Medicare Advantage(MA) and Private-Fee-for-Service (PFFS) Plans
(2/13/20)- We recently received this email from Jason Checketts of Insurance Professionals of America:
I stumbled across your recent posts and I must say you got a lot of readable content, here I would like to draw your attention, to a guide which we released regarding “WHAT ARE THEADVANTAGES AND DISADVANTAGES OF MEDICARE ADVANTAGE PLANS?“
This helpful guide tells you everything you need to know about “ADVANTAGES AND DISADVANTAGES OF MEDICARE ADVANTAGE PLANS”
Also, this guide has already reached to relevant people and viewed by many – So, I was just wondering, if you could spare a few minutes to check out the given information it would be a valuable addition.
Your treasured comment would be considered at most. And if you think it would make a buzz to your blog then feel free to add. I would love to get your thoughts on the same.
The olink provided in the email leads you to a guide showing the advantages and disadvantages of Medicare Advantage and it should be helpful to those of you who are contemplating Medicare Advantage plans.
(1/13/20)- Newly elected Democratic Governor Laura Kelly of Kansas said that she had reached a deal with the Republican controlled Legislature to expand Medicaid under the terms of the Affordable Care Act. If legislators approve the plan, it would end years of wrangling between the parties.
If Kansas does approve the Medicare Advantage plan it would become the 37th state plus the District of Columbia in having done so.
In 2017 the Kansas Legislature approved an Medicare Advantage plan, but it could not override the veto of the then Republican Governor Sam Brownback.
(12/20/19)- A report from the federal inspector general’s office showed that insurers for Medicare Advantage plans were padding their bills to claim additional illnesses for its member clients.
There are about 21 million people enrolled in Medicare Advantage plans in 2018, accounting for well over a third of total Medicare and disability enrollees. The report cited a Medicare estimate that the program distributed $40 billion in overpayments from 2013 through 2017 to plans that included diagnoses that were not supported by a patient’s medical records.
Linda Ragone , a regional inspector general in Philadelphia was an author of the report.
(10/3/17)- About 1 percent of patients account for 20 percent of the cost, and 5 percent of the population account for nearly one-half of health care spending.
CareMore Health, a California based health care system and Medicare Advantage plan that specializes in caring for chronically ill patients receives payments from the government for the overall costs of its enrollees, instead of payments for each individual services rendered.
If it can provides care more efficiently compared with predetermined benchmarks, it must use the difference to lower the premiums charged to its enrollees.. Certain medical standards must be met for each patient covered by the plan.
Every CareMore enrollee meets a team of doctors, nurse practitioners, dieticians, social workers and behavioral health specialists for evaluation purposes upon enrollment. The team then decides on an individual plan geared towards the health condition of each enrollee.
(4/6/16)- Sean Cavanaugh, deputy administrator for the Centers for Medicare and Medicaid Services (CMS) said that the Medicare Advantage payments to insurers would increase by 0.85% on average for 2017 The insurers would see their revenues increase by about 3.05%. This data was in a final rule that was published on April 4th.
The CMS had indicated the increase would be about 1.35% in February, when it released some preliminary rates. At that time the agency estimated that insurers overall revenues would increase by about 3.55%
(2/21/16)- Officials from the Centers for Medicare and Medicaid Services (CMS) proposed a slight increase in payments to insurers covering their Medicare Advantage plans. The CMS increases represent a 1.35% plus on average for 2017, but the insurers overall increase would be about 3.5% because of billing for more intensive medical services.
About 18.2 million are now enrolled in Medicare Advantage plans, according to the analyst at Wells Fargo, an increase of more than 5% from a year ago.
(1/27/16)- Cigna Corp., the large health-insurance corporation, announced that Obama administration officials have requested it to stop enrolling people in its Medicare Advantage and prescription drug plans. The company is attempting to merge with Anthem In., another large health-insurance company.
Officials from the Centers for Medicare and Medicaid Services (CMS) sent the company a letter imposing sanctions on Cigna because of problems with the insurer’s coverage-appeals-process, among other issues. There has been a “longstanding history” of non-compliance” with requirements.
Cigna is also blocked from marketing its Medicare plans. A spokesperson for the company said it was “working to resolve these matters as quickly as possible and is cooperating fully with CMS on its review”.
(12/31/15)-New federal regulations that start January 1, 2016 empower the Centers for Medicare and Medicaid Services (CMS) to fine insurers up to $25,000 per beneficiary for errors in Medicare Advantage plan directories, and up to $100 per beneficiary for errors on plans sold on the federal health insurance marketplace.
States are imposing their own rules and penalties. Insurers say it is up to providers to keep their information updated. LexisNexis data shows that 30% of doctors change their hospital or practice-group affiliation every year. 35% of provider listings contain errors
(8/3/15)- The latest figures from the Congressional Budget Office (CBO) show that more than 30% of the 55 million people enrolled in Medicare are in Medicare Advantage plans.
Even though Congress did reduce the amount that the government subsidizes these plans under the Affordable Care Act, enrollment has increased to 16.6 million people, from 11 million in 2010. The CBO predicts that the number of people in Medicare Advantage plans will grow to 30 million by 2025.
(6/19/15)- The fee-for-service data set published by CMS today covers $90 billion in Medicare fee-for-service payments to some 950,000 physicians, nurse practitioners, physician assistants, nurse anesthetists, and other clinicians in 2013.
It includes the types and number of services performed, the average Medicare payment, and the average Medicare-allowed amount, which combines the Medicare payment and any deductible or coinsurance owed by the patient.
CMS omitted payment information for services a clinician furnished to 10 or fewer Medicare patients. The agency also published data on payments to hospitals for the 100 most common Medicare inpatient stays and 30 selected outpatient procedures at more than 3000 hospitals in 2013. The inpatient stays generated $62 billion in Medicare payments
(4/15/15)- The Centers for Medicare and Medicaid Services estimated that Medicare Advantage payments to insurers will rise about 1.25% next year, though insurers will see average revenue increase by about 3.25% as they deliver and bill for more intensive services.
The agency had estimated in February that the payments would decline for 2016 by 0.95%, with insurers’ revenue increasing by 1.05%
There are now about 17 million people enrolled in Medicare Advantage plans, according to Avalere Health, a consulting firm, which is up from the 15.9 million enrollees in Advantage plans last year.
(2/25/15)- The Centers for Medicare and Medicaid Services (CMS) estimated that there would be a slight decrease in payments to insurers that offer Medicare Advantage plans for 2016.
