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How New Medicare Cards Deter ID Theft

There are big changes Medicare has planned in 2018 that will help protect the identity of seniors and continue proper health benefits. The biggest and best change will be the new Medicare ID cards.

When Medicare recipients receive their Medicare card, they are typically shocked to see that their Medicare Identification number is the same as their Social Security number. Medicare beneficiaries run the risk of identity theft when they have their Medicare card in their wallet or purse; it would be comparable to walking around with their Social Security card in their possession.

Identity theft is a major issue; when someone has the Social Security number of another person the thief can apply for loans, open bank accounts and possibly gain employment. When someone has your Social Security number, the person has the key to your credit and identity.

The Social Security administration and the Federal Trade Commission have been urging the Centers for Medicare and Medicaid Services to change the Medicare Identifier for years.

Finally, after years of requesting that changes be made, CMS has made the decision to move to updated cards that do not have a Social Security number as the Medicare identifier. These updated cards were sent via mail in the beginning of April 2018. CMS anticipates all Medicare beneficiaries will have a new, updated card by April 2019.

What to Expect from the New Medicare Cards

The updated Medicare cards will feature a new Medicare Beneficiary Identifier (MBI) number. The card will display a randomly assigned number for all Medicare recipients.

Healthcare providers and Medicare beneficiaries will be able to securely access tools that will allow them to look up MBIs as needed.

During the 21-month transition period, it will be possible for providers to use a patient’s Social Security number or the new MBI number. The transition period was put in place to help things run smoothly for providers and patients across the nation. The issuance of a new card will not affect Medicare benefits.

The new MBI number will have 11 characters, with a combination of numbers and uppercase letters. These new numbers will have no special meaning, making it safe to keep in your wallet or purse.

The new cards will be mailed to you based on your geographical location; however, it is possible that you and your neighbor will get a new card at different times.

See also: Identity Theft Can Be Double Whammy

The Transition Period

CMS is trying to make the transition smooth for caregivers, patients and others who need accurate Medicare information. The transition period will allow beneficiaries and providers to exchange Medicare information with CMS using MBI or a Health Insurance Claim Number; this period is scheduled from April 1, 2018, until Dec. 31, 2019.

On Jan. 1, 2020, beneficiaries and caregivers will be required to use an MBI for most situations. It is suggested that beneficiaries keep an eye out for their updated Medicare card, and when it comes they should get into the habit of using their new MBI early.

Obtaining an Updated Card

Beneficiaries should destroy their old cards immediately after receiving their updated Medicare card. Once the new card is in possession, you can start using it at once. It is important that you keep your new MBI number confidential and watch the mail carefully so that you are aware when the new card is delivered.

The new cards are going to be made of paper, making it easier for providers to use and copy. If you are enrolled in a Medicare Advantage Plan, the Plan ID card is the main card you show to your providers, although a healthcare provider may ask to see your MBI card, so keep it with you.

How to Protect Your Identity Now

Identity thieves have noticed seniors as ideal victims for identity fraud. Seniors typically have more money in their checking and savings accounts, and they have paid off their major financial obligations.

Because seniors usually receive Medicare benefits, the door for identity theft in the medical industry is wide open. Because most seniors are not purchasing a new home or taking out a large loan, they have no reason to stay informed and therefore check their credit score less often.

How to Keep Important Documents Safe:

  • Make copies of your insurance cards
    • Make a copy of your insurance card and remove the last four digits of your Social Security number.
    • Leave the original at home.
    • If you do need to take an original, remove the card from your wallet after the appointment and store it in a safe place.
  • Keep important documents safe:
    • A home safe can allow you to store important documents; if you have highly important documents, you might want to consider a bank safety deposit box for documents you do not need often.
    • Never carry around extra bank cards, credit cards you don’t frequently use, any health insurance card or your Social Security card.
  • Protect computer and internet access:
    • Be sure you use anti-virus, anti-spyware and firewall software to combat hacking programs that are designed to steal personal information.
    • Be creative with passwords and never use the same passcode for multiple accounts. Changing passwords regularly can ensure privacy.
    • Never send personal or financial information through an email, no matter the situation or company.
    • Be sure to have your Wi-Fi network password protected and secure. Your internet installation service rep can help make sure your wireless network is protected.
  • Check your credit frequently: Per the Fair Credit Reporting Act (FCRA), every 12 months a free credit report can be provided for you from each of the nationwide credit reporting agencies.
  • Destroy old documents:
    • Some documents need to be stored safely; others can be destroyed.
    • You should be destroying credit card statements, receipts, bank statements, tax documents, canceled checks and old driver’s licenses.

