven to be more likely to carry out the desired result your looking for.

if you choose traffic, which will allow your ad to link to a landing page on your website, Facebook will show your ads to people who have proven to be more likely to click on those types of links.



Let’s review the Marketing Objectives and their definitions.

  • Awareness: Generate interest in your content or your product. The brand Awareness objective is for reaching people with the intent of creating awareness of who you are and what you have to offer, without the expectation of a click or action of any kind.  

Brand Awareness


  • Consideration: With Consideration you are trying to get interest in your business and encourage them to do business with you. This is the stage where you need to build a relationship with your prospects.




Video Views

Lead Generation


  • Conversion: Get the audience to purchase your product or service.


Catalog Sales

Store Visits


Creating Your Campaign

Now that we know what it means, let's choose the Traffic objective. This will tell Facebook to show your ad to people who fit your audience description and have a history of clicking links to websites outside of Facebook.

We are looking to get our prospects to click the link which in turn will bring them to a website landing page. This is where you will have an offer they can't resist, and will be prompted to enter their contact information, becoming a newly minted lead.

 [ Click screenshot to open larger image ]

After setting your Objective it’s time to set your Audience. Facebook has over 2 billion users, so you’ll probably want to narrow that down a bit.

By thinking in terms of your audience or persona you are trying to engage with, you can break down the larger group of “seniors”, if you wish, into many smaller groups for hyper-targeting.

Facebook lets you get really granular with your audience. You can specify your audience by:

  • Location: country, state, city, zip code, or a mile radius
  • Age/ gender
  • Language
  • Education: schools, year of graduation, field of study
  • Interests: pages they like, areas of interest (i.e. Entertainment, Fitness and Wellness, Food and Drink)
  • Behaviors: purchase behavior, digital activities, charitable donations
  • Net Worth
  • Languages



The size of your audience is up to you. Are you targeting local seniors within a 25mi. radius of your location or are you targeting seniors on a national scale?

Whichever you choose, ensure your content offer is appropriate for the audience you are selecting.

If you are marketing to seniors across the country, make sure your offer is actually applicable to people across the country. If it isn't, you may want to consider creating separate ads for different locations.



If you have a list of contacts Facebook allows you to upload them using the Custom audience option and find them in Facebook. 

There is also the option to find a Lookalike audience. The Lookalike audience is a tool that allows you to target users whose demographics and interests are similar to that of your existing business page followers.

This type of targeting is where Facebook excels. Facebook uses Its massive database to connect the dots and find a relevant audience that you may not have been able to reach otherwise.


Select Which platform You Want Your ad To Run

Facebook advertising allows you to post on other Facebook properties like Instagram and Messenger. For this example, we are going stick with Facebook.


Set Your Budget

You have the ability to select the budget and reach for your ad campaign.

Select a length of time you would like to see the ad run, and set a daily limit and Facebook will tell you what your ad will cost for the time frame selected.

In our audience below it shows a possible reach of 130,000 people.

At $10 per day Facebook estimates you would reach between 340 - 1400 of those people each day. Increasing your daily budget would increase the number of people reached per day.

With a budget of $10 per day Facebook shows that you will spend no more than $70.00 for the week. The exact daily amount may vary slightly as Facebook's algorithm spends slightly more at the beginning of an ad, in an effort to identify the best prospects for your ad.




If you haven’t run ads previously you may want start by running your ad for a short duration to test your ads and get an idea on your return.

Select a Start and End Date and tell Facebook exactly which days you want your ad to run. You can always expand the reach and duration of your ad and run it again.

If you run a campaign for a few days at $10 dollars a day, that should give you a basic idea on how your campaign will perform. All days do not perform the same on Facebook, but you can still get a feel for what type of return you can expect before spending more money.

You could also test a slightly different version of your campaign. Use a different call to action, a different add image, maybe select a different geographic region, or different days of the week and see if you get a different result. When you do this type of testing, the insight you gain will help you tremendously on your next campaign(s).

When you complete the add you will simply figure your conversion rate to decide if you are willing to spend more money in the ad, or go back to the drawing board and work towards a  better ROI.


Optimization for Ad Delivery

For our example below, we assume you have a blog or landing page that you want to share through your Facebook Ads.

After setting your budget, select Landing Page Views in the Optimization for Ad Delivery field.



