Fed changes mean new course for West Virgina retiree care : LAWRENCE MESSINA
By: www.EasyToInsureME.com | Posted: 23rd May 2009
West Virginia must find a new way to provide health care to some 35,000 retired public employees.
For more than two years, the state has contracted with a national managed care company to cover these retirees through the federal Medicare program.
But Coventry Health Care Inc. now wants to increase its monthly per-enrollee rate by nearly 37 percent, from $163 to $223. That's expected to increase state health care costs by $20 million during the budget year that begins July 1.
The Maryland-based insurer also announced last week that it plans to quit this market entirely next year.
The news has prompted a Thursday emergency meeting of the Public Employees Insurance Agency's finance board to discuss options.
Officials say retirees should not be concerned about their future coverage. Officials instead view the development as the sooner-than-expected end to a short-term plan for reducing public health care costs.
"We're going to take care of them," PEIA Director Ted Cheatham said Friday. "They're obviously going to be covered differently in January than they are today."
Coventry has administered a plan operated under Medicare Advantage, the privately run portion of the government health program for seniors. Such plans receive a government subsidy and generally offer more benefits than traditional Medicare.
Cheatham estimates that this approach to covering retirees will have helped the state save $104 million by the end of 2009.
"I think the state of West Virginia and the retirees came out perfectly on target," he said.
PEIA had previously supplemented the retirees' Medicare coverage. The new plan, approved in December 2006, also reduced premiums for these enrollees but increased their out-of-pocket charges.
While touting the resulting savings, finance board member Perry Bryant noted that the state's Medicare advantage plan had a rough start
"It was disruptive to the retirees," Bryant recalled. "It was a very fast implementation."
Among other concerns, retirees who had moved out-of-state worried about continued coverage with their providers.
"We were placed into this, basically, against our will," said Ernie "Spud" Terry, president of the state retiree chapter of AFSCME, the union that represents government workers. "Most of those problems, I believe, have been resolved and it's been run more smoothly."
Medicare Advantage plans have grown since they emerged in the late 1990s to cover more than 10 million of the 44 million seniors in Medicare. Coventry has 318,000 of those seniors.
But Coventry and other insurers are withdrawing before expected cuts to their federal reimbursement rates take effect. Rival WellCare Health Plans Inc. also said last week that it would not renew its Medicare Advantage private fee-for-service contracts, which cover about 110,000 people.
The Obama administration has criticized current payment levels, estimating that the government spends about $1.30 on Medicare Advantage patients for each dollar it spends on patients in traditional Medicare. Obama has proposed requiring participating insurers to compete to offer their services in different parts of the country, with the average bid in each region shaping its reimbursement.
"The concern has always been that, with the change in administrations, that the (Medicaid Advantage) funding would be cut back," Terry said. "Our concern is, if there's extra money that must be involved, it will come from retirees or the state of West Virginia."
Terry noted that state retirees don't receive cost-of-living increases.
"Their pensions are pretty much static," he said. "We've been getting hammered by the increases in medical costs for years now."
But Cheatham said PEIA officials previously figured that Medicare Advantage would end. They had planned to end the fee-for-service plan with the budget year that begins July 1, 2010. He doesn't fault Coventry for seeking a higher reimbursement rate, or for its plan to exit the market six months ahead of the state's schedule.
"Coventry has taken the position that it's no longer a sustainable business model," Cheatham said. "It's clearly a business decision on their corporate side."
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