On average, the decline would be 0.95%, though insurers would likely see overall revenue increase about 1.05% as they deliver, and bill for, more expensive services. The CMS recently announced that it had changed its method of rating quality of services in connection with its “star rating” system on NursingHomeCompare.gov as we discussed in our recent item in our item dated 2/24/15 on How to Find a Nursing Home in Your Area and Its Rating
(10/7/14)- Monthly premiums for Medicare Advantage plans are estimated to rise to $33.90, a $2.94 increase in 2015, according to the Centers for Medicare and Medicaid Services. Medigap, with 10 plan levels labeled from A to N, is optional additional coverage that is federally standardized, meaning it must be the same coverage no matter which insurer is selected.
There are now 16 million people enrolled in Medicare Advantage plans, which represents about 30% of all Medicare beneficiaries. Doctors can drop out of Advantage plans at mid-year.
You can unroll from a Medicare Advantage plan, if you so desire, after signing up for an Advantage plan from January 1, 2015 to February 14, 2015, and then switch to original Medicare.
(5/4/14)- Medicare Advantage enrollment continues to vary geographically. Eighteen states had more than 30 percent of Medicare beneficiaries in Medicare Advantage plans, while six states (AK, DE, MD, NH, VT and WY) had fewer than 10 percent of Medicare beneficiaries in Medicare Advantage plans.
Much of the difference is caused by the varying premiums charged by the insurers and by the medical professionals covered by the plan. Another could be the prescription drug formulary covered by a particular plan.
(4/11/14)- Officials at the Centers for Medicare and Medicaid Services (CMS) announced the final rates that they will pay insurers in 2015 for Medicare Advantage plans, and overall the new rate represents an 0.4% increase compared to this year’s rate.
As noted in our item dated 2/24/14 below, officials had originally proposed at 1.9% cut in the rate.
Thomas Carroll, an analyst with Stifel Financial Services estimates that there are 16 million beneficiaries enrolled in Medicare Advantage health-insurance plans, which represents about 30% of the total amount of individual beneficiaries who could be covered under Medicare rules.
The announcement from the CMS officials limited the amount of any increase that may be charged to Medicare Advantage members to $32 per month, compared with the $34 increase imposed last year.
(3/27/14)- Medicare Advantage plans cover everything that Medicare part A and Part B cover, and usually cover Part D also, with each plan having its own drug formulary. Some plans charge an extra premium in addition to the government-mandated Part B premium.
Advantage plans often offer coverage traditional Medicare does not, including vision and hearing treatments. As we point out in our item dated 2/14/14, Obama administration officials announced a proposed reduction of 1.9% in 2015 in payments to Medicare Advantage insurers. The proposed cuts are aimed at reducing the extra cost to the government that is made to insurer of Medicare Advantage plans, over the cost of regular Medicare.
(2/24/14)- The Medicare Payments Advisory Commission (MedPAC) is an independent agency that has pointed out for many years that Medicare Advantage plans cost the government more than straight Medicare does. Here is a quote taken from its site at MedPAC.gov that explains its creation, make-up and purpose:
“The Medicare Payment Advisory Commission (MedPAC) is an independent Congressional agency established by the Balanced Budget Act of 1997 (P.L. 105-33) to advise the U.S. Congress on issues affecting the Medicare program. The Commission's statutory mandate is quite broad: In addition to advising the Congress on payments to private health plans participating in Medicare and providers in Medicare's traditional fee-for-service program, MedPAC is also tasked with analyzing access to care, quality of care, and other issues affecting Medicare.
The Commission is supported by an executive director and a staff of analysts, who typically have backgrounds in economics, health policy, public health, or medicine.
MedPAC meets publicly to discuss policy issues and formulate its recommendations to the Congress. In the course of these meetings, Commissioners consider the results of staff research, presentations by policy experts, and comments from interested parties. (Meeting transcripts are available on this website.) Commission members and staff also seek input on Medicare issues through frequent meetings with individuals interested in the program, including staff from congressional committees and the Centers for Medicare & Medicaid Services (CMS), health care researchers, health care providers, and beneficiary advocates.
Two reports -- issued in March and June each year -- are the primary outlet for Commission recommendations. In addition to these reports and others on subjects requested by the Congress, MedPAC advises the Congress through other avenues, including comments on reports and proposed regulations issued by the Secretary of the Department of Health and Human Services, testimony, and briefings for congressional staff.”
There are about 15 million people who are enrolled in Medicare Advantage plans, or about 29% of the 52 Medicare beneficiaries currently enrolled. MedPAC’s most recent call was that Advantage plans cost the government about 7% more than plain Medicare costs.
Obama administration officials have proposed a reduction of 1.9% in 2015 in payments to the insurance companies administering Medicare Advantage plans. Other factors in the formula that determines the amount of these payments will deepen these cuts to bring them more in line with what regular Medicare payments for these treatments. Mr. Obama has stated that private insurers were “overcharging massively” for the care they are providing to Medicare beneficiaries. The proposed cuts, he said, would “reduce overpayments to Medicare Advantage plans.”
As our item dated 4/9/13 below stated, officials were proposing a cut in Medicare Advantage payments back then, but that cut did not take place, and instead, an increase occurred.
(1/12/14)- Enrollment in Medicare increased by 4% in 2012, the largest one-year increase in 39 years, according to a report issued by the Centers for Medicare and Medicaid Services. More than half of the new beneficiaries joined Medicare Advantage plans managed by private insurers. More than one-fourth of the 50 million Medicare beneficiaries are now enrolled in Medicare Advantage plans.
In a decision that could have national implications, a federal judge in Connecticut temporarily blocked UnitedHealthcare from dropping an estimated 2,200 physicians from its Medicare Advantage plan in that state.
(11/22/13)- Doctors in at least 10 states have received termination notices from UnitedHealth Group Inc., the nation’s largest provider of privately managed Medicare Advantage plans. Because of the fact that doctors receiving these notices can appeal the decision within 30 days, a great deal of uncertainty has been created for members of the plan who can’t be sure if their medical professional’s treatment of them is covered or not.
There are about 13 million Medicare beneficiaries enrolled in Advantage plans at the end of 2012, which represents about 27% of those enrolled in Medicare. UnitedHealth has almost 3 million members in its Advantage plan, many of them sold under the AARP brand. The company says it had over 350,000 doctors in its Advantage provider networks.
