Health Reform:Key Changes Affecting Medicare Beneficiaries

July 2010

Disclaimer• This presentation provides information on two bills:

– Patient Protection and Affordable Care Act (H.R. 3590)– Health Care and Education Reconciliation Act of 2010 (H.R.

4872) • Information in this presentation is taken from a variety

of sources and is current as of July 2010.• This presentation is intended to serve as a training

tool for SHIP counselors.• The presentation can be customized to meet your

state and local needs.

• Provide detailed information on the key changes affecting Medicare beneficiaries

• Help SHIP counselors be prepared to address an array of questions from beneficiaries and the public in the latter half of 2010

• Help SHIPs begin to understand how to adjust their program operations to meet new demands

Training Goals

Table of ContentsI. Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1II. Medicare Part D . . . . . . . . . . . . . . . . . . . . . . . . . . . 3III. Low-Income Subsidy . . . . . . . . . . . . . . . . . . . . . . . . 9IV. Medicare Advantage . . . . . . . . . . . . . . . . . . . . . . . . 11V. Medigap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17VI. Preventive Services . . . . . . . . . . . . . . . . . . . . . . . . . 18VII. Miscellaneous (Medicare Part B) . . . . . . . . . . . . . . . . . . 20VIII. Pre-Medicare Population . . . . . . . . . . . . . . . . . . . . . . 22IX. Web Tools for Beneficiaries and Caregivers . . . . . . . . . . . . 23

I. Overview

• Health reform through two bills (March 2010)– Patient Protection and Affordable Care Act (H.R. 3590)– Health Care and Education Reconciliation Act of 2010 (H.R.

4872) • Collectively called the “Affordable Care Act (ACA)”

• The Affordable Care Act strengthens Medicare– Improves some benefits– Guarantees Medicare benefits– Extends Medicare’s financial solvency

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I. Overview• The Affordable Care Act protects and improves

guaranteed Medicare benefits– Provides that nothing in the Act shall result in a reduction

of guaranteed benefits under Medicare– Requires that savings generated for Medicare under the

Act are used to: • extend the solvency of the Medicare trust funds;• reduce Medicare premiums and other cost-sharing for

beneficiaries; and • improve or expand guaranteed Medicare benefits and

protect access to Medicare providers

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II. Medicare Part D• Closes the coverage gap over time

– Provides a $250 rebate to those who enter the gap (or “doughnut hole”) in 2010

• CMS automatically sends a rebate check when a beneficiary’s Part D spending reaches the coverage gap

– Checks are issued each month through mid-2011– Checks are issued within 75 days of the quarter in which the

beneficiary enters (or hits) the gap• Two groups do NOT receive the $250 rebate

– LIS enrollees– Enrollees in a qualified retiree drug plan

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II. Medicare Part D

• Closes the coverage gap over time– Medicare Coverage Gap Discount Program

• Begins on January 1, 2011– Receive up to a 50% discount on Part D covered brand-name

drugs and a 7% discount on generic drugs (2011)• Gradually reduces the out-of-pocket costs for brand-name

and generic drugs• Gap will be “closed” by 2020

– Beneficiaries still liable for 25% co-insurance between the initial coverage limit (ICL) and the catastrophic coverage level

– Reduces the catastrophic coverage level; it currently stands at $6,440 in total annual Part D drug costs.

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II. Medicare Part D

• Annual Enrollment Period (October 15 – December 7)– Moves and extends the dates– Effective in 2011 for the 2012 plan year

• Formularies– Requires plans to cover drugs in the six classes of

clinical concern:• anticonvulsants, antidepressants, antineoplastics,

antipsychotics, antiretrovirals, and immunosuppressants to prevent transplant rejection

– Effective for plan year 2011

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II. Medicare Part D• TrOOP (True Out-of-Pocket) Costs

– Drugs provided by AIDS Drug Assistance Programs (ADAP) or the Indian Health Service count as TrOOP

– Effective January 1, 2011

• Cost-sharing– Eliminates cost-sharing for dual-eligible beneficiaries receiving

services under a Medicaid home and community-based services (HCBS) waiver program

– Effective no earlier than January 1, 2012

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II. Medicare Part D

• Exceptions and Appeals– Part D plans must use a single, uniform exceptions and

appeals process with respect to the determination of prescription drug coverage for an enrollee under the plan

– Part D plans must provide instant access to a single, uniform exceptions and appeals process through a website and toll-free number

– Effective for exceptions and appeals filed on or after January 1, 2012

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II. Medicare Part D• Higher Part D premium for higher-income beneficiaries

– Income related monthly adjustment amount (Part D IRMAA)– The additional amount is a percentage based on the national base

premium• The percentage increases as income increases, and ranges from 35%

to 80% • Income is based on income reported to the IRS

– The additional amount will be deducted from a beneficiary’s monthly SSA/OPM/RRB benefit

• Beneficiaries will receive a notice from SSA• It does not go to the Part D plans

– Effective January 1, 20118

III. Low-Income Subsidy

• LIS Benchmark Premium– Improves the determination of the low-income benchmark

premium by removing Medicare Advantage (MA) rebates and quality bonus payments from the calculation of the LIS benchmark

• Promote greater stability among the number of LIS benchmark plans available to beneficiaries each year

– Allows Part D plans that bid a nominal amount above the regional LIS benchmark to remain a $0 premium LIS plan by absorbing the cost of the difference between their bid and the LIS benchmark amount (effective January 1, 2011)

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III. Low-Income Subsidy• Redetermination Process

– Allows widows and widowers to delay redetermination for the LIS for 1-year after the death of a spouse (effective January 1, 2011)

