Retirement insights from a Colorado PERA perspective

A distant view shows a mountainous landscape with sloping peaks, green trees in the foreground, and a cloudy sky above.

In this story:



<ul><li>Enrollment in Medicare Advantage plans has grown steadily in recent years</li><li>PERACare is changing providers for PPO Medicare Advantage plans in 2022</li><li>UnitedHealthcare will offer same plan benefits, lower premiums</li></ul>



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More people than ever are enrolled in Medicare Advantage plans, and PERACare is making some changes in 2022 to make its plans more affordable and convenient for retirees.



A <a href="https://www.kff.org/medicare/issue-brief/a-dozen-facts-about-medicare-advantage-in-2020/" target="_blank" rel="noreferrer noopener">data analysis by the Kaiser Family Foundation</a> found that enrollment in Medicare Advantage plans – like those offered by <a href="https://www.copera.org/peracare" target="_blank" rel="noreferrer noopener" class="broken_link">PERACare</a> – has been steadily increasing since the early 2000s. In 2020, nearly 40 percent of all Medicare beneficiaries were enrolled in a Medicare Advantage plan rather than traditional Medicare, KFF found.



Colorado was one of 19 states where more than 40 percent of Medicare beneficiaries were enrolled in a Medicare Advantage plan in 2020.



<h4 class="wp-block-heading">The advantages of Medicare Advantage</h4>



Medicare Advantage plans are offered by private insurers and serve as “all-in-one” or “package” plans. They combine the benefits of Medicare Parts A (hospital insurance) and B (medical insurance) with Part D (prescription coverage) into one comprehensive plan. These plans also usually cover extra services that aren’t covered by original Medicare, like dental and vision and even gym memberships.



While Medicare Advantage enrollees pay a premium on top of the Medicare Part B premium, Medicare Advantage plans may have lower out-of-pocket costs for some services. They also have yearly limits on out-of-pocket spending on services that Part A and Part B cover, while original Medicare doesn’t have any limits.



Medicare Advantage plans differ from Medicare Supplement Insurance, also known as Medigap, which supplements the coverage provided by original Medicare. Medigap plans typically don’t offer as much coverage as Medicare Advantage plans and they don’t include prescription drug coverage. A retiree cannot have both Medigap and Medicare Advantage.



PERACare offers three Medicare Advantage plans for PERA retirees, in addition to four pre-Medicare plans for retirees who aren’t yet eligible for Medicare.



<h4 class="wp-block-heading">Cost-saving changes coming to PERACare</h4>



In 2022, PERACare is making some changes to the providers who administer PERACare’s Medicare Advantage plans. UnitedHealthcare will replace Anthem Blue Cross Blue Shield and Silverscript.



One reason for the change is that UnitedHealthcare is able to offer lower plan premiums than Anthem. The new plans will also combine medical and prescription coverage under one company, making for a more streamlined process for enrollees and their providers.



“We have designed the new UnitedHealthcare plans to mirror the current plans as closely as possible; if there are changes to benefits, they are upgrades, not downgrades,” said PERA Director of Insurance Jessica Linart. “Plus, UnitedHealthcare brings an expanded fitness center benefit with access to more gyms, the Real Appeal weight loss program, and a commitment to delivering our retirees a high level of customer service.”



Retirees enrolled in an Anthem plan will be automatically enrolled in a corresponding UnitedHealthcare plan and recently received a letter in the mail with details on their new, lower premiums. Most copays for the new plans will be the same, though some copays will be lower with UnitedHealthcare. Like Anthem, UnitedHealthcare offers nationwide coverage.



Enrollees in PERACare’s Kaiser Permanente HMO plan will also see a reduction in their premiums for 2022.



PERACare open enrollment began Oct. 11 and retirees will be able to sign up for coverage for the first time, or make changes to their existing coverage through Nov. 17. For more information on the changes on open enrollment, including details on <a href="https://www.copera.org/peracare-working-to-cut-costs-as-medicare-advantage-enrollment-grows" target="_blank" rel="noreferrer noopener">virtual meetings</a>, <a href="https://content.copera.org/peracare-working-to-cut-costs-as-medicare-advantage-enrollment-grows/" target="_blank" rel="noreferrer noopener">click here</a>.

PERACare Working to Cut Costs as Medicare Advantage Enrollment Grows

Two initiatives—one led by the state and one led by private parties—aim to address the rising cost of health insurance premiums in different ways. Both are still in early phases, but they have shown the potential to influence prices in the years ahead.



A New Approach to Setting Prices



Consumers fed up with rising prices often have a familiar request for insurance companies: “negotiate better prices!”



If only it were that easy.



Negotiating requires coming to an agreement. You could very well negotiate with a car salesperson by asking him or her to sell you a new sports car for $10,000. But the salesperson is under no obligation to agree.



In the case of health care providers, including hospitals, they aren’t required to join any health insurance plan. If an insurance plan asks for prices to be lowered, providers can say no.



And that’s not all. Insurers feel pressure from both sides of their business. As PERA’s Director of Insurance Jessica Linart puts it, “insurers want to keep prices low for clients, but they also have pressure from those same clients to keep a broad network.”



As much as consumers want low prices, if a person’s favorite doctor isn’t covered by their insurance, or, worse yet, if he or she was covered but dropped out due to hard-ball price negotiations that could motivate someone to look for insurance elsewhere.



In this sense, the negotiation between customer and insurer is as important as the negotiation between the insurer and a health care provider. And in order to keep their network as big as possible, insurers often must accept prices set by providers.



Health care in Colorado has an additional complicating factor, especially when it comes to hospital care. For years, hospital systems have been <a href="https://content.copera.org/can-these-ideas-control-health-care-costs/" target="_blank" rel="noreferrer noopener">growing and merging</a>, leading to concerns about <a href="https://www.coloradohealthinstitute.org/research/competition-conundrum" target="_blank" rel="noreferrer noopener">reduced competition</a>, which can keep costs high and lower quality.



