Oct. 18--Medicare Advantage is a tough line of business for the region's major health insurance companies.
Independent Health and the parent companies of BlueCross Blue Shield of Western New York and Univera Healthcare all have lost tens of millions of dollars on their managed Medicare plans, which serve seniors and the disabled, thanks to federal taxes and fees and the rising costs of medical care and drugs.
They, along with insurance carriers across the country, are under pressure through Medicare's star-rating program to make sure their plans meet minimum standards of quality.
And they are locked in a fierce competition to re-sign their existing members, and to sign up new members, as the 2016 open enrollment period gets underway.
Even with the financial and regulatory challenges they face, the main local insurance companies say they remain committed to serving the Medicare Advantage market.
"We want to insure people from the day they're born until they're 99. And it's a mission-driven product for us as well," said Roger Van Baaren, vice president of Medicare sales for Univera Healthcare.
That enthusiasm is clear to anyone who has seen one of their Medicare Advantage ads in the newspaper, on the Internet or on a billboard.
It's a core part of the companies' business, with hundreds of thousands of members here, and Medicare Advantage plans remain popular with area seniors because they provide benefits that aren't offered by traditional Medicare.
Seniors and the disabled living in Erie County can choose from 36 Medicare Advantage plans during the open enrollment period that began Thursday and runs through Dec. 7, and insurers have made a number of changes to their plan offerings for 2016.
Experts say seniors need to look at more than just the monthly premium price before deciding on a plan. The size of your deductibles, the cost of any prescription drugs you take and your total, out-of-pocket expenses are all factors to weigh in what is a complicated and expensive decision.
"That's why this open enrollment period is just so important for people," said Louanne Bakk, director of the Institute on Innovative Aging Policy and Practice at the University at Buffalo's School of Social Work, who has studied the costs of Medicare Advantage plans. "People really need to shop around."
Very popular here
Since the 1970s, seniors have had the choice to receive their Medicare benefits through HMOs and other private health plans as an alternative to the federally administered traditional Medicare program.
The program, which was renamed Medicare Advantage in 2003, has proven particularly popular with baby boom seniors who are used to an HMO model of health insurance.
The Medicare Advantage payment policy initially focused on saving money, according to the Kaiser Family Foundation, but later shifted to an emphasis on expanding access and on providing extra benefits to seniors, such as wellness programs, and vision and dental benefits, that made the Medicare Advantage plans more attractive to seniors.
Members also know they can talk to a customer-service representative here if they need anything instead of trying to reach an out-of-town government employee.
"You have a local connection -- seniors like a local connection," said Tom Sass, director of consumer markets for HealthNow New York, which operates locally as BlueCross BlueShield of Western New York.
Enrollment in Medicare Advantage plans soared, especially locally. In Erie County, 56.6 percent of people eligible for Medicare, or 105,736, are enrolled in Medicare Advantage. In Niagara County, the figure is 53 percent. That compares to a national Medicare Advantage enrollment of 31.5 percent.
By 2009, however, Medicare was paying insurance companies 14 percent more per enrollee than the cost of care in traditional Medicare, Kaiser reported. Under provisions of the Affordable Care Act, the federal government began trying to rein in those higher Medicare Advantage payments, and that's one reasons insurers say they are facing steep losses in their Medicare Advantage lines of business.
Losing millions
The three main, nonprofit insurers that serve the Western New York market lost tens of millions of dollars each on their Medicare Advantage lines of business last year, as revenues failed to keep up with their medical, pharmaceutical and administrative costs.
HealthNow reported $79 million in underwriting losses in 2014. Amherst-based Independent Health reported $71.7 million in underwriting losses last year and Excellus BlueCross BlueShield of Rochester, which operates here as Univera Healthcare, reported an underwriting loss of $31.9 million.
Other nonprofit insurers in the state lost money on their Medicare Advantage programs last year, Politico New York reported in August, again citing the Affordable Care Act reimbursement cuts and new taxes and fees imposed on insurers.
"The reimbursement levels from CMS have been just fundamentally inadequate to support the cost of care that we help administer," said Stephen T. Swift, HealthNow's executive vice president and chief financial officer, referring to the Centers for Medicare and Medicaid Services.
On the expense side, the local insurers said medical claims have risen along with the trend of consolidation among providers, as, for example, physicians move into hospital systems and insurers must pay an additional facility fee.
Another, growing expense for insurers is the rising cost of members' drugs.
Insurers are responding by putting prescription drugs on different pricing tiers, which take into account the effectiveness of the drug, or by steering members toward the use of generics. But there's only so much that can be done when newer drugs can cost tens of thousands of dollars for a three-month supply, or when pharmaceutical companies raise the cost of a drug that's been on the market for decades.