(10/18/13)- Open enrollment for joining a Medicare Advantage plan began October 15th and will end December 7, 2013. About one-fourth of the 52 million Medicare beneficiaries are in Medicare Advantage plans. If you are in a Medicare Advantage plan or even straight Medicare, you cannot buy health care coverage from an insurer selling a plan over the new Patient Protection Act health exchange.
The Obama administration reversed a proposed cut in federal payments to Medicare Advantage plans, even though it costs the federal government about 7% more in payments for beneficiaries in Advantage plans, and instead gave these insurers a fresh infusion of federal money.
Medicare actuaries estimate that as a result payments to insurers will rise by $6.5 billion in 2014 and by $60 billion over 10 years. These numbers include additional premiums that will be paid by Medicare beneficiaries, roughly $1.5 billion next year and $14 billion over 10 years.
(7/3/13)- Analysis finds that 14.4 million Medicare beneficiaries were enrolled in private Medicare Advantage plans in 2013, up nearly 10 percent from 2012. Since 2010, enrollment in Medicare Advantage plans has grown by 30 percent in spite of concerns that the payment changes enacted in the 2010 Affordable Care Act would lead to significant reductions in enrollment
(4/9/13)- In mid-February, officials from the Centers for Medicare and Medicaid Services (CMS) stated that they would cut by 2.2% the rate that the government pays the insurers of Medicare Advantage plans. Their final decision as to the exact amount of the cut would be announced in early April.
And then the lobbyists went to work. And then at least 160 members of Congress signed letters to the CMS advocating against that cut in the rate. Then we heard a lot about cutting the federal deficit and sequestration. And then the real world set in, so that instead of cutting the rate by 2.2%, they would increase the rate by 3.3% "growth positive".
The federal Payments Advisory Commission has estimated the Medicare Advantage already costs about 7% more than regular Medicare. President Obama has acknowledged the fact that Medicare Advantage costs the government more than does regular Medicare.
There are articles in the media that Congress is contemplating merging Part A and Part B of Medicare, in order to effectuate savings by combining the 2 Parts. Just wait and see what happens once the lobbyists for the medical facilities and medical professionals get to work on this issue.
(2/21/13)- Government officials announced that costs per person for Medicare Advantage plans will fall more than 2% in 2014. The government uses this figure as a benchmark to determine payments to Medicare Advantage insurers.
(8/17/12)- Medicare Advantage costs the government anywhere from 3% to 5% more than does regular Medicare. Under the Patient Protection and Affordable Care Act that gap will be eliminated, thus saving the government an estimated $156 billion over 10 years, according to the Congressional Budget Office.
Nearly 2 million Medicare beneficiaries are readmitted within 30 days of release each year, costing Medicare $17.5 billion in additional hospital bills. The national average readmission rate has remained steady at slightly above 19 percent for several years, even as many hospitals have worked harder to lower theirs.
(3/28/12)- The recently released data from the Centers for Medicare and Medicaid services showed, that for the period through February 10, Medicare Advantage enrollment is up 738,000 lives year-to-date.
The basic motivation behind this growth in membership is the fact that Medicare Advantage plans offer seniors far better benefits than what the government provides through the regular fee-for-service program.
(2/9/12)- Medicare Advantage enrollment continues to be very strong through the months of January and February. The Centers for Medicare and Medicaid Services (CMS) released both January and February enrollment numbers, covering applications through January 12, showing membership increased by 693,000 lives so far.
Over the last 6 months of 2011, the industry averaged a monthly increase of 53,000 lives. If that pace continues over the balance of the year, it would bring the new membership total to 1.2 million. Only 750,000 new members were added to Medicare Advantage in 2011.
(1/14/12)- Medicare Advantage enrollment has been quite strong so far in the month of December, with membership up 58,000 for the month. That brought the total membership growth for Medicare in 2011 to increase by 748,000 members this year.
Private-fee-for-services membership finished the year down 1.06 million lives. HMOs had over 8 million members by the end of their year with the addition of 570,000 lives this year. Preferred provider organizations had a membership increase of 1.2 million lives in 2011.
(12/20/11)- Medicare enrollment has been quite strong so far in the month of December, with membership up 58,000 for the month. That brought the total membership growth for Medicare in 2011 to increase by 748,000 members this year.
Private-fee-for-services membership finished the year down 1.06 million lives. HMOs had over 8 million members by the end of their year with the addition of 570,000 lives this year. Preferred provider organizations had a membership increase of 1.2 million lives in 2011.
(10/29/11)- Medicare enrollment for 2012 has begun and will run through December 7. Last year, it began on November 15th and ran through December 31st. Medicare Advantage premiums are expected to decrease by 4% on average next year, and average drug-plan premiums for Part D of Medicare are estimated to decrease about 2% to $30 a month, according to the federal Centers for Medicare and Medicaid Services (CMS).
Advantage plans will not be able to charge users for preventive services that are free to users of traditional Medicare. There will no time limit to switch into a five-star Advantage or prescription-drug plan. Medicare users have one chance to switch to one of these top-rated plans at any point next year.
(8/21/11)- Medicare Advantage enrollment grew by 51,500 in the month of August, bringing year-to-year enrollment growth to 543,000 lives. This is the second consecutive month of better than anticipated enrollment growth.
Some medical experts attribute this growth to the fact that we will be having a lot more people achieving the age of 65 in the coming years. They are now calling for added membership to Medicare Advantage in the 675,000 range for this year, up from the previously projected number of 625,000 to 650,000 new lives projection of last month.
(7/15/11)- Medicare Advantage enrollment was up 53,000 lives in July, bringing the year to date membership up to 482,000 new lives. Last year the industry averaged 33,000 new lives per month over the last 5 months of the year so it looks like total membership will grow between 625,000-650,000 for all of this year.
The industry added 582,000 lives in 2010. There were a total of almost 1.1 million lives lost in private-fee-for services this year, with industry experts looking for growth of between 750,000 to 1 million new members in 2012.
(6/15/11)- WellPoint Inc., the large health insurer announced that it would purchase CareMore Health Group, one of the largest senior-health care providers who cover 54,000 Medicare Advantage beneficiaries.
The transaction increases WellPoint's entry into Medicare Advantage plans, in anticipation of some of the provisions of the new health care law that was passed in 2010. CareMore owns a network of 26 clinics in California, Arizona and Nevada that specialize in preventive services and managing the care of weak and chronically ill seniors.