While hospitals contend that the correlation among consolidation, competition, prices, and quality is tenuous, Colorado does have high hospital costs <a href="https://coloradosun.com/2019/05/13/colorado-hospital-prices-rand-study/" target="_blank" rel="noreferrer noopener">relative to other states</a>, regardless of the driving factors.&nbsp; And the <a href="https://coloradosun.com/2019/09/13/colorado-hospital-profit-margins/" target="_blank" rel="noreferrer noopener">profits hospitals generate</a> suggest to some that there is room for prices to come down.



It’s within this context that the <a href="https://www.copera.org/can-these-ideas-control-health-care-costs">Colorado Health Purchasing Alliance</a> (CHPA) was born. “The idea of the Purchasing Alliance is that they would take the carriers out of the discussion,” Linart said. “They put employers directly in negotiation with providers.” (Note: CHPA was created in and supported by <a href="https://www.copera.org/can-these-ideas-control-health-care-costs">Colorado Business Group on Health</a>, a non-profit, employer-led coalition “committed to collaboratively improving the health care value-proposition.” Colorado PERA is a member of CBGH.)



The Alliance works like this: Currently, insurance carriers negotiate with hospitals and providers for lower prices. The Alliance would effectively replace the insurance company as the main negotiator with hospitals. It would negotiate on behalf of all Alliance members collectively, rather than for each plan individually, and would create a network of hospitals all members could access. Insurers would still administer the plan and pay claims.



To incentivize hospitals to accept lower prices, the Alliance members would direct more business to those hospitals that deliver quality care for low prices through benefit incentives, such as lower copays. Hospitals that participate, for example, could see a boost in business as consumers flock to those facilities due to lower costs and quality care.



The negotiating power that comes with representing a larger pool of consumers is self-evident. But forging such agreements is not easy. Health risks, and their associated costs, carried by some groups are greater than others. PERACare, for example, is a retiree plan and consists of older people with more expensive healthcare needs than a plan built for a company or school that is built around a wide range of ages. While those in a retiree plan would jump at the chance to combine their risk with a younger risk pool, the enthusiasm to combine might not be as great on the other side. The Alliance sidesteps this problem by focusing squarely on setting up a network, not joining risk pools together.



PERA is actively monitoring the development of the CHPA. The Alliance is still in its early phases and no network is currently operational. But it does hold potential to lower costs for members in the future. “What PERA hopes is that if the Alliance gets this up and running, we can participate,” Linart said. “Our members would benefit from the lower cost as the long-term goal is that this would bring down premiums.”



Reinsurance—Managing the Outliers



Imagine going out to dinner with a few friends and agreeing to split the check. Everyone orders a $10 burger and a $5 beer except for one person, who orders a $40 T-bone and a $100 bottle of wine.



A similar situation can occur in a risk pool if one person incurs a really high bill—an expensive treatment for a disease, for example. Premiums for the entire group can go up in the following year, even if everyone else had a fairly healthy year.



Earlier this year, lawmakers passed Senate Bill <a href="https://leg.colorado.gov/bills/sb20-215" target="_blank" rel="noreferrer noopener">20-215</a>, which, among other measures, creates a reinsurance program. Under the <a href="https://www.colorado.gov/pacific/dora/reinsurance-program" target="_blank" rel="noreferrer noopener">reinsurance program</a>, the state serves as a financial backstop for insurers, helping cover the most expensive patients. This, in turn, dampens the premium increases the following year. The funds come from federal dollars that would otherwise have been spent on subsidies for higher premiums, as well as from fees imposed on hospitals and insurers.



The Colorado Division of Insurance estimates that, in 2021, the program will save consumers 17.4% over what premiums would be without reinsurance (though premiums still will rise an average of 2.2% compared to 2020). The biggest savings occur in rural areas of the state.



While this is encouraging news, the reinsurance program only includes those who purchase health insurance through Connect for Health Colorado. 



PERACare is not associated with Connect for Health Colorado, but Linart said anyone looking for health insurance should review and consider all their options. It’s a decision with multiple variables—premium cost, ability to pay out-of-pocket expenses up to the policy max, projected health care needs, and coverage area to name just a few. PERACare offers multiple plans that covered more than 60,000 people in 2019. But for those considering all the options, Connect for Health Colorado provides a centralized marketplace where dozens of plans can be compared.

Can These Ideas Control Health Care Costs?

The rising cost of prescription drugs is an issue of nationwide concern. Studies, articles, and think-pieces on the subject are churned out daily. Legislators question pharmaceutical executives and roll out plans to wrestle prices down. It’s the <a href="https://news.gallup.com/poll/276932/several-issues-tie-important-2020-election.aspx" target="_blank" aria-label="undefined (opens in a new tab)" rel="noreferrer noopener">number-one topic</a> on voters’ minds in 2020.



Despite all the attention and demand for action, change can seem nonexistent. One reason: Untangling the drug-price knot isn’t easy. A 2019 Consumer Reports <a href="https://www.consumerreports.org/drug-prices/the-shocking-rise-of-prescription-drug-prices/" target="_blank" aria-label="undefined (opens in a new tab)" rel="noreferrer noopener">article</a> stated, “to pin all the blame on Big Pharma is an oversimplification.”



In July, President Trump signed a number of executive orders with a stated goal of lowering the price consumers pay for prescription drugs. The Public Sector HealthCare Roundtable, an organization in which Colorado PERA is a member, “<a href="https://www.copera.org/can-an-executive-order-bring-down-drug-prices" target="_blank" label="undefined (opens in a new tab)" rel="noreferrer noopener">vocally opposed</a>” one particular executive order that seeks to change the way rebates work in Medicare Part D plans.



The executive order in question instructs the Director of Health and Human Services (HHS) to ban Medicare Part D plans, including PERACare, from passing on prescription drug rebates to those in the plan (a cost-saving mechanism recently featured in another <a href="https://peraontheissues.com/multiple-approaches-to-keeping-prescription-drug-prices-down/" target="_blank" aria-label="undefined (opens in a new tab)" rel="noreferrer noopener">PERA On The Issues article</a>). Instead, the rebates, which are paid by drug manufacturers, would be passed directly to the consumer at the point of sale.



At first, this change might seem like a more efficient way of conducting business. But PERA’s Director of Insurance Jessica Linart said understanding a few details can illustrate some unexpected consequences of this change.



