Medicare patients face challenges; NAIC doesn't want to add more with Medigap cost sharing (AP Photo/Jeff Barnard)

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.

$50 copay for Plan C for the purchase of each power operated vehicle. 

$50 copay for Plan F for the purchase of each power operated vehicle for Medicare assigned claims.

$500 copay for Plan F for the purchase of each power operated vehicle for unassigned claims.

A representative of Wellpoint on the call wondered if these co-pay attachments should be attached or listed in the Sebelius cover letter, depending on who the audience for the letter is and how it would be handled by the press.

Another Subgroup member said that Medigap cost-sharing is going to be on the table and will become a subject for the press and for Congress and that the NAIC group should make a very strong stance against cost-sharing.

Medigap is a political football. Medigap’s protections “are now inappropriately being held responsible for encouraging the overuse of covered services and increasing costs in the Medicare program,” the draft NAIC letter states.

The NAIC draft letter refuted the assertion being made by some parties that Medigap is the driver of unnecessary medical care by Medicare beneficiaries. Medigap pays benefits only after Medicare has determined that the services are medically necessary and has paid benefits.

“ …the assertion that Medigap coverage causes overuse of Medicare services fails to recognize that Medigap coverage is secondary and that only Medicare determines the necessity and appropriateness of medical care utilization and services,” the draft letter stated.

Consumer advocates worried that the NAIC should not detail a “fallback position” to copays or it would undercut  the message that no cost sharing should be the stance.

Most, if not all, health insurance consumer advocates have raised concerns, reflecting a lack of consensus about any changes to the model regulation.

“I don’t want the Secretary to think for two years we haven’t been doing anything,” said one member of the Subgroup.

America’s Health Insurance Plans (AHIP) has suggested adding language reporting that NAIC officials have reviewed the data they could get and found no studies showing whether Medicare enrollees with Medigap coverage are really overusing medical services.

“It has been a challenge and I think everybody has worked together with good will and with a good attitude and I very much appreciate that,” said Michelle Robleto a Florida regulator who chairs the Subgroup. 

Medicare beneficiaries who do not have access to Medicare Advantage plans may also be disproportionately impacted, particularly in rural areas, the letter, developed by the  NAIC Medigap PPACA Subgroup, told Sebelius.

“In summary, based on our thorough review and deliberation on this topic, we believe, and hope that you will agree, that no changes should be made to Plans C and F to add beneficiary cost sharing at this time. If, however, it is determined that changes are required, then we have developed proposed revisions to the NAIC model regulation,” the draft letter from the NAIC stated.