When you are happy with this page, continue on to the next.


Create Your Ad

At the top of the next page you can name your ad. Be sure to create a name that will make sense when you are looking at your ad in the future.

Review the Identity section and make sure the Facebook page listed is your page before moving down to the Format section.



For this ad we are using a single image format. Depending on your specific add, you could use whatever seems most appropriate. I think it's a good to keep your first couple of ads simple so you can better analyze what is working and what is not. 

The section after the Format section is the Image section. I've skipped that one for now and went down to the Link section, shown below. That is where you will paste the link to your landing page. 

Facebook will try to pull an image from your landing page to use as the add image. If you don't have an image on your linked page, or it just doesn't work for your Facebook ad, you can go back up to the Image section and upload the appropriate image.




Below the Website URL field you will find a spot for your ad headline. Take your time to think of a short, concise headline that will urge your prospects to click the link.

In the AD Preview you'll notice a pull down menu that shows Mobile News Feed. If you click the pull down you will see additional options like Desktop News Feed, etc. This will show how your ad will look in different formats, allowing you to adjust your ad accordingly.

When your happy with how your ad looks and reads press the green Place Order button and you've just created your first ad. Facebook will review your add to ensure it doesn't violate Facebooks Advertising Policies before they approve it.

Well, there it is, your first Facebook Ad campaign. But lets be honest, the work is just beginning.




Measure, Adjust, Repeat

Once your add starts running it's time to measure your results and adjust your campaign appropriately. Try different content, different length articles, formats, time frames, etc. Find what gets the best responses from your specific niche and keep fine tuning for success.

Facebook will show you a variety of metrics, like click-through rates, daily spend and engagement. It's good to review all the data. Be sure to key in on the data that matters most for each ad campaign.



In this case you would want to keep on eye on how many clicks you are getting through to your landing page. The click-through rate would be key on this campaign. 

Once a prospect clicks through and is on your landing page, you will monitor that page in a similar fashion, outside of Facebook. 

If your landing page isn't converting many prospects into leads, that would be an issue on your landing page, that should also be understood and corrected. Make sure your looking at the data that really matters according to your goal.




It is important to see this as a process. Monitor how your ads perform, change up your content and tweak the settings to find your sweet spot.

If you are consistent in putting the effort into creating relevant content offerings to your audience, you will see the benefits it brings to your business.

It can be a slow roll at first when gaining traction on social media. Nevertheless, don’t let that discourage you. Growing a business is a marathon. If you’re willing to put in the time and learn as you go, you will see it all pay off.


Key Takeaways

There aren't many platforms with the reach and ability to hyper target your audience the way Facebook does. Especially if you're audience is the senior market.

Know that seniors have proven to be slightly more expensive to market to compared to younger buyers. You will pay a little more per prospect compared to a 19 year old. That's just the nature of our business. 

With the ability to set a modest budget to run a couple ads and learn what is getting the best conversion, you can find your prospects without spending a ton of money with Facebook Ads. Stick with it and take the time to understand how Facebook Ads operate and you won't be disappointed

Always remember that social media is only one part of your marketing strategy. Leverage face to face meetings, network events, etc. as sources of content. Tell your stories, so that your audience sees the bigger picture of who you are and all you put into your business.

Let's face it, social media isn't going anywhere. If you don't learn to use it now, you may be losing out to the people or agencies that are.


Back To Top


Additional Updates:
Top 10 Marketing Ideas for Insurance 
6 Tips to Improve Client Communication
14 Ways to Generate Medicare Leads
Social Media Marketing for Insurance Agents
7 Ways to Grow Your Insurance Business

Tags: facebook advertising for insurance agents, facebook ads for insurance agents

Medicare Advantage Directories Remain Full of Errors Due to CMS Inaction

Posted by www.psmbrokerage.com Admin on Thu, Dec 06, 2018 @ 11:27 AM

Medicare Advantage Directories Remain Full of Errors Due to CMS Inaction


(Image: Canva)

Julie Carter / December 6, 2018 / Medicare Watch

It is important that Medicare Advantage organizations (MAOs) supply complete, accurate, and accessible provider directories to ensure that those who enroll in Medicare Advantage (MA) plans know which providers are in a given plan’s network. Unfortunately, as we have highlighted before, MAO provider directories are not complete and accurate. Instead, for the third year running, the Centers for Medicare & Medicaid Services (CMS), the agency that runs the Medicare program, has revealed directory audit results showing widespread errors and inaccuracies.

