Freebies flow for Medicare patients – if they’re in the right county

 By Susan Jaffe
3/21/2008 © Florida Health News 
WASHINGTON – If some Floridians really want a better Medicare health plan, they might have to pack up and move to Miami – and soon. They have only until March 31 to switch before they’re locked into their coverage for 2008.

Click here to find out what Medicare is paying private health plans in  your county.

Because of the way private Medicare health plans are designed and funded, the same insurance company can lure customers with appealing benefits and extra perks— worth hundreds of dollars—in Miami-Dade County, while charging more, or even dropping benefits entirely, from the same plan in neighboring Broward.

Some South Florida congressmen think that’s unfair. Democrats Robert Wexler, Alcee L. Hastings, Ron Klein, and Tim Mahoney have asked Gov. Charlie Crist to request that Medicare change the way the agency calculates the federal payments to plans in Miami-Dade, Palm Beach and Broward counties.

In 2000, the U. S. Office of Management and Budget classified the three counties as one metropolitan area because of their economic and social similarities. Because of that designation, the congressmen argue that plans in those counties should be paid the same.

Currently, plans in Palm Beach get an average of $233 less than those in Miami Dade, a difference of 27 percent. And Broward plans receive an average of $175, or 19 percent, less than those in Miami-Dade. Under the most likely solution, Palm Beach and Broward payments would go up and Miami-Dade payments would come down, a Wexler spokesman said.

Lopsided payments mean that one plan can afford to offer its members in Miami free transportation to doctor appointments, but members in the same plan in another county are on their own. For members who live in profitable counties, some plans offer to pay their members’ nearly $100 Part B monthly premium, which covers doctor visits and other outpatient services.

Berenson

“I don’t think Gov. Crist can solve the problem,” said Robert Berenson, a senior fellow at the Washington-based Urban Institute, who was responsible for private plan contracts when he worked at Medicare during the Clinton Administration.

The complicated formula for calculating payments is based on what the government pays for patients in traditional Medicare with adjustments to reflect such factors as local costs, demographics and health conditions. Last month, the independent Medicare Advisory Payment Commission reported the government would pay private plans between 13 and 17 percent more this year than it spends on patients enrolled in traditional Medicare.   “It’s a convenient way to pay plans, but not the right way,” Berenson said.

For example, the Miami-Dade payments don’t take into account the fact that private insurers’ costs can be lower than Medicare’s because they can negotiate lower rates for doctors in a competitive marketplace, he said. In a recent article in the journal Health Affairs, Berenson explained that the number of doctors in South Florida competing for Medicare patients helps to drive down insurance company costs.

In fact, Berenson wrote, a congressional study found that Miami-Dade was the only the place in the country where private plans’ overall costs in 2005 were significantly lower than the amount that traditional Medicare pays to care for patients.

Getting rid of the payment disparity in South Florida wouldn’t solve the problem across the state. The federal payments to plans in Miami-Dade are currently 38 percent higher than in 24 other Florida counties and nearly 50 percent higher than in a dozen others, according to a Florida Health News analysis.

Most plan members have to decide by March 31 whether to switch coverage before they are locked in for the rest of the year, with a few exceptions. They can change plans if, for example, their plan suddenly goes out of business, if they also qualify for a low-income subsidy or Medicaid, or if they move to an area where their plan isn’t offered.

Some seniors don’t have to look very far for a health plan with better benefits. Hendry and Palm Beach counties share a zip code, but in Hendry, seniors have just 29 plans to choose from, and only four with no monthly premiums, according to Medicare's online plan finder. On the Palm Beach side of the county line, there are 84 plans—40 of them free, Florida Health News found.

In the right county, you can even get cash back—a rebate of whatever you pay for the Medicare Part B monthly premium. Instead of the money being taken out of your Social Security check, it is deducted from the amount Medicare pays the plans, explained Steve Snider, director of Medicare Marketing for Citrus Health Care.

The small Tampa-based company, which hopes to grow, is offering members in the Citrus Saver HMO plan free enrollment with no Part B premiums. That amounts to more than $1,150 this year in extra spending money that members of most other plans won’t get. 

The Dividend plan from Tampa-based Wellcare is also offering Part B premium rebates —sometimes called “cash-back offers” — as a strategy for holding on to its members while it is the subject of a government investigation. Those who live in Pinellas County can get up to $95 of the Part B deduction restored to their Social Security checks, while across Tampa Bay in Hillsborough County, members can get up to $49 restored.

Benefits vary from county to county because the amount the government pays the plans varies, too. In Miami-Dade, for example, plans get an average of $1,093.78 per member a month, but only about $739.35 in Hendry. In Hillsborough County, plans receive an average of $791.62 per member but in neighboring Pinellas, they get $810.56. These payments are adjusted to reflect health risks, local medical costs and demographics such as age. The amounts also do not include any money the plans return to Medicare.

If the cost of providing care to their members is less than the monthly allowance, the plans have to spend 75 percent of the excess on additional benefits or a beefed-up sales pitch. That’s why in high-paying counties, seniors are treated to free lunches at popular restaurants, such as Red Lobster or Golden Corral. Plans have to return 25 percent of what’s left over to Medicare.

While Medicare beneficiaries may enjoy the freebies, many health policy analysts in and outside the federal government criticize overpayments by a health care system that is headed toward insolvency. However, the 2009 federal budget submitted to Congress by President Bush last month maintains payments to private Medicare health plans, known as Medicare Advantage plans. Doctors’ and hospitals’ payments would be cut.

“This current payment system isn’t promoting efficiency,” said Michelle Kitchman Strollo, principal policy analyst at the Kaiser Family Foundation in Washington, D. C. “Some argue it should be adjusted to reflect what the actual costs are of providing care.”

But Steven Findlay, a health care analyst at Consumers Union in Washington, D.C., predicted that won’t happen. Congress will block the cuts to doctors and hospitals, he said, but Democrats wouldn’t have enough votes to overcome a promised Bush veto of any cuts to private health plans. “Medicare Advantage has been a core part of the Bush Administration’s agenda to privatize Medicare,” Findlay said.

The free lunches, pill boxes, thermometers and other give-aways, along with the promise of premium rebates, can distract seniors from the most important reasons for picking a health plan, said Sylvia Gaddis, program manager for the fraud-fighting Senior Medicare Patrol Project at the Agency on Aging of Pinellas-Pasco. If seniors decide to switch plans, she said, they shouldn’t do it just because they think they’ve found a bargain.

“When you’re purchasing a health plan, you can’t look at it that way,” she said. Make sure the plan offers what you really need, based on your health condition and the medicine you take, she urged. And get help, if necessary, to compare the costs of different plans.  Sometimes a monthly premium is low but copayments are higher. Or, drugs may be covered but not in the coverage gap. She said, “We try to warn people that you can’t get something for nothing.”

FHN Washington correspondent Susan Jaffe can be reached at susanjaffe@earthlink.net.