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Dangers of Surprise Medical Bills Underscore Importance of Medicare’s Beneficiary Protections This week, Kaiser Health News (KHN) and National Public Radio (NPR) published and broadcast the story of 44 year-old Drew Calver, a high school teacher in Austin, Texas who faced an outrageous hospital bill. In the wake of a lifethreatening heart attack, Mr. Calver was rushed to a nearby emergency room, where he was admitted to the hospital and underwent surgery. The heart attack was a shock for Calver, an avid swimmer and triathlete. Adding to his surprise was the bill he faced afterwards: the hospital charged $164,941 for the surgery and four days in the hospital. His insurer paid the hospital $55,840. The hospital then billed Mr. Calver for the unpaid balance of $108,951.31. This practice, known as “balance billing,” allows providers to bill patients for the outstanding balance after the

insurance company submits its portion of the bill. Out-ofnetwork providers— as was the hospital in this case—are not bound by contractual in-network rate agreements and therefore have the ability to bill patients for the entire remaining balance. Balance billing may occur when a patient receives a bill for an episode of care previously believed to be in-network and therefore covered by the insurance company, or when an insurance company contributes less money for a medical service than a patient expected. While people who have private health insurance, such as employer-based coverage, may be vulnerable to these and other types of surprise medical bills, Medicare has financial protections in place to safeguard beneficiaries from unexpected and confusing charges.

These protections— which include the participating provider program, limitations on balance billing, and conditions on private contracting—have been effective in limiting beneficiaries’ out-of-pocket liability for physician services. Today, for example, a small share of Medicare beneficiaries experience balance billing, which is ver y different from the years before balance billing limits were instituted. After Mr. Calver’s story was made public, the hospital offered to accept $782.29 to resolve the outstanding balance. Mr. Calver disputed that he owes any additional money. While in this instance the billing situation may be resolvable, others facing such financially crippling costs may not have similar outcomes. State

and federal laws must be changed to prevent such billing practices from impacting those who are privately insured, and Medicare’s existing financial protections must be maintained and strengthened. Medicare Rights will continue to urge policymakers to prioritize these important safeguards. Relaxing these rules, as some policymakers have proposed, would jeopardize recent gains and put people with Medicare at risk of higher costs and reduced access to care. Our latest fact sheet, Paying More for Less: Private Contracting explains how some of Medicare’s beneficiary protections work, and why they are critical to providers, the program, and people with Medicare. Read the Medicare Rights Center’s fact sheet, Paying More for Less: Private Contracting

CMS Announces New Rules That Could Make Part D Drug Formularies Much More Complicated

This week, the Centers for Medicare and Medicaid Services (CMS) announced that, starting in 2020, Part D Plans and Medicare Advantage Plans with Part D will be able to include medications on their formulary for some FDA-approved uses, but not others. Currently, a plan can favor one drug over another by including a medication on its formulary or not; placing it on a lower cost sharing tier; or putting coverage restrictions, like prior authorization, quantity limits, or step therapy on the less preferred medication. These rules apply uniformly to each drug, for all FDA- and compendia-approved purposes—the new rules do not.

For example if drug A is FDA approved for two uses— one to treat condition X and one to treat condition Y—plans must include drug A on the formulary for X and Y or exclude it for both X and Y. Under the new rules, however, plans will be able to treat a prescription for a drug to treat X differently from the same prescription to treat Y. CMS indicates that their intent is to increase a plan’s ability to negotiate indication-specific drug prices, but there are few details about how these differences will be

communicated to beneficiaries. The memo from CMS states that if plans wish to use this type of formulary design they must “disclose that some drugs may be subject to those requirements in the plan’s Annual Notice of Change (ANOC) and Evidence of Coverage (EOC) documents.” We believe this is inadequate – CMS should require integration of this information, including asking about the conditions for which drugs are prescribed, in the Medicare Plan Finder tool. Plans should also be required to designate any drugs

that have indicationbased restrictions in their online and print formularies. Medicare Rights is concerned that people with Medicare will face ever-growing difficulties in choosing what coverage is right for them. Already, many people struggle with their coverage decisions, and new complex plan offerings are likely to increase these problems. Read the CMS announcement.

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RI ARA September 9, 2018 E-Newsletter  

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