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Medicare for All Explained Podcast: Episode 113

Medicare for All Explained Podcast: Episode 113

The Missing Criteria for Health Insurance Companies

July 15, 2024

Podcast host Joe Sparks laments the growing use of artificial intelligence to deny claims in the so-called “Medicare Advantage” program—a technological advance that aligns with health insurers’ business interests, but actively harms patients.

“Health insurance companies are mostly worried about profit,” he says, “and one of the best ways to increase profits is to deny care.”

Additional episodes will be uploaded monthly. Subscribe in iTunes, or access a complete archive of the podcast, below.

https://medicareforallexplained.podbean.com

Critiquing Project 2025: Medicare

Project 2025 proposes building Medicare Advantage and value-based care, and an all-in focus on free market methods proven not to work in health care. It’s a recipe for increasing costs and maximizing profits for corporations.

Project 2025 Mandate for Leadership: The Conservative Promise, April 2024, The Heritage Foundation & partner organizations, Chapter 14: Department of Health and Human Services

Medicare (p. 463-469)

Medicare should be reformed according to four goals and principles:

Increase Medicare beneficiaries’ control of their health care. Patients are best positioned to determine the value of health care services, working with their health care providers. They also benefit from increased choice of doctors, hospitals, and insurance plans. Access to reliable information with respect to physicians, hospitals, and insurers is therefore essential.

HJM comment: Choice of provider, yes! However, it’s a debunked myth that valuing health care is like valuing cars or phones. Health care is complex and often emotionally fraught. It’s unsuited for a free market approach (Ken Arrow got a Nobel for this insight). Let’s stop pretending that a “free market” can fix health insurance.

Ensure sustainability and value for beneficiaries and taxpayers. Prices are best for patients when determined by economic value rather than political power and when they are known in advance of the receipt of services. Government’s use of non-market-based methods to determine reimbursement leads to overspending on low-value services and products and underpayment for high-value services and products, stifles beneficial innovation, and because of Medicare’s size distorts payments throughout the health care system. Intermediate entities that can manage financial risk and ensure quality of care are important in transitioning to value-based care within the Medicare program.

HJM comment: With a free market not up to the task, the government has a key role to play. Indeed, there are proven methods to assure both sustainability and value – used in 32 other wealthy nations. In contrast, “Intermediate entities” – Medicare Advantage plans and direct contracting entities like ACO REACH – shift funds from care to profits and increase costs for taxpayers, with a mixed record on quality.

Encourage more direct competition between Medicare Advantage and private plans. Medicare Advantage (MA), a system of competing private health plans, is the major alternative to traditional Medicare for America’s large and growing cohort of seniors. The program provides beneficiaries with a wide range of competitive health plan choices—a richer set of benefits than traditional Medicare provides and at a reasonable cost. Equally as important, the MA program has been registering consistently high marks for superior performance in delivering high-quality care. Critical reforms are still needed to strengthen and improve the program for the future. Specifically:

  • Make Medicare Advantage the default enrollment option.
  • Give beneficiaries direct control of how they spend Medicare dollars.
  • Remove burdensome policies that micromanage MA plans.
  • Replace the complex formula-based payment model with a competitive bidding model.
  • Reconfigure the current risk adjustment model.
  • Remove restrictions on key benefits and services, including those related to prescription drugs, hospice care, and medical savings account plans.

HJM comment: We’ve written extensively about problems with Medicare Advantage (MA). It incurs > $100 billion per year in excess costs for CMS and beneficiaries, and has a mixed effect on quality (with some distortion by bias). MA plans already have a marketing edge over traditional Medicare; don’t boost that. MA needs more, not less, management. The current payment bidding incorporates, in a complex way, competitive elements. Overall, we need less MA, not more. And ultimately, no MA – no for-profit intermediaries!

