A lot of seniors are worried about what will happen to their Medicare coverage now that health reform has passed. The rumors are abundant: “the government will tell you when to die.” “The government will tell your doctor not to do surgery on you if you are old.” “The cuts in Medicare will mean cuts in the services you receive.” None of this is true, although to tell you the truth, as we face the future for Medicare, there will HAVE to be some changes made. At this point, however, instead of cutting beneficiary services, the cuts will be more focused on the doctors and hospitals who deliver services.

Here’s what health reform means for you if you are over 65 years of age.

1.) The Medicare program will be stronger not weaker.

  • Health reform will put a lot more resources into making the Medicare program more efficient. And although Medicare is run at a low administrative cost and overhead, the program really needs some modernization. The new head of Medicare (to be appointed shortly) is a physician (Dr. Don Berwick) who is a national leader in quality improvement. He is expected to help Medicare focus on doing better not just doing more.

2.) You can keep your same doctor and your same health plan.

  • This is mostly although not completely true. Health reform doesn’t change the basic structure of Medicare. The same physicians and hospitals who treat Medicare patients now will likely treat them in the future. And if Medicare can pay doctors faster and better, it is more likely they will continue to treat Medicare patients.

There are definitely doctors out there who are dropping out of Medicare because of its low reimbursement rates, but since Medicare is such a big player, and because there are specific incentives in the legislation to entice physicians to stay involved, I don’t expect a huge exodus of providers once the incentive system is in place.

3.) You will actually have improved benefits — preventive services without a co-pay and help with the cost of your prescription drugs.

Not only will preventive services be covered without any copay or deductible, Medicare will pay your doctor to develop a “prevention plan” with you, something doctors may have been doing but without any reimbursement up to this point.

The Medicare prescription drug program (or Part D as it is called) will also be improved. If you take several prescription drugs, you probably already know about the “donut hole” — that’s the popular term for a gap in coverage between what Medicare pays for your drugs and what you have to pay yourself. This very complicated program often hits seniors unexpectedly when they go into the pharmacy to get a drug and find out they have to pay 100% of the cost themselves.

A third of all Medicare beneficiaries fall into the donut hole each year (where they have to pay 100% of their drug costs), and don’t climb out gain until they have spent $3,610 of their own money.

Not only do seniors in the donut hole have to pay all the costs of their drugs themselves, but 15% stop taking their drugs because they can’t afford them, and over half of those don’t resume those drugs even when Medicare starts paying again. So, while the donut hole was designed to save Medicare money, it has had the unintended consequence of causing seniors a lot of anxiety, loss of substantial income, and potentially making their diseases worse by forcing them to choose among food, rent and the drugs they need to stay healthy.

But there is good news. Health reform will help seniors with these drug costs. This year, 2010, seniors falling into the donut hole will receive a $250 rebate from the government, and starting next year there will be a 50% discount on brand name drugs, which will ramp up to a 75% discount on brand and generic drugs by 2020, eventually closing the donut hole gap completely. Some will argue that $250 is not much — but it’s a start, and there was no way that the donut hole could be completely filled in one year. So some patience will be required.

Another benefit to seniors is that the popular Medicare Advantage plans (Part C), which are HMOs or PPOs offered by private insurance companies, will be required to spend at least 85% of their revenue on actual medical services, not profits or overhead. And while some worry that the cuts in payment to Medicare Advantage will result in cuts to their benefits, seniors have an advantage over the under 65 population. The Medicare program guarantees, by law and regulation, a certain level of benefits, and the program oversees and regulates premium increases and rigorously reviews marketing materials to be sure that plans explain in plain English what they are covering and what they are not.

In addition, the cuts in payment to Medicare Advantage are cuts in the “overpayments” that these programs have been enjoying for the past several years. These requirements for Medicare Advantage to play on a more fair playing field will raise $132 billion over 10 years. MA plans MUST provide all the basic services that Medicare covers. That’s what you should keep your eye on. Managed care plans that get a four star quality rating will actually get bonuses not cuts.

The new health reform law promises the following:

Sec. 3202. Benefit protection and simplification. Prohibits Medicare Advantage plans from charging beneficiaries cost sharing for covered services that is greater than what is charged under the traditional fee-for-service program. Requires plans that provide extra benefits to give priority to cost sharing reductions, wellness and preventive care, and then benefits not covered under Medicare.

All of this is not to say that seniors can sit back and rest on the fact that they have Medicare and will be able to keep it. While health reform is helping to save Medicare, seniors need to keep active and vigilant to be sure that these reforms play out the way they are advertised. Every senior knows about AARP but there are other senior organizations that keep track of these issues as well — this website contains links to many organizations that track changes and offer ways to get politically involved. And here’s a good website with answers to the many questions about the impact of health reform on Medicare.

The one source of information that seniors should not depend on is the random mass email being distributed from some “supposed” expert — the retired constitutional lawyer or the occasional physician spokesman — these folks may sound like they know what they are talking about, but too often they have an axe to grind and are misinformed about the real facts of health reform.

I know that many readers of this blog support single payer and mourn the loss of a public option. But the politics for that did not work out this year. The votes were not there in the Senate. Because health reform will now be played out at the state level, you may see some public options popping up, so staying aware of what is happening in your state will become even more important.

For more information, check out this Huffington Post piece by Ricardo Alonso-Zaldivar about the impact of reform on Medicare.