WellPoint currently has 550,000 Medicare Advantage beneficiaries enrolled under its plans. Under the terms of the new law Medicare Advantage payments will be tied into bonuses for improved results to Medicare patients.
(3/25/11)- Medicare Advantage enrollment was up by 35,300 members in March. Medicare Advantage insurance companies are expecting a growth of about 600,000 net new members this year. Total enrollment in Medicare Advantage plans was 12,200,116 as of March 1, 2011.
(2/17/11)- The data for Medicare Advantage for the month of February showed that the industry added 646,000 new members, after losing 355,000 members in January. Thus the year-to-date membership in Medicare Advantage plans has grown by 291,000 lives so far this year.
(12/25/10)- There were 23,000 new members who joined Medicare Advantage programs in December, which was up from the16,000 new members who joined MA plans in December 2009. 16,000 new members joined Medicare Advantage plans in November 2010.
(11/27/10)- Although the new health-care legislation that was passed in 2010 will cut about $100 billion from Medicare Advantage during the next 10 year, average premiums will remain essentially flat in 2011, according to the federal Centers for Medicare and Medicaid Services.
Advantage plans will have to cap at $6,7000 member's annual out-of-pocket expenditure for Medicare-covered services within their network. The plans will be barred form charging higher co-payments or co-insurance rates for some services, including chemotherapy, than patients would pay under traditional Medicare.
Advantage participants who want to switch to another Advantage plan will have to make a move by December 31 instead of being able to do so between January 1 and March 31. An Advantage participant can drop an Advantage plan from January 1 to February 14, but will only be able to switch to regular Medicare during this period of time
(10/8/10)- In 2011, open enrollment for Medicare Advantage plans will be from January 1 through February 15, instead of its present timeframe of January 1 through March 31. Under the old system Medicare Advantage plan participants could change insurers or go back to regular Medicare. Under the new law, a beneficiary will be allowed to only go from Medicare Advantage plans back to regular Medicare. You will not be allowed to switch from regular Medicare to Medicare Advantage.
(9/27/10)- Starting October 1, insurers can start their marketing campaigns to enroll Medicare beneficiaries into their Medicare Advantage plans. There are about 11.3 million out of the total of almost 46 million Medicare beneficiaries enrolled in Medicare Advantage plans. Jonathon Blum, deputy administrator of the Centers for Medicare and Medicaid services said: "Medicare Advantage plans project that enrollment will increase by 5% in 2011".
The Centers for Medicare and Medicaid Services announced that it had denied rate increases and benefit cuts sought by 298 privately run Medicare plans out of the 2,100 bids that had been submitted to the agency.
"For these plans we said 'No, you have to do better,'" said Donald Berwick, the administrator for the CMS. Last year, the CMS did not deny any bids. It predicted that Medicare Advantage premiums would be 1% lower. When the premium change is combined with higher deductibles and co-payments that insurers plan to change, the core benefit package will cost members $13 per month more on average, the agency said.
In 2012, the government will begin cutting $136 billion in payments to insurers who run Medicare Advantage plans. "The administration may be trying to persuade seniors that everything is fine, but the millions of Medicare beneficiaries who will lose their current coverage or see fewer benefits in the coming years will disagee, " said Iowa Republican Senator Charles Grassley. Mr. Grassley would become head of the Senate Finance Committee if the Republican gain the majority in the Senate in the upcoming elections.
(9/22/10)- Medicare Advantage gained 35,000 new lives (a 0.3% growth rate), down from 39,000 members added the prior year and 39,000 members added in August. Year-to-date membership has grown by 517,000 lives, and the industry is on track to add about 600,000 new members for the year.
(6/9/10)- The Medicare Payment Advisory Commission, an independent congressional agency estimates that the government pays private insurance companies an average of 9% more to operate Medicare Advantage programs than it costs the government to run traditional Medicare.
Insurers that sell Medicare Advantage plans must submit their 2011 bids to the government, and because the government is cutting back on the subsidies that it pays to these carriers, it is expected that they will pass along some fairly substantial premium increases to their members.
The rate the government will pay these insurers is frozen for 2011 at 2010 levels. Starting in 2012, the new health care law calls for a gradual reduction in government payments to the insurers, totaling $136 billion by the year 2020.
Some of the insurers are planning to cut back vision, dental and prescription benefits. The administration has sent a letter to 4 of the larger plans warning them against increasing premiums and co-payments for their members.
(1/20/10) Enrollment in Medicare Advantage (MA) declined by 321, 000 net lives in the month to 10.9 million as of December 11 for January 1 effective date. Enrollment decreased sequentially by 2.8% for January 2010 compared to a sequential increase of +1.6% in January 2009 and +2.4% in January 2008.
Employer plan membership now represent 18.2% of total MA membership. Enrollment in Special Needs Plans decreased 128,000net new lives or -9.2% sequentially to 1,300,000 as of December 11 compared to +9,000 net new lives last month. SNP membership represents 11.5% of total MA membership. Note plans can enroll members in SNP plans year-round.
(12/26/09)- In the great health care reform debate, many Americans are asking, "Why does the Obama administration want to cut back on Medicare Advantage"? The answer is simple; Medicare Advantage costs the government about 12% more than does regular Medicare, according to an independent analysis from the Medicare Payment Advisory Commission (MedPAC).
Enrollment in Medicare Advantage (MA) grew by about 16,000 net new lives in the month to 11.29 million as of November 13 for December 1 effective date, compared with 18,000 net new lives last month and 26,000 for the same month last year.
Eighty-two percent of the enrollment growth for the month was in HMO plans and 63% was in PPO plans. Private-Fee-for-Service (PFFS) plans shed 8,400 lives, while enrollment in employer plans grew by 3,700 net new lives to 2.01 million as of November13 for the December 1 effective date. Enrollment in Special Needs Plans grew by 9,000 new lives for the period in question
(10/18/09)- The average premium for all Medicare private plans will increase to $39 a month in 2010, from about $32 this year, according to comments from Timothy Hill, deputy director for the Center for Drug and Health Plan Choice, the federal agency that manages Medicare.
Insurance companies had signaled there would be an increase in premiums, citing the government's decision to cut payments to Medicare Advantage by 4.5%. A federal law enacted in 2008, required Private Fee for Service (PFFS) plans to establish provider networks.