In 2017’s audit report, CMS found that 45.1% of provider directory locations listed in these online directories were inaccurate. In the early 2018 report, 52.20% of the provider directory locations listed had at least one inaccuracy. Now, the third such report shows that 48.74% of the provider directory locations listed had at least one inaccuracy. The types of inaccuracies remain the same: the provider was not at the location listed; the phone number was incorrect; or the provider was not accepting new patients when the directory indicated they were.

Read the newest audit report


Additional Updates:
  • To reduce Seniors' drug costs, expand Medicare Advantage - View
  • Medicare players team up for 2020 Chronic Care push - View
  • UnitedHealthcare customers not happy about cuts to SilverSneakers - View
  • How to get better results from your prospecting - View
  • Increase your sales with our complimentary tools and tech - View
  • Express: Mutual of Omaha weekly updates - View
  • VALUES Quote of the Week - View
  • Current agent incentive trips and contests - View
  • The DSNP Market continues to grow. Are you missing out? - View

Tags: Medicare Advantage, Medicare

How to Get Better Results from Your Prospecting

Posted by www.psmbrokerage.com Admin on Tue, Dec 04, 2018 @ 10:35 AM

How to Get Better Results from Your Prospecting


Every time you reach out to a customer to ask for time, you are making a couple of decisions. The first decision you are making is around the medium you choose. If you are asking for a meeting, there are different choices available to you, and a greater or lesser likelihood of achieving the outcome you want, in this case, a meeting.

If you choose email as the medium, you are choosing a medium that isn’t particularly good for acquiring meetings. Email is something that is easy to ignore, and because you aren’t present, there is no way for you to resolve your dream client’s concerns about giving you their time. Sometimes they politely reject your request, and other times (maybe most of the time), they just delete the email and move on with their work.

The phone still reigns supreme as the best medium, not least of all because almost anyone you would want to reach is never more than 36 inches away from their phone (it turns out that any distance further than 36 inches away causes headaches, sweating, difficulty in breathing, and in some cases, violent convulsions). A phone call allows for conversation, a synchronous communication and not asynchronous, like email, where there is a long pause between exchanges. If your prospective client has concerns, you are there to address them, massively increasing your odds of securing a meeting, if you’ve got the chops.

The second decision is what you are offering of value in trade for your dream client’s time. If you want greater success, you have trade something where your dream client benefits even if they never buy from you. The Trading Value rule is critical (read more here in The Lost Art of Closing). If your client doesn’t recognize the value in meeting with you, you make it easy for them to reject your request and do something else with their time.

If you can trade insights, ideas, new thinking, or interesting experiences from which they can benefit, there is value outside of deciding to buy from you. When you pitch the great privilege of listening to you talk about you, your company, your locations, and your solutions, you repel people from you like a skunk at the garden party.

If you want to make prospecting easier, get better at it.


Additional Updates:

Tags: closing sales, prospecting, phone sales

Medicare Players Team Up for 2020 Chronic Care Push

Posted by www.psmbrokerage.com Admin on Tue, Dec 04, 2018 @ 10:01 AM

Medicare Players Team Up for 2020
Chronic Care Push


Regional health carriers could make “short-term long-term care” Medicare Advantage plan benefits a lot more common in 2020.

The 47 regional carriers in the Health Plan Alliance have joined with two consulting firms to form the Alliance Medicare Advantage Supplemental Benefits Consortia.

(Related: 4 Top Medicare Advantage Mini LTC Benefits)

The new alliance will help the member carriers look into the idea of offering non-medical benefits, such as transportation services and in-home assistance, to Medicare Advantage plan enrollees in 2020.

The alliance will also look into opportunities for offering benefits designed to meet the needs of enrollees with specific chronic conditions, such as diabetes or high blood pressure.

The alliance will help members decide which new types of benefits to offer.

The Players

The consulting firms in the alliance are Faegre Baker Daniels Consulting and Wakely Consulting Group.

Faegre Baker Daniels is an arm of a law firm.

Wakely is an actuarial consulting firm.