The Reason Behind a New Medicare Number

The current Medicare number for many beneficiaries is their Social Security number. The U.S. Railroad Retirement Board, state Medicaid agencies, Social Security, healthcare providers and health plans all use this number.

There are great dangers that can occur when a Social Security number is in the hands of a criminal. The Medicare Access and CHIP Reauthorizations ACT of 2015 is requiring CMS to replace the old numbers with a new updated Medicare Beneficiary Identifier.

These cards are being released for one primary reason, to better prevent seniors from being the victim of identity theft.

See also: 8 Questions on Medicare Set Aside

Be Aware of Scams

The reason for new Medicare ID cards was to prevent seniors from being the victims of identity fraud. Unfortunately, the change has inspired criminals to take a new approach. There have been attempts to mislead Medicare recipients, and more attempts are likely to be made through the transition. It is important that beneficiaries be aware of possible scams.

The new Medicare ID does not cost beneficiaries money. The new card has the same benefits as the current card. Do not give the new card to anyone other than a healthcare provider. Many identity thefts are committed by friends and family.

Medicare will not ask you to give personal information to obtain your new number and card. Nobody should contact you about the new Medicare card, your new number or any personal information.

Medicare does not make uninvited calls to beneficiaries. If you think you are a victim of medical identity theft, contact the Federal Trade Commission about what to do next.

Advantages of Change

Because the new cards will not have a Social Security number, scammers will find it more difficult to commit fraud. Beneficiaries need to keep MBI numbers confidential and treat the numbers like personal identifiable information.

If a beneficiary forgets the new card at home, healthcare staff can search the new Medicare ID number on a secure site. All existing Medicare information will continue to be available to your doctor.

More than 57 million Americans will be provided with greater identity protection from the new Medicare ID cards. CMS intends a successful transition to the MBI for all people with Medicare and for their doctors.

Medicare Set Asides: You Are Overpaying

Medicare Set Asides (MSAs) have become a standard feature in settling workers’ compensation claims over the past 15 years. This year, MSA proposals for 26,000 workers’ compensation claims might be submitted to the federal government. We present new evidence that strongly suggests that this voluntary process of submission predictably and excessively inflates the cost of claims. For claims payers who are concerned about the burdens of set asides, this problem and its solution are top news.

Workers’ compensation claims payers far over-spend on Medicare set-asides (MSAs), paying as much as double what they need to. The conventional practice of submitting a MSA report to CMS for review and approval, which is entirely voluntary, predictably inflates costs and overburdens claims payers. Claims payers simply need to
change their gameplan.

This year alone, for some 26,000 claims and at an average of about $93,000, claims payers will set aside funds to reimburse Medicare for any medical care Medicare delivers to injured workers to treat their work injuries.

I became involved in this massive, cumbersome process of financial resolution in 2000. I participated and watched as most claims payers selected to follow a certain game plan. They’ve stuck to it.

In a nutshell, here is what happens, at an annual outlay of more than $2 billion. At the time of a claims settlement, claims payers want to cap their future financial exposure to Medicare. They know that if they submit to Medicare a report for funding (“set aside”) a fixed, irrevocable amount of money for treatment under Medicare, and Medicare approves the report, they can wash their hands of the
claim.

This method of resolution spawned a small industry of firms that help claims payers prepare these reports and negotiate an amount.

Problem solved – but at a very high cost.

First, the process is extremely convoluted and time-consuming. Our company’s survey of three dozen claims payers, which we undertook in 2016, revealed a very low level of trust in the process. Due to the involvement of Medicare, it is inherently bureaucratic.

Second, these irrevocable set-aside plans (“MSA reports”) tend to be extremely costly. They greatly inflate the projected treatment costs over actual treatment costs.

See also: 8 Questions on Medicare Set Aside  

Our company recently analyzed several hundred approved reports. We compared the forecasted spending on medical care (surgeries , medication, etc.) with actual spending on behalf of the injured worker for the first five years post approval of the MSA report. We found that in the fifth year, the pace of medication spending was 64% of the forecast and for all other medical care 55%.

In other words, close to half of the funds locked up in the MSA reports were not being used!

Another study confirms how medical spending declines for many claimants over time. We analyzed a huge database of eight million non-settled workers’ compensation claims, noting medical spending for as much as 11 years after injury. We focused on opioid treatment patterns, as opioids are both expensive and create patient safety risks. The data showed a rapid early decline, as we expected. But it strikingly showed that the decline in use never ceased. For instance, for every 100 claimants who were actively using opioids in the fourth year post injury, only 50% were using opioids in the seventh year and 25% were using opioids in the tenth year.