Legacy Medicare Reform. Legislation reforming legacy (non-MA) Medicare should:

  • Replace the bureaucrat-driven fee-for-service system with value-based payments to empower patients to find the care that best serves their needs.
  • Codify price transparency regulations.
  • Restructure 340B drug subsidies toward beneficiaries rather than hospitals.
  • Repeal harmful health policies enacted under the Obama and Biden Administrations such as the Medicare Shared Savings Program and Inflation Reduction Act.

HJM comment: Value-based payments (e.g., ACOs) have not worked to reduce net costs or improve quality; they should be dropped. Price transparency efforts have failed mainly due to complexity; again, medical care is not a viable free market, and our fragmented insurance system undermines even good ideas like price transparency. The other points are too in the weeds or vague. “Legacy” i.e., traditional, fee-for-service Medicare has much to recommend it, most of all free choice of providers and avoiding insurer risk gaming. It’s the foundation for an improved Medicare-for-All single payer system.

Medicare Part D Reform. The Inflation Reduction Act (IRA) created a drug price negotiation program in Medicare that replaced the existing private-sector negotiations in Part D with government price controls for prescription drugs. These government price controls will limit access to medications and reduce patient access to new medication.

This “negotiation” program should be repealed, and reforms in Part D that will have meaningful impact for seniors should be pursued. Other reforms should include eliminating the coverage gap in Part D, reducing the government share in the catastrophic tier, and requiring manufacturers to bear a larger share. Until the IRA is repealed, an Administration that is required to implement it must do so in a way that is prudent with its authority, minimizing the harmful effects of the law’s policies and avoiding even worse unintended consequences.

HJM comment: Ironically, this section undermines the one free market tool that could work in our dysfunctional system: direct price negotiations for a discrete product, medications. Private sector negotiations fail because the sellers (Pharma) have too much power. Further, the medication supply line is distorted by a superfluous profiteering intermediary, pharmacy benefit managers. Although these price efforts are baby steps, they are in the right direction. Other nations negotiate drug prices, as would single payer. The last sentence implies subverting the law’s intent.

P.S. On a positive note, I agree with closing the Part D coverage gap!

Comment:

By Jim Kahn, M.D., M.P.H.

The Project 2025 Medicare vision focuses on free-market ideas like price transparency and the interaction of supposedly well-informed consumers and providers. This falls way short in light of many decades of evidence that a free-market approach fails in medical care, because it is unlike other goods and services. Kenneth Arrow was the first to point this out, for which he received the Nobel Prize. Others have written similarly. We see repeatedly how our fragmented system, attempting to use free market ideas despite the evidence, costs too much and provides too little care.

Project 2025 would have us believe that further steps in the free-market direction would remove the glitches. But they will not. The one free market strategy that would work – negotiating prices for a standard commodity (drugs) – is rejected by Project 2025.

As seen in wealthy nations around the world, the solution lies in a single insurance plan for everyone with no profit-making insurers, and national oversight. Health care is too complex logistically and emotionally to work like other parts of the economy.

See my detailed point-by-point critique above. The report also offered a couple of good ideas, e.g., reducing regulatory burden on doctors and gaming of payment rates, but these do not mitigate the serious harms which would accrue from the overall approach.

In coming days, I’ll concisely summarize my recent 3 critiques of Project 2025 (Medicaid, Private Insurance, and Medicare).

https://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

FTC: PBMs Inflate Drug Costs & Punish Local Pharmacies

A landmark Federal Trade Commission report finds that pharmacy benefit managers – large corporations which control 90% of US prescriptions – routinely adopt aggressive business practices that increase costs for consumers and financially penalize local pharmacies.

Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies, Interim Staff Report, Federal Trade Commission, July 2024

Executive Summary:

PBMs [negotiate] the terms and conditions for access to prescription drugs for hundreds of millions of Americans. They wield enormous power and influence over patients’ access to drugs and the prices they pay. This can have dire consequences for Americans, with nearly three in ten surveyed Americans reporting rationing or even skipping doses of their prescribed medicines due to high costs.