The list of carriers includes well-known health insurers and managed care companies, such as AvMed, which has about 370,000 major medical enrollees in Florida, and Geisinger Health Plan, which has about 600,000 major medical enrollees in Pennsylvania.

The carriers in the Health Plan Alliance formed that organization in 1996, to give provider-owned health plans a new, for-profit vehicle for developing and implementing new ideas.

The Health Plan Alliance does not affect community-level competition, because the carriers in that alliance are in non-competing markets, according to the Health Plan Alliance.

The Medicare Advantage Benefits Race

Policymakers in Washington once tried to keep Medicare out of the chronic care and non-medical care markets, in part to give commercial insurers a chance to establish a private market for long-term care insurance (LTCI).

Now, major carriers are showing less interest in offering private LTCI, and, in some cases, saying that they would prefer to participate in public-private LTC benefits hybrid programs.

Earlier this year, managers of the Medicare Advantage program eased obstacles to carriers offering limited amounts of chronic care benefits through that program, by announcing that they would classify benefits related to the “social determinants of care” as benefits that Medicare Advantage plan issuers could offer as supplemental benefits.

The new flexibility gives carriers a chance to add what amount to “short-term care” benefits, or convalescent care benefits, to plan benefits, in an effort to improve enrollee health and hold down overall spending.

The news about the rule change came out too late for many carriers to add major “mini LTC” benefits to their benefits packages. But analysts from Avalere Health looked at Medicare Advantage data files and found that hundreds will offer at least one mini LTC benefit in 2019.

The annual enrollment period for 2019 Medicare Advantage plan coverage started Oct. 15 and is set to end Friday.

In many states, a policy classified as an LTCI policy must provide coverage for at least three years. Under that definition, the new chronic care or non-medical benefits introduced for 2019, or that might emerge in 2020, would not be LTCI benefits. But they could end up looking like samples of LTCI benefits. In some cases, it’s possible that they could increase consumers’ appetite for true LTCI products, by make consumers more aware of the need for LTC services, and of the need for arrangements for paying for LTC services.


Additional Updates:

Tags: Medicare Advantage, Medicare, Medicare Part D

To Reduce Seniors’ Drug Costs, Expand Medicare Advantage

Posted by www.psmbrokerage.com Admin on Mon, Dec 03, 2018 @ 01:55 PM

To Reduce Seniors’ Drug Costs, Expand Medicare Advantage

As prescription-drug costs have risen steadily in recent years, politicians of both parties have made audacious claims that billions could be saved by imposing lower prices on drugmakers. Yet newly developed drugs are expensive because they are enormously valuable to patients relative to existing alternative treatments. Unless the patent system allows drugmakers to initially capture much of the value associated with these new therapies, multi-billion-dollar investments in research and development of new products will not be made. Price controls on patented drugs therefore come at the expense of future medical innovation, and politicians unwilling to make that trade are likely to be unable to greatly reduce drug prices.

As effective therapies can save thousands of dollars by keeping patients out of the hospital, reformers should instead focus on promoting new insurance arrangements to better protect enrollees from drug costs. Medicare Advantage is leading the way in this respect: shielding seniors from catastrophic costs, eliminating drug-benefit premiums, and reducing drug deductibles by an average of 67 percent relative to standalone Medicare drug plans. (By giving Medicare beneficiaries the option to receive health coverage from competing private insurers, Medicare Advantage allows seniors to receive more generous medical benefits by choosing more efficiently run plans.)

(Photo: Freepik)

Drug prices are politically salient because they touch most seniors. Whereas only 15 percent of Medicare beneficiaries had inpatient hospitalizations in 2015, 91 percent used prescription drugs — with median drug spending of $902 per year. Americans therefore remain eager for politicians to generate major savings:

March 2018 poll found that 80 percent thought that prescription-drug costs are unreasonable, while 77 percent believed that President Trump and his administration were not doing enough to reduce them.

In 2016, when campaigning for election, Donald Trump repeatedly suggested that if the United States government were allowed to negotiate drug prices, it could save $300 billion per year. Senator Sanders made a similar claim, arguing that a transition to single-payer health care could reduce drug costs by $324 billion, even though total nationwide drug spending amounted to only $305 billion. On November 20, Senator Sanders and Representative Ro Khanna introduced legislation to cap drug prices in the United States at levels paid by other developed countries; they claimed this would reduce the median price of branded prescription drugs paid by Americans by 40 percent.

