Medicare Changes Effective January 1, 2011

This Alert serves as a reminder about changes to Medicare that go into effect on January 1, 2011.

1.      The Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) competitive bidding program[1]

Beginning January 1, 2011, beneficiaries in nine areas around the country will have to get medical equipment and supplies through suppliers that have a contract with Medicare.  This requirement applies to beneficiaries who live in one of the areas or who travel to that area.

Areas affected: Charlotte-Gastonia-Concord, NC-SC; Cincinnati-Middletown, OH-KY-IN; Cleveland-Elyria-Mentor, OH; Dallas-Fort Worth-Arlington, TX; Kansas City, MO-KS; Miami-Fort Lauderdale-Pompano Beach, FL; Orlando-Kissimmee, FL; Pittsburgh, PA; Riverside-San Bernardino-Ontario, CA.  Beneficiaries should check their zip code as described below, to determine whether they are within one of those areas.

Categories of DMEPOS included in the program:  The following product categories are included in the Competitive Bidding program:

• Oxygen, oxygen equipment, and supplies;
• Standard power wheelchairs, scooters and related accessories;
• Complex rehabilitative power wheelchairs and related accessories (Group 2 only);
• Mail-order diabetic supplies;
• Enteral nutrients, equipment, and supplies;
• Continuous Positive Airway Pressure (CPAP) devices and Respiratory Assist Devices (RADs) and related supplies and accessories;
• Hospital beds and related accessories;
• Walkers and related accessories; and
• Support surfaces (Group 2 mattresses and overlays in Miami-Fort Lauderdale-Pompano Beach, FL only).

Finding a supplier:  Beneficiaries can find a Competitive Bidding program contract supplier by visiting http://www.cms.gov/DMEPOSCompetitiveBid/01A2_Contract_Supplier_Lists.asp, by calling 1-800-Medicare, or by using the online supplier tool.  Beneficiaries who want to use the online supplier tool should go to www.medicare.gov/supplier and follow the steps below:

• Enter the Medicare beneficiary's zip code and click "Submit;"
• A list of product categories will appear; those product categories with a star icon next to them are included in the competitive bidding program;
• After selecting a competitive bidding product category, click "View Results;"
• A page will display stating you've selected a competitive bidding product category and briefly explain the program; click "Continue;"
• A list of all Medicare contract supplier locations in the competitive bidding area will appear.

Note:  Some beneficiaries may be able to continue renting certain equipment from their current supplier if that supplier chooses to become a grandfathered supplier by agreeing to continue to rent equipment under the terms of the Competitive Bidding program.

Getting items repaired: In some situations a beneficiary may be able to get an item of DMEPOS that was owned by the beneficiary before January 1, 2011, repaired or replaced by a non-contract supplier.    CMS has developed a fact sheet that describes the rules for repairs.  http://www.cms.gov/MLNProducts/downloads/DME_Repair_Replacement_Factsheet_ICN905283.pdf.   See also information for beneficiaries who need repairs made to items subject to competitive bidding while traveling: http://www.cms.gov/MLNProducts/downloads/DME_Travel_Bene_Factsheet_ICN904484.pdf.

More information: The CMS tool kit on DMEPOS Competitive Bidding contains a number of useful fact sheets.  It is available at: http://www.cms.gov/Partnerships/03_DMEPOS_Toolkit.asp.

2.      Legislative and Regulatory Changes

As previously reported, the Affordable Care Act (ACA) makes numerous changes to the Medicare program, some of which go into effect on January 1, 2011.  The Centers for Medicare & Medicaid Services (CMS) also issued new regulations that affect Part C and Part D plans, starting on January 1.

Enhanced coverage of preventive health services: The ACA creates a new Medicare-covered service, an annual wellness visit, for which beneficiaries pay no deductible or co-insurance.  Cost-sharing for most preventive services covered by Medicare is also eliminated.[2]

Closing the Part D coverage gap or "donut hole":  Beneficiaries who enter the coverage gap will pay 50 % of the cost of covered brand name drugs plus a dispensing fee. They will pay 93% of the cost of generic drugs.  The coverage gap will be phased down and completely eliminated by 2020.[3]

Reforming the Part C Medicare Advantage (MA) program:[4]

• In 2011, payments to MA plans are frozen at 2010 levels, with future payment reductions being phased in over a number of years.  The transition to a modified payment mechanism is designed to reduce overpayments to MA plans. 
• MA plans cannot impose cost-sharing for chemotherapy administration services, renal dialysis services, and skilled nursing facility services that exceed the cost-sharing for those services under original Medicare. 
• All local MA plans must have a maximum out-of-pocket (MOOP) liability amount for all Part A and Part B services to be set yearly by CMS. 
• Preferred Provider Organization plans (for out-of-network services), Private Fee For Service plans, and Medical Savings Account plans are prohibited from imposing prior notification requirements. Plans have used these prior notification requirements to assess higher cost-sharing when an enrollee or provider fails to notify the plan in advance of a service being furnished. 
• A new Medicare Advantage Disenrollment Period (MADP) starts on January 1 and runs through February 14.  Individuals may use the MADP to return to traditional Medicare and a prescription drug plan (PDP).  The MADP replaces the old Open Enrollment Period (OEP), during which time individuals could enroll in an MA plan, change MA plans, or return to traditional Medicare.  Many marketing abuses occurred during the OEP as plan sponsors tried to lure individuals into MA plans.

Annual enrollment period (AEP): The AEP, during which beneficiaries may choose how they receive their Medicare benefits and their prescription drug coverage, will run from October 15 through December 7 of each year, rather than from November 15 to December 31:[5]

Income-related premiums: The ACA froze, at 2010 levels, the modified adjusted gross income levels for determining whether a beneficiary must pay a higher, income-related premium ($85,000 for an individual; $170, 000 for a couple).  Starting in 2011, these individuals will also pay an additional amount for their Part D premiums.[6]

3.   Direct deposit of Social Security and other federal checks

The Fiscal Services Administration of the Internal Revenue Service published an interim final rule on December 22, 2010, concerning distribution of Social Security, Supplemental Security Income (SSI), Railroad Retirement, Veterans, and other federal government checks.[7]  As of May 1, 2011, all checks must be received through direct deposit.  Individuals who do not have a bank account or who would rather use a credit card account may sign up for Direct Express Debit MasterCard.  Individuals who currently do not use direct deposit must change how they receive their check by March 1, 2011.  They can go to www.GoDirect.org, or they can call 1-800-333-1795.  People who apply for federal benefits after May 1, 2011, will automatically get their benefits electronically.

Conclusion

Other than the changes to the income-related Part B and Part D premiums, most Medicare beneficiaries can expect to see savings in their out-of-pocket costs as a result of the changes described above.  The DMEPOS competitive bidding program is designed to reduce the cost of durable medical equipment, prosthetics, orthotics, and supplies.  The new focus on prevention eliminates cost-sharing for important services and allows beneficiaries to meet yearly with their medical providers to establish or update a screening schedule.  MA plans have new restrictions on the cost-sharing they may impose.  Beneficiaries who enter the donut hole will pay less for their medications.  All in all, the changes to Medicare that go into effect in 2011 will bring improvements to the lives of millions of older people and people with disabilities.