PBMs also exert substantial influence over independent pharmacies, who struggle to navigate contractual terms imposed by PBMs that they find confusing, unfair, arbitrary, and harmful to their businesses. Between 2013 and 2022, about ten percent of independent retail pharmacies in rural America closed. Closures of local pharmacies affect not only small business owners and their employees, but also their patients. 


PBMs oversee critical decisions about access to and affordability of medications without transparency or accountability to the public. Indeed, PBM business practices and their effects remain extraordinarily opaque. In 2022 & 2023, the FTC 
 requested data and documents regarding the large PBMs’ businesses and business practices 
. some of the PBM respondents have not yet fully complied 


Even as FTC staff continues to press the PBM respondents to turn over the required information, 
 this Interim Report provides the following key insights:

> The market for pharmacy benefit management services has become highly concentrated, and the largest PBMs are now also vertically integrated with the nation’s largest health insurers and specialty and retail pharmacies. 
 The top three PBMs processed nearly 80 percent of the approximately 6.6 billion prescriptions dispensed by U.S. pharmacies in 2023, while the top six PBMs processed more than 90 percent. All of the top six PBMs are vertically integrated downstream, operating their own mail order and specialty pharmacies, while one PBM owns and operates the largest chain of retail pharmacies in the nation. Pharmacies affiliated with the three largest PBMs now account for nearly 70 percent of all specialty drug revenue. In addition, five of the top six PBMs are now part of corporate healthcare conglomerates that also own and operate some of the nation’s largest health insurance companies 


> As a result of this high degree of consolidation and vertical integration, the leading PBMs can now exercise significant power over Americans’ access to drugs and the prices they pay. 
 The result is that the dominant PBMs can often exercise significant control over which drugs are available, at what price, and which pharmacies patients can use to access their prescribed medications.

> Vertically integrated PBMs may have the ability and incentive to prefer their own affiliated businesses, which in turn can disadvantage unaffiliated pharmacies and increase prescription drug costs. 
 Our analyses highlight examples of affiliated pharmacies receiving significantly higher reimbursement rates than those paid to unaffiliated pharmacies 
. These practices have allowed pharmacies affiliated with the three largest PBMs to retain levels of dispensing revenue well above estimated drug acquisition costs, resulting in nearly $1.6 billion of additional revenue on just two cancer drugs in under three years.

> [I]ncreased concentration may give the leading PBMs the leverage to enter into complex and opaque contractual relationships that may disadvantage smaller, unaffiliated pharmacies and the patients they serve. Independent pharmacies generally lack the leverage to negotiate terms and rates when enrolling in PBMs’ pharmacy networks, and subsequently may face effectively unilateral changes in contract terms without meaningful choice and alternatives. This has increased uncertainty in pharmacy reimbursements, which can make it difficult for smaller pharmacies to manage basic business operations. [T]he rates in PBM contracts with independent pharmacies often do not clearly reflect the amount the pharmacy will ultimately be paid.

> PBMs and brand drug manufacturers sometimes negotiate prescription drug rebates that are expressly conditioned on limiting access to potentially lower cost generic alternatives. 
PBMs and brand pharmaceutical manufacturers sometimes enter agreements to exclude generic drugs and biosimilars from certain formularies in exchange for higher rebates from the manufacturer. These exclusionary rebates may cut off patient access to lower-cost medicines. …

Comment:

By Jim Kahn, M.D., M.P.H.

The odd and secretive business intermediary known as “pharmacy benefit manager” is being critically examined. HJM has discussed this. PBM scrutiny is even that rare beast in Washington — bipartisan. Indeed, the FTC released this report by a 4:1 Dem & GOP vote of Commissioners, despite the “interim” status (which reflects the non-response of some PBMs to requested information). The process of oversight seems to be working.

The substance is also impressive: The top 6 PBMs, part of a corporate merger frenzy in health care, control 90% of pharmacy-dispensed prescriptions, in a highly irregular and exploitive fashion. They favor pharmacies in their own corporate structure. They force other pharmacies to accept complex and uninterpretable contracts that result in large take-back payments and thus financial harm. And they accept pharma incentive payments (aka rebates) to prefer more expensive brand-name drugs over generics, adding system costs and penalizing patients both financially and medically. I suspect that eventually other abusive tactics will come to light.