Once a drug has been developed, the cost of manufacturing it is normally trivial, so price controls could potentially yield enormous immediate savings windfalls to taxpayers, insurers, and patients. But doing so would wipe out future drug development. The average cost of developing a new drug, demonstrating its safety and efficacy, and bringing it to market has been estimated to be as high as $2.9 billion. Patents allow drug firms to recoup their investment by temporarily restricting competition.

But how much should we willing to pay for such drugs?

Nations differ in their willingness and ability to pay for improvements in health care. Affluent countries, which are willing to spend more to save lives by delivering a greater intensity of care in a hospital setting, will similarly be willing to pay more to access cutting-edge drugs. The share of health-care spending on prescription drugs is, if anything, relatively low in the United States (12.3 percent) by comparison with Canada (17.8 percent). Drug manufacturers know this, and will therefore develop new drugs on the expectation that that they will be able to cover a disproportionate share of development costs from wealthier nations. It therefore makes little sense to cap the rewards available for new drug development just because other countries have less ability to pay for it than Americans do.

If a branded drug merely replicates an existing generic drug, there is little reason to pay more. Drugs with the highest prices therefore tend to be those that offer unique advances on existing medical capacities. Although Gilead received much criticism for its pricing of Sovaldi, its $84,000 cure for Hepatitis C, this represents extraordinarily good value by comparison with the alternative $577,000 average cost of a liver transplant — a procedure that falls short of a cure and is prone to complications.

The prices of branded drugs are therefore most appropriately constrained by the ability of purchasers to switch to available substitutes at any given price. For this reason, prescription-drug plans often require that patients seeking the most expensive therapies try a cheaper alternative (“step therapy”) or receive approval (“prior authorization”) before purchase.

The Trump administration is therefore correct when it seeks to expand the capacity of Medicare Part D plans to employ these tools for prescription drugs, and for Medicare Advantage plans to do so for physician-administered drugs covered by Medicare Part B. But in both cases, the expected savings amount to a drop in the ocean: $0.14 billion out of $113.7 billion spent on Part D in 2020, and $0.14 billion out of $28 billion on Part B drugs. A further proposal to base payments for Part B drugs on average payments made abroad would likely excessively squeeze revenues, by coupling them to markets with a much lower willingness to pay for medical care — were it not for the likelihood that such metrics could be easy for drugmakers to manipulate with rebates, volume discounts, and other such shenanigans.

Overall, the proposed changes are likely to amount to little, and they fall far short of the claims made by Trump on the campaign trail and the likely expectations of voters.

Is there a better way? Yes, but rather than feeding the delusion that Americans can continue to enjoy pioneering drug development without paying for it, policymakers should instead focus on finding ways to better protect them from those costs.

Under Medicare Part B, beneficiaries must pay 20 percent coinsurance for physician-administered drugs — a potentially ruinous amount, given that 12 of 13 new cancer drugs approved in 2012 cost over $100,000. By contrast, Medicare Advantage plans are required to cap annual out-of-pocket costs for hospital and physician services at $6,700 — a comprehensive protection that many Medicare beneficiaries are unaware they lack if they fail to choose such a plan.

Medicare Advantage also provides better protection from Part D prescription-drug costs, which form the bulk of drug expenditures for Medicare beneficiaries. A patient can avoid a costly hospitalization by taking his drugs on the correct schedule, so MA plans have an incentive to cross-subsidize drug coverage to make sure patients aren’t skipping pills to save money. By contrast, in a “standalone” Part D plan that covers drugs and drugs alone, the insurer offering coverage doesn’t see the benefit of avoiding an expensive medical procedure.

As a result, whereas Medicare beneficiaries enrolled in standalone plans must pay premiums averaging $492 per year, the majority of Medicare Advantage enrollees receive Part D coverage at no additional cost. And even though access to prescription drugs is the same under both coverage options, by enrolling in Medicare Advantage, beneficiaries can reduce their annual deductibles from an average of $400 to $131.

Some organizations have criticized the Trump administration for doing too much to steer Medicare beneficiaries towards MA plans. If the administration really wants to help seniors cut their drug costs, it should do this even more.


Additional Updates:

Tags: Medicare Advantage, Medicare, Medicare Part D

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