Case Study: Enrolled In a Medicare Advantage Plan Without Her Knowledge Through “Seamless Conversion Enrollment”

October 21, 2016 – Update on Seamless Conversion: CMS is revisiting the seamless conversion enrollment policy and is temporarily suspending its acceptance of any new seamless enrollment proposals. Read more…

Ms. M., a Medicare beneficiary living in the Southwest, turned 65 in October 2015 and became eligible for Medicare on October 1st. On September 30th she signed up for Part B and terminated the insurance plan coverage she had been paying on her own as she was self-employed.  She signed up for a Medigap (Medicare supplemental insurance) plan to start on October 1st.  She also attempted to enroll in a Part D plan on October 15th, but was told by the plan’s customer service representative that since she was signing up during “Open Enrollment” (October 15^th through December 7^th) her Part D plan would not be effective until January 1, 2016.

Shortly after becoming eligible for Medicare, Ms. M. required two surgeries, one in October and one in November 2015.  She lives in a rural area near the state line and went to the closest hospital – over that state line.  Following the surgeries, her doctor’s office called and told her that the claims had been denied by Medicare because she was enrolled in a Medicare Advantage (MA) plan and the surgeries were performed at a hospital that was outside of the MA plan’s network.  Ms. M. called the MA plan and was shocked to find out that because she had coverage through this insurance company before she joined Medicare, they were allowed to enroll her in one of the company’s MA plans without her choosing to do so.

Seamless Conversion Enrollment

Medicare rules allow MA plan sponsors to “develop processes to provide seamless enrollment in an MA plan for newly Medicare Advantage eligible individuals who are currently enrolled in other health plans offered by the MA organization (such as commercial or Medicaid plans) at the time of their conversion to Medicare.”[1]  MA organizations that wish to perform such “seamless conversion enrollments” must obtain approval from the Centers for Medicare & Medicaid Services (CMS), and certain conditions must be met by the plan (the relevant Medicare Manual provision is reproduced, in full, below).   

In order to perform a seamless conversion enrollment, an insurance plan must engage in “outreach activity … including a written notice provided to each individual at least 60 days prior to the date of conversion. The notice must include clear information instructing the individual on how to opt-out, or decline, the seamless conversion enrollment.”[2]  In other words, in order to prevent such enrollment into an MA plan offered by the same plan sponsor, someone must affirmatively opt-out or decline, rather than opt-in or elect to be enrolled.  

Similar to many individuals approaching Medicare eligibility, Ms. M. received mail from numerous Medicare Advantage, Part D and Medigap plan sponsors in the months prior to her 65^th birthday.  Having already decided that she wanted to have traditional Medicare and enroll in a Medigap plan and a stand-alone Part D plan, she discarded these materials, including, presumably, the notice sent by her commercial plan sponsor informing her that she would be enrolled in the same company’s Medicare Advantage plan unless she actively opted out.  She received no other notice or communication about her plan’s seamless conversion enrollment, and had no idea she was enrolled in an MA plan until her providers’ bills were rejected because the services were out of the plan’s network.

Other Important Enrollment Periods

There are separate, but usually parallel, enrollment periods available to individuals who are first eligible for a Medicare Advantage plan (when someone first has both Parts A and B)[3] and a Part D plan (when someone first has either Part A or Part B)[4].  As explained in the Medicare Manuals, the Medicare Advantage Initial Coverage Enrollment Period (ICEP) is “the period during which an individual newly eligible for MA may make an initial enrollment request to enroll in an MA plan. This period begins three months immediately before the individual’s first entitlement to both Medicare Part A and Part B and ends on the later of: 1. [t]he last day of the month preceding entitlement to both Part A and Part B, or; 2. [t]he last day of the individual’s Part B initial enrollment period. The initial enrollment period for Part B is the seven (7) month period that begins 3 months before the month an individual meets the eligibility requirements for Part B, and ends 3 months after the month of eligibility.”[5]  

Similarly, concerning Part D eligibility, “[i]ndividuals who are becoming eligible for Medicare will have an Initial Enrollment Period for Part D that is the 7 month period surrounding Medicare eligibility (same as the IEP for Part B).”[6]   In order to become eligible for Part D, someone need not have both Parts A and B.

