Consumer Federation of California

Consumers receive their fair share of sucker punches from big corporations. But this one’s a real beauty.

And it affects all California seniors with Medicare Advantage plans offered by Anthem Blue Cross.

Melvin Salse, 71, of North Hollywood received a letter from the insurance giant recently stating that "it has been our pleasure to provide you with Medicare Advantage coverage."

Salse, a retired TV producer, was assured that he’s "a valued member" of the company and that "we look forward to providing you with outstanding service for years to come."

I don’t know about you, but when businesses butter me up like that, I start looking over my shoulder.

Sure enough, a second letter from Anthem arrived two weeks later. This one wasn’t nearly as collegial.

"Important notice," it declared. "Your Medicare coverage is changing. Anthem Blue Cross and Health Insurance Company will no longer offer your plan in 2012."

Salse was now told that if he didn’t apply for a new plan, he’d lose his Medicare Advantage coverage and receive only standard Medicare benefits as of Jan. 1.

Medicare Advantage is coverage offered by private insurers that typically provides all the benefits of the government program, including prescription drug coverage.

Nearly 12 million seniors, or about a quarter of Medicare beneficiaries, are in Advantage plans, according to the Kaiser Family Foundation.

Private insurers are reimbursed by the federal government for many of their costs. They can also charge members additional monthly premiums and out-of-pocket expenses.

Salse didn’t know what to think when he got Anthem’s second letter. He even read through the first letter once again to make sure he didn’t miss anything.

He didn’t. The first letter basically said everything’s cool. It said that "you can rely on us for ongoing coverage that will fit your needs."

The second letter said Salse’s coverage was about to end.

How to explain the discrepancy?

Kristin Binns, an Anthem spokeswoman, said the two letters were basically an example of one hand at the insurance company not knowing what the other was doing.

Anthem, she said, "sent an initial letter to our members to make them aware of possible changes coming with this year’s annual election period." That was the happy, smiling letter talking about how Anthem "has you covered."

Right around the same time, though, the company mailed out its more in-your-face letter alerting people to changes in the Medicare Advantage program.

"We apologize for any inadvertent confusion that these mailings may have caused our members," Binns said.

Here’s what’s going on: Anthem has been losing money on its Medicare Advantage plans in Northern California because of higher medical costs there.

But the company can’t just fiddle with those policies, because it offers uniform rates and benefits throughout the state. It can’t change terms for some people without changing them for everyone.

So Anthem is terminating its existing California Medicare Advantage plan, replacing it with 13 regional variations that allow it to set premiums and benefits according to local conditions.

In Los Angeles County, for example, the company’s new Medicare Advantage PPO plan will have the same premium but "somewhat different benefits," Binns said.

I asked what "somewhat different benefits" means. Binns replied that it means "somewhat less rich."

That’s Anthem-speak for "less," as in "less healthcare coverage for the same price."

Binns declined to say how many of its nearly 8 million California customers hold Medicare Advantage policies.

I passed along my findings to Salse about how Anthem will be cutting back on his insurance benefits.

"Why am I not surprised?" he responded.

And I wasn’t surprised ‘ nor should Anthem be ‘ to learn that Salse is now shopping for a new Medicare Advantage provider.