From Susan Hesse, October 27, 2010 Dear teachers,
I am a retired teacher from Westlake, Ohio. What follows is part of a document I created to share my research. It addresses how the failure of STRS to provide objective information to retired teachers jeopardized their future health care.
Online, the full document links readers to the laws and government documents that support my claim. Material that challenges STRS does not move well through normal channels. Only recently did I connect with the watchdog group:
Concerned Ohio Retired Educators www.concernedohio.org
A key player in this CORE group, Dr. Dennis Leone, initiated the investigation (2002-2004) against STRS that led to the dismissal of the Executive Director and the conviction of six Board members for ethics violations. Eventually elected to the Board, Dr. Leone was the only member to vote against the forced 'move' discussed in my paper. On the CORE website, click on 'history' to see the results of this group‟s vigilance and perseverance. To protect your pension and quality health care, follow this group and help them create a direct line to educators.
A WARNING TO OHIO TEACHERS
What we don’t know can really hurt us. Please share this with others, especially retirees.
I write to warn my fellow retired teachers that their future well-being is threatened.
That threat comes not from the possible loss of the “wellness” benefits they’ve enjoyed as part of their Medicare Advantage plan. It comes from the nature of the plan itself.
I write to warn those who follow us. Pay close attention to what happened here, and how it has jeopardized the future security of retirees. Be sure you understand the significance of what was lost, for without your awareness and help, it will disappear for you. Use what you learn here to question your leaders and define their obligation to you.
On paper, it appears that last year, all but a few Medicare-eligible retirees chose to forsake traditional ‘Plus ‘plans for Aetna Medicare. That is not the case. Retirees were ‘moved’ into that plan.
You should be concerned about the following:
1. STRS assured retirees that they could keep their former plans, but those who so requested were told that
both companies had withdrawn their Plus plans from the 2010 STRS Retiree Options. ( True, says Medical Mutual,
but at the request of STRS.)
2. All Medicare Advantage plans, like Aetna Medicare, were already at the center of controversy.
3. Retirees were not given essential information that would have sent most fleeing.
4. STRS is not providing you with unbiased information.
What were retirees not told about the nature of this plan?
MA plans cover everything that Medicare covers,
….but they don’t have to do that in the same way.
Call the Ohio Senior Health Insurance Information Program (1-800-686-1578) to verify that.
Only the first part of that statement appears in material from the State Teachers Retirement System and Aetna. Even more significant is that last year, when the entire presentation at open enrollment meetings centered on how Aetna Medicare differed from every other plan, ( remember, they were moving people, not just offering options) , the main difference wasn’t mentioned. It’s not even on Slide 30 -What to Consider When Selecting a Plan.
Why is that difference so important?
As one who was pushed into this plan, I searched to protect myself. I feel compelled to share what I found.
My ideas and sources are not from any political group, because we only have power to effect change if we agree as to what is true. If you see this as hard copy, Email me for a document with active links.
THE STRUCTURE OF TRADITIONAL MEDICARE- (my simplified overview for the younger crowd)
As in public education, the regulations in Medicare (although they can drive us crazy), are intended to assure that the public gets the services it has paid for. The program isn’t without flaws, but its transparency allows the public to continually assess the program and make improvements. Medicare exists primarily to help those over 65 obtain medically necessary services. Funding comes from govt revenues (a lot from payroll taxes), and premiums paid by beneficiaries. Because charges for medical services can vary greatly, the program established an acceptable charge for each covered service. By accepting Medicare patients, doctors, et al., agree to accept that amount. After a small deductible,
Medicare pays 80% of the acceptable charge to the provider: the patient pays the rest. [1]
Now, if you require frequent or complex medical services, that 20% can be financially overwhelming. So, private insurance companies offer a variety of supplemental plans to help patients cover their responsibilities.
Important: Supplemental insurance companies do not receive any public money.
Their payments come strictly from the individual who hired them. They simply work with Medicare to make things easier for their clients. Example: You go the doctor--doctor submits bill to Medicare—Medicare pays doctor the 80%--Medicare knows that Anthem is your supplemental—so Medicare sends remaining amount due straight to Anthem- You wait for your supplemental to tell you what, if anything, is left for you to pay.