Linart said that when PERACare receives rebates from a manufacturer, the money is used to bring down monthly premiums for everyone. If these rebates disappeared, premiums would rise by the corresponding amount. This isn’t just a PERACare issue, either: the Congressional Budget Office <a href="https://www.cbo.gov/system/files/2019-05/55151-SupplementalMaterial.pdf" target="_blank" aria-label="undefined (opens in a new tab)" rel="noreferrer noopener">estimated</a> the price tag of this change to be $177 billion over a decade.



Second, giving the rebate directly to the purchaser of a drug might seem like a more equitable use of the money—after all, why should someone who buys a prescription drug split those savings among others in the plan who didn’t buy that drug?



Linart said the explanation lies in the different layers of payments in any insurance plan. Say the sticker price of Drug XYZ is $300. You pay a $50 co-pay at the counter. The remaining $250 is picked up by your insurance plan.



Now let’s say the drug manufacturer issues a $100 rebate for this drug. Currently, the plan gets $100 and, in the case of plans like PERACare, those dollars are used to lower premium prices.



Under the new executive order, the plan would no longer get the $100 to lower premiums and would be on the hook for the full $250, a cost that is borne by participants in the plan in the form of higher premiums. The consumer buying the drug would also not get $100. He or she would receive a rebate up the amount paid at the counter—in this case, $50. The manufacturer pockets the difference. 



Healthsperien, a health care policy consulting firm, released a Roundtable-endorsed <a label="undefined (opens in a new tab)" href="https://www.copera.org/can-an-executive-order-bring-down-drug-prices" target="_blank" rel="noreferrer noopener">memo</a> that addressed the executive orders. The memo reiterates that this executive order does not itself change the rebate rules; it only instructs HHS to make this change. The memo concludes that any final rule is unlikely to resemble the executive order exactly due to pushback from “multiple angles” and budgetary restrictions.



How exactly this executive order will play out remains to be seen. In the meantime, what can consumers do? Linart said being proactive about researching your options is a must: &#8220;In addition to the usual advice to take generic medications whenever possible, I’d suggest reviewing all of your medications with your physician on an annual basis to ensure the medications you’re taking are still needed, work safely together, and are the lowest-cost options.&#8221;



Linart said that while PERACare can&#8217;t control industry and regulatory realities, she and others work to get the best outcomes for members: &#8220;We work with a pharmacy consultant to continually review the operation of our pharmacy plan, and we go out to bid for pharmacy benefit managers every three to four years to get the most competitive pricing for our members.&#8221;

Can an Executive Order Bring Down Drug Prices?

You can trade stocks, apply for a mortgage, and hire a person to deliver your groceries to your doorstep, all without getting off the couch. With the internet in your pocket, it makes sense that you also could have a consultation with your doctor without leaving home.



Telehealth has been in the news for years, and the groundwork needed for the system to work in a widespread way has been growing. In 2010, 35 percent of hospitals had at least partial implementation of a telehealth system, according to a <a rel="noreferrer noopener" href="https://www.aha.org/factsheet/telehealth" target="_blank">2019 report</a> from the American Hospital Association. In 2017, that number was 76 percent.



Using telehealth can be both convenient and financially beneficial. Videochatting with a doctor can save a more expensive trip to an urgent care in some cases. If you live in a rural area rural areas, if it’s hard to get out of the house, or if it’s late at night, telehealth can provide a better way to access care.



While the use of telehealth has grown, it hasn’t necessarily kept pace with adoption rates of other technologies. First, availability does not always lead to usage. One recent <a rel="noreferrer noopener" href="https://www.kff.org/womens-health-policy/issue-brief/opportunities-and-barriers-for-telemedicine-in-the-u-s-during-the-covid-19-emergency-and-beyond/" target="_blank">article</a> by Kaiser Family Foundation stated “telemedicine in the U.S. had been minimal prior to COVID-19,” reporting that only “an estimated 15 percent of physicians used telemedicine to facilitate interactions with their patients.” Despite the upsides of telehealth, many people place an even higher value on face-to-face communication.



The adoption of telehealth also follows familiar socioeconomic patterns: A <a rel="noreferrer noopener" href="https://content.copera.org/telehealth-challenges-and-opportunities-during-a-pandemic/" target="_blank">story</a> in Health Affairs states that community health centers, which deliver healthcare to nearly 30 million low-income patients have not been able to keep pace with deeper-pocketed hospitals. In Colorado, only 28 percent of community hospitals <a rel="noreferrer noopener" href="https://www.aha.org/center/emerging-issues/market-insights/telehealth" target="_blank">reported</a> using telehealth as an option for consultations as of 2017.



But these studies and reports all took place prior to COVID-19.



Shutdown Brings Skyrocketing Demand



The global pandemic has brought a jolt to telehealth prospects as the risk in seeing a doctor in person grew from negligible to considerable overnight. In a <a href="https://www.copera.org/telehealth-challenges-and-opportunities-during-a-pandemic" target="_blank" rel="noreferrer noopener">press release</a>, the company eClinicalWorks claimed that its network of 40,000 physicians went from spending 100,000 minutes per day using its telehealth platform to more than 1.5 million per day by April 6. LiveHealth Online, the telehealth service available to PERA retirees enrolled in an Anthem PERACare plan, saw usage at the end of April rise 30 to 50 times higher than pre-March averages.



Changes in <a href="https://www.brookings.edu/research/removing-regulatory-barriers-to-telehealth-before-and-after-covid-19/" target="_blank" rel="noreferrer noopener">regulation</a> have increased access, too, as longstanding disagreements over licensure and reimbursement details regarding Medicare providers have quickly been swept aside as this once-experimental option has quickly became the only option. Some <a href="https://khn.org/news/coronavirus-fuels-explosive-growth-in-telehealth-%e2%80%95-and-concern-about-fraud/" target="_blank" rel="noreferrer noopener">have stated</a> concerns about billing fraud and abuse, but, for now, the urgency to find new, safer ways to provide care overshadows what were compelling hesitations a few months ago.



Telehealth After the Pandemic



Will the sudden momentum brought by COVID-19 have enough inertia to bring telehealth into the mainstream after this crisis?