(9/4/09)- Karl Rove, the former senior adviser and deputy chief of staff to President George W. Bush wrote a letter in the August 28th edition of the Wall Street Journal condemning President Barack Obama's proposed cuts to the Medicare Advantage (MA) program.
His letter stated that "an estimated 10.2 million seniors (editor's note-there are now over 10.8 million seniors enrolled in Medicare Advantage programs) -one of five in America" who would be negatively impacted by any cuts that may occur in the Advantage program.
Please keep in mind, as per our item dated 12/4/08 below the Medicare Payment Advisory Commission (MedPAC) studies have shown that the government pays about 13% more for MA plans than what it pays for regular Medicare plans.
This discrepancy in cost to the government is costing all Americans money and is unfair to regular Medicare beneficiaries. You then might rightfully ask, "Why don't all Americans join a Medicare Advantage program?" We will leave that question unanswered.
(6/20/09)- Every June, the Medicare Payment Advisory Commission (MedPAC) releases a report to Congress detailing the important issues faced by Medicare. Please see our item dated 12/4/08 below for more information about MedPAC. The report focuses on ways incentives in the current system could be changed to reward for value as opposed to volume.
In the latest report, MedPAC estimated that in 2009, Medicare Advantage plans will be paid $12 billion more than if those beneficiaries were enrolled in traditional Medicare. The report also called for reforming medical education to focus on care coordination and quality.
In a speech at the recent American Medical Association meeting in Chicago, President Barack Obama called for cuts to Medicare Advantage, urging the introduction or competitive bidding. That step, he said, "will save $177 billion over the next decade, just that one step."
(4/17/09)- The Centers for Medicare and Medicaid Services (CMS) announced that reimbursement rates to private insurers that administer Medicare Advantage plans would fall by as much as 4% to 4.5% next year. The agency also announced that it would raise the baseline rate for the private plans by 0.81%, which certainly pales in comparison to the recent 4% increases that insurers have gotten in the last few years.
The payment rate also includes a 3.41% reduction as a result of a change in how the government uses a reimbursement scale pegged to enrollees' health. According to the Medicare law, physicians are due for a 21% rate cut next year, and based on the reality of that situation, " there have never been rate cuts to Medicare physicians in the past and it ain't going to happen next year either".
If, as expected, the rate cuts to physicians do not occur, it is only reasonable to expect that the rate cuts to the Medicare private insurers will certainly be lessened, depending, ultimately on how much the physicians rate increase turns out to be.
(3/23/09)- Medicare Advantage enrollment grew by 90,400 net new lives in the month of February to 10,748,045 million as of February 10 for the March 1 effective date. This represented a 0. 8% sequential growth. Enrollment was negatively impacted by some plans exiting unprofitable markets.
(3/12/09)- The Centers for Medicare and Medicaid Services (CMS) proposed payment increases for Medicare Advantage plans of just 0.5% in 2010, compared with the roughly 4.0% increase that private plans have seen in recent years. Please keep in mind, as per our item dated 12/4/08 below the Medicare Payment Advisory Commission (MedPAC) studies have shown that the government pays about 12 % more for MA plans than what it pays for regular Medicare plans.
The Obama administration is hoping to achieve universal health care coverage, and under its proposal, insurers would be required to competitively bid to offer plans beginning in 2012, which the administration believes would lower per-patient outlays for Medicare Advantage plans. Insurers would be paid according to the average of those bids in a given area.
(3/1/09)- WellCare Health Plans inc., which has the dubious distinction of having the highest number of beneficiary marketing complaints among large Medicare Advantage plans said that it was suspending new enrollments. Please keep in mind that the next time that open enrollment takes place for new coverage is November 15th, 2009.
The CMS had previously ordered the company to suspend marketing to and enrollment of Medicare beneficiaries by March 7 because of the company's misleading advertisements, deficiencies in Medicare prescription drug payments and noncompliance with Medicare rules in general.
CMS's undercover shoppers found substantial evidence that WellCare misled and confused beneficiaries at a December sales event. The CMS also accused the company of failing to discover forged applications.
(12/4/08)- An article in a recent edition of the journal Health Affairs stated that the results of a study done by two analysts from the Medicare Payment Advisory Commission (MedPAC) indicates that the government pays an extra 13% to cover Medicare Advantage beneficiaries than it does for regular Medicare beneficiaries.
The two analysts, Carlos Zarabozo and Scott Harrison found that health maintenance organizations are, on average, 12% higher than what the government would spend for beneficiaries in traditional Medicare, while payments to private fee-for-service plans were 17% higher.
Medicare Payment Advisory Commission (MedPAC)- The Medicare Payment Advisory Commission (MedPAC) is an independent federal body established by the Balanced Budget Act of 1997 (P.L. 105-33) to advise the U.S. Congress on issues affecting the Medicare program.
The Commission's statutory mandate is quite broad: In addition to advising the Congress on payments to private health plans participating in Medicare and providers in Medicare's traditional fee-for-service program, MedPAC is also tasked with analyzing access to care, quality of care, and other issues affecting Medicare. The Commission's 17 members bring diverse expertise in the financing and delivery of health care services.
Commissioners are appointed to three-year terms (subject to renewal) by the Comptroller General and serve part time. Appointments are staggered; the terms of five or six Commissioners expire each year. The Commission is supported by an executive director and a staff of analysts, who typically have backgrounds in economics, health policy, public health, or medicine. MedPAC meets publicly to discuss policy issues and formulate its recommendations to the Congress.
Both President -elect Barack Obama and former Senator Tom Daschle, who is his choice to become the next secretary of health and human services have stated that they would like to see this subsidy reduced or even eliminated.
(11/15/08)- Medicare Advantage enrollment grew by 34,000 net new lives in the month to 10.2 million as of October 10 for the November 1 effective date. This compares with 53,000 net new lives last month and 33,000 for the same month last year.
Enrollment in Employer Plans grew by 6,000 net new lives to 1.8 million as of October 10 for the November 1 effective date, compared with 10,000 net new lives last month. Employer plan membership now represents 17.5% of Medicare Advantage membership.
(11/5/08)- The latest figures, as shown in our item dated 1/19/08 show that 10.2 million Americans are enrolled in Medicare Advantage as of September 11, 2008. According to a June report from The Medicare Payment Advisory Commission, an independent congressional agency, projected that 2008 payments to these private plans would be 13% higher than what the government would have spent on direct coverage under regular Medicare.
