Lately, it seems that to know Medicare is to hate it. Just ask doctors, hospitals and retirees. Well review why and then look at how producers who serve the senior market can respond.
Medicare has gone through a sea of changes in the past, but for the most part, these changes were invisible to beneficiaries. The pain of lower Medicare payments, for example, was absorbed by hospitals and other providers. In fact, physician reimbursements from Medicare fell 5.4% in January 2002.
Imagine if that same model were applied to insurance agents. If the commissions on the products were cut, initially you might work harder to maintain your income. If they were cut again, you might decide not to sell that product anymore.
Thats exactly what is happening with Medicare providers. In response to drastic, recent cuts in Medicare reimbursements, doctors are responding with their feet–i.e., refusing to take Medicare patients. One study says 21.7% of physicians surveyed in June 2002 reported they no longer take new Medicare patients, a 28% increase from a year ago (see American Academy of Family Physicians at www.aafp.org/x14993.xml).
This is a huge problem for seniors entering Medicare and for those already on it who want to change doctors, relocate or leave a Medicare Part C plan (also called Medicare + Choice) to go to traditional Medicare.
Fewer docs arent the only problem seniors face. In both the public and private sectors, many retirees have had health coverage paid by their former employers. This insurance acted as a Medicare supplement for them. Now, the party is over; thousands of retirees are finding this benefit has been or will be cancelled.
The retiree health care problem is not limited to unfortunate retirees of highly publicized corporate scandals and bankruptcies. Across the country, towns and states are responding to lower tax receipts by discontinuing health insurance for retirees.
These seniors must now search for Medicare supplements or Medicare Part C, usually Medicare HMOs.
Unfortunately, the Part C hunt may turn up little or no solution. Thats because there are fewer Medicare HMOs around today. In recent years, in fact, many thousands of Medicare beneficiaries have been shocked to receive notices in the fall, informing them that their Medicare HMO has decided to discontinue the plan, effective January 1–yet another health care problem for seniors.
The HMO withdrawal problem is rampant in many areas of the country. It seems like a frightening form of musical chairs, with seniors shuttling from one plan to another, hoping to get a good spot and scared they wont. Access to their favorite care providers is often interrupted, and out-of-pocket costs can skyrocket.