Some experts <a rel="noreferrer noopener" href="https://www.forbes.com/sites/joeharpaz/2020/05/04/5-reasons-why-telehealth-here-to-stay-covid19/#682e577753fb" target="_blank">argue</a> that the combination of market incentives ($175 billion by 2026, according to one estimate), created a massive opportunity to make an impression on a large number of first-time users; continued improvements in technology and the user experience puts a future of widespread telehealth adoption within reach. 



Others point out obstacles such as socioeconomic disparities, <a rel="noreferrer noopener" href="https://www.theverge.com/21277936/telehealth-english-systems-disparities-interpreters-online-doctor-appointments" target="_blank">language barriers</a>, and the <a rel="noreferrer noopener" href="https://mhealthintelligence.com/news/consumers-like-telehealth-but-still-prefer-face-to-face-healthcare" target="_blank">perception</a> of sacrificing quality for convenience that current models must still address.



An Opportunity for Innovation



The scramble to meet patient needs amid sudden disruption has not only expanded the reach of telehealth, it has also opened up the opportunity to experiment.



Prior to March, telehealth services often mimicked the urgent care model: You could call in to get care quickly, but the doctor on the other end of the screen was not a provider you knew.



Linart said that the pandemic led to some providers offering consultations directly to their patients using non-specialty tools, like Zoom, FaceTime, or Google Meet—essentially creating a telehealth option for their patients overnight. For some, knowing you can talk with a doctor you know on a platform you’re already familiar with could mitigate some of the barriers to using telehealth. 



This bootstrap model is likely to face a more critical eye as health delivery slowly gets back to normal, but the appeal from a customer perspective is apparent. It’s hard to undo success.



Regardless of what changes in the years ahead, one thing seems certain: telehealth is not going to go away. You won’t find an expert who thinks telehealth is just a fad. The question is when, not if. Or, as law professor Kristi V. Kung put it in an article on <a href="https://healthtechmagazine.net/article/2020/06/how-will-telehealth-change-after-pandemic" target="_blank" rel="noreferrer noopener">HealthTech</a>, “we can’t put the genie back in the bottle.”



Linart agrees: “I really think the use will stay,” she said. “Maybe it won’t be quite as high as it is now because some types of appointments are better in person, but there will be more things that people will want to do virtually.”

Telehealth: Challenges and Opportunities During a Pandemic

During the 2019 legislative session that
concluded on May 3, the Colorado General Assembly was active in debating health
care. As promised during the 2018 campaigns, the new leadership at the State
Capitol wanted to address rising health care costs. While none of the bills
directly impact PERACare, there were several bills that will change the health
care landscape in Colorado.



<blockquote class="wp-block-quote">For more details on PERA legislation, see <a href="https://content.copera.org/2019-health-care-legislation-overview/">2019 legislative session adjourns “sine die”</a></blockquote>



A summary of health care-related legislation
is below. The most recent bill status is included in the summary. For more
details on these bills, please use the links in each brief.



<ul><li><a href="https://leg.colorado.gov/sites/default/files/2019a_004_signed.pdf">SB 19-004</a>
– Address High-Cost Health Insurance Pilot Program </li></ul>



Signed into law by Governor Polis on May 17, this legislation is
designed to mitigate the higher cost of health care insurance in the rural and
mountain areas of the state through the use of health care coverage
cooperatives.



<ul><li><a href="https://leg.colorado.gov/sites/default/files/2019a_005_signed.pdf">SB 19-005</a>
– Import Prescription Drugs from Canada</li></ul>



This bill was signed by Governor Polis on May 16 and allows for
the design and implementation of a wholesale drug importation program
for the exclusive benefit of Colorado residents that would provide Colorado
consumers access to safe and less expensive prescription drugs.



<ul><li><a href="https://leg.colorado.gov/sites/default/files/2019a_1004_signed.pdf">HB 19-1004</a>
– Proposal for Affordable Health Coverage Option </li></ul>



The Division of Insurance is tasked with developing a proposal
that considers the feasibility and cost of a state option for the delivery of
health care insurance. Requirements are that the plan leverage the current
state health care infrastructure and that it improve quality and access to
health insurance. The Division of Insurance must submit a recommendation to the
General Assembly’s Joint Budget Committee on or before November 15, 2019. This
bill was signed into law on May 16.



<ul><li><a href="https://leg.colorado.gov/sites/default/files/2019a_1168_signed.pdf">HB 19-1168</a>
– State Innovation Waiver Reinsurance Program </li></ul>



The goal of this legislation, signed into law by
Governor Polis on May 17, is to make private health insurance that is available
on the individual market more accessible and more affordable by encouraging
competition by carriers throughout the state.The desired outcome would be to
decrease the costs of care.



<ul><li><a href="https://leg.colorado.gov/sites/default/files/documents/2019A/bills/2019a_1176_enr.pdf">HB 19-1176</a>
– Health Care Cost Savings Act of 2019</li></ul>



This bill has been sent to the Governor. It would
create a task force to analyze health care financing systems and provide the
General Assembly with information to better understand how to provide adequate
health care to Colorado residents.



<ul><li><a href="https://leg.colorado.gov/sites/default/files/2019a_1174_signed.pdf">HB 19-1174</a>
– Out-of-network Health Care Services</li></ul>



This bill was signed into law by the Governor on May 14. The law
aims to better protect health care consumers by ending surprise medical bills
when out-of-network medical services are used.



While it remains to be seen what impact, if any, the above
legislation will have on health care costs in the state, PERA staff will
continue to monitor the health care landscape and any potential effects on
PERACare.



The Second Regular Session of the 72nd General
Assembly is scheduled to convene on January 8, 2020. Stay tuned to PERA on the
Issues for updates throughout the interim.

2019 Health Care Legislation Overview

End-of-life issues may be
hard to talk about, but that doesn’t make them unimportant. In fact, by
embracing the discomfort and discussing some of the challenging decisions we
will all face, whether as we age or as our loved ones do, the realities of
managing this season of life can be made easier.