The projected net dollar cost to the government by MedPAC would be $10 billion. Medicare spending hit $431.5 last year according to the Medicare trust funds report. This meant that Medicare spending has almost doubled in the last 7 years.
Democrats in Congress have called for cutbacks in spending to Medicare Advantage plan insurers, while Republicans, as a general rule feel that Medicare Advantage plans ultimately save the government millions of dollars.
(10/19/08)- Medicare Advantage enrollment grew by 53,000 net new lives in the month to 10.2 million as of September 11 for the October 1 effective date. This compares with 46,000 net new lives last month and 29,000 for the same month last year. Plans began their marketing for prescription drug Part D and Medicare Advantage programs on October 1, and the 2009 open enrollment season begins on November 15th.
Special Needs Plans grew by 28,000 net new lives to 1.3 million as of September 11th for the October 1 effective date, compared with 23,000 net new lives last month. Special Needs plan membership now represents 12.7% of total Medicare Advantage membership.
The new rules would bar a number of practices considered "deceptive" or "high pressure" by the CMS. They prohibit providing free meals during promotional events for Medicare plans and conducting sales activities in doctor's offices or educational events, as well as gifts to prospective enrollees that are larger than $15 in value.
Other banned activities include "unsolicited direct contact like door-to-door solicitation, outbound telemarketing, approaching beneficiaries in parking lots, or follow-up calls abut mailing without prior consent".
The new rules set a cap for overall compensation for agents who are signing up beneficiaries for the first year of a plan. The regulations set up a six-year payment commission plan for agents, and stipulate that, for a beneficiary's first year of enrollment, "the compensation paid can be no more than 200% of the compensation paid in the second year, or any individual subsequent renewal year, up to a total of five renewal years."
(9/16/08)- Medicare Advantage enrollment grew by 46,000 net new lives in the month to 10.14 million as of August 8 for the September 1 effective date. This compares with 57,000 net new lives last month and 56,000 for the same month last year. Plans may begin their marketing for prescription drug Part D and Medicare Advantage programs as of October 1.
About 53% of the 46,000 new enrollee membership for Medicare Advantage came from enrollment through HMO membership, 18% came from Preferred Provider Organization membership and 14% came form Private-Fee-For-Service plan membership.
Enrollment through employer plans grew by only 8,000 new lives to 1.8 million members as of August 8 for September 1 effective date, compared with 15,000 net new lives last month. Employer plan membership now represent 7.5% of total Medicare Advantage membership. We would not be surprised to see this number head into the minus column as employers may opt out of Medicare during these hard economic times.
(7/28/08)- Medicare Advantage enrollment grew to 10.1 million as of the report of June 11, 2008 for the July 1 effective date. Thus MA grew by 55,000 net new lives in the month compared with 46,000 net new lives last month, and 112,000 net new lives for the same month last year. This figure represents an 11.7% increase since December 1, 2007.
Special Needs Plans (SNP) membership was 1.2 million in the June report, which represents 11.8% of total Medicare Advantage membership. This figure represents an increase of 30,000 net new lives for the month, compared with 27,000 net new lives last month and 29,000 net new lives for the same month last year.
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The vote in the House was 383 to 41, with 153 Republicans voting in favor of overriding the president's veto. In the Senate the vote was 70 to 26, with 21 Republicans voting in favor of overriding the veto.
This is the fourth time that a bill has been enacted in Congress overriding President Bush's veto. Two of the previous overrides occurred in connection with farm bills and the third one was on a water-project bill.
The new law will cost around $20 billion over 5 years. Beneficiaries will see a cut in their out-of-pocket costs for mental health services, as well as some new coverage, including for certain classes of drugs often used to treat anxiety and insomnia.
Medical equipment manufacturers will get a delay in a competitive bidding process for suppliers of equipment such as oxygen tanks and power wheelchairs. The bill cuts extra payments that currently go to Medicare Advantage plans based on local costs for care at teaching hospitals, and imposes new limits on private-fee-for-service plans.
Under the Medicare formula, doctors will be faced with a 20% cut in their fees in 18 months Instead of a 10.6% cut under the formula that was to go into effect on July 1 of this year there will be a 1.1% increase for physicians fees. Medicare Advantage insurers will be cut by 2% under this new bill.
(7/16/08)- In early July the House passed a bill to prevent the Medicare 10.6% pay cut to physicians by a vote of 355 to 59. Senate Republicans barely blocked efforts to take up the bill by 1 vote. During the July 4th recess holiday the American Medical Association ran an ad supporting the bill in the home state of 10 Republican Senators who had previously voted against it.
The Senate Democrats won a decisive vote by a margin of 69-30 to cut off debate on the bill after the recess for the holiday ended, with Senator Ted Kennedy (D-Mass.) making his first appearance on the floor of the Senate since his recent bout with cancer was announced, and casting his vote for the bill.
A number of Republican Senators targeted by the ad from the AMA supported the bill after having previously voting against it. Besides heading off the cut to doctors' fees for 18 months, the bill gives the physicians a1.2% increase. The bill would also increase payments to physicians who make the switch from handwritten prescriptions to digital ones, then docking doctors' fees in later years if they fail to adopt the technology.
The bill would cut payments to Medicare Advantage and Private-Fee-for Service providers by 2 %. Because of the cut to Medicare Advantage and PFFS insurers, the president has threatened that he will veto the bill.
(7/2/08)- According to a spokesman for the CMS, Medicare will delay processing doctors' claims until July 15th, thus enabling Congress to pass legislation that would block the scheduled 10.1% cut to their fees that was to go into affect on July 1. When, as and if Congress passes the needed legislation it can be made retroactive so that the doctors will not have their fees cut. If the legislation contains cuts to Medicare Advantage insurers, the president has threatened to veto such legislation, since he is desirous of expanding that program.
(6/28/08)- Medicare spent $12 billion in 2007 on the targeted population for special needs plans, or about 15% of the $80 billion for all Medicare Advantage plans, according to Joseph Kuchler, a spokesman for the Centers for Medicare and Medicaid Services.
The battle between the president and the Democratic congressmen continues as to cuts to be made to Medicare Advantage plan allowances from the government in order to be able to avoid the required cut in physician fees mandated by the law. The president would like to continue to expand Medicare Advantage plans, while the Democrats feel that Medicare Advantage plans are being overpaid at the expense of the government and the taxpayers.
