Steven Wevodau - Accident & Health Insurance News

Medicare Advantage plans may lose some federal cash

posted by Steven Wevodau

By Nicole Lucht

Fri, Jan 16, 2009 (2 a.m.)

Health insurers offering enhanced Medicare plans to senior citizens could see their reimbursements dramatically cut as Congress looks to further squeeze the optional, yet lucrative, Medicare product sold by those companies.

The Medicare Advantage plans were developed as a supplement to traditional Medicare, a social health plan for people 65 and older, people with disabilities and those with end-stage renal failure.

The plans are paid by the government an average of 13 percent more than hospitals and doctors seeking reimbursement for their services, according to the Medicare Payment Advisory Commission.

Medicare Advantage was created by the government as a way to increase benefits to Medicare beneficiaries and also as a way for the government to shift the administration of the plans to insurers, all with the intention of saving the government money.

Medicare beneficiaries can sign up for Medicare Advantage, sometimes with no monthly fee, but their coverage then falls under the administration of insurers. The purpose of the supplement program is to offer beneficiaries extra services and coverage, including additional coverage of prescription drugs.

In 2006 the federal government spent $60 billion on the Medicare Advantage plans, according to a report last month from the Government Accountability Office. In 2007 the spending increased to $77 billion. The GAO estimates in 2008 the expenditures increased to $91 million, the report said.

“Payments to (Medicare Advantage) organizations are, in part, based on the projected expenditures organizations submit in their bids for providing Medicare-covered services, as well as actual enrollment and beneficiary health status,” the report said. “Once Medicare payments are determined, they are not modified based on differences between actual and projected expenses.”

The GAO analyzed data collected from health maintenance organizations, private fee-for-service plans and preferred provider organizations.

“There was a consistent pattern of actual profits being higher than projected and medical expenses being lower than projected,” the report said. Although companies on average estimated that they would spend 86.9 percent on medical expenses, they actually spent 83.3 percent. Companies also reported higher than estimated earnings, the report said.

President-elect Barack Obama has stated he supports eliminating subsidies to companies offering Medicare Advantage.

UnitedHealthcare, through its subsidiary Health Plan of Nevada, offers an HMO Medicare Advantage program called Senior Dimensions to 60,000 members.

It’s too early to tell what changes would be made if Medicare Advantage reimbursements are lowered for fiscal year 2010 (beginning in July 2009), said Peter O’Neill, UnitedHealthcare spokesman for Nevada.

The proposed rates come out in February or March, and insurance companies have until June to file any benefit changes, he said.

Historically, any time there have been large cuts, the company has “tweaked” co-payments.

“We have no concept of what the (final) rates will look like,” O’Neill said.

Health insurer Humana acquired Secure Horizons, UnitedHealthcare’s Medicare Advantage product, as a condition of United’s acquisition of Sierra Health Services last year.

“With America’s economy in dire straits, it’s more important than ever that we make the most of our health care dollars,” Humana spokesman Ross McLerran said in a statement in response to a request for an interview. “Medicare Advantage plans emphasize wellness and offer resources to manage chronic disease and help improve overall health — all of which can pay dividends for our nation. Ten million Medicare beneficiaries, or more than 20 percent of those eligible for Medicare, rely on their Medicare Advantage plans to help keep them healthy, alert and active.”

Anthem, which insures more than 5,000 people under its Medicare Advantage plans in Las Vegas, was not available for comment.

Tags: Medicare Advantage Plans, Steve Wevodau Medicare Advantage Plans, Steven Wevodau Medicare Advantage Plans

Anthem’s parent cutting 1,500 jobs

Posted by Steven Wevodau

WellPoint mum on Kentucky number

By Patrick Howington
phowington@courier-journal.com

WellPoint, the Indianapolis-based parent of Anthem Blue Cross and Blue Shield in Kentucky, is eliminating about 1,500 jobs — 3.5 percent of its work force — including about 600 by layoffs, to cut costs.

The company would not say how many jobs might be affected in Kentucky or other markets. More than 1,000 Anthem employees work at the company’s office building in Louisville’s Eastpoint Business Center.

“With the current state of the economy we made the difficult decision to adjust the size of our work force,” WellPoint Chief Executive Angela Braly said in a statement.

In addition to the 600 layoffs, WellPoint won’t fill more than 900 open positions. The company has about 42,000 employees.

WellPoint did not say how much it will save from the job cuts but said it will take an after-tax charge of $24 million against its fourth-quarter earnings, which it will report Jan. 28.

Other health insurers have cut jobs recently as layoffs by their employer customers reduce the number of people covered by health insurance.

Cigna said earlier this month that it would cut about 1,100 jobs, and last month Aetna announced plans to eliminate 1,000 jobs.

Anthem is Kentucky’s largest health insurer, and WellPoint is the nation’s largest based on membership of more than 35 million. It operates Blue Cross and Blue Shield plans in 14 states, including Indiana.

WellPoint shares gained 4 cents yesterday to close at $37.89.

Reporter Patrick Howington can be reached at (502) 582-4229.

Tags: Anthem Blue Cross and Blue Shield, Steve Wevodau Anthem Blue Cross and Blue Shield, Steve Wevodau WellPoint, Steven Wevodau Anthem Blue Cross and Blue Shield, Steven Wevodau WellPoint, WellPoint