According to <a href="https://theconversationproject.org/">The
Conversation Project</a>, while 92 percent of Americans say that talking
with their loved ones about end-of-life care is important, only 27 percent have
actually done so. A full 95 percent say they would be willing to talk about
their own wishes, and more than half even say they would be relieved to discuss
the issue. <a href="https://www.nhdd.org/">National
Healthcare Decisions Day (NHDD)</a>, held in 2019 on April 16, is an
initiative of The Conversation Project in collaboration with the <a href="https://content.copera.org/national-healthcare-decisions-day/">Institutefor Healthcare Improvement</a> to inspire, educate, and empower the
public and providers about the importance of advance care planning.



It’s never too early to start
a conversation about the medical care you would want in the future. Advance
care planning involves learning about the types of decisions that might need to
be made and the tools available to let others know a patient’s wishes. 



<ul><li>A <a href="https://www.aarp.org/caregiving/financial-legal/info-2017/living-will-power-of-attorney.html">living
will</a> documents what kind of medical treatments a patient would want
or not want.</li><li>A health care <a href="https://www.agingcare.com/articles/power-of-attorney-explained-187545.htm">power
of attorney</a> documents an agent, or the person a patient has selected
to be the voice for health care decisions when the patient is unable to speak.</li><li>Aging With Dignity offers its “<a href="https://www.copera.org/national-healthcare-decisions-day">Five Wishes</a>”
template for recording medical treatment preferences. It meets legal
requirements in 42 states, including <a href="https://content.copera.org/national-healthcare-decisions-day/">Colorado</a>.
People in other states often attach it to their state forms.</li></ul>



Though documenting health
care wishes is a critical part of end-of-life planning, this should be a
process that focuses on conversations among friends, families, medical
providers, and health facilities.



If it feels awkward to begin
those conversations, The Conversation Project has a number of resources,
including a <a href="https://theconversationproject.org/wp-content/uploads/2017/02/ConversationProject-ConvoStarterKit-English.pdf">conversation
starter kit</a> that provides guidance for talking with loved ones about
end-of-life wishes before a medical crisis hits as well as <a href="https://theconversationproject.org/wp-content/uploads/2017/02/ConversationProject-TalkToYourDr-English.pdf">How
to Talk to Your Doctor</a> to make medical decisions easier once they
need to be made.



The Conversation Project
emphasizes having a conversation about values, “what matters to you, not what’s
the matter with you.” Some early questions to consider might include:



<ul><li>If you were to become severely ill, what is most
important to you?</li><li>Are there treatments that you would or would not
want?</li><li>Who will you designate to understand your wishes
and communicate them to your doctor, hospital, and family members?</li></ul>



Addressing the realities of
health care at the end of life can mean that fewer people encounter health care
they would not choose, and more loved ones can be relieved of the guilt and
uncertainty that often comes with a medical crisis.



In addition to the
information listed above, other resources are available to help make advance
care plans and begin the conversations about medical wishes:



<ul><li><a href="http://www.theconversationprojectinboulder.org/">The Conversation Project
in Boulder County</a> or call 303-442-0436 (Calls are answered by the
Community Foundation; ask for mailbox 133)</li><li><a href="http://www.caringinfo.org/">National Hospice and Palliative Care</a></li><li><a href="https://www.aarp.org/caregiving/financial-legal/?intcmp=AE-CAR-R2-C2">AARP</a></li></ul>

National Healthcare Decisions Day

With health care topics in the news almost daily, if not hourly, it can be hard to understand some of the basic concepts and terms described – not to mention keeping up with changes to health care benefits and coverage you might rely on.



While we can’t slow down the 24-hour news cycle or predict how future debates will be resolved, we can try to provide basic information to help you follow along.



Below is a short glossary of health care terms you might see in the news or read about from <a href="https://peraontheissues.com">PERA on the Issues</a> (definitions are summarized from <a href="http://www.healthcare.gov">HealthCare.Gov</a> except where otherwise noted). And if we missed something? Let us know in the comments.



Affordable Care Act (ACA): The health care reform law passed in 2010, sometimes referred to as Obamacare. The law requires subsidies for consumers with incomes between 100 and 400 percent of the federal poverty level. The ACA expanded the Medicaid program and supports medical care methods that are designed to lower the costs of health care.



Coinsurance: The percentage of health service costs paid by an insurance policy holder after any required deductible has been paid.



Copayment: A fixed amount paid for a health service by an insurance policy holder after any required deductible has been paid.



Cost sharing: Sharing the cost of health care between policy holders and insurance. The term may apply to out-of-pocket costs such as deductibles, copayments, and coinsurance but not to premiums, balance billing from non-network providers, or the cost of non-covered services.



Creditable coverage: Prior health insurance through a variety of insurance plan types that will reduce or eliminate the length of a pre-existing exclusion period under new employer-based coverage.



Deductible: The amount paid for covered health care services before insurance starts to pay. For example, with a $2,000 deductible, the policy holder pays the first $2,000 of covered services before insurance begins to pay any costs.



Durable medical equipment (DME): Equipment and supplies ordered by a health care provider for everyday or extended use. Examples of covered DME could include oxygen equipment, wheelchairs, crutches, or blood testing strips for diabetics.



Excluded services: Health care services that a health insurance plan does not pay for or cover.



Essential health benefits: A set of 10 services that health insurance plans must cover under the Affordable Care Act. These include doctors’ services, inpatient and outpatient hospital care, prescription drug coverage, pregnancy and childbirth, mental health services, and more. Certain plans may cover additional services.



Exclusive provider organization (EPO) plan: A managed care plan where services, except for emergencies, are covered only from providers such as doctors, specialists or hospitals in the plan’s network.



Family and Medical Leave Act (FMLA): A federal law guaranteeing up to 12 weeks of job-protected leave for certain employees when they need to take time off due to serious illness or disability, to have or adopt a child or to care for another family member. Leave under FMLA allows an employee to continue coverage under a job-based health insurance plan.



Fee for service: A method in which doctors and other providers are paid for each service performed. Examples of services include tests and office visits.



Flexible benefits plan: A benefit program that offers employees a choice between various benefits including cash, life insurance, health insurance, vacation, retirement plans, and child care. Although a common core of benefits may be required, remaining benefit dollars may be allocated for each type of benefit from a total amount promised by the employer. Sometimes employees can contribute more for additional coverage. Also known as a Cafeteria Plan or IRS Section 125 Plan.



