Anthem Blue Cross announced that it will issue rebates to members enrolled in their Medicare Supplement plans in five different states. The rebates are a result of the Medicare supplement or Medigap plans failing to meet the medical loss ratios (MLR). Rebate checks being sent out in September will range from $3.51 to $487.08 per member.
Medicare supplement or Medigap plans can be purchased by individuals enrolled in Original Medicare. The supplement plans cover the “gaps” in Medicare associated with deductibles, copayments and coinsurance for Part A hospital and Part B outpatient costs.
Supplement plans lag in MLR
Nationwide, the Medigap MLR specifies plans must spend 65% of their premiums from individual Medicare supplement plans on health care services and 75% in the group market. In other words, Medigap issuers like Anthem Blue Cross can spend 35% and 25% on items such as marketing and administration.
Medigap stuck in 1990
Congressional legislation introduced in 2011 would have mandated Medigap plans meet the same MLR as private insurers under the 2010 Affordable Care Act (ACA). Under the ACA MLR rules, individual health insurance plans must spend 80% of their premium dollars on health care services and quality improvement and 85% in the large group market. The proposed Medigap MLR died in committee. Current Medigap MLR rules date to 1990 while some states have put in tighter medical loss ratios.
Many different plans to chose from
Anthem Blue Cross has not given much information as to which plans will be receiving rebates. There are eleven different plans that Anthem can offer in most states (A, B, C, D, F, F – High Deductible, G, K, L, M, N) to individuals. Plan members will have to wait until they get a check to find out if their Anthem Blue Cross Medigap plan failed to spend required amount on health care services for those enrolled.
More marketing expense that health care payments
Medicare supplements are a very competitive market. Lots of dollars are spent to acquire new members that are ageing into Medicare. When Anthem Blue Cross has to send out rebate checks for medical loss ratios lower than current individual and group business, one has to wonder how they spent the premium dollars of Medicare beneficiaries.
Here is the announcement from Anthem Blue Cross. Note: I called the California number and no one had any answers to my questions.