Texas Medicare Supplement

[This is an open letter from Michael J. Burke at Coventry]

July 15, 2008

Last Wednesday, the U.S. Senate voted in favor of the Medicare Bill (H.R. 6331), which successfully blocks a cut in Medicare payments to physicians, but does so by partially funding these payments with changes to the Medicare Advantage program.  The White House will veto the bill because it reduces payments to companies like ours who serve the beneficiaries enrolled in Medicare Advantage plans.  (The White House also opposes the delay in the competitive bidding for durable medical equipment as well as changes to expand the number of protected classes of Part D drugs).  Democratic leaders are marshalling efforts to gain the two-thirds majority needed to override the President’s veto.  From our viewpoint, it is uncertain whether this veto can be sustained; however, early indications suggest that it will be very difficult to stop the momentum of this legislation becoming law.

We expect this process to come to a conclusion in the next few weeks, and as yesterday’s New York Times article pointed out, the issues contained in the Medicare bill coming before the President are only the tip of the iceberg in terms of remedying Medicare’s payments to physicians.

While we are supportive of preserving payment levels to physicians accepting Medicare enrollees, we continue to remind Members of Congress that seniors would bear the burden of the vast majority of the budget cuts in this legislation.  They could face limited choices, reduced benefits, and higher premiums and/or out-of-pocket costs if the legislation in its current form becomes law.

In anticipation of this scenario as well as others that have circulated over the last few months, we at Coventry Health Care are prepared for several different outcomes, including the provisions passed by the House, and then by the Senate last Wednesday.

Regardless of the outcome, whether the veto stands, or if an override is successful, we are committed to implementing the needed changes no matter how they are finalized.  Most of the items in the Medicare bill require implementation by 2011, which provides an adequate transition period for implementing any needed changes.  

Two requirements in the Medicare bill that are most likely of importance to you include:

• The bill’s requirement that Private Fee-for-Service (PFFS) plans will be required to have a contracted network of providers in counties in with at least two “network-based plans” (MA coordinated care plans, local PPOs, MSAs, or 1876 cost plans).  We are already addressing the need for such contracted arrangements and are confident that we will deliver on such a requirement by 2011.

• Employer group programs will need to develop networks for PFFS plans starting in 2011, no matter the number of plans in the service area.  Again, we are already working on the transition plan, which will position us to be ready for the 2011 change.  We will be working through the details of these changes over the coming months, and will keep you apprised of our progress.

We appreciate the support that many of our partners have expressed to us as well as the direct communication to their Members of Congress about the impact of this legislation.  We remain committed to serving all seniors with much-needed health care coverage, and we welcome your input as we continue to work to preserve these Medicare programs.

Sincerely,

Michael J. Burke
Vice President & National Sales Manager
Medicare Distribution

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