A change to the health insurance held by retirees of Delaware’s state government is causing an uproar.
The state’s requirement that retirees and pensioners switch from original Medicare to a specially-tailored Medicare Advantage plan has led to charges that retirees will lose their doctors or be denied services that are currently covered.
That’s not true, said Delaware Secretary of Human Resources Claire DeMatteis.
She insists the plan will be cheaper for retirees while offering the same access to care. It will even include a few perks, she said, such as SilverSneakers, a fitness program for senior citizens.
DeMatteis said 95% of Delaware doctors who accept traditional Medicare have already signed on to participate in the Advantage plan. State officials are working to get others on board, too.
The shift is necessary to reduce the state’s $10 billion unfunded liability for retiree healthcare, according to DeMatteis. Left unchanged, that liability would likely grow to $31 billion by 2050.
An unfunded liability is when the state sets aside less than is needed to cover the expected full costs of benefits for its retirees.
With the Medicare Advantage plan, officials project the unfunded liability will shrink to $3 billion by 2050.
“That’s still not perfect, but much better than the current state,” DeMatteis said. “Because the worst case scenario is the unfunded liability grows so severely that the state can no longer afford to pay for retiree health care. That won’t happen because of the very reasonable, measured reforms that we’re implementing now.”
Rep. John Kowalko, D-Newark, who voted for the change in the FY 2023 budget, said the reforms are anything but reasonable and measured, and the governor’s administration quietly pushed the change through the legislature without them having all the details.
“This is a g-d d-mn freaking abuse of the retirees of Delaware,” Kowalko said. “When you put this type of Medicare Advantage plan in place as the only option available for retirees, what you’re actually doing is privatizing Medicare.”
He believes the program will require additional referrals and pre-authorizations for medical care that retirees can access now without the red tape.
“What this means is that the most efficient health care plan that we offer in this country, next to the [Veterans Affairs] plan, will be at the mercy of for-profit enterprises — in this case, Highmark,” Kowalko said.
DeMatteis said it’s true that some services that are “not medically necessary” will meet higher scrutiny under the new plan, but that’s just one of the factors that will bring the overall cost down.
Traditional insurance, including the plans active state employees use, have had prior authorization requirements for decades, she noted.
“When it came out 40 years ago, people didn’t understand what managed care was,” DeMatteis said. “But we’ve been living with managed care very successfully now for 40 years and managed care is just that — it’s to make sure there’s an extra step to ensure that healthcare service is medically necessary.”
According to data from Highmark Blue Cross Blue Shield, during the past two years, 92% of all prior authorizations were approved initially. Of the 8% that were denied, at least 1% were overturned on appeal.
“So then you have to look at that 7% of healthcare services that are denied because they’re not medically necessary,” DeMatteis said. “It has nothing to do with emergency services and has nothing to do with life-threatening chronic care conditions, but 7% of what we previously had been paying for without any questions asked may be deemed not medically necessary and quite frankly, very costly.”
Former state Sen. Karen Peterson, D-Christiana, called prior authorization requirements a “barrier to care.”
Peterson pointed to an April 2022 report from the U.S. Department of Health and Human Services Office of Inspector General which found that the companies offering Medicare Advantage programs “sometimes delayed or denied Medicare Advantage beneficiaries’ access to services, even though the requests met Medicare coverage rules.”
“Some of those delays lasted months and others resulted in death,” Peterson said. “While waiting for pre-authorization, some people have died.”
DeMatteis said the pre-authorization requirement will root out things like cosmetic and experimental surgeries — not life-saving care.
“Is it possible that somebody who’s receiving medication for a chronic care condition will need prior authorization when they seek approval for the first time under Medicare Advantage? Possibly, yes,” she said.
“But if it’s a chronic care condition and it’s life-threatening and there’s a history of that patient receiving it and it helps their condition, it’s not going to be denied.”
Requiring prior authorization for certain prescriptions and procedures isn’t the only thing Highmark plans to do to wrangle costs.
The company has been working with Delaware hospitals over the past two years to “make them understand” that the reimbursement rates they were charging under traditional Medicare were unfair, DeMatteis said.
“For health care to be sustainable, particularly for our seniors, we had to shift the cost differential,” she said. “So the reason it’s possible to move to Medicare Advantage is because of the work Highmark did with our hospitals to lower reimbursement rates.”
Most importantly, she said, the plan will have a heightened focus on preventative care and management of chronic care conditions “so that seniors don’t get really sick and then need more expensive care.”