Glimpses into the exploitive approach of PBMs are long in coming. PBMs have always claimed that they reduce costs, but the evidence has never been forthcoming, even as the corporate profits of this novel intermediary skyrocketed. What’s the advantage of inserting a new corporate entity between drug manufacturers, insurers, and pharmacies? And letting that entity merge with the insurers and pharmacies? Turns out – and we suspected this – there is none. Consumers and patients lose, and so do unaffiliated pharmacies.

Under single payer, drug purchasing is simple: the public insurer establishes an evidence-based drug formulary, negotiates fair prices, and pays for prescriptions. That’s how it’s done in almost all wealthy nations. Surprise – there is an approach proven to work, and we’re not using it. Yet.

https://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Less Care at Higher Cost—The Medicare Advantage Paradox

By Adam Gaffney, M.D., M.P.H.; Stephanie Woolhandler, M.D., M.P.H.; and David U. Himmelstein, M.D.
JAMA Internal Medicine, July 10, 2024

Abstract: Celebrating a Medicare Advantage (MA) milestone—enrollment in those private plans surpassed 30 million—the health insurance industry’s trade group proclaimed MA “a good deal for members and taxpayers.” The first part of that claim is debatable, while the second part is false. Medicare Payment Advisory Commission (MedPAC), the nonpartisan agency reporting to Congress, recently estimated that MA overpayments added $82 billion to taxpayers’ costs for Medicare in 2023 and $612 billion between 2007 and 2024.

full viewpoint:
https://www.jamanetwork.com


Burnout in the health care workforce

By Ahmed Kutty, M.D.
Monadnock (N.H.) Ledger-Transcript, July 9, 2024

A recent paper in the Journal of the American Medical Association (JAMA) dated June 25, reporting on a study in 2020, says one in five physicians in the United States intended to quit practice in the next two years, and a follow-up survey in 2021 showed a grimmer picture, with 40% voicing similar intentions.

Dr. Mark Lenzer, a coauthor and director of the Institute For Professional Worklife at Hennepin Healthcare in Minneapolis, is quoted as saying, “With the way medicine is practiced today it is just barely sustainable.”

The title of the JAMA report under is “To Fix Burnout, New Initiatives Go Beyond Worker Resilience and Put Onus on Health Systems.” It accurately reports the impact COVID-19 pandemic had on physicians, nurses and other professionals comprising the health care workforce. However, Dr John Howard, Director of the National Institute for Occupational Safety and Health (NIOSH) says, “These problems did not arise overnight.”

Stigma associated with mental health and institutional barriers impede clinicians from seeking help when they need it most. The electronic health record (EHR) is cited as the biggest driving force. In March 2022, Congress passed the Dr Lorna Breen Healthcare Protection Act, named after an emergency medicine doctor who died of suicide during the pandemic.

The NIOSH released a National Plan for Health Workforce, added on to the Change Maker Campaign by the National Academy of Medicine (NAM). The Lorna Breen Heroes Foundation published their “Impact Wellbeing Guide.” These collaborative efforts are funded from the American Rescue Plan Act of 2021.

A report by Definitive Healthcare, a health care tech company, last September found 145,213 health care workers to have left practice from 2021 through 2022. Nearly half of them were doctors; 35,000 nurse practitioners walked away, and thousands of physician-assistants, physical therapists and medical social workers have joined the exodus.

While a critical shift from an individual-based efforts at self care to a an institutional and system-wide approach for the well-being of these precious resources is recommended to stem the tide, the guide’s coauthors, Drs. Stefanie Simmons and John Howard recommend decreasing excessive workload as one of the seven actionable measures.

Conspicuously absent  is naming, let alone attempting to address issues at the core of the rot – loss of professional autonomy, a deep fountain of pride in the work, mostly joyful acceptance of the long hours and disrupted work-life balance by the folks entering careers in health care dating back to more than a century and a deserved compensation level. All have upended by the advent of the world ruled by humongous and powerful commercial enterprises, decimating a once-revered profession, beginning in the late 1970s.

