Shirlee Zerkel to STRS Board re: Medicare Advantage

From Shirlee Zerkel, August 8, 2007
Subject: Health Care Concerns for the August Meeting

Dear STRS Board Members:

I am a five year retiree member of STRS and am now 65 years old. I have some concerns about some of the plans, as I and other Medicare covered members can be greatly impacted financially by decisions made next week. Our health benefits can also be greatly affected.

After emailing Ms. Knoesel about the Advantage Plan, she tells me that all of the Board Members will have information by this Friday concerning the MA Plan. She also stated: "Information on Medicare Advantage will be presented at the Board meeting. It will be up to the Retirement Board to decide if it wants to take action on this matter." I am asking you to look over all information provided by STRS carefully and also read other articles concerning the MA Plans so that you can make a decision which is in the best interest of the retirees and their health. I am including one such article about a certain type of Medicare Advantage Plan that really frightens me.

After reading many articles on MA's, my sister's personal experience with such a plan, and then the newsletter, called FOCUS distributed by SERS of Ohio, I have concerns about STRS entering into this venture.

SERS newsletter says that the Medicare age SERS retiree who has both Medicare A and B will automatically be put into their Advantage Plan. SERS members will not have the option of choice as do other Americans! If SERS members do not want this plan, then they will not have any SERS coverage even as a supplement or for prescriptions. Quote from that newsletter: "SERS will be transferring all Medicare retirees and dependents currently enrolled in the Aetna Indemnity Plan to the Medicare Open PFFS plan effective January 1, 2008. All those now in the Medical Mutual Plan (MMO) will be transferred to MMO's (PFFS)." (The PFFS plans are the MA ones) Also another quote: "If you do not want this coverage, then you will not have any medical or drug benefits from SERS and will only have the traditional Medicare benefits." I am upset by such a plan because it leaves the retiree no choice.

In the beginning, the private MA plans looked good; then as the private plans continued members had to pay increased premiums, some more than traditional Medicare, coverage decreased, and lists of providers were given out and that list kept shrinking.

Articles tells us that these Advantage Plans are not cost effective for the Medicare finances. The government pays on the average 12% more or about $1,000 more per beneficiary per year than it would cost to cover these same people in regular Medicare. Where is that going to leave the Medicare funds in the future. These overpayments not only weaken Medicare finances, but force tens of millions of people in regular Medicare to pay higher monthly premiums to help cover the cost of the overpayment to private plans.

Please as you go over the information that Ms. Knoesel says you will receive on Friday, look to see if they are requesting a Special Needs Medicare Advantage Plan (SNP). If so, this could even be worse for our STRS retirees than other MA plans! The SNP also provides drug coverage, which sounds good. The catch is that this plan does not have any oversight by the federal Medicare Program once the private provider is approved. The private provider can service the retiree any way it wants to.

That scares me because of a situation two years ago when I helped an STRS retiree who had Aetna through STRS instead of the regular Medicare A. There is no oversight for STRS retirees who havae the STRS version of Medicare A. STRS was content to let this older couple pay over $21,000 in hospital charges for 2004 when the STRS Health Care Program handbook stated that out-of-pocket max for a retiree was $1,500 per year. I pushed and pushed Mr. Russell and used their handbook, letters from Aetna, and previous emails from STRS, to prove what was happening and that it was wrong. Finally about 1 year later, all was resolved and it was resolved according to charts in the handbook. It shouldn't take a year to resolve such an issue. Board Members, no ill elderly STRS retiree should have to endure that kind of hassle. Many of then can't, for they do not have the health and energy to do it. But that is what could happen to all retirees in the Advantage plans if there is no oversight.

Board members, as you think about this decision, please consider the retirees and their well-being.

Sincerely,

Shirlee Zerkel
2002 STRS retiree

MEDICARE ADVANTAGE SPECIAL NEEDS PLANS: WHAT CONGRESS NEEDS TO KNOW

July 19, 2007
Center for Medicare Advocacy

In 2003, Congress authorized a new kind of private Medicare Advantage (MA) plan called a Special Needs Plan (SNP). SNPs differ from regular private MA plans in that they are intended to enroll, exclusively or disproportionately, only specific high-needs subpopulations of the Medicare population. Such focused enrollment is prohibited for regular MA plans.

SNPs operate with few requirements from the law or from the Centers for Medicare & Medicaid Services (CMS). CMS does not define key terms, allowing SNPs to operate without standards. Nor does CMS collect meaningful data on the services SNPs provide, allowing SNPs to operate without oversight of how or whether they deliver what they promise. The Secretary of Health and Human Services is required to report to Congress by December 31, 2007 about the impact of SNPs on the cost and quality of services provided to enrollees, but, to date, little is known about what SNPs are doing and whether they are meeting the special needs of the medically complex populations they serve.

