Managed Care in the Senior Market

1
Managed Carein the Senior Market

• Herb Haigh, President
• 2536 Countryside Blvd
• Clearwater, FL 33763
• 800-940-7587
• www.medicareselect.com

2
Overview

• Medicare Program
• Medicare Market
• Senior Population
• Managed Care Plans
• HMO (Now Medicare Advantage)
• Traditional Supplements
• Medicare Select
• Distribution
• DIMA the new legislation

3
Ameri-Plus

• National network of participating hospitals
• Since 1990
• 500 hospitals
• 23 states
• One out of every 18 seniors who have a Medicare
  Supplement is a policyholder with one of the ten
  Insurance Companies Ameri-Plus represents
• Exclusive agreement with the largest
  independently owned Senior Healthcare
  Organization in the United States
• Ameri-Plus Medicare Select policies are the
  fastest growing segment in the Medicare
  Supplemental market.

4
In 1945 President Truman Proposed a National
Health Program
The greatest gap in our social security structure
is the lack of adequate provision for the
Nation's health. We are rightly proud of the high
standards of medical care we know how to provide
in the United States. The fact is, however, that
most of our people cannot afford to pay for the
care they need.  
The greatest gap in our social security structure
is the lack of adequate provision for the
Nations health.
I have often and strongly urged that this
condition demands a national health program. The
heart of the program must be a national system of
payment for medical care based on well-tried
insurance principles. This great Nation cannot
afford to allow its citizens to suffer needlessly
from the lack of proper medical care.
national health program
Source CMS CMS/HCFA History www.cms.gov
5
President Johnson Enacted the Medicare/Medicaid
Bill 20 Years After Trumans Proposal

• July 30, 1965, President Johnson signs Medicare
  and Medicaid into law.

Source CMS CMS/HCFA History http//cms.hhs.gov/
about/history
6
Medicares MilestonesLegislative History
1945-2003
1993 Medicare SELECT Approved as a permanent
Supplemental Medicare Insurance Plan alternative
1989 Prospective payment extended to physician
services through use of Resource-Based Relative
Value Scale
1999-2000 Balanced Budget Refinement Act (BBRA)
and Benefits Improvement and Protection Act
(BIPA) passed
1965 Medicare enacted covers only the elderly
1982 Medicare risk contracts with HMOs authorized
1965
1970
1980
1975
1985
1990
1995
2000
1945
2003
1983 Prospective Payment System (PPS) for
inpatient hospital services adopted
1992 Congress created 10 standardized plans.
From no-frills A to top-of-the-line J
1945 Proposed as a National Health Plan by
President Truman
1972 Coverage expanded to include under-65
disabled and ESRD populations
1997 Balanced Budget Act (BBA) passed
MedicareChoice created
2003 Medicare Prescription Drug Improvement and
Modernization Act (DIMA)
7
Medicare Facts

• Health Insurance Program for
• People age 65 or older
• Some people with disabilities under age 65
• People with End-Stage Renal Disease

8
Medicare Benefits

• Part A
• Hospital Insurance
• Most people do not pay for Part A Insurance

• Part B
• Medical Insurance
• Most People Pay
• 66.60/month in 2004
• Taken out of Social Security Payment

9
Part A -Hospital Insurance-

• Medicare Pays
• Inpatient Hospital Care
• Critical Access Hospitals
• Skilled Nursing Facilities
• Some Home Care (PT, DME,Skilled Nursing, etc)

• Individual Pays
• Hospital Stays
• 876 deductible Days 1-60
• 219 per day Days 61-90
• (60 Reserve Days Lifetime)
• 438 per day Days 91-150
• 100 of all costs Days 151
• Skilled Nursing
• 109.50 per day Days 21-100 through each benefit
  period

2004 Medicare Costs
10
Part B -Medical Insurance-

• Medicare Pays
• Medical Professional
• Clinical Lab
• Some Home Health
• Outpatient Hospital

• Individual Pays
• 100 Deductible
• 20 Coinsurance for Medical Services
• 20 or Fixed Copay for Outpatient Hospital
• 50 Coinsurance for Mental Health

2004 Medicare Costs
11
Medicare Does Not Pay For

• Orthopedic Shoes
• Outpatient Prescriptions
• Routine Foot Care
• Routine Physicals
• Screening Tests