As things stand now, physicians face an over 10% cut in theiir allowable Medicare fees effective July 1. It is unlikely that Congress will act in time to change anything by July 1, but any change made in fees can be made retroactively, so that changes in payment can be made after that date.
Special Needs Plans (SNP) membership was 1.2 million in the June report, which represents 11.8% of total Medicare Advantage membership. Employee plan membership now represents 17.3% of total Medicare Advantage membership.
(6/4/08)- Enrollment in Medicare Advantage plans grew to 10 million as of the report through April 11, 2008 for May 1 effective date. This is the first time that the number of enrollees in Medicare Advantage plans has grown to 10 million. This figure represents an 11.2% increase since December 1, 2007.
In this latest report the Centers for Medicare and Medicaid Services included the fact that for the month of May, Special Needs Plans (SNP) membership represented 11.6% of the total number of Medicare Advantage membership while employer plan enrollees represented 17.3% of total Medicare Advantage membership.
(5/12/08)- According to the latest figures there are an now an estimated 9.4 million Medicare beneficiaries enrolled in Medicare Advantage plans, up from the 9.22 million that we mentioned in our item of 1/21/08 below. The federal government will spend an estimated $86.4 billion this calendar year on coverage of the 9.4 million people enrolled in these plans.
There has been a large outcry in connection with some unscrupulous sales practices that insurance companies have used in connection with selling this type of plan to Medicare beneficiaries. In fact Senator Max Baucus, the Democrat from Montana who heads the Senate Finance Committee vowed to introduce legislation to try and curb many of these practices.
There are many health professionals who feel that the states should introduce legislation that would rein in many of these illicit sales practices. The Bush administration is introducing several proposals that are intended to deal with this problem.
State can regulate the activities of insurance agents and brokers who sell private Medicare plans, but they generally can't regulate the insurance companies that offer such plans. Under the 2003 Medicare law, which added a drug benefit to Medicare, the federal government sets standards for private Medicare plans, and these standards supersede state laws and regulations except in two areas, the licensing and solvency of insurers.
In the draft of a report prepared by the National Association of Insurance Commissioners, state officials say they hope to propose common standards for marketing the private plans, which could then be enforced by states that adopt them.
Federal officials intend to issue final rules before the marketing of plans for 2009 begins this October. Medicare pays private insurers 13% more on average than it would spend for the same beneficiaries in the traditional Medicare program.
The president's proposal would prohibit door-to-door marketing of private Medicare Advantage plans. Agents would not be allowed to "cold-call" prospective clients on this product. The proposal includes a ban on the value of gifts and promotional items being offered to potential customers in excess of $15. Insurers would not be allowed to offer free meals, no matter what the value of the meal was.
Under the new proposals, the commission paid for the initial coverage could not exceed the commission paid for renewal coverage in a subsequent year. Man insurers pay a higher commission in the first year, which could some agents to encourage beneficiaries to change plans each year. The insurer would have to pay the same commission for all its Medicare Advantage plans and a uniform amount for all its drug plans.
(3/7/08)- In a report issued by the Government Accountability Office, an investigative arm of Congress, investigators determined that many people in private Medicare Advantage plans face higher costs for home health care, nursing homes and some hospital stays. There are about 9 million people in such plans, or abut 1/5 of the total 44 million people who are beneficiaries under these plans.
The report stated: "Medicare spends more per beneficiary on Medicare Advantage than it does for beneficiaries in the original Medicare fee-for-service program, at an estimated additional cost to Medicare of $54 billion from 2009 through 2012.)
It went on to show that certain costs are not counted towards the out-of-pocket limits. Twenty-nine percent excluded the cost of some cancer drugs, 23% exclude the cost of some mental health services and 21% exclude home health care expenses.
"If the policy objective is to subsidize health care costs of low-income Medicare beneficiaries," the report said, "it may be more efficient to directly target subsidies to a defined low-income population that to subsidize premiums and cost-sharing for all Medicare Advantage beneficiaries, including those who are well off."
(2/3/08)- Senator Max Baucus (D-Montana), chairman of the Senate Finance Committee said that his committee is considering whether to legislate on reforms to act as a check against the growth of Medicare private-fee-for services plans (PFFS). PFFS plans grew enrollment by 120% in 2007 and accounted for 60% of Medicare Advantage growth.
PFFS plans have come under renewed attack by the Democrats because of their misleading marketing plans, and because of questions of whether or not they add sufficient value in comparison to what they are paid.
According to a study done by the Kaiser Family Foundation, about one-half of the enrollees in PFFS are in counties where another type of Medicare Advantage plan is available that offers more benefits with a greater net value. Senator Baucus had considered last year legislative changes that would have curtailed PFFS in areas where other types of Medicare Advantage plans are available.
(1/21/08)- The Centers for Medicare and Medicaid Services (CMS) released Medicare Advantage (MA) enrollment data as of the January 2008 payment. Enrollment in MA grew to 9.22 million from 9.01 million as of December 7, 2007. This is an increase of 2.4% which reflected enrollments accepted through November 8, 2007.
The February report will contain the most meaningful data, since it will contain the data for the final 3 weeks in December. The open enrollment period for Medicare Part D ran from November 15th thru December 31st, so the January data will reflect results from the beginning half of open enrollment.
(12/21/07)- The House by a vote of 411 to 3 cleared the legislation passed by the Senate unanimously on 12/18 that would replace a pending 2008 physicians pay cut of 10% through June 30th with a 0.5% pay increase and re-authorized the children's health program with funding to maintain current enrollment levels through March 2009.
The president is expected to sign the legislation into law before January 1. Medicare Advantage plans will suffer only some minor cuts, even though the Democrats had hoped to make more significant cuts to this type of plan.
The package would cut more than $1 billion from a "stabilization fund" created in a 2003 bill to help faltering Medicare Advantage insurers. The package would also cut an incentive fund passed by Congress last year to encourage physicians to report quality data to the government. Such cuts would be made to comply with Congress's pay-as-you-go budget rule that requires new spending to be offset.
(12/12/07)- Under the Medicare fee formula for physician payments rules, the payments to doctors and other medical professional is due to be cut 10% starting in 2008. If this were to happen many doctors would opt out of participating in Medicare. These called for cuts in fee payment occurred under the formula in prior years also, but this has never happened before.
With the Congress and the president locked in a battle over the budget, mainly over the expenditure for the Iraq-Afghanistan war and child-health care cost legislation, the Medicare Advantage program has come to the forefront as a potential area for cost savings for the Medicare program.