Flexible spending account (FSA): An arrangement set up through an employer to pay for many out-of-pocket medical expenses with tax-free dollars. Expenses could include insurance copayments and deductibles, qualified prescription drugs, insulin, and medical devices. Employees decide the amount of pre-tax wages to be put into an FSA while an employer’s plan sets a limit on the amount of money that can be contributed to an FSA each year. Up to $500 in FSA funds can be carried over to the next year, but any funds beyond that amount not spent by the end of the plan year cannot be used for expenses in the following year.



Formulary: A list of prescription drugs covered by an insurance plan offering prescription drug benefits.



Generic drugs: A prescription drug that has the same active-ingredient formula as a brand-name drug. Generic drugs usually cost less than brand-name drugs. The Food and Drug and Administration (FDA) rates these drugs to be as safe and effective as brand-name drugs.



Health maintenance organization: A health insurance plan that typically limits coverage to care from doctors who work for or contract with the plan. Generally, out-of-network care is not covered except in an emergency.



Health Reimbursement Accounts (HRAs): Employer-funded group health plans from which employees are reimbursed tax-free for qualified medical expenses up to a fixed dollar amount per year. Unused amounts may be rolled over to be used in subsequent years. The employer funds and owns the account. Health Reimbursement Accounts are sometimes called Health Reimbursement Arrangements.



Health savings account (HSA): &nbsp;A type of savings account that allows a policy holder with a high-deductible health insurance plan to set money aside on a pre-tax basis to pay for qualified medical expenses. HSA funds roll over year to year and are not tied to an employer.



High deductible health plan (HDHP): A health insurance plan with a higher deductible than a traditional insurance plan. Usually, the premium is lower but policy holders may have to pay more health costs before insurance begins to pay a share. A high deductible plan can be combined with a health savings account or health reimbursement arrangement in order to pay for certain medical expenses with untaxed dollars. The IRS considers any plan with a deductible of at least $1,300 for an individual or $2,600 for a family a high deductible health plan.



Health Insurance Portability and Accountability Act (HIPAA): A federal law that expanded health care coverage in the event of job loss or job changes. HIPAA provides protections for pre-existing medical conditions or difficulty obtaining health coverage if based on past or present health. HIPAA also limits how companies can use pre-existing conditions to limit health insurance coverage and provides privacy standards to protect patients’ medical records and other health information provided to health plans, doctors, hospitals and other providers. (Source: <a href="https://content.copera.org/staying-top-health-care-terminology/">Centers for Medicaid and Medicare Services</a> and <a href="http://www.medicinenet.com">MedicineNet.com</a>)



Lifetime limit: A cap on the total lifetime benefits provided from an insurance company. Total lifetime limits could be on dollar benefits (such as a $1 million lifetime cap) or on specific benefits (such as a $200,000 lifetime cap on organ transplants or one gastric bypass per lifetime) or a combination. After a lifetime limit is reached, the plan will no longer pay for covered services.



Long-term care: Medical and non-medical care provided to people who are unable to perform basic activities of daily living such as dressing or bathing. Can be provided at home, in the community or in assisted living or nursing homes. Typically not covered by Medicare and most health insurance plans. (Read more about <a href="https://www.copera.org/financial-security-future-retirees">long-term care</a> from <a href="https://peraontheissues.com/">PERA on the Issues</a>).



Medicaid: Public health insurance programs providing free or low-cost health coverage to some lower income people such as families and children, pregnant women, the elderly, and people with disabilities. Medicaid benefits and program names vary between states. (<a href="https://www.healthfirstcolorado.com/">Health First Colorado</a>, for example, is the Medicaid program for some lower income Colorado residents).



Medically necessary: Health care services or supplies needed to diagnose or treat an illness, injury, condition, disease, or their symptoms, and that meet accepted standards of medicine.



<a href="https://www.medicare.gov/">Medicare:</a> A federal health insurance program for people 65 and older and certain younger people with disabilities.



<a href="https://www.copera.org/staying-top-health-care-terminology">Medicare Advantage:</a> A type of Medicare health plan offered by private companies that contract with Medicare to provide all Medicare Part A and Part B benefits. Most Medicare Advantage Plans offer prescription drug coverage.



<a href="https://www.medicare.gov/part-d/index.html">Medicare Part D:</a> A program that helps pay for prescription drugs for people with Medicare who join a plan that includes Medicare prescription drug coverage. There are two ways to get Medicare prescription drug coverage: through a Medicare Prescription Drug Plan or a Medicare Advantage Plan that includes drug coverage.



Network: The facilities, providers, and suppliers contracted with a health insurance plan to provide services to its members.



Obamacare: See Affordable Care Act.



Open enrollment: The period when a health insurance policy is open for new members to enroll or for members to change their policies. Health insurance plans generally allow for enrollment outside of the open enrollment window for qualifying events such as marriage or birth of a baby. (Learn more about <a href="https://www.copera.org/poti-year-review">open enrollment in PERACare</a>.)



Out-of-pocket maximum: The maximum amount a policy holder would pay for covered services in a plan year. After the out-of-pocket maximum is spent through deductibles, copayments, and coinsurance, the health plan pays 100 percent of the remaining costs of covered benefits. The out-of-pocket maximum does not include monthly premiums or any costs for services not covered by the insurance plan.



<a href="https://www.copera.org/staying-top-health-care-terminology">PERACare:</a> Health insurance plans for PERA retirees and their dependents as well as for active members whose employers choose to offer a PERACare plan.



PERACare Select: A <a href="https://content.copera.org/staying-top-health-care-terminology/">fixed-cost hip or knee replacement procedure</a> offered to pre-Medicare retirees and their dependents enrolled in an Anthem health insurance plan through PERA Care.



Pre-existing condition: Any condition (physical or mental) including a disability for which medical treatment was recommended or received within the six-month period ending on the enrollment date in a new health insurance plan.