• Acupuncture
• Dental
• Cosmetic Surgery
• Custodial Care
• Hearing Aids

Seniors Need Additional Health Insurance
12
The Number of Beneficiaries has Doubled Since
Medicares 1965 Inception
80
70
60
50
Medicare Enrollment (millions)
40
76.8
61.0
30
49.7
45.9
20
39.6
34.3
28.4
10
20.4
19.1
0
1965
1970
1980
1990
2000
2010
2013
2020
2030
Calendar Year
Source CMS, Office of the Actuary.
13
Senior Population
2,000,000 lt 3,000,000
500,000 lt 1,000,000
1,500,000 lt 2,000,000
100,000 lt 500,000
1,000,000 lt 1,500,000
gt 3,000,000
lt 100,000
Source U.S. Census Bureau, Census 2000
14
Todays Competition in the Marketplace

• Traditional Medicare Supplement
• Medicare SELECT
• Medicare Advantage Plans
• Private Fee-for-Service
• PPO Demonstration

15
75 of Medicare Beneficiaries have insurance to
supplement their Medicare
2000 Survey
Medicare Only
9
Other
2
Employer
Sponsored
Insurance
32
Medicaid
12
MC
18
Medicare
Supplement
27
Source MedPAC analysis of 2000 Medicare Current
Beneficiary Survey, Cost and Use File.
16
Increase in FFS Enrollment

• MedPAC estimates that in 2002 11-17 of Medicare
  enrollees will be covered by Medicare FFS with no
  supplemental coverage.

Source MedPAC Health Insurance Choices for
Beneficiaries, Report to the Congress Medicare
Payment Policy, March 2003, p. 206
17
Senior Income Wealth Health

• More than half of the Medicare Population has a
  household income under 28,000/year
• The more money you have, the more likely you are
  to be healthy
• Those who earn less than 28,000/year spend
  14-30 of their income on healthcare

Sources Income U.S. Census Bureau 2000
Census Income spent on Healthcare CMS, Office of
the Actuary data from the Bureau of Labor
Statistics, Consumer Expenditure Survey,
1999-2000.
18
MedicareChoice Plans Attract the Poorer/Sicker
Seniors
Out of Pocket Costs for MedicareChoice Enrollees
Source Marsha Gold and Lori Achman, Average
Out-of-Pocket Health Care Costs for
MedicareChoice Enrollees Increase 10 Percent in
2003, The Commonwealth Fund, August 2003
19
Annual Costs MC Supplement
Notes Supplemental average annual rates are
based on average costs of all Plans (A-J) for a
65 year old female. MC results are weighted by
plan enrollment. Costs include Part B premium,
MC premium, co-pays, and drugs not covered.
Source Supplemental costs Weiss Ratings MC
costs Mathematica Policy Research analysis of
Medicare Compare using HealthMetrix Researchs
Medicare HMO Cost Share Report Methodology
20
Medicare Providers Availability
Medicare Approved Providers across the United
States 6,000 Hospitals 885,500 Physicians and
Practitioners
Notes These data are as of December 2001
SOURCE CMS
21
Traditional Medicare Supplements

• Understandable
• Predictable
• Available
• Choice of Physician and Hospitals
• Guaranteed Renewable
• - BUT -
• Prescription Coverage Expensive
• Escalating Annual Premiums

22
Traditional Supplements Plans A-J
Standardized - Can Only Be Sold In These Plan
Types
Under New Medicare Law, Plans H, I, and J will be
deleted after 2006 New Plans K L will be added
(unknown benefits)
A B B C C D E F F F G H I J J K L
Basic Benefits X X X X X X X X X X X X X X X
Skilled Nursing Co-Insurance X X X X X X X X X X X X
Part A Deductible X X X X X X X X X X X X X X
Part B Deductible X X X X X X X
Part B Excess (100) X X X X X X X
Foreign Travel Emergency X X X X X X X X X X X X
At Home Recovery X X X X X
Basic Drugs X X X X
Preventive Care X X X
Plans B, C, F, and G are also offered as
Medicare Supplement SELECT Plans. Plans F and
J also have an option called a high deductible
Plan F and Plan J.
23
HMO Plan Benefits
Example of HMO Plan Benefits and Co-Pays
Company Pinellas County, FL HMO
Premium zero
Doctor visits (Co-pay) Primary 12.00
Doctor visits (Co-pay) Specialist 25.00
Drug Co-pay 15.00 for non-formulary generic 500 annual limit no coverage for brand name
Hospital Stay 265/day for first 18 days in Hillsborough, Pinellas 265/day for first 19 days in Hernando, Pasco
Maximum annual out of pocket 4,800.00
24
Supplements vs. HMO/PPOunder DIMA
HMO - PPO
Supplement

