History of Medicare Supplement Plans – Medigap Insurance: 1980′s
The history of Medicare Supplement Plans - Medigap insurance takes us back to 1980. What began as voluntary standards governing the behavior of insurers increasingly became requirements. Consumer protections were continuously strengthened, and there was a trend toward the simplification of Medicare Supplement Plans – Medigap Insurance reimbursements whenever possible. During the 1980s the federal government first provided a voluntary certification option for Medicare Supplement, or Medigap Insurance, insurers in Section 507 of the Social Security Disability Amendments of 1980, commonly known as the “Baucus Amendment.” In order to meet the Baucus Amendment’s voluntary minimum standards, the Medicare Supplement plan was required to:
- Meet or exceed the National Association of Insurance Commissioners (“hereinafter referred to as “NAIC”) model standards for such plans, and
- Return to policyholders as aggregate benefits at least 75% of the aggregate amount of premiums collected in group policies and at least 60% of the aggregate amount collected in individual policies.
Whether or not the insurers met these voluntary standards, the Secretary of Health, Education, and Welfare (now Health and Human Services, or “HHS”) was required to:
- Make information available to Medicare beneficiaries about the value of Medicare Supplement policies;
- Study the methods the states used to regulate Medicare Supplement plans; and
- Report to Congress, at least once every two years, on the effectiveness of the certification procedure.
The move toward increased consumer protections was evident beginning in the late 1980s. The Medicare and Medicaid Patient and Program Protection Act of 1987 provided that individuals who knowingly and willfully make a false statement or misrepresent a medical fact in the sale of a Medicare Supplement Plans – Medigap Insurance Insurance, policy are guilty of a felony.
The Omnibus Budget Reconciliation Act of 1987 permitted the participating physicians or suppliers to be paid directly by the Medicare Supplement insurance carriers.
The Medicare Catastrophic Coverage Act of 1988 (hereinafter referred to as “MCCA”) improved the information available to potential Medicare Supplement Plans – Medigap Insurance Insurance purchasers by directing the Secretary of Health and Human Services to inform them about sales abuses, publish a toll-free phone number to report such abuses, and inform potential beneficiaries of the addresses and telephone numbers of state and federal offices that provide information and assistance. The MCCA also required that Medicare Supplement, or Medigap Insurance, plans offered in a state meet or exceed the NAIC guidelines. If this requirement was not met, federal model standards would be established for that state. Several provisions in MCAA would have made additional changes to original Medicare, but they were repealed before they went into effect by the Medicare Catastrophic Coverage Repeal Act of 1989. The changes made by the MCAA included the following:
- Expanding Medicare Part B benefits;
- Imposing an annual supplemental Medicare premium on Part A beneficiaries whose tax liability equaled or exceeded $150; and
- Imposing an out-of-pocket maximum on Part B expenditures.
These changes would generally have lowered the Medicare beneficiary’s level of cost-sharing, and therefore, interact with Medicare Supplement, or Medigap Insurance, plans
History of Medicare Supplement Plans – Medigap Insurance: 1990′s
The history of Medicare Supplement Plans – Medigap insurance, continues through the 1990′s. It was during the 1990′s The Omnibus Budget Reconciliation Act of 1990 replaced some voluntary guidelines with federal standards. Specifically, the The Omnibus Budget Reconciliation Act of 1990 did the following:
- Provided for the sale of only 10 standardized Medicare Supplement Plans – Medigap Insurance (in all but three states);
- Guaranteed plan renewability (with rare exceptions);
- Prohibited the selling of policies that duplicated certain health insurance provisions to which a beneficiary was entitled, for instance through a retiree health plan;
- Curtailed the use of preexisting condition limitations and other forms of health based pricing;
- Required that insurers return to policyholders as aggregate benefits at least 75% of the aggregate amount of premiums collected in group policies and at least 65% of
the aggregate amount collected in individual policies; and,
- Introduced Medicare Supplement Plans – Medigap insurance, SELECT plans in 15 states. The Medicare SELECT Supplement plans provided a managed-care option for beneficiaries with reimbursement within a limited network.
The Act to Amend the Omnibus Budget Reconciliation Act of 1990, which was passed in 1995, extended the Medicare SELECT Supplement plans beyond the initial 15 states’ demonstration program to every state, at each states’ choice.
Two of the statutes, or Acts, enacted during the 1990s continued to emphasize consumer protections. The Balanced Budget Act of 1997 imposed restrictions on preexisting condition exclusions during the initial Medicare Supplement Plans – Medigap insurance, Open Enrollment Period when the Medicare beneficiary is at least 65 years of age and meets a requirement for previous health insurance coverage. In addition, the Budget Reconciliation Act requested that the Secretary of Health and Human Services ask the NIAC to develop two high deductible Medicare Supplement – Medigap plans. As a result, the High Deductible Plan F and Plan J were created.