Once the doctors, nurses, pharmacists and other health care professionals can stop feeling like a cog in the giant wheel of the profit-making machine, it is still not too late to expect resiliency towards healing and capacity to bounce back as proud, dedicated and competent caregivers individually and within a team at the institutional level.

Policy-makers, private institutional leaders, professional societies and publicly funded research organizations like the National Institutes of Health will be well-served if the corrosive effects of putting profits over patients is firmly grasped and tackled vigorously, head-on..

Otherwise the current situation is unsustainable, indeed.

Engaged and well-informed citizenry, confronting the formidable forces of profit-driven conglomerates like Big Insurance, Big Hospitals and Big Pharma, will find them intimidating. Margaret Mead said, “Never doubt that a small group of thoughtful committed citizens can change the world; indeed it is the only thing that ever has.”

Small yet impactful steps could start with joining a campaign to protect traditional Medicare from the ravages of the pervasive and pernicious consequences of Medicare Advantage, a profiteering empire which now has enrolled 51% of our eligible seniors, enabled by the Medicare Modernization Act of 2003 that opened the floodgates for the privateers. Unless stopped, Medicare as we have known since its inception in 1965 will cease to exist by the end of the decade or will barely survive as a skeleton of the once-popular and widely-acclaimed program of public funding of health care for seniors and the disabled in our country.

Educating seniors nearing Medicare age on the pitfalls of Medicare Advantage is a baby step on this journey.

To agitate for extending the benefits of price regulation of essential drugs like insulin, lately capped at $35 for Medicare beneficiaries, to all Americans is a doable intermediate-term task. Fighting for expanding Medicaid coverage in all states and for adequate insurance coverage for opioid and other substance-use disorders are areas of struggle eminently worthy of joining the battle for.

There is evidence that efforts by large swaths of the public striving to secure health care justice will be conducive toward mitigating the scourge of despair-induced burnout among our world-class health care professionals. As Frederick Douglass said, “Power concedes nothing without a demand. It never has and it never will.”

Dr. Ahmed Kutty is a former health care professional with 50 years of experience.

https://www.ledgertranscript.com…

Medicare Advantage has many restrictions, and patients struggle when they must switch doctors

A doctor at Loyola Medicine worries about a longtime patient forced to find a new in-network health care system to treat life-altering illnesses.

By Monica Maalouf, M.D.
Chicago Sun-Times, July 8, 2024

“I want to make it clear this will be an involuntary separation.”

Her tone was in jest, but her eyes were pure weariness as she sat in my office, wringing her hands and doing her best to fight back tears.

“Pain is something I can deal with. Finding an entire new team of doctors is not,” she said as she shook her head.

If you had passed her in the waiting room, she would’ve struck you as a woman of pure poise — her hair neatly placed, her blouse tucked in and beige shoes matching her purse. Her appearance belied her inner strength and resilience. Sharon is in her 70s and has known pain most of her adult life. She was diagnosed with rheumatoid arthritis at a young age and has had numerous complications and flares. Her inflammatory disease isn’t just limited to her joints. It has contributed to complications including coronary heart disease and chronic lung disease. She recently gave up driving.

However, like many of my patients, the medical exam isn’t the hard part about coming to see me; it’s all the things that come with it: navigating health systems and co-pays, phone calls and parking fees, deductibles, networks and insurance coverage gaps known as “donut” holes.

And now she is being asked to navigate something entirely unexpected: Her Medicare Advantage plan will soon list my health system as “out of network.” She will need to find a new primary care doctor, rheumatologist and cardiologist. She’s been with our team for more than 10 years and is now being asked to make a change.

“Do you even know where the next closest rheumatologist is?” she asked me, still shaking her head.