At first glance, it would appear that Ms. M.’s October 2015 request to enroll in a stand-alone Part D plan should have been treated as a Part D Initial Enrollment Period (IEP) request, effective November 1, 2015[7], and such enrollment should have cancelled her conversion enrollment into the MA plan.  In fact, the Manual provision that outlines seamless conversion enrollment into MA plans seems to acknowledge that an individual might make a different choice subsequent to a seamless enrollment into an MA plan.[8] However, assuming that the MA plan into which Ms. M. was enrolled offered Part D prescription drug coverage, it appears that the plan’s seamless conversion enrollment into an MA plan without her knowledge “used up” her Initial Enrollment Period rights.  Since her MA plan coverage took effect on October 1st, before she contacted the Part D plan on October 15th, she only had the “Open Enrollment” period available to her (aka the Annual Enrollment Period, or AEP, from October 15th to December 7th each year during which individuals can make plan elections for the following calendar year).[9]    

Resolution

In order to undo her undesired predicament, Ms. M. had one apparent option: submit a request to CMS to be retroactively disenrolled from her MA plan. CMS may grant a request for retroactive disenrollment from an MA plan when “there never was a legally valid enrollment”, or “a valid request for disenrollment was properly made but not processed or acted upon.”[10]

An enrollment that is not complete is not considered to be legally valid.  According to the relevant Manual provision, “CMS does not regard an enrollment as actually complete if the member or his/her legal representative did not intend to enroll in the MA organization. If there is evidence that the individual did not intend to enroll in the MA organization, the MA organization should submit a retroactive disenrollment request to CMS.”[11]  Such evidence of lack of intent to enroll may include “[e]nrolling in a supplemental insurance program immediately after enrolling in the MA organization; or Receiving non-emergency or non-urgent services out-of-plan immediately after the effective date of coverage under the plan.”[12]

Ms. M. had no intent to enroll in the MA plan, as evidenced by her enrollment in a Medigap plan, a stand-alone Part D plan, and her efforts to obtain services out of the plan’s network. With assistance from the Center, Ms. M’s local advocate successfully petitioned CMS for retroactive disenrollment from her MA plan.[13]  This resulted in the cancellation of Ms. M’s seamless enrollment conversion into the MA plan.  Ms. M. was put in traditional Medicare as of October 1, 2015.  Because she had signed up for a Medigap plan to start on October 1^st, the surgeries she had would, assuming they were medically reasonable and necessary, be covered by traditional Medicare and the cost-sharing picked up by her Medigap plan.  The traditional Medicare program has no network restrictions, so that would no longer be a barrier to coverage for her surgeries.

Conclusion

It is unclear how often plan sponsors seek – and are approved by CMS – to use seamless conversion enrollment for plan enrollees who become newly eligible for Medicare.  The Center questions the breadth of consumer protections embedded in this practice built upon an opt-out arrangement rather than an opt-in process.  This is of particular concern when there is apparently no confirmation of an individual’s intent other than the absence of a response to a letter easily mistaken for, or neglected among, a deluge of plan marketing material received when approaching Medicare eligibility.  Those enrolled in a health plan offered by an MA organization at the time they become eligible for Medicare should be attentive.  Be on the lookout for written notice regarding conversion and carefully consider whether to opt-out of the MA plan.

Medicare Managed Care Manual, Chapter 2

Section 40.1.4 – Seamless Conversion Enrollment Option for Newly Medicare Advantage Eligible Individuals

MA organizations may develop processes to provide seamless enrollment in an MA plan for newly Medicare Advantage eligible individuals who are currently enrolled in other health plans offered by the MA organization (such as commercial or Medicaid plans) at the time of their conversion to Medicare. CMS will review an organization’s proposal and must approve it before use. MA organizations must send proposals to the appropriate Regional Office account manager and must meet the following conditions.

• A description of the MA organization’s process to identify individuals currently enrolled in a health plan offered by the organization. Such process must be able to identify these individuals no later than 90 days prior to the date of initial Medicare eligibility (the conversion date) and must include individuals whose eligibility is based on disability as well as age.
• A description of the outreach activity associated with the seamless conversion process including a written notice provided to each individual at least 60 days prior to the date of conversion. The notice must include clear information instructing the individual on how to opt-out, or decline, the seamless conversion enrollment.
• Acknowledgement that the MA organization will send the appropriate enrollment transaction to CMS at the same time that it sends the written notice (see previous bullet point); i.e., at least 60 days prior to the conversion date.
• The process to opt-out or decline the seamless conversion enrollment must include the opportunity to contact the MA organization either in writing or by telephone to a toll-free number. The MA organization is prohibited from discouraging declination. The process must allow for opt-out requests to be accepted up to and including the day preceding the enrollment effective date. The organization will submit opt-out requests to CMS as enrollment cancellations.
• Enrollment transactions submitted to CMS for these cases must always use the first day of an individual’s ICEP as the application date in the transaction record. Doing so ensures that any subsequent action taken by the individual will take precedence in systems processing. In addition, the enrollment effective date must always be the date of the individual’s first entitlement to both Medicare Part A and Part B.
• Plans must have beneficiary information, including HICN, date-of-birth and sex in order to process seamless conversion enrollments.