Rep. Ruth Briggs King agrees that something had to change.
“The plan is pretty much similar to Medicare and I think there’s a lot more information to be shared,” she said. “When you read on the internet negative things about Medicare Advantage and it’s a privatized plan, it’s not one that’s been constructed by the state with a special contract.”
Kowalko said there are better ways to stabilize the pension benefit plan that wouldn’t require a switch to Medicare Advantage.
“Take the $122 million that you proposed to waste on reconstructing Legislative Hall and put that into this pension benefit fund,” Kowalko said. “Then take the other $150 million that this governor has yanked out of the budget surplus under his bullsh-t budget smoothing plan and put that in there. That quarter of a billion dollars will go a long way to smoothing the gap that is existing right now in our ability to appropriately fund the pension benefits plan.”
Sen. Dave Lawson, R-Marydel, said there’s plenty of waste in the state budget that the General Assembly should look at cutting, but changing the agreement the state made with its retirees on the medical coverage they’d receive isn’t where the government should start.
Kowalko said the switch to Medicare Advantage was slipped into the FY 2023 budget during the Joint Finance Committee’s annual mark-up process.
There was little to no discussion on the item during the committee hearing, he said, and the change was approved “just like hundreds of mark-ups in front of the JFC.”
“It was spit out into the budget and passed by General Assembly,” Kowalko said. “On June 30, we … say ‘Our work’s done here — another good year accomplished.’ And then a month later, the details of what we’ve done, inadvertently, without our knowledge, but inexcusably, is coming back to bite our retirees in the godd-mned a-s.”
Lawson said it’s not fair to suggest that legislators knew they’d be changing retirees’ health insurance when they voted on the budget.
“The only thing we voted on was to reduce the $10 billion underfunded liability by taking 1% of the annual budget each year and putting it toward that,” he said. “To say that we voted on it — yes, we voted on the 1%, but we didn’t vote on the intricacies of this contract. They say they haven’t even finalized the contract.”
Kowalko said he’s asked repeatedly for a copy of the contract so that he can determine whether there are any loopholes that the General Assembly might take advantage of to delay the plan’s implementation.
“I don’t know whether it will require legislative action,” he said. “But I do know that legislative action certainly would be one path to redeeming ourselves as representatives of the people.”
Briggs King said she feels the process was “open and transparent,” but she’s approaching the matter with “guarded optimism.”
“I just think that a lot of people didn’t think it would be that big of a change,” she said. “But I don’t think many people agree that it’s going to be devastating and I certainly think that this might be a better option rather than dropping some other retiree benefits.”
Lawson said there are too many unanswered questions about the new plan.
“They held the meetings but I sat through one of those and I felt like it was an infomercial from Dr. Oz,” Lawson said. “If you’re selling a product, you’re probably going to tout the goodness of it and kind of let the other things slide.”
DeMatteis said her mother, who recently passed away, was a state employee for more than 25 years.
“She’d be asking the same questions — but I would never do anything that would hurt her health care,” she said. “That’s why I’m confident that this is the right thing to do.”
On Sept. 3, Kowalko and Rep. Madinah Wilson-Anton, D-Newark, emailed DeMatteis asking to see a copy of the contract as agreed upon in Feb. 2022.
“I have received a lot of questions and concerns from my constituents on this matter,” Wilson-Anton wrote. “An understanding of the proposed amendments to the February plan is necessary for me to better serve my constituents. My understanding is that these documents are public records and should be made available to us.”
As of Tuesday, Wilson-Anton hadn’t received a response from DeMatteis, she said.
Lawson said he also asked to see a copy of the contract and was told “it’s not finished yet,” and “it’s proprietary.”
“Wait a minute — it’s a public contract,” Lawson said. “So it’s just things like that — for me, it doesn’t pass the smell test and I’m suspicious and I’m trying to get to the bottom of it.”
DeMatteis told Delaware LIVE News “the contract is not finalized.”
“We knew we would need to amend it before implementation started on Jan. 1 so that actually is not an issue,” DeMatteis said. “Rep. Kowalko, I think, is trying to play both sides of that. He’s trying to say, ‘If you don’t have a final contract, then you can delay it,’ and, ‘How could you sign a final contract before the General Assembly voted on it?”
DeMatteis said Highmark, “to their credit,” is addressing some concerns raised by retirees and the state is “actively amending the final contract as we speak — so that actually is not an issue.”
In addition to SilverSneakers, the new plan will offer 28 free home-delivered meals for up to 14 days following discharge from an inpatient hospital stay.