Sharon isn’t alone; she’s among thousands in my system who will be affected once United Health no longer contracts with my hospital. While younger patients on commercial plans might not be surprised by network changes, something that frequently comes with the territory of having private insurance in America, this is a new and unique challenge for seniors.

Traditional Medicare vs. Medicare Advantage

Traditional Medicare is accepted by 98% of physicians. It’s exceedingly popular and for generations has been the mainstay for insuring America’s seniors. With traditional Medicare there are no networks; patients can see any and all accepting physicians.

But the past decade has seen a rise in Medicare Advantage, also known as MA or Medicare Part C. It is a privately administered program that uses capitation, defined by the Centers for Medicare & Medicaid Services as “a way of paying health care providers or organizations in which they receive a predictable, upfront, set amount of money to cover the predicted cost of all or some of the health care services for a specific patient over a certain period of time.” Patients enrolled in Medicare Advantage receive their benefits through intermediaries like United Health or Aetna.

Since 2007, the volume of beneficiaries enrolled in Medicare Advantage has nearly tripled and as of 2023, 51% of patients eligible for Medicare were enrolled in Medicare Advantage plans. Because these plans are administered through a private insurance company, seniors are now subject to shifts in contracting and network restrictions.

Such a disruption for a patient with numerous chronic diseases isn’t just frustrating, it’s potentially life-threatening. It is well-studied that transfers of care pose risks to patients, especially those with more complex conditions. When you leave a health system and a team of physicians that has known you well for years, information will inevitably be lost, which creates space for mistakes to be made.

Now, here was Sharon, in my office, faced with the frustration of having to find a new team of doctors at a time when waiting lists are long and also confronting the prospect this might mean getting a lower standard of care.

I had no answers for her. Physicians, unfortunately, have little or no say when large health systems are engaging in contracting disputes with even larger insurance giants. This is happening to patients nationwide. In October a health system in Virginia and Ohio dropped their contract with Anthem Blue Cross Blue Shield for a time, which affected the care of tens of thousands of Medicare patients.

When I asked Sharon what her plan was, she replied, “I can’t get into my new system for at least six months. So my plan is to hope this gets resolved before an emergency arises.”

Dr. Monica Maalouf is a primary care internist, associate professor of medicine and assistant dean of diversity, equity and inclusion at Loyola Stritch School of Medicine.

https://chicago.suntimes.com…

Critiquing Project 2025: Private Health Insurance

Project 2025 proposes changes to private insurance that will remove important protections put in place by the Affordable Care Act.

Project 2025 Mandate for Leadership: The Conservative Promise, April 2024, The Heritage Foundation & partner organizations, Chapter 14: Department of Health and Human Services

Affordable Care Act and Private Health Insurance (p. 469-470)

Remove barriers to direct primary care. Direct primary care (DPC) is an innovative health care delivery model in which doctors contract directly with patients for their care on a subscription basis regardless of how or where the care is provided. The DPC model is improving patient access, driving higher quality and lower cost, and strengthening the doctor–patient relationship. DPC has faced many challenges from government policymakers, including overly exuberant attempts at regulation and misclassification. Changes should clarify that DPC’s fixed fee for care does not constitute insurance in the context of health savings accounts.

HJM comment: IMO, DPC has some genuine pluses – it facilitates clinical focus for physicians by cutting payment-related paperwork, and fosters continuity of care. However, the “health savings accounts” promoted in the last sentence are expensive to administer (far more than single payer) and are regressive, shifting scarce health insurance resources to tax free retirement accounts of the healthy and wealthy. Under single payer, DPC will be easy to implement.

Revisit the No Surprises Act on surprise medical billing. The No Surprises Act protected consumers against balance bills, but it also established a deeply flawed system for resolving payment disputes between insurers and providers. This government-mandated dispute resolution process has sown confusion among arbiters and regulators as judges have sought to ascertain its meaning. The No Surprises Act should scrap the dispute resolution process in favor of a truth-in-advertising approach that will protect consumers and free doctors, insurers, and arbiters from confused and conflicting standards for resolving disputes that the disputing parties can best resolve themselves.

