Turmoil in Medicare Advantage hits NC seniors hard

by Ann Doss Helms, News and Observer, November 19, 2014.

North Carolina senior citizens who choose private Medicare policies are seeing an unusual level of turmoil this year, with more than 57,000 notified their plans won’t be offered in 2015 and others seeing rates more than triple.

The upheaval involves Medicare Advantage, a program that lets people 65 and older choose private policies instead of federal health coverage. About 475,000 in North Carolina have those policies, including about 35,000 each in Mecklenburg and Wake counties.

No other state had so many people lose their current Medicare Advantage plans, according to a national tally by the  Kaiser Family Foundation, a nonprofit group that tracks health trends. New York was second with just over 55,000 enrolled in canceled plans.

While some year-to-year change is normal, the extent in North Carolina is out of step with what’s happening across the country, according to  the Kaiser report and the federal Centers for Medicare and Medicaid Services.

The churn appears to be driven by Blue Cross and Blue Shield of North Carolina’s decision to drop two Health Maintenance Organization plans in 11 counties, including Wake and Iredell. Blue Cross said Monday about 50,000 people in those counties were notified their plan won’t be available in 2015, though they still have Medicare Advantage options from Blue Cross and other insurers.

“You just shook your head and said, ‘What went on here?’ ” said Roberta Dunn of Iredell County, whose plan was dropped.

Residents of Mecklenburg and 73 other counties can keep the Blue Cross HMO plans, but several customers in the Charlotte area said their premium will go from $18.90 to $64.40 a month.

“There’s no explanation whatsoever,” said Charles Kolton of Charlotte. “I’m not going to pay that premium. It’s ridiculous.”

Blue Cross spokespersons Ryan Vulcan and Lew Borman attribute the cancellations and rate hikes to changes in federal reimbursement and rising health care costs.

“We are establishing a platform for future product growth and sustainability,” Vulcan said Monday. “If you look at rates for 2015 plans in Mecklenburg, BCBSNC is still comparable with other insurers.”

On a national average, premiums for Medicare Advantage plans will rise $2.94 in 2015, to $33.90 a month, federal officials report. Neither the Observer nor Kaiser has been able to get state-by-state breakdowns.

Surprising stability

All Americans are eligible for Medicare when they turn 65, along with some younger people who have disabilities. The Advantage plan lets recipients use the money allotted for Medicare to buy a private policy.

Like most insurance policies, Advantage plans offer a range of premiums, benefits, provider networks and out-of-pocket costs. Some come at no additional cost to the consumer, but others charge extra for benefits such as better prescription coverage, lower deductibles or a broader network of doctors and hospitals.

Plans also vary by location. For 2015, Mecklenburg residents have 22 options and Wake residents 25. Both include several plans that charge no premium, including a Blue Cross option. Premiums run as high as $142 a month in both counties, for a Blue Cross “enhanced freedom” Preferred Provider Organization policy.

The Affordable Care Act, passed in 2010, cut reimbursements for Medicare Advantage plans, and experts predicted that enrollment would decline, providers would back out and premiums would shoot up. But that hasn’t happened.

“Since 2010, enrollment has far exceeded expectations, increasing by nearly 5 million beneficiaries, continuing a steady upward climb that started a decade ago,” the Kaiser foundation reported in October. In 2014, about 30 percent of all Medicare recipients – more than 15 million seniors – chose the private plans.

The federal government reported in September that strong enrollment and competition means most will see better plans at little or no extra cost.

Tar Heel twists

It’s not clear why North Carolina is bucking those trends.

“I can’t say specifically what’s going on in North Carolina. I can only tell you what we see,” said Kaiser Foundation Senior Vice President Tricia Neuman, one of the authors of the October report. “The change may or may not be related to the Affordable Care Act. It’s hard to tell.”

Blue Cross is one of the state’s biggest providers of Medicare Advantage, along with UnitedHealthcare and Humana. The company provided no specifics about rate hikes and cancellations of HMO plans. A  memo sent to providers in September said the company was ending its HMO “standard” and “enhanced” plans in 11 counties but offering those residents a new “HMO essential” plan with “higher copayments and a higher premium.”

Several insurance agents and benefit specialists in Mecklenburg and Wake voiced reluctance to talk publicly about the Blue Cross changes, saying they must continue to work with the company.

One Charlotte agent said most Blue Cross customers are seeing premiums rise for Advantage plans, but benefits are also improving. One Wake-based benefit specialist said the rate hikes and cancellations are linked to increased competition in the Advantage market, which seems to be hurting Blue Cross’ ability to negotiate rates in some counties.

Those affected by rate hikes or canceled plans must decide what to do by Dec. 7.

Dunn, the Iredell resident whose HMO plan was dropped, is reviewing the 18 policies available in that county to find one that includes the doctors she uses.

David Darwin, a Charlotte textile retiree who’s on the Blue Cross plan that’s going from $18.90 to $64.40, says he’s learning that there are a lot of factors that determine what’s best for any individual. Prescription drug coverage is the biggest one for him, he said.

Gary Ludwick of Huntersville, who was also on that plan, said he has decided on a cheaper Blue Cross plan. At $38 a month it’s still more than he was paying, but Blue Cross offers the best access to doctors, clinics and hospitals, he said.

Ludwick says he’s been doing research since the September premium notice landed.

“Among the 14 plans with drug coverage available to me,” he said, “there was a spread of about $1,100 between the lowest estimated annual health and drug costs and the highest.”

 This article is done in collaboration with  Kaiser Health News, an editorially independent program of the  Kaiser Family Foundation.