Medicare Advantage Plans replace Part A, Part B and Medigap

By Peter Laird, MD

Medicare Advantage plans are the latest target of alleged government excess, greed and wasted resources justifying the need to overturn this system for that of a comprehensive national health care plan. The data sited shows the costs differences between these various Medicare Advantage plans and Medicare Part A, Part B.

The GAO Finds Fault With Medicare Advantage

The program is a political football. Though it was originally envisioned as a potential way to save the Medicare program money, the government pays on average 13 percent more to care for a Medicare Advantage enrollee than it would if that person were in traditional Medicare. This report only fans the flames of critics who maintain that the government is getting little bang for its buck. "Overpayments fatten company profits, even as many seniors face higher costs in MA plans than they would in traditional Medicare," said Rep. Pete Stark (D-Calif.), chairman of the House Ways and Means Subcommittee on Health, in a press statement following the report's release.

However, what I have not heard in any of the articles on the alleged excesses of Medicare Advantage plans is that they not only incorporate a capitated payment system for Part A and Part B, but they also incorporate internally the advantages of Medigap coverage into one single payer system as well:

2009 Choosing a Medigap Policy (Page 6) (pdf link)

Medicare Advantage Plans and Medigap Policies

Important: If you have a Medigap policy and you are switching from Original Medicare to a Medicare Advantage Plan, you don’t need and can’t use the Medigap policy to cover deductibles, copayments, or coinsurance under the Medicare Advantage Plan. You may choose to drop your Medigap policy, but you should talk to your State Health Insurance Assistance Program (see pages 49–50) and your current Medigap insurance company before you do because you may not be able to get it back. If you already have a Medicare Advantage Plan, it is illegal for anyone to sell you a Medigap policy unless you are switching back to Original Medicare.

Thus, any comparisons between Medicare and Medicare Advantage must take Medigap (Pays the 20% copay of Medicare Part A and B) into consideration as well instead of the improper comparison of Medicare Advantage with only Part A and Part B of Medicare:

Medigap (Supplemental Insurance) Policies

A Medigap policy is health insurance sold by private insurance companies to fill the “gaps” in Original Medicare Plan coverage. Medigap policies help pay some of the health care costs that the Original Medicare Plan doesn’t cover. If you are in the Original Medicare Plan and have a Medigap policy, then Medicare and your Medigap policy will pay both their shares of covered health care costs.

Insurance companies can only sell you a “standardized” Medigap policy. These Medigap policies must all have specific benefits so you can compare them easily.

The specific benefits of Medicare Advantage programs for CKD-5 patients whether on PD, dialysis or transplant, is that these capitated rates can lead to internal cost savings not available to the Part A, Part B separation in traditional Medicare. In my Southern California Kaiser HMO for instance, we have a 16% system wide mortality statistic for our CKD-5 patients on dialysis and PD. Although there is much room for improvement in many individual units, not only does the Kaiser Senior Advantage program realize internal cost savings between the segments covered in Part A and Part B, but there is also a significant survival advantage just as Bill and others have reasoned would occur when the wall between Part A and Part B vanishes.

I am personally aware of efforts to consolidate best practice outcomes from those units that have achieved 3-7% annual mortality statistics to those that are over 20%. If brought to fruition, best practice implementation system wide could shortly produce results that rival or exceed our best international examples such as Japan with 9% average rates. This would never be possible if Kaiser could not take advantage of internal cost savings inherent in the Medicare Advantage program.

Bill and many others have long called for the removal of the wall between Part A and Part B to fund improved dialysis care to all American patients. I would hope that the success of many integrated health care systems such as Kaiser will not suffer from further short sighted calls to abolish Medicare Advantage programs. The whole story has not been told in the latest articles calling additional benefits “perks”, when in fact they are basic coverages found in Medigap.

I believe that if Part A, Part B and Medigap coverage is compared to Medicare Advantage in responsible HMO’s such as Kaiser, you will find both cost savings and survival advantage in these integrated systems. We need to remember to not throw the baby out with the bath water. Achieving coverage for Part A, Part B and Medigap for only 13 or 14% more than Part A and Part B alone is a cost savings for the entire system since Medigap is designed to cover the 20% not covered by those sections. It is time to compare apples to apples instead of misleading statements intended to disparage a system that is a decided success in the hands of reputable HMO's. The standard is how well they deliver these three separate components and come in under 120% of payments for Medicare Part A and Part B when we correctly consider Medigap as well in the analysis.

