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When a Medicare Advantage Plan Does Not Renew Its Contract
 

In 2010, as in previous years, some Medicare Advantage (MA) plans and some prescription drug plans (PDPs) have decided not to renew their contracts with the Centers for Medicare & Medicaid Services (CMS) for the coming year.[1] This Alert will address the notice beneficiaries will receive and the rights they have depending on the circumstances under which their MA plan is leaving the Medicare program for 2011.

 

Non-Renewal vs. Consolidation

 

What happens to beneficiaries depends in part on whether the sponsoring organization of the non-renewing plan offers another, similar plan in their region.

 

In some instances, enrollees in a plan that will no longer be offered will be moved into other plans offered by the same plan sponsor.  This process is called consolidation (also known as "mapping" or "crosswalking").[2] Enrollees of a plan being consolidated into another, renewing MA plan offered by the same plan sponsor will not have to take any enrollment action on their own.  They will default into the consolidated MA plan. "Mapping" or "cross-walking" generally occurs if the plan sponsor offers an MA plan that is similar to the terminating plan in that service area.

 

Individuals who are in a non-renewing or terminated plan and who are not being "mapped" into a different plan offered by the same company will default into Traditional Medicare if they do not elect another MA plan.  Those who are in a Medicare Advantage plan that offers drug coverage (MA-PD) will need to actively enroll in either another MA-PD or a stand along PDP in order to retain Part D prescription drug coverage. 

 

Notice from Non-Renewing Plans

 

Plan sponsors that are not renewing contracts with Medicare must issue a written notice of the approaching plan termination to all enrollees residing in the affected regions.  This termination notice should have been received by October 1, or at least 90 calendar days before the date on which the non-renewal is effective.[3]  Plan sponsors must also provide information about the alternatives in the region, including MA plans, MA-PD plans, and other PDPs. For plan year 2011, the information can be provided in writing or through outbound calls to affected beneficiaries to ensure that they know who to contact to learn about enrollment options.[4] In addition, this notice must provide information about guarantee issue Medigap rights (see below).[5] 

 

CMS developed a model plan termination notice for use by affected plan sponsors; the notice cannot include information about Medicare supplemental policies that the company also sponsors.  However, plan sponsors are permitted to send out, in a separate mailing, information about other MA plans, PDPs, or Medicare supplemental plans they offer.  Such information must comply with CMS marketing guidelines. 

 

Similarly, plan sponsors that use outbound calls to provide information about enrollment options must follow a model script developed by CMS.  Plans cannot during the course of the call try to sell their own MA, PDP, or Medigap plans or endorse other products.

 

The notice requirements do not apply where two plans offered by the same plan sponsor are being consolidated. Plan sponsors do not have to provide notice to beneficiaries who are being "mapped" into the consolidated plan.  Beneficiaries who are being mapped will receive the combined Annual Notice of Change (ANOC) and Explanation of Benefits (EOC) sent to enrollees of the consolidated plan.  The ANOC describes changes in benefit structure from 2010 to 2011, and the more detailed EOC provides information on benefit packages, cost-sharing, and plan procedures.[6]

 

Enrollment Opportunities

 

Beneficiaries whose plan is terminating or not renewing its contract have several opportunities to change to a new MA plan or to return to traditional Medicare and a PDP.  The time periods for the enrollment opportunities overlap somewhat.

 

  • Annual Coordinated Election Period  (ACEP) - All beneficiaries, including those in terminating or non-renewing plans, can make an MA or Part D election for the following calendar year. Beneficiaries who are "mapped" into a consolidated plan may also use the ACEP to choose a different plan from the one to which they were placed by CMS. Through 2010, this period is November 15th through December 31st.  Coverage in the new plan becomes effective on January 1. The Affordable Care Act of 2010 changed the timing of this period, so that, starting in 2011 and thereafter, the period will be October 15th through December 7th of each year.[7] 

 

  • Special Enrollment Periods (SEPs) - In addition, enrollees of MA plans that are terminating have a Special Enrollment Period (SEP) during which they may enroll in a new MA plan.[8]  Beneficiaries whose previous plan is being consolidated with another plan offered by the same sponsor will be "mapped" into the consolidated plan and are not eligible for a SEP.

    For non-renewals that are effective January 1, 2011, the SEP begins October 1, 2010 and ends on January 31, 2011.  Enrollment requests received from October 1 through December 31 will have an effective date of January 1. Enrollment requests received in January will have an effective date of February 1.[9]

    The timing of the effective date is significant.  Some beneficiaries in terminating MA-PDs who default into Traditional Medicare may not sign up for PDPs during the November 15 - December 31 enrollment period.  If they realize in January that they no longer have drug coverage, they can utilize the SEP until the end of the month to enroll in a PDP.  However, because coverage under the new drug plan will not start until February 1, they will be without drug coverage for all of January.  Note that individuals in terminating MA-PDs who are eligible for the Part D low-income subsidy (LIS or Extra Help) will not have this problem because they will be reassigned to a PDP.[10]

 

