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Managed Care in the Senior Market

Managed Care in the Senior Market. Herb Haigh, President 2536 Countryside Blvd Clearwater, FL 33763 800-940-7587 www.medicareselect.com. Overview. Medicare Program Medicare Market Senior Population Managed Care Plans HMO (Now Medicare Advantage) Traditional Supplements Medicare Select

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Managed Care in the Senior Market

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  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 Nation’s 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. July 30, 1965, President Johnson signs Medicare and Medicaid into law. President Johnson Enacted the Medicare/Medicaid Bill 20 Years After Truman’s Proposal Source: CMS; CMS/HCFA History; http://cms.hhs.gov/about/history

  6. Medicare’s Milestones:Legislative 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 1975 1980 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 – Medicare+Choice 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. Part A Hospital Insurance Most people do not pay for Part A Insurance PartB Medical Insurance Most People Pay $66.60/month in 2004 Taken out of Social Security Payment Medicare Benefits

  9. 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 Part A -Hospital Insurance- 2004 Medicare Costs

  10. 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 Part B -Medical Insurance- 2004 Medicare Costs

  11. Acupuncture Dental Cosmetic Surgery Custodial Care Hearing Aids Orthopedic Shoes Outpatient Prescriptions Routine Foot Care Routine Physicals Screening Tests Medicare Does Not Pay For Seniors Need Additional Health Insurance

  12. The Number of Beneficiaries has Doubled Since Medicare’s 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 – < 3,000,000 1,500,000 – < 2,000,000 500,000 – < 1,000,000 1,000,000 – < 1,500,000 100,000 – < 500,000 > 3,000,000 < 100,000 Source: U.S. Census Bureau, Census 2000

  14. Today’s 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% M+C 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. $6,000 Poor Health Fair Health $5,305 $5,000 Good Health $4,783 $4,000 $3,578 $2,823 $3,000 $2,696 $2,210 $2,432 $2,000 $1,842 $1,503 $1,565 $1,203 $1,430 $1,000 $1,194 $997 $836 $0 1999 2000 2001 2002 2003 Medicare+Choice Plans Attract the Poorer/Sicker Seniors Out of Pocket Costs for Medicare+Choice Enrollees Source: Marsha Gold and Lori Achman, Average Out-of-Pocket Health Care Costs for Medicare+Choice Enrollees Increase 10 Percent in 2003, The Commonwealth Fund, August 2003

  19. Annual Out of Pocket Spending & Premiums M+C Vs. Traditional Supplement 2500 M+C 2000 Supplement 1500 Annual Cost of Healthcare 1000 500 0 1999 2000 2001 2002 2003 Year Annual Costs M+C & Supplement Notes: Supplemental average annual rates are based on average costs of all Plans (A-J) for a 65 year old female. M+C results are weighted by plan enrollment. Costs include Part B premium, M+C premium, co-pays, and drugs not covered. Source: Supplemental costs: Weiss Ratings M+C costs: Mathematica Policy Research analysis of Medicare Compare using HealthMetrix Research’s 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) *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

  24. 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 Supplements vs. HMO/PPOunder DIMA HMO - PPO Supplement

  25. New Part D Benefit Voluntary Medicare prescription benefit Available 2006

  26. Part D Annual Expenses The participant’s drug expenses must be greater than $810 per year for them to break even * 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. $2,000 $1,500 Average Annual Premium $1,000 $500 $0 1999 2000 2001 2002 2003 Year Why are Supplemental Premiums Rising? • Medicare is covering less, forcing Supplements to cover more • The fall of M+C 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. 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) Medicare Select

  30. Exclusivity Increased Census Increased Out-patient Services Lower Bad Debt Shorter Length of Stay Marketing Opportunities Contribution to the Community Why is Select A Win for the Hospital?

  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. [Hospital] SELECT 1-800-555-5555 Carrier/Agent/Hospital Partnership Insurance Carriers, Hospitals, and Agents work together as a marketing force that generates leads and sales • T.V. spots • target Local Senior Market - puts your product in front of thousands • Direct Mailings • offer more information about the product and generate interest For [Hospital] SELECT Information call today

  35. Medicare Prescription Drug Improvement and Modernization Act • “DIMA” The Medicare Managed Care – M+C (HMO) Plans are changing to “Medicare Advantage” Plans It is yet to be determined how these plans will differ from current M+C 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

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