Whether or not they choose to have a supplemental plan, most people (currently over 75%) in Medicare, stick with this “traditional” setup. Why?
For me, the stability of a traditional Medicare setup is knowing that 80% of most of my future medical needs are covered by a public insurance plan. No surprises. No fear of being dropped or squeezed out if I begin to need major medical expenses. Only 20% of my future coverage relies upon my ability to interpret the fine print of a private supplemental insurance policy and the integrity of that company to deliver promised services.
How well does “traditional Medicare work? In 2003 I became caregiver for my parents. They each paid $175 monthly for a supplemental plan with no deductibles. Since 2003, they’ve been to countless specialists and have each been hospitalized for weeks at a time. My father has had two major surgeries at the Cleveland Clinic, and I was able to research and choose from their top surgeons. (Yes, CC doctors accept Medicare). Medicare + the insurance picked up all but a few hundred of their expenses. Why wouldn’t I want that kind of support?
THE STRUCTURE OF MA PLANS MAKES YOU VULNERABLE.
HOW DOES THE STRUCTURE OF MA PLANS MAKE YOU VULNERABLE?
Think: charter schools. We know that, by transferring a child to a charter school, a parent directs the state to hand the per diem amount allocated for their child’s education to that private entity; and with that move, they forego the rights and protections afforded to them and their child in the public schools.
Charter schools are subject to few public-reporting requirements. There is no transparency. No one has to show parents how the money is spent, what’s being taught, whether the “teachers’ have licenses, or what’s in their child’s records. The school can change its structure at any time. It could work out fine, but its one hell of a gamble.
As long as you are enrolled in an MA plan, you are in the same situation.
100% of your future coverage relies on your ability to read the fine print.
You still have to pay into Medicare, but you’ve signed away the protection it offers. .
The 80/20 rule no longer applies
Each plan has its own rules for deductibles, copayments, and other cost sharing, all different from the cost sharing in Medicare Part A and Part B.[2]
This is even more chilling. “ The Medicare Modernization Act of 2003 (MMA) MMA included provisions that prohibited state regulators from holding plans accountable for their marketing practices, the acts of their agents or from providing assistance to consumers enrolled in Medicare private plans.” [3] How could that be? The law made MA plans accountable only to Medicare. Medicare had to hire private companies, ( QICs-qualified independent contractors) to review complaints against them. That action meant that MA plans didn’t have to answer to state regulations, and it removed them from the jurisdiction of the courts. The firm of Crowell & Moring LLP offers annual legal seminars for health care payers and providers. Follow the link to access their 2008 PPT presentation on the MMA and state regulations.[4] You’ll find not only the details of the law, but also synopses of specific cases that illustrate what happens when people try to sue MA plans. (Check your Aetna book. Do complaints still go to QICs?)
At this point, you need some more background, because the impact of these plans on individuals and the sustainability of the Medicare program is intertwined with their history, particularly, the MMA.
THE HISTORY OF MEDICARE ADVANTAGE PLANS
Let me preface this section by saying that I am not interested in laying political blame. As political power shifts, each party ‘reshapes’ big government programs like public education and Medicare to reflect its own philosophy. Even so, no major legislation makes it through Congress without being compromised- not the MMA of 2003, and not current legislation. My goal is to give you enough information to protect yourself.
“Private health plans, now called Medicare Advantage plans, were first allowed to participate in Medicare because some policymakers believed they could provide better services at a lower cost than traditional Medicare. In fact, because it was anticipated private plans would be so efficient, the government initially paid them five percent less for each beneficiary they enrolled than it would have cost to cover that same beneficiary in traditional Medicare.” [5]
Prior to 2003, the main argument against them seems to be that they pulled healthy seniors out of the Medicare risk pool. That began to drain money from Medicare. Medicare has to service every eligible senior, no matter how sick. Money coming in from healthy seniors can be used to offset the costs of those needing more medical care. But MA plans, like charter schools, get paid up front; therefore, all the money from healthy seniors rests in the company’s coffers. And since they don’t have to service everyone, why should they pursue those who will cost them money? That’s just good business………………….but not good for Medicare.