HJM Comment: Once again, partly true but misses the big picture. The “No Surprises Act” payment resolution process has too much ambiguity, argument, and therefore wasted resources. However, “truth-in-advertising” is a nonsensical solution: patients in emergency and high stakes medical situations won’t be able to consider or act on complex price disclosures. Not to mention that such disclosures will often be incorrect or misleading. What we need is a system where all care is covered by the same insurance. You know, single payer.

Facilitate the development of shared savings and reference pricing plan options. Under traditional insurance, patients who choose lower cost care do not benefit financially from that choice. Barriers to rewarding patients for cost-saving decisions should be removed. CMS should ensure that shared savings and reference pricing models that reward consumers are permitted.

HJM Comment: Only a little true: insurance often shields patients from the most severe cost consequences of higher prices. However, studies show that even then the patient is responsible for the price difference, the system doesn’t work – providers can’t or won’t provide prices in advance, and higher prices are seen (incorrectly) as a marker of higher quality, which everyone demands when it comes to medical care. “Skin in the game” strategies don’t control health care costs. In general, medical care does not work as a “free market” (Ken Arrow, Nobel Prize)

Separate the subsidized ACA exchange market from the nonsubsidized insurance market. The Affordable Care Act has made insurance more expensive and less competitive, and the ACA subsidy scheme simply masks these impacts. To make health insurance coverage more affordable for those who are without government subsidies, CMS should develop a plan to separate the non-subsidized insurance market from the subsidized market, giving the non-subsidized market regulatory relief from the costly ACA regulatory mandates.

HJM comment: Ooh, this one is so nasty it hurts. The “costly ACA regulatory mandates” are protections for patients, e.g., community rating (premiums based on demographics and location, not history of prior illness, which costs the sick out of insurance); standard insurance coverage categories and transparent disclosure of benefits; and prohibition on “recission” (retroactively revoking insurance based on even trivial errors in the application). I’m no fan of a system built on private insurance, but as long as we have it, let’s keep it fair.

Strengthen hospital price transparency. In 2020, CMS completed its rule to require hospitals to post the prices of common hospital procedures. Future updates of these rules should focus on including quality measures. Combined with the shared savings models and other consumer tools, these efforts could deliver considerable savings for consumers.

HJM comment: Dreaming. The posting of prices has not worked, with most hospitals not complying and the posted lists so complicated as to be unusable by consumers – too many procedures, in too many configurations, for too many health plans. Quality measures are highly contentious (poor-performing hospitals claim, often legitimately, that their stats are skewed by high risk cases) and are widely manipulated by playing to the metric or lying. There is no evidence that shared savings and consumer tools save money. The way to save money is to cover everybody with the same insurance, and slash administrative costs – like single payer, and health insurance in every other wealthy nation.

End restrictions on benefits and types of health plans that can participate in the exchanges. Congress should build on the Trump Administration’s efforts to expand choices for small businesses and workers, both in and out of the exchanges, by codifying an expansion of association health plans, short-term health plans, and health reimbursement arrangements (including individual coverage HRAs). [The government should] give consumers more flexibility with their health care dollars through expanded access to health savings accounts.

HJM comment: These “restrictions” assure that insurance doesn’t abuse subscribers. With the major exception of high deductibles, ACA exchange plans are far fairer than unregulated insurance. See my critiques of HSAs above.

Comment:

By Jim Kahn, M.D., M.P.H.

Read my comments above, integrated with the excerpts.

Once again, a deep dive into Project 2025 health insurance reform proposals reveals a complete disregard for the welfare of beneficiaries / subscribers. It’s presented in the guise of innovation and regulatory relief, but it’s really a way to remove consumer protections, most harming the sick and middle class.

See my intro to the Project 2025 critique series here, and my discussion of Medicaid issues here. Next up – Medicare.

