Medicare Supplements: No Changes Coming

Medicare supplement Plan F fills all the gaps in Medicare, leaving a person with no co-pays for services covered by Medicare. Medicare pays its part of the bill and Plan F pays the deductibles and co-insurance.  There has been talk for some time about modifying Plan F because having 100% coverage is too good and encourages people to overuse the medical system.

My response to this kind of talk has been, “I guess somebody thinks going to the doctor is recreational activity for seniors”.

The National Association of Insurance Commissioners (NAIC) was asked by CMS (Centers for Medicare and Medicaid Services) to review Plan F and Plan C Medicare supplements to determine how they could be changed to reduce Medicare spending.

NAIC came back with its recommendations: Don’t change Plan F or Plan C Medicare supplements!

“We were unable to find evidence in peer-reviewed studies or managed care practices that would be the basis of nominal cost sharing designed to encourage the use of appropriate physicians’ services. Therefore, our recommendation is that no nominal cost sharing be introduced to Plans C and F. We hope that you will agree with this determination,” the NAIC wrote in the Dec. 19 letter.

Kathleen Sebelius, Secretary of Health and Human Services, agreed with NAIC.

According to a LifeHealthPro article: 

The NAIC did its work and “discovered that there is a limited amount of relevant peer-reviewed material on this topic. “

Moreover, none of the studies provided a basis for the design of nominal cost sharing that would encourage the use of appropriate physicians’ services.

Importantly, the NAIC pointed to caution in implementing added cost-sharing because it could result in delayed treatments that could increase Medicare program costs later, for example, increased expenditures for emergency room visits and hospitalizations, and result in adverse health outcomes for vulnerable populations like the elderly, chronically ill and low-income, the NAIC warned.

In the last few months, my clients who are turning 65 have overwhelmingly chosen the Plan F Medicare supplement.

About 20% of my clients have chosen to enroll in a Medicare Advantage plan, while the vast majority chose to stay with Original Medicare and get a supplement. A few people chose the Plan N supplement, which has some co-pays and the Part B deductible. But most have opted for the simplicity of Plan F – no co co-pays, no bills.

I have been telling my clients that Plan F is excellent coverage, but I’ve also told them Plan F might be too good – and that’s why Medicare has considered making changes to it.

It is kind of common sense that cost sharing makes people think twice about the medical services they receive.

If people have no co-pays, they are very likely to get that expensive knee replacement surgery. And they will get as much physical therapy as they can because they have no out-of-pocket costs. Medicare pays first and the supplement pays the rest of the bill.

But then again….. Do seniors overuse the medical system? Are they getting too much physical therapy?  Are they getting too many knee replacements?  And is shifting cost to the patient the best way to cut down on what some might consider elective surgery, or services like physical therapy?  These are the billion dollar questions facing Medicare.

I can tell you that people enrolled in Medicare Advantage plans do not overuse physical therapy, and this is because they have $25 to $45 co-pays for each visit. So my 80 year old clients might go once to physical therapy and pay $40 – but they won’t go again. So they suffer with their pain, and their sore shoulder doesn’t get better.  Is that the way to save Medicare money?

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