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Closing a Loophole
April 30, 2009 • Volume 9, Issue 17
Who doesn’t like free money?
But there are reasons why Medicare providers are barred from offering cash inducements to patients to undergo procedures or purchase medical equipment.
Such kickbacks increase the use of services, raising costs for taxpayers and premiums for people with Medicare. Medical procedures also carry risks; consumers’ assessment of the risks and benefits of a particular procedure should not be clouded by the prospect of a cash benefit.
Insurance companies are also prohibited from providing cash rewards to new enrollees in Medicare private health plans.
With one exception.
The law specifically allows insurers to rebate all or part of the Part B premium to enrollees in their Medicare “Advantage” plans. Effectively, that means the Medicare Advantage plan can kick back up to $96.40 per month—over $1,000 for the year—to its enrollees.
Just to be clear: the Part B premium rebates DO NOT come from any savings generated by more efficient private plans. Medicare Advantage plans cost taxpayers 14 percent more than Original Medicare. Insurers will collect excess subsidies that will total more than $150 billion over the next 10 years. By enticing new enrollees with a cash benefit, insurers gain access to these lucrative government subsidies, raising costs to taxpayers and to the other people with Medicare who still pay the full Part B premium.
Medicare Advantage plans often use the Part B premium rebate as a “come-on” to consumers. Enrollees get the cash in year one, but the benefit vanishes in year two or three.
Picking an insurance plan on the basis of a short-term cash reward can also be dangerous for your health. Plans that offer Part B premium rebates often leave enrollees on the hook for major medical expenses, like chemotherapy.
The Senate Finance Committee is right to consider prohibiting Medicare Advantage plans from kicking back the Part B premium to their enrollees. The proposal is part of a larger reform that would make Medicare Advantage plans include an annual out-of-pocket limit in their benefit packages, providing financial protection to enrollees who need high-cost treatment. High-quality insurance, not kickbacks, is what taxpayers and people with Medicare deserve from Medicare private health plans.
“One option is to require MA plans that can offer extra benefits with their bonus payments to do so in the following priority: (1) set a maximum limit on beneficiary out-of-pocket copayments, (2) reduce Parts A/B cost sharing, and (3) add new benefits, like eyeglasses, dental coverage, and gym memberships. Plans could also be disallowed from buying down the Part B or D premiums.” (Transforming the Health Care Delivery System: Proposals to Improve Patient Care and Reduce Health Care Costs, Senate Finance Committee, April 2009)
“Ironically, overpayments to Medicare Advantage plans, which are supported by the same lawmakers who supported means testing of the Part B premium, create a situation where wealthier people with Medicare may actually pay lower Part B premiums than some impoverished older adults and people with disabilities. That is because one of the “extra” benefits offered by some Medicare Advantage plans is a reduction or elimination of the Part B premium for plan members.” (Medicare Private Health Plans vs. Medicare Savings Programs: Which Is the Better Way to Help People with Low Incomes Afford Health Care? Medicare Rights Center, September 2007)
“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-fee-for-service plans cost the Medicare program over three dollars.” (Statement of Medicare Payment Advisory Committee Chairman Glenn Hackbarth before House Ways and Means Subcommittee on Health, March 2009)
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Medicare Part D Appeals Help for Advocates Is Here!
Medicare Rights Center’s new Medicare Part D Appeals: An advocate’s manual to navigating the Medicare private drug plan appeals process offers an easy-to-understand, comprehensive overview of the entire appeals process, including real-life case examples, a glossary of important appeals terms, a sample protocol for advocates, and links to important resources.
Register for a FREE copy of this great resource.
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Medicare Part D Monitoring Project
would like to hear about your experience, or that of someone you know, enrolled in a private drug plan. With information about what the issues are with Medicare Part D, we will be able to demand that those problems be fixed. Medicare Rights Center
Submit your story at http://www.medicarerights.org/issues-actions/tell-your-story.php.
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The Louder Our Voice, the Stronger Our Message
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Asclepios—named for the Greek and Roman god of medicine who, acclaimed for his healing abilities, was at one point the most worshipped god in Greece—is a weekly e-newsletter designed to keep you up-to-date with Medicare program and policy issues, and advance advocacy strategies to address them. Please help build awareness of key Medicare consumer issues by forwarding this action alert to your friends and encouraging them to subscribe today.
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The Medicare Rights Center is a national, nonprofit consumer service organization that works to ensure access to affordable health care for older adults and people with disabilities through counseling and advocacy, educational programs and public policy initiatives.
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