Comments

[Miriam Lippel Blum]

Peter -
While this isn't exactly a response to the A/B, Medigap issue you have delineated, I just want to point out that Kaiser, while it may have great benefits, has a very limited scope of service and if one ever had to move away from those areas to another state, one might have great difficulty getting picked up for coverage elsewhere.

I never joined Kaiser for that reason even when it was offered by the place I worked. As it turned out I ended up in living in a state where there is no Kaiser Permanente.

[Peter Laird, MD]

Dear Miriam,

You are quite right about the number of states that Kaiser covers. The last time I checked it was limited to 16 states. Fortunately, our kids live in a state that is covered by Kaiser. However, with Medicare turned over to Kaiser, I can travel for six months in one place and then another six months in another place giving a great deal of flexibility on travel.

On the other issue, I have had excellent coverage as well as has my wife. Kaiser coverage comes in many variations depending on how much is paid for. That leads to perceptions of limited coverage, when in fact it is more a matter of coverage choices purchased by employer groups. Full and complete coverage is widely available for all health situations in Kaiser and any services not covered by Kaiser must be made available by California state law at an outside provider. Kaiser has many relationships with outside medical providers to assure complete and total coverage.

For those with limited budgets, Kaiser has many options from simple catastrophic coverage to more benefits on a graded scale. With most of Kaiser's base patient clients from the work force, coverage issues are actually more a matter of what the employer has paid for than what Kaiser chooses. In fact, Kaiser does not make those choices, it is the purchaser of our services that chooses which plan fits their needs.

I did encounter instances when patients complained at times about coverage issues with me, and I correctly advised them to deal with their unions or administrators instead who had chosen the employee coverage levels.

In addition, after many years taking care of my own patients within the system, I felt that the Kaiser system had many advantages that could accommodate all of my patients needs. Kaiser has done exceptionally well in preventative measures for many different diseases. Patient education is strong asset that helped me greatly to care for my patients. In addition, we have population care managers that oversee cholesterol management, diabetes, HTN, Asthma care among many others outside of my internal medicine experience.

In such, when it came time for my mother in law to choose which Medicare plan that she should choose, I had no qualms whatsoever in recommending Kaiser for her. She has had two operations and a screening colonoscopy with regular office visits without any problems of coverage. Once again, I understand it is a common perception that Kaiser does not offer full coverage, but that was not part of my experience with Kaiser as a physician and now as a patient.

Thank the Lord I have a dedicated nephrologist seeking the best possible patient outcomes at our unit. I know how private fee for service units have faired with patient survival and they are no where near the level we have in m unit in part because Kaiser can benefit directly from the cost savings of Part B for Part A treatments. When properly run, Medicare Advantage offers more access to patient benefits than is possible in traditional Part A and Part B coverage with or without Medigap coverage as well.

it wasn't really my intention to talk specifically about Kaiser, I simply used my personal and professional experience with the Medicare Advantage at Kaiser as an example of how these programs can succeed in a better patient care outcome than when the wall between Part A and Part B prevents capturing cost savings between the two. An integrated Medicare system allowing cost savings between these two is to the benefit of patients and tax payers funding the system.

[Alison Hymes]

I was told I couldn't join a Medicare Advantage plan in my state while on dialysis, haven't checked post-transplant. I pay a lot for Medigap, but I have no bills except the 135 yearly deductible and the constant phone calls for billing mistakes by various providers, only once or twice have I ended up paying what I should have had covered because it was a small amount and easier than trying to fight it or too late or I didn't want to lose the provider.

Why not change Part A and B and get rid of the co-pays but charge more for Medicare to everyone? Spread out it would maybe not cost so much? It has to cost a fortune to do all that double billing to the differnt parts and to Medigap also. And roll Part D into it too. All these separate parts are hard for me to keep track of in middle age, can't imagine what it is like for folks in their 80's.

But I also agree that putting Part A and B together makes sense. Some folks actually turn down Part B which is their choice now and then end up costing a lot of money in Part A or to providers elsewhere.

Who am I kidding, I really want single payer Medicare all parts for everyone!

[Brenda]

Will Kaiser pay any,for dialysis on Cruise ships.

[Brenda]

Will Kaiser pay anything concerning dialysis on cruise ship