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How do the carriers get a budget for their Medicare Advantage Plan designs each year?

The process begins with CMS releasing its advance notice, a document that outlines the agency’s planned changes to how it will calculate Medicare Advantage payment rates for the following calendar year. CMS must release the advance notice at least 60 days prior to release of the final rate announcement (published on or before the first Monday in April every year). The public is given 30 days to submit comments on the advance notice. 

Released alongside the rate announcement is a rate book that details the maximum amount Medicare will pay plans in a given area — what’s known as the benchmark. Insurers use these rates to develop and submit their “bids” to offer Medicare plans.

These bids represent their estimated costs of providing Medicare Parts A and B services to the average enrollee.

The benchmarks and the risk adjustment model — used to modify payments to account for enrollees’ health status — are the major items that CMS updates when calculating payment rates for the next year.

Learn more: https://www.commonwealthfund.org/publications/explainer/2024/mar/how-government-updates-payment-rates-medicare-advantage-plans 

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Since this is a hot topic currently, I wanted to take the time to provide some education from our history.

Medicare has addressed funding issues through several strategies over the years:

1. Payroll Taxes: Medicare is primarily funded through payroll taxes collected under the Federal Insurance Contributions Act (FICA). Employees and employers each pay 1.45% of wages, and higher-income earners pay an additional 0.9%.
2. Premiums and Cost Sharing: Beneficiaries pay premiums for Medicare Part B and Part D, as well as deductibles and coinsurance for services. Higher-income beneficiaries pay higher premiums. 
3. General Revenue: A significant portion of Medicare funding comes from general federal revenue, particularly for Part B and Part D.
   Legislative Adjustments: Congress has periodically adjusted Medicare funding through legislation. For example, the Balanced Budget Act of 1997 introduced measures to control costs, and the Affordable Care Act of 2010 included provisions to reduce spending and increase revenue. 
   
4. Payment Reforms: Medicare has implemented various payment reforms to control costs, such as the Prospective Payment System for hospitals and value-based payment models that incentivize quality and efficiency. 
5. Trust Funds: Medicare Part A is funded through the Hospital Insurance Trust Fund, while Parts B and D are funded through the Supplementary Medical Insurance Trust Fund. These trust funds help manage and allocate resources. 

Despite these measures, Medicare continues to face financial challenges, particularly with the aging population and rising healthcare costs. Ongoing efforts are needed to ensure its sustainability.

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Medicare-eligible individuals might use a discount card for several reasons:

In PA you can qualify for Medicaid based on a disability without considering the income limits.

In Pennsylvania, Medicaid eligibility for individuals with disabilities surpassing the Medicaid limit due to having income is still possible. This is called MAWD (Medicaid for-Workers with Disabilities).

MAWD allows individuals with disabilities to work and still receive Medicaid benefits, including any services and supports provided through waiver programs. There is a small monthly premium based on your income, typically around 5%.

However, there are specific programs and waivers that might offer some flexibility:

• Medical Assistance for Workers with Disabilities (MAWD): This program allows individuals with disabilities to work and still receive Medicaid benefits. It has higher income and resource limits compared to standard Medicaid
• Medically Needy Only (MNO): This category allows individuals with higher incomes to spend down their income on medical expenses to qualify for Medicaid 
• Waivers: Certain waivers, like the Consolidated Waiver, provide services to individuals with disabilities and may have different financial criteria

It's best to contact your local County Assistance Office or visit the Pennsylvania Department of Human Services website for detailed information and to see if you qualify based on your specific circumstances.

Learn more: https://www.pa.gov/services/dhs/apply-for-medical-assistance-for-workers-with-disabilities-mawd.html

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Medicare-eligible individuals might use a discount card for several reasons:

• Prescription Drug Savings: Medicare-approved prescription drug discount cards can help reduce the cost of medications by providing discounts of 10-25%. This is especially beneficial for those without comprehensive drug coverage.
• Coverage Gaps: Some Medicare plans, like Original Medicare (Parts A and B), do not cover prescription drugs. Discount cards can help fill this gap until a more comprehensive plan is in place.
• Financial Assistance: For individuals with limited income, discount cards can provide significant savings. For example, certain programs offer credits (e.g., $600 annually) to help cover prescription costs.
• Additional Benefits: Some Medicare Advantage plans offer extra benefits, such as discounts on over-the-counter medications, healthy food items, and other essentials.

Using a discount card can help manage healthcare costs more effectively, ensuring that individuals can afford their necessary medications and other health-related items.

As an agent, you can make a small additional income each time your clients use this discount card. It’s a win-win! Watch the recorded training for more information.

Learn more: https://youtu.be/ZL-vj56wW4E