• Must use their network of hospitals and
  physicians
• Reduced out-of-area coverage
• Controlled referrals
• Not guaranteed renewable
• Usually co-pays and deductibles open ended
  payments

• Retain Medicare card
• Choice of doctors and hospitals
• Coverage extends across USA
• No co-pays
• Guaranteed renewable
• Paperless automatic claims
• One Annual Rate you know your yearly cost

25
New Part D Benefit
Voluntary Medicare prescription benefit Available
2006
For Part D Benefit You Pay
Annual Premium 420 (35 monthly)
Annual Deductible for prescription drugs 250
Prescription drug coverage after deductible is satisfied 25 of the next 2,250 total 100 between 2,251 and 5,100 5 of all amounts greater than 5,100
26
Part D Annual Expenses
The participants drug expenses must be greater
than 810 per year for them to break even
Annual Prescription Costs Cost with Part D Enrollment
250 670
500 733
1,000 858
1,500 983
2,000 1,108
2,500 1,420
3,000 1,920
4,000 2,920
5,000 3,920
7,500 4,140
10,000 4,265
Includes premiums, deductibles and co-pays
Source Money Magazine, Jan. 2004
27
Private Prescription Drug Cards

• There are two different types of cards available
• Medicare Approved Cards
• Private Issued Cards
• There are 160 card choices
• The benefits differences are as yet undetermined

28
Why are Supplemental Premiums Rising?

• Medicare is covering less, forcing Supplements to
  cover more
• The fall of MC plans have forced Supplements to
  accept open enrollees
• On the bright side, the rising cost of
  traditional supplements make
• Medicare SELECT plans more appealing

Source Weiss Ratings, average annual
supplemental premiums plans A-J
29
Medicare Select

• All the benefits of Traditional Medicare
  Supplements but COST LESS (15-20)
• Medicare Select Policyholders are not responsible
  for the Part A Deductible if
• they receive care in a Network Hospital
• they receive emergency care in any Hospital
• If the beneficiary does not choose a Network
  Hospital, they are responsible for the Medicare
  Part A Deductible (876 in 2004)

30
Why is Select A Win for the Hospital?

• Exclusivity
• Increased Census
• Increased Out-patient Services
• Lower Bad Debt
• Shorter Length of Stay
• Marketing Opportunities
• Contribution to the Community

31
Sales and Distribution

• Products Require
• Reliable distribution networks
• Comprehensible Benefits
• Stability

32
Developing an Independent Sales Force

• Insurance Carriers and Agents Depend Upon
• Company Service
• Competitive Premiums
• High Commissions
• Lead Generation
• Product Persistency

33
Developing an Independent Sales Force

• Agents need three things
• Low Premiums
• High Commissions
• Leads

Forget the first two if we can offer the third
LEADS!
34
Carrier/Agent/Hospital Partnership
Insurance Carriers, Hospitals, and Agents work
together as a marketing force that generates
leads and sales

• Direct Mailings
• offer more information about the product and
  generate interest

• T.V. spots
• target Local Senior Market - puts your product
  in front of thousands

For Hospital SELECT Information call today
35
Medicare Prescription Drug Improvement and
Modernization Act

• DIMA
• The Medicare Managed Care MC (HMO) Plans are
  changing to Medicare Advantage Plans
• It is yet to be determined how these plans will
  differ from current MC Plans

36
Facts about DIMA

• Medicare Part A and Part B coverage have not
  changed
• Beginning 2005 Medicare will cover several types
  of preventive check-ups
• Physical Exam
• Blood tests
• Diabetes screening
• The Medicare Part D Prescription benefit is
  scheduled to begin in 2006

37
Questions About Supplements in the Medicare Reform

• How will new laws change my coverage?
• Protection you receive from your Supplemental
  policy remains the same
• How will laws change My Premium?
• Premiums will not be affected at all.
  Supplemental benefits remain the same

38
DIMA

• This recent legislation has left most people with
  nothing but questions about the new Medicare
  Advantage programs
• It remains to be determined whether the Medicare
  Advantage plans will differ from the HMOs of the
  past.
• Until these plans are sorted out, all we can do
  is speculate as to the reform they bring to
  Medicare