The MMA brought the changes that created the current version of Medicare Advantage plans-the ones with the ‘wellness benefits”. The law made it illegal for Medicare to negotiate with drug companies or offer prescription coverage. That right went to private companies. Then, to “ensure that beneficiaries have access to high-quality care” it created a ‘quality incentive payment policy’ but only for the private Medicare Advantage plans. [6] It shouldn’t be a surprise that an administration that projected itself as ‘business-friendly’ created a ‘business-friendly’ law. You can read the law online,[7] but the formula for determining the incentive payment involves unknowns, like benchmarks, bids, and county rates. (The best explanation is at www.ncpssm.org [8] )
The results? Not only are our extra benefits financed by those in traditional Medicare: we’re also helping to pull the rug out from under our collective feet.
MA plans began to offer “wellness” benefits, just as the law intended., however, with no additional monies flowing into Medicare, the incentive payments made to the MA plans had to come from the money that was supposed to service everyone. The American Medical Association bulletin, “Medicare Advantage: The Facts” (2007), offered details about the “enormous subsidies that the government provides to these plans…an estimated 54 billion in 5 years”. It referred to the GAO and Congressional Budget Office reports that the incentive payments averaged between 122 and 150 percent of the Medicare Fee For Service cost per person. While supporting competition and choice, the AMA questioned why the administration was subsidizing private groups at the same time it was threatening to lower Medicare payments to doctors. (Self-serving, or common sense?)[9] In 2008, the Congressional Budget Office projected that, if Congress returned to paying MA plans 95%, the savings to the Medicare program between 2010 and 2019 would be $187 billion.[10]
In 2009, the Medicare Payment Advisory Commission (MedPAC), which has the job of tracking Medicare money, told Congress that MA plans “provide enhanced benefits to enrollees and overwhelmingly these benefits are not financed out of plan efficiency, but rather by the Medicare program and other beneficiaries, and at a high cost. For example, each dollar’s worth of enhanced benefits in private FFS (PFFS) plans costs the Medicare program over three dollars.”[11] The National Committee to Preserve Social Security and Medicare reported that every Medicare beneficiary is paying higher Part B premiums ($36 yr) to help finance the payments to MA plans.[12]
Part of the reason these payments are so high is that these plans have found ways to ‘milk’ the system.
Even in 2005, MedPAC provided evidence that MA plans were exaggerating the health problems of beneficiaries to get higher payments. [13] If you click through the Regence MedAdvantage 2010 PPT presentation for providers, you’ll notice that they instruct providers to use the Regence standard multiple procedure fee reductions rather than Medicare’s family of codes payment methodology, to submit the maximum no. of codes allowed per session, and to send all risk scores not directly to Medicare, but to Regence for review.[14]
How have MA plans treated the seniors they serve? They could afford to pay high commissions and had immunity from almost every state regulation. What do you think happened? State regulators couldn’t do much to control these companies, but they did investigate and accumulate hundreds of complaints they had received about deceptive and abusive marketing practices as well as fraud. In 2007, A special Senate Committee on Aging heard testimony from 39 states. Many reports involved misrepresentation, such as” telling seniors that they can go to any provider without being told that they may only go to a provider that accepts Medicare, and also a provider that has agreed to accept the plan's payments” (Does that sound familiar?) or telling a senior he’d have the same coverage as he would under Medicare. (That also rings a bell.) Others involved setting up shop in nursing homes, signing up people with dementia, and even enrolling dead people.[15] Finally, on July 15, 2008, Congress overrode President Bush's veto and passed The Medicare Improvements for Patients and Providers Act (MIPPA), which prohibits and limits certain sales and marketing activities under Medicare Advantage and Part D prescription drug plans. [16]
Despite getting incentive payments, MA plans are known for structuring their policies so that the cost of major illnesses falls onto the beneficiaries. In 2008, the Government Accounting Office reported that 19% of those in MA plans were projected to pay more for home health services than they would have paid under traditional Medicare, and 16% were projected to pay more for inpatient services. [17] In 2010 the Kaiser Foundation did an extensive study, comparing out-of pocket costs for MA plan enrollees to those in traditional Medicare. The results were similar. Those with significant medical problems faced higher out-of-pocket costs in MA plans than they would in traditional Medicare. What appears to happen is that those with major medical problems return to traditional Medicare as soon as possible. [18]Once again, the MA plans get ‘the healthy.’