The Ticket to Work and Work Incentives Improvement Act of 1999 permitted disabled Medicare beneficiaries to request the suspension of a Medicare Supplement Plan – Medigap insurance, when they were covered under a major medical group health policy.
The Social Security Act Amendments of 1994 modified the Omnibus Budget Reconciliation Act . As listed above, The Omnibus Budget Reconciliation Act barred the sale of policies that duplicated other coverage to which a Medicare beneficiary was entitled. Therefore, The Omnibus Budget Reconciliation Act had the unintended consequence of insurance companies refusing to sell Medicare Supplement Insurance – Medigap insurance, policies to Medicare beneficiaries who had any other type of private non-Medicare insurance coverage regardless if the other coverage was very limited. The Social Security Act Amendments of 1994 amended the Omnibus Budget Reconciliation Act of 1990 requirements by narrowing the anti-duplication provisions and clarifying the circumstances under which insurance companies could sell health insurance policies which duplicated non-Medicare insurance coverage.
The Omnibus Consolidation and Emergency Supplemental Appropriation Act of 1999 required that providers or facilities that paid Medicare Supplement Plans – Medigap insurance, premiums for Medicare beneficiaries be subject to civil penalties. This legislation attempted to avoid conflicts of interest created when providers or facilities first paid premiums and then self-referred patients.
History of Medicare Supplement Plans – Medigap Insurance: 2000′s
The history of Medicare Supplement Plans – Medigap insurance continues through the 2000′s. The Consolidated Appropriations Act of 2001 specified various anti-discrimination provisions. In particular, individuals who experienced certain changes in their health insurance status (i.e., involuntary termination of a Medicare Supplement, or Medigap Insurance, plan) were guaranteed the right to purchase a new Medicare Supplement, or Medigap Insurance, plan and were protected against preexisting conditions exclusions.
The Medicare Prescription Drug Improvement and Modernization Act of 2003 (hereinafter referred to as “MMA”) included various changes in Medicare Supplement Plans – Medigap insurance plans. Based upon the fact that the MMA added the Medicare Part D drug provisions, Medicare Supplement Plan – Medigap insurance, plans containing drug benefits could no longer be sold to those who did not already have them. The Medicare beneficiaries whose Medicare Supplement Plans – Medigap insurance, policies were issued before January 1, 2006, and did contain drug coverage were allowed to keep their existing Medicare Supplement Plan – Medigap insurance, policy as is, or in some cases the Medicare beneficiary could keep their existing policy minus the drug benefit, or the Medicare beneficiary could purchase Medicare Part D together with either their old Medicare Supplement Plans – Medigap insurance plan minus the drug benefit or certain new Medicare Supplement Plan – Medigap insurance plans. In particular, individuals with Medicare Supplement Plans – Medigap insurance Plan H, Plan I, and Plan J were guaranteed the right to purchase any of Plan A, Plan B, Plan C, and Plan F with the same insurance company. Moreover, the insurance company could not use the Medicare beneficiary’s health status, claims experience, receipt of health care, or medical condition to determine the premium. Additionally, excluding preexisting conditions from these policies was also prohibited.
The MMA also requested that the Secretary of Health and Human Services request the NAIC to develop additional Medicare Supplement Plan – Medigap insurance plans. Specifically, the two new plans were to incorporate coinsurance and a maximum out-of-pocket limit. No plans available in 2003 had these features. These two plans became Plan K and Plan L. Any other Medicare Supplement, or Medigap Insurance, plans developed by the NAIC did not have to incorporate these features, but were required to exclude prescription drug benefits. Medicare Supplement Plan M and Plan N fell into this category. In some instances, the MMA changes created two identical Medicare Supplement Plan – Medigap insurance plans; therefore, the existing Plan E, Plan H, Plan I, and Plan J were eliminated because they duplicated other plans.
The Medicare Improvements for Patients and Providers Act of 2008 set standards for which Medicare Supplement Plan – Medigap insurance plans that insurance companies must offer. Specifically, insurance companies that wanted to offer plans beyond the basic least comprehensive plan, Plan A, were required to offer at least one of the most comprehensive plans –Plan C or Plan F. The Genetic Information Nondiscrimination Act of 2008 prohibited discrimination by health insurance companies and employers based on genetic information. Finally, Section 3210 of the Patient Protection and Affordable Care Act of 2010 requested that the Secretary of Health and Human Services request that the NAIC “review and revise” cost-sharing in Medicare Supplement, or Medigap Insurance, Plan C and Plan F.
History of Medicare Supplement Plans – Medigap Insurance
The history of Medicare Supplement Plans – Medigap insurance brings us to the current standardized plans, which are the third generation of Medicare Supplement Plans – Medigap insurance plans included in statutes. The first group of plans predated the plan standardization mandated by Omnibus Budget Reconciliation Act of 1990. The second group of plans, labeled Plan A through Plan J, were standardized and became effective in a state when the terms of Omnibus Budget Reconciliation Act of 1990 were adopted by the state, mainly in 1992.
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