Medicare Advantage plans currently account for almost 9% of the 43 million Medicare beneficiaries. Based on calculations from both the Congressional Budget Office and the federal Medicare Payment Advisory Commission (MedPAC). Medicare Advantage plans cost taxpayers about 12% more than does regular Medicare plans.
The federal payment for Medicare Advantage plans vary from locality to locality, but on average it costs about $9,000 per enrollee nationwide. Humana currently has 1.1 million members enrolled in its Medicare Advantage program, making it the number four player in this program, and UnitedHealth, which markets its plans along with AARP has 1.3 Medicare Advantage members, making it the number one insurer under this program.
Democrats in general favor cutting back on the Medicare Advantage program, while the president and the Republicans are in favor of maintaining it, since its members in general are quite satisfied with the program. If the program goes unchanged, government spending on it is projected to exceed $100 billion in 2009.
(11/21/07)- The Centers for Medicare and Medicaid Services (CMS) released Medicare Advantage (MA) enrollment data as of November 1, 2007 payment. Enrollment in MA grew to 8.98 million from 8.95 million as of July 1, 2007. This is an increase of 0.4% which reflected enrollments accepted through October 17, 2007. November is normally a slow period and most enrollment comes in January and February when over 700,000 enrolled in 2007.
(8/22/07)- The Centers for Medicare and Medicaid Services (CMS) released Medicare Advantage (MA) enrollment data as of August 1, 2007 payment, which reflects enrollments accepted through July 13, 2007. Enrollment in MA grew to 8.79 million from 8.68 million as of July 1, 2007. This is an increase of 0.9% which reflected enrollments accepted through June 13, 2007.
(7/17/07)- The Centers for Medicare and Medicaid Services (CMS) released Medicare Advantage (MA) enrollment data as of July 1, 2007 payment, which reflects enrollments accepted through June 13, 2007. This is an increase of 1.3% which reflected enrollments accepted through May 15, 2007.
(5/20/07)- The Centers for Medicare and Medicaid Services (CMS) released Medicare Advantage (MA) enrollment data as of the May 1, 2007 payment, which reflects enrollments accepted through April 13, 2007. Enrollment in MA grew to 8.62 million from 8.51 million since the data of April 1, 2007, which reflected enrollment accepted through March 15, 2007.
There are two types of Medicare Advantage plans. One is the regular Medicare Advantage plan and the other is called a private-fee-for-service plan (PFFS). PFFS were created in 1997, but they received a big boost by the new prescription drug law of 2003. It is estimated that there are about 1.3 million Medicare beneficiaries who are enrolled in PFFS.
Recently Medicare officials have warned Congress and the public about the overly aggressive sales pitches being employed by the PFFS. To try and remedy the problem, Medicare will require PFFS plans next year to call all new enrollees to make sure they understand what PFFS are, and exactly how much of a premium they will have to pay for their coverage.
The Medicare Payment Advisory Commission, which advises Congress on Medicare issues estimated that the government spends 12% more on beneficiaries in Medicare Advantage plans, and 19% more on beneficiaries in PFFS than it does on regular Medicare beneficiaries. The commission has recommended to Congress that it cut payment to these plans so that they are at the same level as is the cost for all Medicare participants.
(1/24/07)- Medicare Advantage insurance companies received a substantial subsidy increase under the new prescription drug law written in 2003. With the Democrats now in control of Congress, many are questioning the wisdom of that increase. Please keep in mind also that President Bush has emphasized Medicare Advantage as the key to his Medicare revamping strategy.
As of the most recent count, there were 7.6 million people enrolled in Medicare Advantage programs as of December 2006. That compares with about 6.1 million who were enrolled in the plans as of December 2005. Incidentally, there are about 44 million enrolled Medicare beneficiaries as of the end of last year.
A November 2006 report that was written by the Commonwealth Fund, a private nonprofit foundation that supports health research, concluded that, on average, the government is spending about $922 more each year for every Medicare beneficiary who is in the Advantage program, than for the beneficiaries in the regular Medicare program. That comes to a total cost of about $5.2 billion.
The main author of that report was Former House Democratic aide Brian Briles. MedPac, the independent panel that advises Congress on Medicare issues concluded that the government is paying substantially more for Medicare Advantage beneficiaries than it is for regular Medicare beneficiaries.
"There are precious few areas where we can save money. Medicare Advantage is a prime target to pick up a few dollars," said Rep. Pete Stark (Dem.-CA) who heads the House Ways and Means panel's health subcommittee. The House Ways and Means Committee, and the Senate Finance Committee are the respective panels from which legislation pertinent to Medicare arises from.
(9/3//06)- Congress created private-fee-for service (PFFS) plans in 1997 as an alternative to Medicare. This type of plan has experienced phenomenal growth the last few years as Congress has continued to increase the subsidies to these plans to encourage more and more seniors to join them. President Bush has also been in the forefront of encouraging seniors to join these plans as a way of reducing the growing health care benefit coverage cost for Americans.
Sometimes called Medicare alternative plans, but better known now as Medicare Advantage Plans they are becoming more and more attractive to participants since they not only cover physician and hospital services under one roof, and in addition they continue to add benefits for its members.
Instead of paying the beneficiaries claims through the Medicare payments system, these plans involve the direct payment by the federal government to the insurance company to manage the health care needs of its members.
As of July, more than seven million Americans were in some form of Advantage plan, which represents about 17% of all Medicare beneficiaries, up from 14,3% in December according to Avalere Health LLC, a health-care advisory firm that analyzes Medicare data.
Enrollment in private fee-for-service plans jumped to 82,068 as of August 1 from just 20,000 three years ago, says David Lewis, acting director of the Medicare Advantage Group at the Centers for Medicare and Medicaid Services.
Wellpoint Health Services said that it plans to offer Advantage plans in all 50 states in 2007. Because of the subsidies that the Advantage plans get from the federal government, many of them have lower premiums than do the HMOs or PPOs in particular areas.
The Medicare Payment Advisory Commission, which advises the government on Medicare issues has warned that the government pays 11% more on average for Medicare Advantage plans for physician and hospital services than for the traditional Medicare plan.
There are many of us who remember how the insurers abandoned their plans when they felt that they were not making enough money off these plans. The government continues to increase the subsidies to these plans, but even that did not stop them from abandoning their members in many localities.
by Allan Rubin
updated February 13, 2020