MA plans have been frequently accused of not delivering on their contracts. In 2007, the AMA reported results of a survey involving over 2,200 physicians. Half said they received payments lower than the Medicare standard and three out of five said they had encountered excessive documentation requests and faced long hold times on payments. The final comment, underscored by the AMA was, “Contrary to the widely reported claim that they provide more benefits to patients. Half have experienced denial of services typically covered in the traditional Medicare plan.”[19]
CONCLUSION
Before 2003 MA plans had 13% of the market. In 2010 they have 24%. If the new health legislation remains intact, I believe the incentive payments will end in 2011. Meanwhile, each dollar’s worth of enhanced benefits in MA plans costs the Medicare program over three dollars.”[20] In 2011 when they must once again resume a ‘financial neutral” relationship with Medicare, these plans will probably disappear. Then insurance companies will search for a new way to curry your favor and regain that profit.
WHAT ABOUT STRS ?
I ‘m sure there are some dedicated Board members who work tirelessly in our behalf. They are the
ones who will work with us to restore what was lost and to alter the path that led us to this place.
1. Our retirees should always have the option of traditional Medicare plus a comprehensive ( not basic) supplemental. Can we get that this year? Improbable, but not impossible. Although many Board members might also have been deceived, they did send out ‘counselors’ with biased information and many will extend themselves to rectify the situation. How?
Invite Medical Mutual to make an offer. Their Plus plan was an option for our retirees last year. Surely they’ve updated their figures for other groups. They might jump at the chance to regain the business they lost. (Aetna won’t. They profited by forcing Aetna Plus people to move).
They’ll be legal hangups with required dates, Board approval, et al, but smart lawyers can do amazing things, and these are extenuating circumstances.
2. We must be sure that Board members make decisions based on sufficient objective information .
This ‘move’ would never had happened if all Board members had known the information that is in this document. Perhaps the OCHER groups at state universities will help create a network of ‘researchers’ that can act as a resource for them.
3. No ‘cost effective’ rationale justifies removing members from traditional Medicare and placing them into a plan they didn’t know was private.
4 Open enrollment meetings are a sham if they don’t impart objective information.
It’s not uncommon for MA plan agents to be paid huge commissions to send their people to ‘explain’ a policy to beneficiaries. It is unacceptable, however, for those agents to present themselves as neutral STRS counselors. Whether or not I’m correct in thinking that the’ counselors’ were provided by Aetna ,a close look at the PPT presentation proves the point.
AS FOR ME
I’ll be working to get this information to teachers, retiree organizations, and STRS Board members. Before people can accept change, they have to see why they need it. As much as I had hoped to get this information out before now, I’ve learned not to give up; every time you think a ‘wrong’ has been ‘righted’, it eventually manifests itself in a different way.
So, no matter what happens in the immediate, keep circulating and posting this.
For now, I’ll help coordinate this effort. Email me . shesseOH@wowway.com
1. For an online copy of this doc with links, use the Subject “Warning”.
2. If you believe that STRS should once again, offer retirees the option of traditional Medicare and a Plus Plan,
use the Subject, “Plus Option” Adding your name to that list doesn’t obligate you to select that.
3. If you have had problems with the MA plan, use Subject “MA problems”. I’ll be the repository for the time being. It’s the only way we can really know what’s going on.
Remember that there are millions of seniors in these plans. Help them know where they stand by sharing this information. I welcome your information, your suggestions, and your help.
Susan Hesse
NOTES
[17] U.S. Government Accountability Office 2008., February