Preferred provider organization (PPO): A type of health plan that contracts with medical doctors, such as hospitals and doctors, to create a network of participating providers. Costs to policy holders are typically lower when using providers that belong to the plan’s network, but doctors, hospitals, and other providers may be available outside of the network for an additional cost.



Premium: The amount paid for a health insurance policy every month. In addition to the premium, there are typically other costs for health care, including deductibles, copayments, and coinsurance.



Primary care: Health services that cover a range of prevention, wellness, and treatment for common illnesses. Primary care providers include doctors, nurses, nurse practitioners, and physician assistants.



Prior authorization: Approval from a health plan that may be required for a service to be provided or a prescription filled and to be covered by the plan.



Prescription drug coverage: Health insurance or plan that helps pay for prescription drugs and medications.



Preventive services: Routine health care that includes screenings, check-ups, and patient counseling to prevent illnesses, disease, or other health problems.



Qualifying life event: A change in situation or status such as getting married, having a baby, or losing health coverage, that can allow eligibility in a special enrollment period and enrollment in a health insurance plan outside the yearly open enrollment period.



Referral: A written order from a primary care doctor to see a specialist or receive certain medical services. In many HMOs, a referral is required before receiving medical care from anyone except for a covered primary care doctor.



Skilled nursing care: Services from licensed nurses provided in a policy holder’s home or a nursing home. Skilled care services are from technicians and therapists at home or in a nursing home.



Specialty drugs: High-cost prescription medications used to treat complex, chronic conditions like cancer, rheumatoid arthritis and multiple sclerosis. (Source: healthinsurance.org). (Read more about <a href="https://www.copera.org/peracare-open-enrollment-overview">specialty drugs</a> from <a href="https://peraontheissues.com/">PERA on the Issues</a>).



Urgent care: Care for an illness, injury, or condition serious enough that a reasonable person would seek care right away, but not so severe that it requires emergency room care.

Staying on top of health care terminology

Editor’s Note: This article is a summary of the 21st Century Cures Act. Colorado PERA does not have a position on this federal legislation, rather we wanted to let PERA on the Issues readers know about this bill which has received recent media coverage. Share your thoughts about this legislation with us and other readers in the Comments section at the end of the article.



On December 7, the U.S. Senate voted to approve legislation previously passed by the House of Representatives that will overhaul the development of medical treatment and speed up the review and approval for certain medical drugs and devices.



The <a href="https://www.copera.org/senate-sends-medical-research-bill-obama-signature">21st Century Cures Act</a>, as it is known, will speed new medicines to market and authorizes an additional $4.8 billion in spending for medical research.



President Obama has <a href="https://www.copera.org/senate-sends-medical-research-bill-obama-signature">committed to signing the bill</a>, saying it “could help us find a cure for Alzheimer’s…end cancer as we know it and help those seeking treatment for opioid addiction.”



Along with Rep. Diana DeGette, D-CO, the bill had bipartisan support and was co-sponsored by Rep. Fred Upton, R-MI. The House co-sponsors described “a new day for medical research” on the horizon.



This “vote is for patients and their loved ones. We all have more reason for hope,” they said.



There is plenty to like in the legislation, from new funding for Alzheimer’s research and precision medicine to Vice President Joe Biden’s cancer moonshot as well as prevention and treatment of <a href="https://content.copera.org/senate-sends-medical-research-bill-obama-signature/">opioid addiction that has devastated both urban and rural communities</a>.



The bill is not without its critics, however.



“We were already seeing weakening of FDA standards under the Obama administration,” attorney Sarah Sorscher of the Public Citizen Health Research Group <a href="http://www.wsj.com/articles/senate-clears-bill-to-ease-fda-drug-and-device-approvals-1481139236">told The Wall Street Journal</a>. She cited the recent example of the FDA approving a muscular dystrophy drug that didn’t prove any benefit in outcomes of patients.



“Industry will be emboldened by this legislation, and under a deregulation-minded commissioner, will seek further changes in the FDA regulatory scheme,” <a href="http://www.wsj.com/articles/senate-clears-bill-to-ease-fda-drug-and-device-approvals-1481139236">said Michael Carome</a>, director of the Public Citizen health group.



Sens. Elizabeth Warren, D-MA., and Bernie Sanders, I-VT <a href="https://www.copera.org/senate-sends-medical-research-bill-obama-signature">both spoke out about the bill</a>.



“If you want to lower the outrageous cost of prescription drugs, vote against this bill,” Sanders said on the Senate floor Tuesday. “It is time to stand up against the pharmaceutical industry and stand up with the American people who are tired of being ripped of by this extremely greedy industry.”



Read The Denver Post <a href="http://www.denverpost.com/2016/12/02/21st-century-cures-a-bipartisan-battle-on-disease/">guest editorial</a> by Rep. Diana DeGette.



Read the Kaiser Health News 21st Century Cures Act <a href="http://khn.org/news/grab-bag-of-goodies-in-21st-century-cures-act/">summary</a>.

Senate sends medical research bill to Obama for signature

It’s estimated that <a href="https://content.copera.org/learning-long-term-care-now-can-avoid-costly-missteps-later/">70 percent of Americans turning age 65</a> can expect to use some sort of long-term care during their lives.



Long-term care generally means assistance with the activities of daily living (sometimes referred to as “ADL”) that does not require skilled nursing. This care could include everything from simple help with household or yard chores to performing errands, driving to appointments, or help with personal care such as bathing and meal preparation.



Long-term, or ADL, care is generally not the same as skilled care, such as skilled nursing services (help with medications or care for wounds) or physical, occupational, or respiratory therapy. These types of care usually require services from a licensed professional.



However, the costs of long-term care can be significant, particularly if care is needed over a long time period or in a care facility. According to <a href="https://www.copera.org/learning-long-term-care-now-can-avoid-costly-missteps-later">longtermcare.gov</a>, a resource from the U.S. Department of Health and Human Services, in 2010, average costs for long-term care ranged from $21 per hour for a home health aide to $3,293 per month for a room in an assisted-living facility and $6,235 per month for a semi-private room in a nursing home.



Taking steps before care is needed can help make costs more manageable and provide more options, such as remaining in your own home longer.