– Requires CMS to transmit, within 30 days of an LIS-eligible beneficiary being automatically reassigned to a new Part D LIS-plan, information on the differences between the former plan’s and new plan’s formularies and information on the coverage determination, exception, appeal and grievance processes (begins in 2011)

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IV. Medicare Advantage

• Special Needs Plans – Extends the Special Needs Plan (SNP) program until 2014

• Cost-sharing – Prohibits MA plans from imposing higher cost-sharing

requirements for some Medicare covered benefits, including chemotherapy, dialysis services, and skilled nursing care, than those charged under Original Medicare (effective in 2011)

– Requires MA plans that provide extra benefits to give priority to cost-sharing reductions, wellness and preventive care, and lastly, benefits not covered under Medicare (effective in 2011)

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IV. Medicare Advantage

• Disenrollment – Beginning in 2011, eliminates the Open Enrollment

Period (January 1 - March 31)– Starting in 2011, provides a 45-day disenrollment

period to MA enrollees (January 1 - February 14)• Referred to as the Medicare Advantage Disenrollment

Period (MADP)– Return to Original Medicare and enroll in a stand-alone PDP– Not allowed to switch to another MA plan during the

disenrollment period

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IV. Medicare Advantage

• MA-PD Plan Formularies – Requires plans to cover drugs in the six classes of

clinical concern:• anticonvulsants, antidepressants, antineoplastics,

antipsychotics, antiretrovirals, and immunosuppressants for treatment of transplant rejection

– Effective for plan year 2011

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IV. Medicare Advantage

• Exceptions and Appeals– Part D plans must use a single, uniform exceptions and

appeals process with respect to the determination of prescription drug coverage for an enrollee under the plan

– Part D plans must provide instant access to a single, uniform exceptions and appeals process through a website and toll-free number

• Effective for exceptions and appeals filed on or after January 1, 2012

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IV. Medicare Advantage

• Payment rates to MA Plans– Gradual reductions in overpayments to MA plans

• Receive, on average, 14% more than Original Medicare

– Reductions will begin in 2012• For the 2011 plan year, payment to plans will remain at the same

levels as for 2010

– Beginning in 2012, plans will be paid under a new formula• Adjusts for geographic variations

– Reductions will be phased in over 3 to 7 years• Depends on the magnitude of the changes

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IV. Medicare Advantage

• Reductions in payments (cont.)– Creates incentives to deliver high-quality care– Help extend the life of the Medicare Part A Trust Fund

• All MA plans must continue to provide all benefits guaranteed by Medicare

• MA landscape will be different– May see early indicators in the fall of 2010 for 2011 plan year– Real impact will likely surface in the fall of 2011 for 2012 plan

year

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V. Medigap

• Revisions to Policies C and F– Include nominal cost-sharing for physician services– National Association of Insurance Commissioners

(NAIC)• A subgroup of the NAIC’s Senior Issues Task Force will

draft the revisions– States must implement the revised standards in

Medigap policies C and F as of January 1, 2015

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VI. Preventive Services• New Annual Wellness visit

– Beneficiaries receive personalized prevention plan services (PPPS)

– Visit must do the following:• Establish or update the individual’s medical and family history• List individual’s current medical providers and suppliers and all

prescribed medications• Record measurements of height, weight, body mass index, blood

pressure and other routine measurements• Detect any cognitive impairment• Establish a screening schedule for the next 5 to 10 years• Provide personal health advice and coordinate appropriate referrals

and health education

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VI. Preventive Services

• Eliminates cost-sharing for Medicare-covered preventive services– Annual Part B deductible and 20% coinsurance– Effective January 1, 2011

• Eliminates the Part B deductible for tests that begin as colorectal cancer screening tests, but based on findings from the test, become diagnostic or therapeutic services

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VII. Miscellaneous

• Medicare Part B– Disabled TRICARE Beneficiaries

• Creates a 12-month Part B Special Enrollment Period for TRICARE beneficiaries who are entitled to Medicare Part A based on disability or ESRD, but who have declined Medicare Part B (effective in 2010)

– Monthly Premiums • Freezes the income threshold for higher-income

beneficiaries who pay a higher Part B premium (effective in 2010)

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VII. Miscellaneous

• Medicare Part B– Therapy Cap Exceptions

• Extends the process for allowing exceptions to the payment caps for physical, speech, and occupational therapy, until December 31, 2010

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VIII. Pre-Medicare Population• Early Retiree Reinsurance Program (ERRP)

– $5 billion program to help employers offer insurance to retirees

• Businesses, unions, state and local governments, and non-profits

• Submit applications to the Office of Consumer Information and Insurance Oversight (OCIIO) at the U.S. Department of Health and Human Services

– Reimburses employers for medical claims for retirees age 55 and older who are not eligible for Medicare

• Claims for spouses, surviving spouses and dependents are eligible

– A bridge program until more health insurance options become available in 2014 through the Exchanges

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IX. Web Tools for Beneficiaries and Caregivers

• Nursing Home Compare Website– Requires CMS to add certain information to its Nursing

Home Compare Medicare website that includes staffing data, links to state websites regarding state nursing home survey and certification programs, the model complaint form, a summary of substantiated complaints, and information on criminal violations by a facility or its employees

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IX. Web Tools for Beneficiaries And Caregivers• Physician Compare Website

– Requires the Secretary of HHS to develop by January 1, 2011 a “Physician Compare” website with information on physicians enrolled in the Medicare program and other eligible professionals who participate in the Physician Quality Reporting Initiative

– Adding to the new Physician Compare website (available no later than January 1, 2011), requires the Secretary of HHS to implement, by January 1, 2013, a plan for making available comparable information on physician performance including quality and patient experience measures, patient outcomes, coordination of care, safety, effectiveness and timeliness of care, and other information

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