What Really Goes on Behind the Scenes of the Medicare Industry Each Year

By RetireMEDiQ

Every year during the fall, you probably notice an increase in television and radio ads selling Medicare plans. This is because Medicare’s open enrollment season runs from October through December. But have you ever wondered what the government and insurance companies are doing the rest of the year? Here’s a peek into what goes on behind the scenes the rest of the year.

February: CMS Releases the Draft Call Letter

Each year, usually in early February, the Centers for Medicare & Medicaid Services (CMS) publish the “Medicare Advantage and Part D Advance Notice and Draft Call Letter.” You may see this simply referred to in the news as the “Draft Call Letter.” So what is this letter and what does it mean? Let’s break it down.

Who creates the Draft Call Letter and what is it for?

CMS writes the Call Letter. Put simply, the Call Letter outlines the government’s policies, procedures and plans for the Medicare program for the following year. This includes items like what the government will pay private insurance companies, what the insurance companies can and can’t do, the proposed requirements for the Star Ratings Program for the coming year, and more.

Why is it called a draft letter?

The Call Letter is initially referred to as a draft because CMS makes it available first for public review and comment before finalizing it in late March.

April: The Final Call Letter is Published

After the time frame for public review and comment is over and CMS finalizes their plans, the Final Call Letter is published. This document usually comes out in early April and determines all the specifics for the Medicare program for the following year.

What happens after the Final Call Letter is published?

While many organizations and agencies are affected by the Call Letter, we will explain what this means for the insurance companies – and ultimately you! Once the Final Call Letter is published, the insurance companies roll up their sleeves and get to work. They use this document to determine how to structure their plans’ benefits, networks and rates for the coming year. Oftentimes, if the government has decided to cut payments to the insurers, those companies use this period to come up with creative ways to provide benefits to their enrollees while still hitting their business goals.

Can insurance companies make drastic changes to prices or benefits if the government won’t pay them as much?

The short answer is no. CMS includes specific requirements in the Call Letter that tell insurance companies how many changes they can make to benefits, costs, networks and more. The bottom line: insurance companies do not have a lot of wiggle room when it comes to making big changes to costs and benefits. The government includes these rules in order to protect consumers from outrageous price increases or volatile shifts in benefits.

June: Insurance Companies Submit Their Draft Plans to CMS

In June, after months of work, the insurance companies submit their suggested plan changes to the government for review and approval. These changes have to meet specific standards and follow the rules that the government outlined in the Call Letter.

What if an insurance company proposes a change that doesn’t follow the rules?

For the most part, insurance companies comply with the rules laid out by the Call Letter. However, if an insurance company feels they need to make a plan change that goes beyond those guidelines, they must rigorously defend the proposed change to CMS.

August: Insurance Companies Receive Approval from CMS on Their Insurance Plans

By late summer, insurance companies and the government reach an agreement on their suggested plan changes for the coming year. The insurers finalize these approved plans and then must get to work on letting the public know about these changes.

September: Insurers Must Mail the Annual Notice of Change to Their Plan Members

Once all the plan changes have been approved by the government and finalized, the insurance companies are required to let their members know. They do so by mailing the Annual Notice of Change (ANOC) to you no later than September 30. This is where you come in!

In a nutshell, this 200+-page document lets plan members like you know what changes are coming to your plan, what benefits will be covered, what you can expect to pay for benefits and much more. We highly recommend that everyone reviews the ANOC each year. However, if you are on a Medicare Advantage plan or a Prescription Drug plan, it is critical that you review this document each year.

October: Let the Medicare Games Begin!

Insurance companies are officially allowed to begin marketing their Medicare plans on October 1—but not a day sooner. In fact, even agents are restricted from talking about Medicare plans before this date!

Around this time, you probably notice all the Medicare ads and may even see insurance agents in the grocery store. This is all in preparation for Medicare’s Annual Enrollment Period (AEP).

Open enrollment usually begins on October 15 and ends on December 7. During this time, you can “shop your plan options” by comparing Medicare plans and switching from your current plan to a new one. In most cases, you can switch as many times as you want during that time frame. However, whatever you are enrolled in on December 7 is the coverage you will keep for the coming year.

It’s important during the shopping season to pay attention to any potential changes coming to your plan. You may even want to talk to an expert (like RetireMEDiQ) about your health plan options.

Once AEP is over…then what?

After AEP ends on December 7, many insurance companies are busy sending out new ID cards and getting things squared away for the coming year. And come January, the whole process starts all over again!

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