Stanley Adams wouldn’t trade Medicare for any other type of health insurance.
“Nothing beats Medicare,” says Adams, 77, sitting in the billiard room of a senior center in Garfield, N.J.
Adams — or “Ace,” as his friends call him — loves Medicare because he can choose his doctor and knows his coverage is accepted at virtually every health care facility.
Despite Adams’ satisfaction with Medicare, he and other beneficiaries have a chance to make any needed adjustments to their coverage during the period from Nov. 15 to Dec. 31. These six weeks sometimes are referred to as the “annual election period.”
During this time, beneficiaries can change prescription drug plans, enroll in a private health plan for the first time, switch from one private health plan to another, or move from a private health plan to original Medicare. Any new choices go into effect on Jan. 1.
The task of changing coverage may overwhelm some seniors.
“It’s a very confusing time,” said Kim Holland, the Oklahoma insurance commissioner and an executive committee member of the National Association of Insurance Commissioners. “You have a lot of different choices.”
Unethical agents sometimes take advantage of this confusion. They try to persuade Medicare clients to switch their coverage to plans that may not be appropriate.
As a result, some Medicare beneficiaries may become victims of fraud.
Fraud is a widespread problem
Some say the root of the fraud problem is a financial incentive built into Medicare Advantage, a federal program created through the 2003 Medicare Modernization Act.
Medicare Advantage plans are government-sponsored, but sold through private companies. The government pays a subsidy to insurance companies for every new Medicare Advantage member enrolled.
Joseph Kuchler, spokesman for the Centers for Medicare and Medicaid Services, said the federal payments allow most Medicare Advantage plans to offer services and reduced co-payments and premiums not available under traditional Medicare.
“The idea is to provide beneficiaries with choices,” Kuchler said.
Medicare Advantage offers several pluses. Participants generally receive more benefits than seniors who choose the original Medicare plan. For example, Medicare Advantage plans often include Medicare prescription drug coverage, which is only available through private health insurance companies.
One key disadvantage of Medicare Advantage is that your choice of doctors and hospitals may be restricted.
The advent of Medicare Advantage reversed a trend of declining numbers of people getting Medicare benefits through a private vendor. The number of Medicare beneficiaries enrolled in private plans nearly doubled from 5.3 million in 2003 to 10.1 million in July 2008, according to the Henry J. Kaiser Family Foundation in Washington, D.C.
As part of Medicare Advantage, federal law establishes cost “benchmarks.” If a private plan submits a bid to provide Medicare benefits at a cost below the benchmark, the federal government pays 75 percent of the difference to the insurance company offering the plan, Kuchler said.
These federal payments offer a financial incentive for private health insurance companies to enroll more people, according to David Lipschutz, staff attorney for California Health Advocates, a nonprofit public advocacy organization focused on Medicare issues.
However, this creates a major conflict of interest for agents who sell these plans on behalf of the companies, Lipschutz says.
“The new monetary incentives to maximize enrollment were the matches that started the fire of marketing misconduct,” says Lipschutz. “They were tremendous incentives for agents to steer people toward plans that would only benefit the agents.”
Kuchler says the “overwhelming majority” of companies and agents are ethical and lawful when marketing their plans.
But Lipschutz and others say some agents are less ethical. Unscrupulous agents use several tactics to sell their policies, they say. Although Medicare never contacts its beneficiaries by phone, some agents indentify themselves as Medicare representatives when cold calling seniors at home.
“That’s a common tactic,” Holland says.
Paul Precht, director of policy and communications for the Medicare Rights Center in Washington, D.C., says low-income seniors who have both Medicare and Medicaid are particularly vulnerable to unscrupulous health insurance agents.
Seniors with dual coverage are able to change their plans once every month because they often have more chronic health conditions than patients covered only by Medicare, Precht says. Waiting months for the next enrollment period to change plans could be problematic for these seniors.
Some insurance agents see these dual-coverage seniors as prospects to boost enrollment and profits during the “off-season” from the annual open enrollment period.
Enticed by freebies such as cell phones or eyeglasses, seniors are assured by hard-selling agents that their benefits will remain the same or improve, and that their physician is included in the private plans’ network.
After they enroll, however, seniors often find they were swayed by empty promises. In the worst cases, they are caught without coverage and stuck with paying medical costs out of pocket.