"It's really out of control," said Roberta Rifkin, senior vice president for government programs and government affairs at Independent Health. "We can only raise the price so much for our members."
With all of that, why do the insurers want to stay in a business that is costing them so much money?
Insurers said Medicare Advantage is part of their core mission to serve members throughout their lives.
The insurers say they believe their Medicare Advantage plans will return to profitability in the coming years, once reimbursements return to their previous levels, as they reward providers based on value and as they better manage members' costs and health.
"I think it is a cyclical business," Univera's Van Baaren.
Standards rising
The insurers also are under pressure to boost the quality of their Medicare Advantage plans. The federal government has used its star-rating program as a tool to help consumers compare the performance of plans, and to reward insurers with incentive payments for meeting minimum quality standards.
It's a major part of the federal government's shift away from the fee-for-service method of payment that has ruled the health care system for decades and toward a system of paying for quality, said John Gorman, founder and executive chairman of the Gorman Health Group, who spoke in Buffalo this month at a conference on managed care.
"It became the biggest experiment in health care financing for performance-based payment on the planet, and it's pretty hard to argue that it hasn't been successful," he said in an interview.
Plans are rated on a scale from one to five stars on clinical quality, member experience and other measures. The specific metrics that make up the ratings change from year to year, making it harder for plans to receive the four-star rating they need to be eligible to earn a financial bonus that can be plowed back into benefits for members.
The 26 Medicare Advantage plans with prescription drug coverage offered in Erie County for 2016 received an average of 4.08 stars from the Centers for Medicare and Medicaid Services, a slight increase from the average 4.07 stars received by the 22 such plans offered in Erie County for 2015, according to a Buffalo News analysis.
Fighting for clients
Insurers vie to retain their current Medicare Advantage members, and to sign up new members, and any changes they make to their plans can draw in or drive away seniors shopping for coverage during the seven-week open enrollment period.
Two of the three main insurers in the region saw their Medicare Advantage enrollment drop between last year and this year.
Univera's enrollment fell by 25 percent, to 16,024, as of August, a drop largely a result of the insurer's decision to change the premium on its lowest priced product from $0 per month to $18 per month, Van Baaren said. The insurer for 2016 is offering a plan with a $0 per month premium, he said.
"That was our lesson learned," Van Baaren said.
And HealthNow, which offers coverage in Western and Northern New York, saw its Medicare Advantage enrollment drop by 27 percent, to 46,297 as of Sept. 1, because of some premium increases of its own.
"We expected to see some members make the choice to go to another plan," Swift said.
Independent Health, as an exception, saw its enrollment soar by 27 percent, to 94,800 this year, many likely coming from original Medicare as they looked for value, Rifkin said.
"Members are very, very careful about how they choose these plans. They look around. And they're smart. They really understand what they need and what they're looking for," Rifkin said.
Costly changes
The insurers offer a range of plans with a range of monthly premium prices, with lower monthly premium prices typically offset by a narrower network of providers, for example, or by setting higher prices for the brand name version of a drug on the approved list of prescription drugs, known as the formulary.
BlueCross BlueShield of Western New York's Senior Blue Select plan, for example, features the lowest monthly premium among its Medicare Advantage plans with prescription drug coverage, but the plan excludes non-emergency visits to most Catholic Health System hospitals. That exclusion caused controversy last fall, spurring Catholic Health to respond in a series of advertisements and concerned messages and prompting BlueCross BlueShield's parent to file suit in federal court.
Insurers make changes to the monthly premiums, or the deductibles, or the upper limit on in-network, out-of-pocket costs on what a member will have to pay, so it's important to research plan details closely before making a selection. Enrollees also need to make sure their doctors are included in the network of their plan, but that can't be the extent of their research, Gorman said.
"If you're taking four different drugs, most people wouldn't know to ask, well what tier of the formulary are my drugs on?" Gorman said. "Because the way a lot of insurance companies win is, they keep the monthly premium real low, but then they play around with formulary tiers and networks, so that the sickest folks will spend the most out of pocket. But the drivers of that out-of-pocket spending are behind the curtain."
Medicare.gov offers a Medicare Plan Finder that compares the cost of different plans offered in your ZIP code with an estimated total annual medical and drug cost for each plan. UB's Bakk said her research has found that the difference in price for the same drug from one plan to another can be in the thousands of dollars. So seniors need to study their options carefully, she added, because enrollees typically can't switch plans until the following year.
"Once they're in, they're in," she said.
email: swatson@buffnews.com
___
(c)2015 The Buffalo News (Buffalo, N.Y.)
Visit The Buffalo News (Buffalo, N.Y.) at www.buffalonews.com
Distributed by Tribune Content Agency, LLC.
0 Response to " Despite Losses, Insurers Bullish On Medicare Advantage "
Post a Comment