NAIC says NO to Medigap cost-sharing, but frets on how to tell Sebelius

The NAIC is preparing a process to tell Department of Health and Human Services (HHS) Secretary Kathleen Sebelius that no changes should be made to certain Medicare plans to add beneficiary cost sharing, but it is struggling with how much to add to that conclusion. 

The process is a bit confusing for members of the subgroup organized to address Medigap both in terms of process and the draft letter’s wording, should it become a policy vehicle. 

An NAIC-sponsored Medigap Subgroup conference call November 5 about the proposed draft letter became steeped in questions about process, politics and message.

The data the NAIC reviewed does not support a recommendation for cost-sharing in Medigap plans. Alternatives are only being suggested because of Section 3210 of the health care reform law, according to regulators.

However, some worry that the way the draft letter, subject to changes, is written would make it seem that the  NAIC and its Medigap  Subgroup of industry representatives, consumer advocates, aging/policy folk organized by state insurance regulators indeed does support cost-sharing. The Medigap PPACA Subgroup is also  composed of representatives from the Centers for Medicare and Medicaid Services (CMS) and other experts in the areas of Medicare and Medigap.

HHS had asked the NAIC to review and revise the NAIC Medicare Supplement insurance (Medigap) model regulation to include nominal cost sharing in Medigap Plans C and F to encourage the use of appropriate physicians’ services. The Obama administration wants the NAIC and the states to change the rules governing Medigap plans C and F, which hold purchasers’ out-of-pocket costs to especially low levels. Officials say Medicare enrollees who buy Medigap plans C and F now have no incentive to be good health consumers. The NAIC finds otherwise.

The preliminary draft letter to Sebelius stresses concern about the impact of any additional cost sharing on Medicare beneficiaries. If the Secretary does not agree and says changes must still be made, the NAIC will adopt possible revisions to the NAIC Medigap Model.

The Patient Protection and Affordable Care Act (PPACA) requires the NAIC to consider “peer-reviewed journals or current examples of integrated delivery systems.”

If the Secretary determines that the addition of nominal cost sharing is necessary to implement Section 3210 of the PPACA, then the group must suggest possible revisions to the current NAIC Medigap model law, but the question is when to do that.

The NAIC, after its review of the standards under Section 3210, concluded that “it is very unclear that increased cost sharing will cause beneficiaries to limit their use of physicians’ services to those that are ‘appropriate.’ Therefore, our primary recommendation is that no cost sharing be introduced to Plans C and F. We hope that you will agree with this determination,” the very preliminary letter, dated October 31, stated.

The draft letter’s language will certainly be tweaked in the coming weeks to reflect the concerns of consumer representatives and the health insurance industry. The letter will not be sent until after it had been vetted by the various committees–Senior Issues Task Force  Health Insurance on Friday, and the Health and Managed Care Committee at the Winter National Meeting November 29-Dec. 2  –and then to the NAIC’s government relations office in Washington, before being signed by NAIC officers.

The NAIC Medicare Supplement insurance (Medigap) model regulation would only go through the adoption if the law says some changes should be made despite peer reviewed recommendations by the NAIC, according to the NAIC.

The Medigap (PPACA) Subgroup had discovered that there is a limited amount of relevant peer-reviewed material on this topic. Several of the studies caution that added cost sharing would result in delayed treatments that could increase Medicare program costs later. Many of the studies do not consider the same population of health insurance beneficiaries as those that purchase Medigap products, the Subgroup found.

If–and only if–there are to be revisions the proposed revisions would add “nominal” copays for advanced diagnostic imaging services and power operated vehicles (scooters) and include, the Subgroup suggested:

$25 copay for Plan C for each primary covered advanced imaging service. $25 copay for Plan F for each primary covered advanced imaging service.