Q&A: How does the new state retiree health plan affect retirees?

  • Department of Administrative Services Commissioner Charlie Arlinghaus addresses a group of state retirees in Bow on Monday, June 18, 2018, about a sweeping new change to the state retiree health care plan. Ethan DeWitt / Monitor staff

Monitor staff
Thursday, June 21, 2018

By January, New Hampshire’s health insurance plan for state retirees is set to undergo a significant change. In a unanimous vote Wednesday, the Executive Council approved a plan to move 9,600 Medicare-eligible recipients off the “Medicomp” supplemental health insurance plan and into “Medicare Advantage,” a new initiative under Medicare Part C.

The change is expected to save the state $11.8 million and create a better relationship among patients, providers and insurers while maintaining the benefits the recipients currently enjoy.

But promises are easier made than kept. Workers who have for decades seen promised health benefits slashed under new economic and political realities have met the announced shift with a healthy dose of skepticism.

On Monday, a group of state retirees met with top officials in the department for more than an hour, unloading a series of questions about how the new program would work and how it would affect them.

Here are some of them, answered.

Will this change cause me to lose my care?

No. All services, drugs and benefits that were previously available under the present Medicare plan will continue to be available under the new plan, which will continue to be managed by Anthem, officials say. All facilities that accept Medicare – whether in New Hampshire or other states – will continue to do so for recipients. And everything not included in the plan will stay that way, too.

What is changing is the way that the care is being paid for, and how it’s being coordinated. Whereas Medicare recipients currently have to juggle Part A (hospital expenses), Part B (provider costs) and Part D (pharmaceuticals), the new Part C program allows Anthem to coordinate that all itself. The idea is a more comprehensive distribution of care that allows Anthem to find blind spots more easily and check up on patients more frequently, which, officials say, will benefit all parties in the end.

When is this taking effect?

The plan will kick in Jan. 1, 2019. On that day, all current Medicare-eligible recipients will be transferred over. All new recipients after that date will be automatically enrolled.

What do I need to do to prepare?

Not much. As part of the change, the department will be issuing new cards for Medicare-eligible state retirees: Medicare Advantage cards. Those cards will supersede the Medicare Part A and B cards that recipients already have. But don’t throw them out; they might come in handy should the state ever transfer back. Instead, consider filing them away, said Joyce Pitman, director of risk and benefits at the department.

Officials also recommend that those transitioning get in touch with providers alerting them to the change. The new program will involve a more involved relationship between the insurer and the doctors and providers, so a heads up will help with that.

One thing that won’t change: Express Scripts, the program that covers prescription drugs under Medicare. That program will continue, and with it the card necessary to use it.

Why is this happening?

New Hampshire has struggled to keep its state retiree health plan solvent in recent years. It’s currently self-funded, meaning that the state still contracts with Anthem but assumes the financial risk of the plans should premiums be insufficient to cover a spike in claims. That model suffered setbacks in 2015, when the state found itself more than $10 million in the red after the Legislature didn’t set aside enough money.

The new plan would be fully insured, putting Anthem on the hook for any unanticipated claim costs as long as it receives its premiums. That’s important: Projections are that the state would owe Anthem $41 million in medical claim costs and administrative costs if it stayed the course.

As designed, the program would allow Anthem to leverage a larger amount of federal dollars – $11.8 million – to cover its end of the costs. And by switching to a more comprehensive service under Part C, Anthem is hoping to better control costs by addressing health issues before they become more expensive.

But the savings do not mean the department suddenly has a lump of money to throw around. Rather, the savings represent $11.8 million that the department doesn’t have to request from the Legislature during budget negotiations next year.

Why is it being done now?

The idea of moving to a Part C program has been batted around by state officials for years, and it’s one that the federal government has been pushing on states since 2003, primarily through funding enticements.

But it took time before Anthem, the New Hampshire retiree system’s provider of choice, could grow large enough to qualify. It was only in December 2017 that the insurer achieved a high enough star rating with CMS – the federal agency that oversees Medicare – to qualify for the $11.8 million that makes the switch-over worth it.

When that happened, the ball started rolling on cobbling together a new arrangement. Wednesday’s vote seals the deal.

Will this move keep my premium costs stable?

Not in the least! The change will help the state tamp down its administrative costs, but it will by definition do nothing to address the rise in service expenses, drug prices, and the overall cost of care. Those forces are likely to continue to raise premiums, officials warned Monday.

And the savings to the state are probably only short-term as well; rising costs will eventually necessitate greater payouts from the Legislature as well. “We’re bending the curve,” one retiree characterized the savings Monday.

What happens if this fails?

If the federal funding is cut off down the line, or the claims costs become overwhelming, the state may simply transition retirees back to what they have now, necessitating an increase in costs, officials said. That change, they said, would not affect recipients’ care (provided the Legislature is on board).

Nonetheless, department representatives said they are confident in the change, calling the new program a fail-safe way to keep all the benefits but reduce the risks. What happens down the road will be at the whim of something bigger than the Granite State.

(Ethan DeWitt can be reached at edewitt@cmonitor.com, or on Twitter at@edewittNH.)