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NAIC Panel Eyes Medicare Supplement Incentives

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Some members of the Senior Issues Task Force would like to have Medicare supplement plan cost-sharing model revisions ready for final approval by the end of the year.

The task force, an arm of the Health Insurance and Managed Care Committee at the National Association of Insurance Commissioners (NAIC), Kansas City, Mo., included a model revisions time line in the packet for its session at the NAIC’s summer meeting in Atlanta.

If the NAIC ends up adopting the model revisions, and if states build the changes into their own laws and regulations, consumers who have two types of popular no-deductible Medicare supplement plans, or “Medigap” plans — Medigap Plan C and Medigap Plan F — could face new co-payment requirements or other costs when they use Medicare to pay for scooters or for advanced imaging services, such as MRIs.

The traditional Medicare Part A hospitalization plan and the Medicare Part B physician services plan leave many gaps in coverage, in part to save money directly and in part to use out-of-pocket costs to discourage enrollees from getting unnecessary care.

Many enrollees who have traditional Medicare coverage fill in the gaps by buying Medigap coverage. The federal government has created standardized plan types, and two of the plan types — Plan C and Plan F — pay all of an enrollee’s Medicare Plan A and Medicare Plan B deductibles.

The Patient Protection and Affordable Care Act of 2010 (PPACA) calls for the NAIC and state insurance regulators to help control Medicare costs by working to change the Medigap Plan C and Medigap Plan F deductible rules, to reduce enrollees’ use of health care products and services. Congressional budget cutters have also asked for state regulators to help change Medigap cost-sharing rules.

The Senior Issues Task Force has set up a Medigap PPACA Subgroup to come up with a proposal for revising the provisions in the NAIC’s Medigap models that apply to Medigap Plan C and Medigap Plan F.

The subgroup has been holding a series of conference calls on cost-sharing ideas and posting documents relating to the ideas on the Senior Issues Task Force section of the NAIC’s website. The subgroup posted a batch of model revision drafts and other drafts in July.

In one batch of comments on advanced imaging and scooter cost-sharing ideas, three consumer advocates — Bonnie Burns, David Lipschutz and Stacy Sanders — question the idea that increasing Medigap plan deductibles will have any positive effect.

“We believe that reducing a Medigap benefit by adding an out-of-pocket cost to certain services that Medigap policies are otherwise required to pay simply shifts another expense to beneficiaries,” the consumer advocates say in their letter. “We think additional cost sharing imposed on policyholders is unlikely to have any effect on what physicians do or don’t do. Some studies supplied to the subgroup have in fact indicated that cost sharing potentially discourages or delays utilization of needed services, and any savings realized are offset later by subsequently higher cost care when health conditions worsen.”

If the NAIC decides it must add or allow new cost-sharing requirements, “the amount a policyholder must pay must be clearly described and be easily understood by consumers and their representatives,” the consumer advocates say.

Consumers should see disclosures about the costs will be in plan sales and marketing materials, the advocates say.

A fixed co-payment amount would be easier for consumers to understand than a coinsurance requirement, the advocates say.

Betsy Pelovitz, a vice president at America’s Health Insurance Plans (AHIP), Washington, suggested small changes in the wording of some model revision draft passages.

AHIP members support the idea of adding an additional co-payment on excess charges for durable medical equipment, and they would like to see parity in the final amount paid regardless of whether an individual rents equipment to own it or buys the equipment outright.