Q. So, how much are you worth to a Medicare Advantage salesman?

From John Curry, December 29, 2008

A. As much as $600

Medicare Advantage Commissions

The Centers for Medicare and Medicaid Services (CMS) announced in a memo to health insurance companies that they have a plan to combat rapidly rising commissions paid out to insurance agents selling private Medicare Advantage plans. Some health insurance companies are paying as much as $600 to an agent for an enrolled member. Three of the market leaders in selling Medicare Advantage plans include Aetna, Humana, and United Healthcare.

Rules that CMS put in place Sept. 15 to prevent “churning” (encouraging customers to enroll in a different plan each year so the agent can receive a higher commission associated with the first year of enrollment in a health plan) have had the unintended consequence of increasing agent commissions across the board.

It appears as if new changes will be put in place to correct this problem next year as both Senate Finance Chairman Max Baucus, as well as Pete Stark, who chairs the House Ways and Means Health Subcommittee have mentioned plans to cap commissions. In addition, both Humana and UnitedHealth have weighed-in supporting CMS corrective action.

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Will Ohio STRS investment managers "do more adjusting than most?"

This is the point I have been trying to make with Mr. Nehf and others at STRS. Of course the board brings consultants from the same industry to tell us all is fine with the bonuses.
Dave Parshall

Questionable bonuses

The whole financial industry seemingly has been overinflated with its own self-worth

Pennlive.com, December 23, 2008

"All of us have little choice but to adjust our expectations to the economic realities of the moment, and excessively paid investment managers may have to do more adjusting than most."

Paying bonuses to government employees was part of the "reinventing government" movement that sought to create more productive and efficient government through business-like incentives.

But the practice has clearly gone out of favor.

The latest area where bonuses have come into disrepute is among investment managers in one of the state's two large public employee pension funds. The Public School Employees' Retirement System will pay 21 of its staff bonuses ranging from $9,720 to $106,223 for the 2007-08 fiscal year, when the fund lost $1.8 billion. But the fund is ending bonuses, effective at the end of this year.

No one is expected to be eligible for a bonus at the State Employees Retirement System, according to spokesman Robert Gentzel.

The payment of bonuses is common practice for private-sector investment managers. Based on performance, they often are very generous, on top of salaries that already are at the high end of the wage spectrum. As we've seen, the finance industry can be incredibly lucrative, as well as incredibly stupid, often at the same time, enough so to precipitate the financial collapse that has put the entire economy on the brink of economic disaster.

The penalties for losing money clearly don't come close to balancing the rewards for making money.

Gov. Ed Rendell was on the money in writing to PSERS last month, stating: "Given the fund's recent performance and the serious financial challenges now facing the commonwealth as a whole, the payment of large bonuses to PSERS employees would be inappropriate and indefensible."

It also likely is unnecessary. The recent blow up and downsizing of Wall Street powerhouses hasn't exactly made investment managers a dime a dozen, but a lot of them are looking for gainful employment. And you could make the case that the whole financial industry was inflated with its own self-worth at the expense of the rest of the economy. All of us have little choice but to adjust our expectations to the economic realities of the moment, and excessively paid investment managers may have to do more adjusting than most.

.....and the beat goes on!

Jim N. Reed to the Lancaster Eagle-Gazette
December 29, 2008

'Tis The Season at STRS

Toledo Mayor Finkbeiner has announced a five-day furlough for a thousand city employees for a week in February. Columbus Mayor Coleman has decided to reduce a budget gap by closing several recreation centers and freezing hiring of new police and firemen.

Governor Strickland has ordered nearly $2 billion in budgets cuts in several state agencies.

Pennsylvania Governor Rendell has designated as "inappropriate and indefensible" any bonuses paid to state employees.

How many Fairfield County agencies and organizations are whacking spending, personnel and/or reducing services?

It would seem that the State Teachers Retirement System is immune to this economic downturn in light of the recent allocation of $6 million in bonus pay-outs to the investment staff even though the pension fund lost $30 billion in the past year. More recently, there was an unauthorized paid vacation day for staff on "Black Friday," the day after Thanksgiving. Pension funds contributed by Ohio's active and retired educators, taxpayers and by Boards of Education paid for the $175,000 holiday. Though explicitly prohibited by Board policy, Executive Director Michael Nehf granted the holiday. The Board Chair stated that Mr. Nehf had been given executive discretion for this gift.