Why don’t MSA reports anticipate that medical spending will go down? The reason is due to mandatory rules that Medicare imposes. If you elect voluntarily to submit an MSA report, you must follow these rules, three of which are worth noting:

First, Medicare requires that medications (which compose about half of all set-aside budgets combined) be priced unrealistically high, at Redbook “average wholesale price,” or AWP. I cannot imagine a claims payer paying for drugs at that price. Pharmacy benefit managers arrange for prices that are as much as 30% lower.

Second, Medicare unrealistically requires that all medications be budgeted unaltered for the projected life of the injured worker. The average life expectancy for an MSA is 24 years.

There is no scientific assurance whatsoever that opioids are effective in providing long-term relief from pain, much less being safe to use for 24 years.

Third, Medicare requires that any treatment the worker is receiving or has planned at the time of settlement will continue. In reality, treatment evolves as patients adapt.

Rather than submit an MSA report, which locks the claims payer in to an inflated and unalterable fixed amount, the claims payer can prepare a MSA plan for the large majority of claims using realistic forecasts, fund it and enjoy a cap on its financial liability without submitting a report. CMS has always recognized a non-submitted, funded plan as sufficient to satisfy its secondary payer rights so long as certain compliance steps are taken, and in fact states that the submission process is a voluntary one.

See also: Medicare Set Asides: 10 Mistakes to Avoid  

There is a way to realistically predict the medical spending: refer to a huge database of actual spending. Care Bridge’s analytic-powered MSA generates a Medicare Set Aside plan in minutes, based on machine learning algorithms of more than a billion medical claim transactions. It forecasts future medical care and costs at a zip code level. The variables of a claim can be matched against a large data set of similar claims to forecast care, which offers a more objective and accurate projection compared with current methods. Our clients are able to fund Medicare protection at the most probable cost, rather than an inflated cost, and settle claims  six to eight months faster. This  offers  a defensible way to protect Medicare and manage risk at a more realistic cost.

An authoritative white paper, “Medicare Set-Asides: What Is the True Cost of Future Medical Care?” is available here.

More Opportunities for Reinsurers in Health

As insurers and regulators address uncertainties in connection with risk-adjustment, transparent health reinsurance emerges ever more forcefully as a marketplace solution for managing risk in connection with healthcare costs.

The immediate instance animating fresh reconsideration of health reinsurance is the early July Trump administration decision to desist from administering risk adjustment. The decision followed a federal court decision in New Mexico that found that the Centers for Medicare and Medicaid Services was being arbitrary and capricious in its risk adjustment.

There is nothing inherent in risk adjustment that makes rational and neutral implementation impossible. It is simply that CMS wasn’t doing that in New Mexico in the court’s determination, so the judge sided with Land of Enchantment insurers and rapped CMS’s knuckles.

Risk adjustment is a permanent element of the Affordable Care Act, or Obamacare, to transfer risk among insurers. Transitional reinsurance and risk corridors, elements of Obamacare that expired at the end of 2016, worked well… and badly. Transitional reinsurance had pooled enough money, coupled with $5 billion of Treasury subsidies over three years, to pay claims. Risk corridors, by contrast, paid but 12.5% on claims and put a number of insurers in the lurch. They had entered Obamacare markets on the supposition that risk corridors would pay vastly more.

Administration decision making on risk adjustment leads inescapably to uncertainty because of the potential for adverse selection, an escapable element of insurance.

Nicholas Bagley, a scholar, says that, “in one sense, the furor over the risk adjustment program may be overdrawn. The 2019 rule has been fixed, so we’re really talking about accounts receivable at this point. They’re big accounts receivable, amounting to hundreds of millions of dollars, but most insurers can handle a short delay in getting paid.

“In another sense, however, the needless suspension of the risk adjustment program is a signal that the Trump administration remains intent on sabotage. Already, insurers were stiffed on their risk corridor money. Then the cost-sharing payments evaporated. Now, even risk adjustment money may go up in smoke. What’s next? This is no way to run a health program, and no way to run a government.”

One practical solution is to embrace transparent health reinsurance, a proposal that ITL published in anticipation of fade-outs for risk corridors and transitional reinsurance just over two years ago.

If anything, conditions are more propitious now.

See also: Reinsurance: Dying… or in a Golden Age?  

This past fall, the president placed the foundation for association health plans. Last month, the Department of Labor issued implementation guidance, which will go into effect later in August, so associations of enterprises could jointly negotiate and purchase health care coverage. DOL says: “As it has for large company plans since 1974, the department’s Employee Benefits Security Administration will monitor these new plans to ensure compliance with the law and protect consumers. Additionally, states will continue to share enforcement authority with the federal government.”

Similarly, the Trump market liberalization for short-term, limited-duration insurance opens another market for reinsurers. As with association health plans, CMS says that, “in the final rule, we also strengthened the language required in the notice and included language deferring to state authority.”