The authorization for SNPs ends in December 2008. Below is a brief description of SNPs and suggested considerations for Congress in its deliberations concerning whether to extend authorization for SNPs, and, if so, under what terms and conditions.

What Populations do SNPs Serve?

Three groups are identified in law and regulation as special needs populations:

Individuals dually eligible for Medicare and Medicaid, Individuals residing in specified institutions for extended periods, and Individuals with a specific severe or disabling chronic condition identified by the SNP.

The three populations identified are the frailest, sickest, and most disabled Medicare beneficiaries. They are also the highest users of health care services. Dually eligible people, for example, use 24% of all Medicare dollars, but represent only 16% of the Medicare population. While dual eligibles are a separate population for purposes of designing a SNP, the other two populations include many dual eligibles as well.

How Have SNPs Grown Since Their Inception?

The number of SNPs providing services to Medicare beneficiaries has grown exponentially between 2004, their first year of operation, and 2007, due in part to the revenue they generate for plans. In 2004, 11 SNPs were approved by CMS. In 2007, 476 SNPs were approved, enrolling over 800,000 beneficiaries. This represents an increase in plans of over 4000% in four years. The breakdown for 2007, for different types of SNPs, is:

For dually eligible people: 321 plans serving 621,986 enrollees For institutionalized people: 84 plans serving 139,761 enrollees For people with chronic conditions: 71 plans serving 81,093 enrollees

What is, and is Not, Required of an MA Plan to be a SNP?

A SNP must be a "coordinated care" plan, either a Health Maintenance Organization (HMO) or Preferred Provider Organization (PPO), not a Private Fee-for-Service or Medicare Savings Account plan. Unlike other MA HMOs and PPOs, a SNP must provide coverage for Part D, as well as for Parts A and B. Beginning in 2008, SNPs must also state what their "model of care" is; however CMS imposes no requirements for either the content or the performance of the models of care. CMS imposes no other requirements on SNPs. Since SNPs began operating in 2004, CMS has taken no action to enforce any obligations that SNPs meet the special care needs of their members.

Plans serving dual eligibles (regardless of whether they are considered Dual Eligible SNPs) are not required to coordinate care and payments between their members' Medicare and Medicaid coverage, even though the lack of both care coordination and integration of payment systems are the structural "gaps" that promote fragmentation in care for dual eligibles. Plans are also not required to include Medicaid providers in their plan networks, or to inform enrollees of their Medicaid coverage and how to access it.

How are SNPs paid?

SNPs are paid just like other private MA plans: through a monthly amount per beneficiary that is "risk adjusted" to reflect the likely utilization of services of each enrollee. All MA plans receive "bonus" payments for their enrollees who are dual eligibles or institutionalized. As a result, because nearly all SNP members, by definition, fit these categories, SNPs receive a higher average payment than regular MA plans.

What are Considerations for the SNP Reauthorization Debate?

SNPs should be offering care and services that are better at meeting their members' medically complex "special needs" than what is offered by traditional Medicare or by a regular MA plan.

What is, and what should be, required of plans applying to be SNPs? What standards exist and what are needed to measure SNP performance? Many of the needs of dually eligible beneficiaries that are not included in Medicare are covered by their state Medicaid program.

What additional services are Medicare SNPs providing that are not already covered by traditional Medicare and by Medicaid? How can any SNP with dually eligible members provide better care if SNPs are not required to ensure that care is coordinated with their members Medicaid coverage or to include Medicaid providers in its network? Individuals eligible for an institutionalized SNP may reside in institutions that are not subject to Medicare payments, such as Intermediate Care Facilities for people with Mental Retardation, nursing facilities, or in home or community-based settings where they receive primarily Medicaid services.

How can an institutionalized SNP add value for these populations? SNPs should be improving beneficiaries' access to primary care and services and to other providers they need, including specialists and social services.

How do SNPs guarantee that care coordination services already in place will continue after enrollment? How do SNPs guarantee that members continue to receive services from trusted providers? Adequate information should be communicated to potential SNP enrollees and members about all that is or is not covered by the SNP and about how accessing services through the SNP differs from accessing services through Original Medicare or through other Medicare Advantage plans.

Do SNPs accurately explain the interaction between Medicare coverage available through the SNP and Medicaid?

Conclusion

Medicare Special Needs Plans have been a costly addition to Medicare. Because they serve populations whose complex care needs have been a challenge to health care policy makers and providers for decades, it is hard not to conclude that their exponential growth is due more to their generation of revenue than to their success at meeting the challenge of the populations they are intended to serve. Special Needs Plans need to be carefully examined to ensure that any additional costs associated with them translate into valuable additional coverage for the populations they purport to serve.

For more information, contact attorney Patricia Nemore (pnemore@medicareadvocacy.org) in the Center for Medicare Advocacy's Washington, DC office at (202) 216-0028.

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