STRS Ohio continues to operate under an entitlement philosophy regardless of the current difficult economic and social environment. It remains out of touch with a majority of its nearly 450,000 stakeholders and demonstrates little understanding of the plight of the average retiree.

STRS seems impervious to the warnings of financial experts and the pleas of concerned stakeholders. Board accountability has disappeared despite the efforts of retiree advocate and watchdog reformer Dr. Dennis Leone.

Responses to members' challenges to the mismanagement of pension funds sound quite similar to the non-answers being given by the banking institutions' corporate spokespeople. Recently bailed out financial institutions, when asked to explain their use of billions, have responded with "We're (Bank of New York Mellon) choosing not to disclose that" and "We (JP Morgan Chase) have not disclosed that to the public. We're declining to."

Offended, insulted as an educator, taxpayer, BOE? Respond to board@strs.org.

Jim N. Reed
Baltimore, Ohio

A little Dec. 12, 2008 presentation to STRS and let's connect the dots!

From John Curry, December 29, 2008

On Dec. 12, 2008, STRS was given a presentation re. decisions they could make for the future regarding choosing regular Medicare or Medicare Advantage for retirees. A Power Point presentation was made. An 87 page bound booklet was made of this presentation. A part of the presentation entitled "Health Care Benefits Marketplace" was included in this presentation. Two of the presenters listed were employees of Ingenix Consulting. Ingenix data was included in this Power Point presentation and also included in the booklet.

Further research indicates that Ingenix Consulting is a UnitedHealth Group Company. UnitedHealth Group sells Medicare Advantage programs. The dots have now been connected. Is any wonder this "study" turned out to be a hard sell for STRS adopting a Medicare Advantage program? Heck, we (STRS) even paid for this study, didn't we?

John

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So, what does the NEA have to say about Medicare Advantage plans?

From John Curry, December 29, 2008

"NEA Member Benefits believes that the more traditional coverage offered by Medicare combined with a Medicare supplement insurance plan is still the choice that gives you the most freedom. It lets you choose your doctors and hospitals and helps you control your out-of-pocket costs. It lets you remain in control of the management of your care. While some of the other options may appear a little cheaper up front, they can limit your medical care choices and could hit your pocketbook hard if you get seriously ill."

http://www.neamb.com/insurance/mcschc.jsp

Medicare Advantage (Part C)

Medicare Part C, formerly known as "Medicare+Choice," is now known as "Medicare Advantage". If you are entitled to Medicare Part A and enrolled in Part B, you are eligible to switch to a Medicare Advantage plan, provided you reside in the plan's service area. Medicare Advantage provides the following options:

• Coordinated Care Plans (the Balanced Budget Act of 1997's umbrella term for managed care plans);

○ HMO plans, otherwise known as Health Maintenance Organization plans, emphasize preventive care but without coverage for providers or facilities outside the HMO network. They almost always require a network primary care physician referral to access a network specialist; they usually offer drug benefits.

○ POS plans, otherwise known as Point of Service Plans, offer a network of preferred providers, like HMO plans, but also provide reduced benefits for providers or facilities outside the HMO network. They typically require a referral from a network primary care physician to access a network specialist; they sometimes offer drug benefits.

○ Regionally Expanded Preferred Provider Organization (PPO) plans are similar to POS plans but have broader geographic access to network providers in a larger service area, and with reduced benefits outside the PPO network. They do not typically require a referral from a network primary care physician to access network specialists. They may or may not offer drug benefits. ○ PSO plans, otherwise known as Provider-Sponsored Organizations, are similar to the POS plans but are usually organized with physicians that practice in a regional or community hospital. There may or may not be coverage for providers or facilities outside the PSO network, depending upon the plan designs offered. They may require a referral from a network primary care physician to access network specialists. They typically offer drug benefits.

• Medical Savings Accounts set up in conjunction with private fee-for-service plans providing:

○ at least the same benefit coverage levels as Medicare Parts A and B; or

○ high deductible coverage.

Call 1-800-MEDICARE or visit www.medicare.gov to determine if your plan choices have improved in your area. NEA Member Benefits believes that the more traditional coverage offered by Medicare combined with a Medicare supplement insurance plan is still the choice that gives you the most freedom. It lets you choose your doctors and hospitals and helps you control your out-of-pocket costs. It lets you remain in control of the management of your care. While some of the other options may appear a little cheaper up front, they can limit your medical care choices and could hit your pocketbook hard if you get seriously ill.

For more information, visit our new Consumer Guide on Medicare and Medicare supplement insurance.