  • Medicare Advantage Disenrollment Period (MA-DP) - Beginning in 2011, all MA plan enrollees, including those who are "mapped" into a consolidated plan, have a 45 day period starting January 1 to return to Traditional Medicare and enroll in a PDP. [11]  Under the new MA-DP, individuals can get drug coverage through a PDP even if leaving an MA-only plan.  However, individuals who are in or who defaulted to Traditional Medicare will not be able to join an MA plan or an MA-PD during the MA-DP.[12]

 

Medigap Rights

 

Medigap plans are standardized, private insurance plans designed to fill in some of the gaps of the Traditional Medicare program. There are ten types of standardized plans, currently labeled A, B, C, D, F, G, K, L, M and N.[13]  When a Medicare Advantage plan terminates its contract with Medicare, enrollees have the right to purchase one of six Medigap plans: A, B, C, F, K or L without showing insurability and without any pre-existing condition limitations.  These individuals must apply for a Medigap policy within 63 days after coverage ends. [14]  Note that many states provide for additional rights to purchase Medigap plans; beneficiaries whose MA plans are terminating should check the law in their state to see if Medigap rights are broader than the federal minimum.

 

It is generally unlawful for a person to knowingly sell or issue a Medigap policy to an individual receiving assistance under Medicaid, i.e. a dual eligible individual.[15]   In previous years, notices issued by terminating MA plans were confusing, and often did not distinguish between the rights of individuals who had or did not have Medicaid benefits with regard to purchase of a Medigap policy.  For plans terminating at the end of 2010, CMS has separated the information about Medigap rights from the general notice.  Additionally, CMS has advised plans not to send dual-eligible individuals any information about Medigap rights as that information has created confusion regarding the right and need to purchase a Medigap policy.

 

Conclusion

 

Individuals whose plans are terminating their contract with Medicare will receive a variety of notices that describe their rights or that describe their benefits under their new plan.  All beneficiaries may change drug or MA plans during the fall enrollment period, and those whose plans are leaving will also have a Special Enrollment period in which to choose new coverage.  Beneficiaries who are returning to Traditional Medicare from an MA-PD, in particular, need to be sure to choose a new drug plan so that they have seamless drug coverage into 2011.

 

As always, all beneficiaries must review the Annual Notice of Change and the Evidence of Coverage (ANOC) to ensure that the plan in which they are enrolled – whether of their own choosing or whether one to which they have been mapped or reassigned – continues to meet their drug and health care needs.

 

 

[1]The vast majority of MA plans that are non-renewing are Private Fee for Service (PFFS) plans that are withdrawing from the Medicare program because of changes in the law that were enacted 2008 but that become effective in 2011. Medicare Improvements for Patients and Providers Act (MIPPA) of 2008 § 162 (Pub. L. 110-275). See,  CMS Press Release: "Medicare Advantage Premiums Fall, Enrollment Rises, Benefit Similar Compared to 2010", 9/21/10; available at http://www.cms.gov/apps/media/press/release.asp?Counter=3839&intNumPerPage=10&checkDate=&checkKey=&srchType=1&numDays=
3500&srchOpt=0&srchData=&keywordType=All&chkNewsType=1%2C+2%2C+3%2C+4%2C+5&intPage=&showAll=&pYear=&year=&desc=false&cboOrder=date
[2] See, e.g., Medicare Managed Care Manual, Ch. 4, §§140 et seq. at: http://www.cms.gov/manuals/downloads/mc86c04.pdf
[3] 42 CFR §422.506(a).
[4] 75 Fed. Reg. 19811 (Apr. 15, 2010), amending 42 CFR §422.506(a)(2)(ii)(A), (B).
[5] Medicare Managed Care Manual, Ch. 4, §140.7 at: http://www.cms.gov/manuals/downloads/mc86c04.pdf
[6] See 42 CFR §422.111; Medicare Managed Care Manual, Chapter 3, §60.7 available at: http://www.cms.gov/manuals/downloads/mc86c03.pdf
[7] Patient Protection and Affordable Care Act, §3204 (Pub. L. 111-148).
[8] See, generally, 42 USC §1395w-21(e)(4); 42 CFR 422.62(b);  Medicare Managed Care Manual, Chapter 2, §§30.4, et seq. 
[10] See CMS Memo “2011 Reassignment of Low-Income Subsidy Beneficiaries in Terminating Medicare Advantage (MA) Plans” dated August 13, 2010.
[11]The Affordable Care Act of 2010 eliminated the Medicare Advantage Open Enrollment Period (OEP) and replaced it with the MADP.  Patient Protection and Affordable Care Act, §3204 (Pub. L. 111-148). 
[12] Medicare Managed Care Manual, Ch. 2, §30.5.
[13] See, e.g., 42 U.S.C. §1395ss; also see CMS publication "Choosing a Medigap Policy" (2010) at http://www.medicare.gov/publications/pubs/pdf/02110.pdf.  The 10 standard plan types are not sold in Massachusetts, Minnesota, and Wisconsin, each of which have their own standardized plans.
[14] 42 U.S.C. §1395ss(s).
[15] 42 U.S.C. §1395ss(d)(3)
 
  


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