Medicare and private health insurance plans do not pay for most long-term care services and therefore, the PERACare health plans also do not provide coverage. Medicare only pays for medically necessary care, focusing on acute care such as doctor visits, drugs, and hospital stays. Medicare coverage focuses on short-term services for conditions that are expected to improve, such as physical therapy that can help regain function after a fall or stroke.



There are ways to plan in advance for long-term care needs that include financial, legal, and practical strategies. For example, <a href="https://www.copera.org/learning-long-term-care-now-can-avoid-costly-missteps-later">advance care planning</a> can provide peace of mind that personal wishes – both medical and financial – will be kept even when it’s difficult or impossible to make those decisions for oneself.



Identifying <a href="https://content.copera.org/learning-long-term-care-now-can-avoid-costly-missteps-later/">in-home support services</a> and making <a href="http://www.mayoclinic.org/healthy-lifestyle/healthy-aging/in-depth/fall-prevention/art-20047358">home modifications</a>, even simple ones, can make it possible to live at home longer and avoid some of the high costs of care in a facility.



A <a href="https://www.copera.org/learning-long-term-care-now-can-avoid-costly-missteps-later">pathfinder</a> at <a href="https://www.copera.org/learning-long-term-care-now-can-avoid-costly-missteps-later">longtermcare.gov</a> provides helpful information customized to different situations, including age and whether or not care is needed now or in the future.



PERA on the Issues posts are written and compiled by the staff of Colorado PERA under the direction of Executive Director Greg Smith and the PERA Board of Trustees.&nbsp;We encourage you to comment with your thoughts and feedback.

Learning about long-term care now can avoid costly missteps later

A digest of timely information and insight about finance, investing, and retirement.



<a href="https://www.copera.org/retirement-roundup-health-care-edition">The challenge of financing health care in retirement</a>&nbsp;|<a href="http://www.kiplinger.com">Kiplinger</a>



Many people ignore the impact health care costs will have on their nest eggs as they age. In fact, only 12 percent of working Americans have taken any steps toward addressing medical expenses in retirement, according to a study cited in&nbsp;<a href="https://www.copera.org/retirement-roundup-colorado-must-act-now-aging-population">HealthView Services’ 2016 Retirement Health Care Costs Data Report</a>.&nbsp;Most people have no idea what the burden will be when they’re left to foot health insurance premiums on their own, perhaps because they chose to retire early or because they were victims of downsizing. And the result is some serious sticker shock.



<a href="http://khn.org/morning-breakout/as-enrollment-season-heats-up-workers-facing-higher-health-spending/">As enrollment season heats up, workers facing higher health spending</a>&nbsp;|&nbsp;<a href="http://www.khn.org/">Kaiser Health News</a>



Open enrollment season is under way, and when workers get their health-plan information, many of them can expect higher out-of-pocket costs. As employers cope with rising health costs, some are shifting more of the burden onto their workers, often in the form health insurance plans that carry high deductibles. To help rein in expenses, businesses also will ask their employees to take part in cost-cutting drug programs and new services.



<a href="http://www.cnbc.com/2016/10/12/health-costs-may-gobble-up-social-security-benefits.html">Health care costs may gobble up Social Security benefits</a>&nbsp;|&nbsp;<a href="http://www.cnbc.com">CNBC</a>



Health care costs could drain your Social Security benefits in retirement, especially if you’re a woman.



The average woman could spend an estimated 70 percent of her retirement check on health care costs, according to a recent study by the <a href="https://nationwidefinancial.com/#!/nationwide-retirement-institute">Nationwide Retirement Institute</a>. The average man fares better, but still uses nearly half of his benefits to cover medical expenses.



<a href="http://www.nytimes.com/2016/10/15/business/the-future-of-retirement-communities-walkable-and-urban.html">The future of retirement communities: Walkable and urban</a>&nbsp;|&nbsp;<a href="http://www.nytimes.com">The New York Times</a>



Few people in America walk to work. Most of us drive to the supermarket. But more older people these days are looking for a community where they can enjoy a full life without a car.



In the age of Fitbit and a growing cohort of active, engaged retirees eager to take their daily 10,000 steps, retirement communities have been slow to change. Eighty percent of retirees still live in car-dependent suburbs and rural areas, according to a <a href="https://www.brookings.edu/wp-content/uploads/2016/06/20030807_Rosenbloom.pdf">Brookings Institution study</a>. Enter a new paradigm: the walkable, urban space. Get out and walk to basic services.



<a href="http://www.usatoday.com/story/money/columnist/powell/2016/10/05/life-expectancy-actuaries-live-die-retire-retirement/89407296/">For your retirement planning, count on living until age 95</a>&nbsp;|&nbsp;<a href="http://www.usatoday.com">USA Today</a>



If you knew your date of death, retirement planning would be a breeze. Unfortunately – or maybe fortunately? – you don’t. And that can make planning for retirement extremely difficult. If you’re like most people, you’re guessing, and guessing quite wrong. Financial advisers are starting to change assumptions about how long clients will live to make sure they don’t outlive their savings, according to a <a href="http://www.investmentnews.com/article/20160822/FEATURE/160809926/the-longevity-paradox-as-americans-live-longer-they-run-the-risk-of" class="broken_link">survey by Investment News</a>. Advisers are basing retirement income plans on an average life span of 91 for men and 104 for women.



<a href="https://www.copera.org/retirement-roundup-health-care-edition">Drug price hikes may be hitting hospitals harder than consumers</a>&nbsp;|&nbsp;<a href="https://content.copera.org/retirement-roundup-health-care-edition/">Modern Healthcare</a>



Skyrocketing drug prices have hit hospitals even harder than consumers, according to a <a href="https://www.copera.org/retirement-roundup-health-care-edition">recent study</a> from America’s biggest hospital lobbies. Payer reimbursement can’t keep up and nearly all hospitals surveyed said it affected their ability to manage overall healthcare costs, according to the study sponsored by the <a href="http://www.aha.org">American Hospital Association</a>, the nation’s biggest hospital lobby, and the <a href="http://www.fah.org">Federation of American Hospitals</a>, which represents investor-owned hospitals. The study’s authors determined that, for most drugs, spikes in cost drove spending increases, rather than more people using drugs.

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