Kuchler acknowledges that consumers who consider enrolling in Medicare Advantage need to do their homework first.
“Along with (increased) choice comes the need to do one’s research to pick a plan that best meets your situation in terms of health needs and finances,” he says.
Fortunately, there are many other things seniors can do to avoid becoming a victim of Medicare fraud.
Vigilance is the best protection against fraud. Lipschutz advises seniors to protect themselves by keeping a healthy skepticism toward any health insurance agent.
“Never feel pressured, and do your homework by assessing the coverage you have,” he says.
He also recommends double-checking every claim made in a sales pitch.
“Trust, but verify,” he says. “Well, maybe not trust.”
Holland advises seniors to be especially suspicious of any unsolicited contact with an agent.
An agent’s cold call or a knock at the door is a bad sign. In July, Congress passed the Medicare Improvements for Patients and Providers Act of 2008. The law provided marketing restrictions including prohibiting telemarketing and door-to-door solicitation, and providing meals to prospective clients as part of marketing activities.
Outside help is also available. To help Medicare beneficiaries navigate the many health insurance options, the federal government offers the services of senior health insurance program counselors, also known as SHIPS.
SHIPS counselors go through a five-day crash course on health insurance options. Many are volunteers. Others are social workers who have taken the training to better serve their clients.
These counselors do not choose a health insurance plan for inquiring seniors and have no financial stake in a senior’s final decision.
“We don’t have that bias,” said Darlene Sampson, who directs Pennsylvania’s SHIP, which is called the Apprise Program. “We’re able to review the risks and benefits to the consumers.”
Links to all 50 states’ programs are available at the Centers for Medicare and Medicaid Services Web site. Medicare has made “Medicare and You 2009,” a 128-page summary of the program, available for download at its Web site.
You can also call 1-800-Medicare for more information.
One of the best ways to avoid being ripped off is to know your current plan’s coverage details before considering making changes, Holland says.
She suggests seniors and their caretakers review premiums, deductibles, co-pays (including those for prescription drugs) and the general scope of coverage, including which types of doctor and hospital visits are eligible for coverage.
It is also helpful to know of any limits on coverage for medications, such as whether or not prescriptions are covered if they are refilled while traveling outside of enrollee’s home state.
Before switching to a new type of coverage, seniors should make sure that their current physicians or other health care providers are included in the new plan’s health care provider network.
The Center for Medicare Advocacy, a Connecticut-based nonprofit organization founded to educate seniors about health care issues, has made Medicare Advantage information available at its Web site.
Seniors who feel they have been victimized in a scam involving a federal health care program are advised to contact the U.S. Department of Health and Human Services Office of the Inspector General at 1-800-447-8477.
What should seniors do if they sign up for a Medicare Advantage plan, only to discover it may not be in their best interests?
Kuchler advises seniors who need help with leaving a Medicare Advantage plan to call the U.S. Department of Health and Human Services Medicare hotline at 1-800-MEDICARE.
Under certain circumstances, patients are able to switch back to their original Medicare coverage or a different Medicare Advantage plan, Kuchler says.
In addition to the upcoming open Medicare enrollment period (Nov. 15 to Dec. 31), there is a Medicare Advantage open enrollment period from Jan. 1 to March 31 of each year, he says.
During this time, beneficiaries can join, switch to or drop a Medicare Advantage plan. Any changes go into effect the following month. However, in order to join or switch to a plan with prescription drug coverage, beneficiaries must already have Medicare prescription drug coverage.
Patients in special situations are sometimes permitted to join, switch or drop a Medicare Advantage plan at times outside of the enrollment periods. This includes circumstances such as a patient moving outside of the plan’s coverage area, the plan reducing its services or the plan leaving the Medicare program, he says.
In addition — as mentioned earlier — seniors enrolled in both Medicare and Medicaid are able to change their plans once every month.
However, in other circumstances, seniors are locked into the plans the same way beneficiaries covered by health insurance provided by employers are committed to a particular plan, Kuchler says.
These consumers will have to wait until the next open enrollment period before they are allowed to change their coverage option.
And even seniors who have the right to change their coverage may sustain some collateral damage as they switch back to their original coverage, Precht says.
“The damage is patients can be caught without coverage and get stuck with medical bills,” Precht says. “They can no longer see the same doctor, or their relationship with their doctor can be interrupted.”