Picking a Plan During the Annual Enrollment Period? Choose Carefully

As discussed in last week’s Alert, the current Medicare Annual Enrollment Period lasts until December 7^th.[1]  During this time period, Medicare beneficiaries can choose a Medicare Advantage (Part C) or Part D plan for 2013.  This Alert discusses Part C and D plan quality ratings for 2013, and special enrollment periods related to these ratings.  The Alert also includes a reference to a recent report finding that very few Part D enrollees choose plans that are the best for them.

Plan Quality Ratings and Special Enrollment Periods

On October 12, 2012, the Centers for Medicare & Medicaid Services (CMS) released plan quality rating information for Part C and D plans for the 2013 plan year.[2]  Plans are assigned a single star rating from 1 to 5 (5 being the highest) that summarizes a plan’s performance across a number of quality and performance measures.   As discussed below, there are special enrollment periods (SEPs) associated with both high performing and consistently low performing plans.

• 5-Star Plans

  Effective the 2012 plan year, CMS introduced a special enrollment period (SEP) that allows individuals to enroll in a 5-star Part C or D plan – those designated to be the highest quality plans – outside of the Annual Enrollment Period.[3]  While significantly more people will have access to higher quality plans rated 4 or 5 stars in 2013, there will still be very few 5 star plans across the country.  In 2013, only 9 out of 555 Medicare Advantage contracts are with 5 star plans and only 4 of 74 Part D contracts are with 5 star plans.[4]   According to data published by CMS, 5 star Medicare Advantage-Prescription Drug (MA-PD) and Medicare Advantage-Only (MA-only) plans will be available in 2013 in certain counties in California, Colorado, Hawaii, Illinois, Maryland, Massachusetts, Ohio, Oregon, Virginia, Wisconsin, Washington and the District of Columbia.  Five star stand-alone Part D plans will be available in New York, Delaware, Hawaii, and one plan will be available in the upper Midwest and Northern plains (Iowa, North Dakota, South Dakota, Minnesota, Nebraska and Wyoming).[5]

  Of particular note, CMS points out that, similar to this year, “[c]ontracts that are non-profit tend to receive higher ratings than those that are for-profit.”[6]

• Low Performing Plans

  At the other end of the spectrum, in an ongoing effort to promote quality among Part C and D plans, CMS is also flagging plans that are “consistently low performing plans,” meaning those that receive fewer than 3 stars for at least 3 consecutive years.  As noted in CMS’s 2013 Call Letter and its October 12, 2012 press release, beneficiaries enrolled in these low performing plans will receive notification that they can change to a higher quality plan if they choose to do so.[7]  Enrollees of these plans will be able to request a special enrollment period (SEP) to move into a higher quality plan for 2013.

  While CMS has not yet released more formal guidance on this SEP, advocates have been informed that individuals who wish to exercise this SEP outside of the Annual Enrollment Period should call 1-800-MEDICARE to do so.  Advocates have also learned that CMS is sending letters to between 500,000 and 525,000 Medicare beneficiaries this month – October 2012 – telling them that they are in low performing plans and suggesting that they consider switching plans.  

Choosing the Right Part D Plan   

This month’s edition of Health Affairs includes an article entitled “The Vast Majority of Medicare Part D Beneficiaries Still Don’t Choose the Cheapest Plans That Meet Their Medication Needs” by Chao Zhou and Yuting Zhang of the University of Pittsburgh.[8]  An excerpt of the article’s abstract states:

When the Medicare Part D prescription drug benefit began in 2006, a primary concern for some policy makers was whether seniors would be able to make smart choices from among the dozens of competing plans. Using 2009 Part D data, we found that only 5.2 percent of beneficiaries chose the cheapest plan. Nationwide, beneficiaries on average spent $368 more annually than they would have spent had they purchased the cheapest plan available in their region, given their medication needs. More than a fifth of beneficiaries spent at least $500 a year more than they needed to. Beneficiaries often overprotected themselves by paying higher premiums for plan features that they did not need, such as generic drug coverage in the coverage gap. [Emphasis added.]

Zhou and Zhang offer possible explanations for why so few people find the most cost-effective plan for them, including the impact of inertia or preference for the status quo, along with the “high cost of learning” – in other words, the need to learn a new plan’s rules and contracted providers (although these factors are subject to change each year for each plan).  The authors note that “[o]ur findings suggest that beneficiaries might not be capable of gathering sufficient information to choose the cheapest plan on their own” and suggest that assistance in making better choices could come from CMS in the form of “customized communications to beneficiaries, recommending the three most appropriate Part D plans for them based on their medication history” or individuals could be assigned to what would seem the best plan for them based upon their medication needs with an option to choose another plan (sometimes referred to as “intelligent assignment”). 

Conclusion

While CMS has made efforts over the last few years to limit the high number of Part C and D plan choices in a given area, and plans’ overall quality appears to be gradually improving, making informed decisions about what private plan options are the best for individuals still proves to be difficult.  This fact alone should force us to continually examine whether the Part D prescription drug benefit should be available only through private plans.  It should certainly give us pause when exploring other efforts to further privatize the Medicare program.