Kowalko isn’t sold. He said instead of being called Medicare Advantage, the program should be called the “Draconian disadvantage plan.”
Lawson said he’s heard the phrase, “You can keep your doctor” before and it didn’t turn out too well the last time.
“I don’t like the way that government runs around speaking from any orifice that they decide to speak from,” Lawson said. “Can we just be honest?”
What to know about Medicare Advantage
State of Delaware Medicare-eligible pensioners and dependents who are enrolled in the Highmark BCBS Delaware Special Medicfill Plan with prescription will automatically transition to the Highmark BCBS Delaware Freedom Blue PPO Medicare Advantage plan with prescription through SilverScript effective Jan. 1, 2023.
According to a frequently-asked-questions sheet from the state, pensioners should not elect to opt-out of the plan if they only have medical and prescription plan coverage through the State of Delaware.
“State of Delaware pensioners will receive the same covered services including coverage outside of the U.S. and medically necessary home health services under the Highmark BCBS Delaware Freedom Blue PPO Medicare Advantage Plan as they did under the Highmark BCBS Delaware Special Medicfill Medicare Supplement Plan,” the state says on the FAQ sheet.
For retirees who no longer live in the state, the Medicare Advantage plan provides access to any doctor, specialist, hospital or other medical provider who is eligible to participate in Medicare, although they are not required to accept Medicare Advantage.
Benefits and coverage levels are the same for medically necessary covered benefits in and out of the network, according to the state.
More information on the Highmark BCBS Delaware Freedom Blue PPO Medicare Advantage Plan, including a Summary of Benefits, will be available in September. Information can also be viewed at DelawarePensions.com.
For a list of frequently asked questions and answers, click here.
More on Medicare Advantage
Medicare Advantage plans, sometimes called “Part C” or “MA plans,” are offered by private companies approved by Medicare. The plans are commonly seen as a cheaper alternative to traditional Medicare plans.
Advantage plans bundle together parts A, hospital coverage, and B, doctor and outpatient services.
All state retirees, including retired Delaware teachers and college and university faculty covered through the state of Delaware’s health benefits, will be switched to the Freedom Blue PPO Medicare Advantage plan administered by Blue Cross Blue Shield.
State officials say the new plan will offer pensioners all of the same benefits offered with the State of Delaware’s 2022 Special Medicfill plan, including $0 copays and the same access to doctors and hospitals.
Retirees will receive a new Freedom Blue PPO Medicare Advantage plan ID card in December 2022. Enrollees are encouraged to use the new ID card for all care beginning Jan. 1, 2023. State retirees will no longer have to present their red, white, and blue Medicare card for care, but are encouraged to keep them in a safe place.
Members must keep and continue to pay their Medicare Part B premium with the new coverage. The Freedom Blue PPO does not include Part D prescription drug coverage, but pensioners will continue to receive prescription drug coverage from the State of Delaware Medicare Part D prescription drug coverage through SilverScript administered by CVS Caremark.
Why change health insurance?
In February 2022, the State Employee Benefits Committee awarded a 3-year contract to Highmark Delaware for administration of a Medicare Advantage plan to be available to eligible State of Delaware pensioners and dependents beginning Jan. 1, 2023 and to replace the current Highmark BCBS Special Medicfill Medicare Supplement Plan.
According to state officials, the change in the Medicare pensioner health plan offering is part of the broader review that has been underway with the Retirement Benefits Study Committee.
DeMatteis said additional information will be available this month.
“Typically, in other years, we’d start communicating with seniors about their Medicare in September but because of this change, we started communicating with them June 1,” she said. “In October, we’ll have 18 public education sessions up and down the state.”
The state will send out two more mailers in September and hold a town hall event on Sept. 12 with lawmakers and stakeholders present to answer questions.
Meanwhile, Kowalko and New Castle County Councilwoman Lisa Diller have teamed up to form RiseDelaware, which stands for “Retirees Investing in State Equity Delaware.”
The group is described as “a new membership organization dedicated to educating, advocating and informing State of Delaware retirees about what is happening with their health and pension benefits.”
“State legislators could demand that this contract be put on hold and investigate the matter,” Kowalko said in a press release announcing the group’s formation. “They need to do their own research and not to trust canned email responses crafted by the administration for their constituents.”
- Frequently asked questions
- Prior authorization overview
- Statewide Benefits Office resources
- Office of Pensions resources
- Traditional Medicare to Medicare Advantage comparison
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