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NRLC Analysis of the CHAMP Act

Jul 17, 2007 | Medicare

National Right to Life Committe Analysis:

The CHAMP Act’s Assault on the
Private Fee-for-Service Medicare Alternative

How the CHAMP Act Ends the Choice to Add One’s Own Money In Order to Get Health Insurance That Is Less Likely to Ration

INDIRECT ELIMINATION OF THE PRIVATE FEE-FOR-SERVICE OPTION

Section 421 indirectly but effectively eliminates all indemnity private fee-for-service plans as of 2009 and all private fee-for-service plans, including PPOs, as of 2010.

Under a traditional “fee-for-service” or indemnity plan – like the government fee-for-service Medicare option and, until now, most plans under the Medicare private fee-for-service option – beneficiaries are free to pick any doctor they want, who simply submits bills to the insurer for reimbursement. The insurer has no control or oversight over the services provided by the physician. However, section 421(a)(1) imposes upon private fee-for-service plans a requirement to employ the same “chronic care quality improvement program” that managed care pans are required to have. Under this provision, set forth in 42 U.S.C. 1395w-22(e) [the bill mistakenly references it as 13952-1129(e)], the insurer must collect, analyze, and report “data that permits the measurement of health outcomes and other indices of quality.”

42 U.S.C. 1395w-22(e)(3)(A)(iii) in the existing law does state that this requirement applies to preferred provider organizations “only insofar as services are furnished by providers or services, physicians, and other health care practitioners and suppliers that have contracts with such organizations to furnish services under such plans.” Of course, only when the insurer has such contracts can it be responsible for obtaining the required data from those who actually provide the services.

Section 421(a)(2) of the bill provides that in 2009 private fee-for-service plans must submit the same information that would be required to be submitted by PPOs. For 2009, then, there would be no exception for plans which have NO contracts with providers, but simply operate as traditional indemnity plans. Consequently, these plans would be put in the impossible position of having to report data that they are unable to gather. The result is that indemnity plans would no longer be possible as private fee-for-service plans – leaving only PPO’s under that option.

In 2010, however, section 421(a)(2) provides that private fee-for-service plans must submit the same information that would be required to be submitted by coordinated care plans. This creates a Catch 22. By definition, private fee-for-service plans can be indemnity plans or PPO network type plans, but by definition they also must allow beneficiaries to go out of network [“does not restrict the selection of providers among those who are lawfully authorized to provide the covered services and agree to accept the terms and conditions of payment established by the plan” 42 USCS § 1395w-28(b)(2)( C)]. Yet to the extent beneficiaries are able to go to providers who do not contract with the insurer, the insurer cannot gather the data it is required to provide under this provision. Consequently, in 2010 private fee-for-service plans could no longer exist.

PRICE CONTROLS LIMITING OLDER AMERICANS’ ABILITY TO CHOOSE TO SPEND THEIR OWN MONEY FOR PLANS LESS LIKELY TO RATION

Section 401( c) imposes explicit price controls for 2009 and 2010. Section 401 ( c) prevents any private Medicare plan (including a private fee-for-service plan) from enrolling new members if the plan’s premium for 2009 or 2010 exceeds a controlled price (in 2009, 106 % of the average per capita cost of the government fee-for-service program in the relevant area, and in 2010, 103 % of that figure).

Section 425(b) reimposes discretionary price controls on private fee-for-service plans. Section 425(b) grants to the Center for Medicare and Medicaid Services the authority to negotiate and reject the premiums charged by private fee-for-service plans. This grants to the unbridled discretion of CMS the authority to limit the ability of senior citizens voluntarily to add their own money, on top of the government payment, in order to obtain unrationed care through the choice of private fee-for-service plans as an option in what has been known as Medicare Advantage.

ADDITIONAL (THOUGH REDUNDANT) ATTACKS IN THE CHAMP ACT:

Section 425 (a) provides that doctors treating patients under government fee-for-service can be paid 15% more than doctors seeing patients under private fee-for-service plans. Under existing law, under both government fee-for-service Medicare [42 U.S.C. sec. 1395w-4(g)(1) & (2)( C)] and private fee-for-service Medicare plans [42 U.S.C. sec. 1395w-22(k)(2)(A)(I)] physicians are permitted to charge patients 115% of what they are reimbursed by Medicare (through the government or private insurer). Section 425 (a) discriminatorily changes this for private fee-for-service plans so that physicians treating patients seen by them may charge patients only 100% of what they are reimbursed by the Medicare private insurer.

Section 414( c) is designed to drive private Medicare plans out of the market by imposing a an arbitrary and unrealistic cap on their expenses and profits. Section 414( c) essentially prohibits private Medicare plans from having profits and expenses (other than claims paid) that exceed 15% of premiums. Section 414(e) provides for a study of different minimums for different types of private Medicare plans.

Section 421(b) effectively eliminates employer-sponsored private Medicare plans. Section 421(b) prevents employers from offering private Medicare plans unless 90% of those enrolled reside in the county in which the plan is offered. Since most of such plans are offered to company retirees, many of whom tend to move elsewhere in retirement, this provision effectively eliminates the option of employer-provided private Medicare plans.

Section 412(a) reduces the flexibility of plan construction. Section 412(a) ends the current ability of private Medicare plans (including private fee-for-service plans) to employ different forms and levels of cost-sharing (deductibles and co-payments) as long as they are actuarially equivalent to that in government fee-for-service Medicare, requiring instead that cost-sharing be no greater than that in government fee-for-service Medicare.

Categories: Medicare