The market liberalization initiatives, coupled with Department of Labor, CMS and state regulatory oversight, present signal opportunities for reinsurers.

For instance, in the emerging private flood insurance market, “market growth to date has largely been driven by the interest of global reinsurers in covering more U.S. flood risk,” the Wharton Risk Management and Decision Processes Center reported in July 2018.

Issuers would mitigate adverse selection.

Associations and issuers of short-term, limited-duration insurance would mitigate risk.

State legislators and regulators could enact statutes and set standards, their domain competencies.

Mandatory, state-based reinsurance is wholly feasible, particularly in densely populated states, for each marketplace offering.

This approach could go a long way toward creating foundations for accountable health organizations.

See also: The Dawn of Digital Reinsurance  

Innovators like Amazon Web Services could bring one element of available technologies, cloud computing, to provide fresh applications boosting asset values and volumes and increasing probabilities for effective service.

Associations, enterprises and individuals would experience greater healthcare security and quality.

How to Optimize Healthcare Benefits

Based on the trend toward value-based health insurance and reimbursement, health benefit plans are being designed to reduce barriers to maintaining and improving health and to promote higher-value healthcare services.

Value-based reimbursement requires providers to track and report a host of adverse events and population health measures, including biometrics, patient engagement and other measures required to demonstrate quality performance. Unlike the traditional fee-for-service model, value-based care attempts to align incentives of providers to deliver the right care in the right setting in lieu of maximizing the revenue of each encounter by delivering more services.

Providers receive incentives to use standardized, evidence-based medicine, engage patients, upgrade health IT and use more advanced data analytics to optimize their clinical and financial performance. When patients receive more coordinated, appropriate and effective care, providers are rewarded.

Accessing Care Quality and Safety Data

Plan sponsors and their benefits consultants or brokers who advise them need access to information about care cost, along with the quality and safety performance of those hospitals and physicians delivering care to their plan members.

See also: Taming of the Skew in Healthcare Data  

Quality measures are essential in optimizing the benefits of value-based models for all stakeholders. Success for all stakeholders depends upon how well healthcare providers can manage quality of care within tighter financial parameters.

This presents an opportunity for benefits consultants and brokers who are well-positioned to act as trusted advisers in educating and defining how best to design benefits plans to optimize for value. As educators and advocates, they can guide plan sponsors toward partners who will help them evaluate provider quality and safety.

Research shows that many U.S. employers that offer health insurance to employees are unfamiliar with objective metrics of health plan quality information. This gives benefits consultants and brokers an opportunity to outline the advantages of evaluating hospital quality to ensure that plan designs and benefits options include only high-quality hospitals and physicians who provide services at the lowest costs and encourage plan members through incentives to avail themselves to this narrower group of providers.

The Challenge: Hospital Ranking Variability

The significant challenge is the prevalence of numerous hospital quality rating methodologies. Even the slightest differences in adjustment methodology, data source, time period and inclusion/exclusion rules can produce differences in the hospital or physician ratings. This variation makes it more difficult for hospitals and physicians to prioritize and improve the quality of care delivered.

For instance, hospital ranking organizations, such as U.S. News & World Report, Healthgrades, Centers for Medicare and Medicaid Services (CMS) and Leapfrog, reflect substantially different results, fostering confusion to those less literate in healthcare analytics. In 2016, CMS gave 102 hospitals its top rating of five stars, but only a few of those were considered as the nation’s best by private ratings sources such as U.S. News & World Report or viewed as the most elite within the medical profession. First-tier academic journals like JAMA expressed deep concern about the lack of academic credibility in the methods used to assess performance and aggregate the conclusions into a single rating across many different measures.

Plan sponsors and their benefits consultants or brokers must educate themselves on assessing provider quality. While there is a myriad of rating services, many do not include elements essential to a precise and comprehensive assessment of providers.

See also: Healthcare Data: The Art and the Science  

Ratings approaches that use reputation or self-reported data should be considered less reliable than objective outcomes measures using patient level claims data. Additionally, hospital overall surveys or patient reported outcomes do not offer a valid basis for comparison. It is also not possible to use a single outcome measure – for example, risk-adjusted mortality — as a proxy for all outcomes like complications or readmissions because provider performance varies widely across measures. For a comprehensive assessment, all available measures should be incorporated for a specific clinical category. Lastly, aggregating outcomes data into composite scores must be scientifically sound.

As more employers seek greater value for their healthcare dollars, and as benefits consultants and brokers continue to pursue opportunities to help them reduce the upward cost spiral, quality ratings are an important first step toward realizing these goals and advancing the quest for improved employee health.