AP: Medicare insurers' profits exceed expectations

Health insurance companies that serve the elderly and disabled in Medicare are realizing significantly higher profits than they anticipated, resulting in the companies getting $1.3 billion more than projected, congressional auditors say.

This is likely due to an increase in payments to companies by the elderly, without an increase in services by the organizations. This money is now being seen as a profit that the companies in question must diligently work with the government to make sure that the clients served via Medicare are getting the best care that they deserve. We'll keep you posted on any new developments.

For the rest of this article, please click here.

Update: Medicare Advantage Payments

This post on GOOZNEWS.com discusses how several reports have recently taken aim at Medicare Advantage. The NY Times states that payments to health insurance organizations on average are 12 percent higher than what the government would spend on beneficiaries in traditional Medicare, and payments to Medicare Advantage plans are 17 percent higher.

How will the new administration deal with Medicare Advantage, since payments are ridiculously higher than traditional Medicare?

New Rules are Imposed on Medicare Advantage Plan Sales

Yesterday’s article on ModernHealthcare.com discusses that the Centers for Medicare and Medicaid Services have issued compensation requirements for sales agents that sell Medicare Advantage plans and prescription drug plans to Medicare beneficiaries.

Some of the rules include paying compensation to all agents according to fair-market value and adjusted for inflation for similar products in the same geographic area. To make sure that everyone is compliant with the new rules, agents will have to CMS their compensation structures for the previous three years as well as the compensation structure they are implementing for 2009.

Medicare Co-Pays and Premiums Expected to Rise

FierceHealthcare reports today that a recent study conducted by Avalere Health LLC found that for the largest 10 drug companies, premiums are expected to rise up an average of 31 percent next year. It is also speculated that this in term might cause insurers to increase drug co-payments 75 percent (about $7) for generic drugs and a 60% increase (about $40) for brand drugs.

A spokesperson from Humana, an insurer, mentions:

“Prices reflect the experience we've seen over the past three years, and our expectations around what will most interest our members and potential members going forward."

Extra Payments Made to Medicare Advantage Plans Total $8.5 Billion

The Healthcare Intelligence Network reports that in 2008 extra payments made to Medicare Advantage Plans will total over $8.5 billion. There are payments reductions scheduled for 2010, but if the Medicare Improvements for Patients and Providers Act of 2008 went into effect in 2008, MA plans still would have paid 10.6 percent more than expected fee-for-service costs.

The majority of the extra payments were made because of the Medicare Modernization Act of 2003 which has expanded the role of private plans in Medicare in an effort to reduce the growth of spending in Medicare.

Managed Care Provider Cigna adds More States to Medicare Advantage

CnnMoney.com reports that Cigna will add 15 more states to its individual Medicare Advantage plans next year in order to grow its senior business.

Some of the states Cigna will introduce plans to include California, Florida, Illinois, Massachusetts and Ohio. Of the 13 existing states, Cigna also plans to expand the number of counties to which it offers Medicare Advantage plans. Cigna only recently started offering Medicare Advantage coverage last year. It is looking to expand their services by also adding preventive dental care reimbursement to its Advantage plans for next year.

MD Medicare Choice Under Receivership

MD Medicare choice in Tampa Florida has been placed in receivership by Leon County Circuit Court Judge P. Kevin Davey as reported here. Their Medicare Advantage plan had more than 16,000 members across 23 Florida counties. The company had already been under administrative supervision by the Office of Insurance Regulation, but following the difficulties in the stock market these past couple of weeks, the SEC has frozen the $27 million that MD Medicare Choice had as reserves in the Primary Fund of Reserve Management Corp. The current Medicare Advantage contract will be void as of today midnight, and policy holders will be switched to Humana policies. For more information call 1-800-758-4806 or 1-800-833-3301 if you are a beneficiary, or 1-800-882-3054 for information about receivership. You can also log on to http://www.myfloridacfo.com/Receiver/.

More advertising dollars going to Medicare Advantage

In a recent study done by the Kaiser Family Foundation, detailed here at the Washington Post, they found that insurers spent three times more money promoting comprehensive Medicare plans rather than stand alone drug plans. The study was conducted between October 1 and December 31, 2007, with an increased effort looking at what's going on with Medicare marketing practices. For the most part, the commercials emphasized the benefits centered around preventative care, vision and hearing benefits.