(Apologies for a slow week. I found the Supreme Court news terribly distracting.)

https://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Medicare Advantage and Consolidation’s New Frontier — The Danger of UnitedHealthcare for All

By Hayden Rooke-Ley, J.D., Soleil Shah, M.D., and Erin C. Fuse Brown, J.D., M.P.H.
The New England Journal of Medicine, July 6, 2024

UnitedHealth Group has recently come under fire. In February 2024, a ransomware attack on Change Healthcare, the medical claims clearinghouse owned by UnitedHealth, created a cash-flow crisis for hospitals, medical practices, and pharmacies. State and federal regulators are scrutinizing numerous high-profile acquisitions by UnitedHealth’s provider-side subsidiary, Optum Health, and the U.S. Department of Justice (DOJ) is undertaking a broader antitrust probe of the parent company. In addition to owning Change Healthcare and an extensive data-analytics arm, UnitedHealth is the largest insurance company and the largest employer of physicians in the United States. It is also the third-largest pharmacy benefits manager (PBM), and it operates pharmacies and a bank.

This type of vertical consolidation is not exclusive to UnitedHealth. Humana is now the largest provider of “senior focused” primary care and post-acute care in-home services. CVS, after purchasing Aetna in 2018, has acquired physician practices and companies that provide in-home primary care services, which complement its PBM and pharmacy chains. Major insurers Cigna, Centene, and Elevance are pursuing similar vertical growth strategies. Although this new frontier of consolidation has the potential to generate efficiencies, there are also risks: vertically integrated conglomerates can deploy a range of financial tactics and engage in market abuses that raise costs, undermine fair competition, and erode the quality of patient care and physician morale.

full article:
https://www.nejm.org…

Medicare Dis-Advantage: Overpayments and Inequity

The very “choice” that Medicare Advantage is said to offer is undermining Medicare’s promise of equal and universal care for seniors.

By Adam Gaffney, M.D., M.P.H., David U. Himmelstein, M.D., and Steffie Woolhandler, M.D., M.P.H.
The Nation, July 1, 2024

Medicare Advantage—the privatized Medicare plans run by insurance firms but funded by the federal government—rips off taxpayers. On this there is little controversy. In March, MedPAC, Congress’s nonpartisan advisory board on Medicare policy, estimated that this year alone taxpayers will overpay Medicare Advantage plans by $83 billion—the savings to Medicare if all of those plans’ enrollees were instead covered by the traditional, fully public Medicare program. A 2022 New York Times exposĂ©, “’The Cash Monster Was Insatiable’: How Insurers Exploited Medicare for Billions,” lays out the gory mechanisms—like fraudulent schemes (known as “upcoding”) to make patients look sicker on paper, which ups payouts from the government.

So much for the alleged efficiencies of the private sector in healthcare. Still, if these overpayments were the only problem with Medicare Advantage, giving the insurance firms a big haircut might fix the program’s defects. The problems, however, run deeper.

The core business model of Medicare Advantage relies on denying care to enrollees; lower outlays for care mean bigger profits. Implementing that strategy requires an immense, and immensely wasteful, insurance bureaucracy that consumes about 14 percent of Medicare Advantage revenues, sevenfold higher than traditional Medicare’s 2 percent overhead. Even worse, Medicare Advantage—which has grown to cover half of all Medicare beneficiaries—is undermining a cornerstone of Medicare: its promise of equitable, single-tier care for the nation’s elderly.

The New Deal did not, despite the efforts of some reformers, give us universal healthcare. President Harry Truman’s postwar push for national health insurance was defeated by a McCarthyite campaign led by the American Medical Association. Subsequently, the Truman-era supporters and architects of national health insurance plans retreated to a narrower vision: a program just for the elderly, which they hoped to expand later. After Democrats swept the 1964 midterm elections amid historic labor and civil rights mobilizations, that vision came to fruition when President Lyndon Johnson signed a bill establishing Medicare.

Medicare was, in many respects, a compromise. The price for the votes of Congressional Dixiecrats (segregationist Southern Democrats) for that federally administered program for the (disproportionately white) elderly, was an assurance that Medicare wouldn’t be expanded to the non-elderly poor, many of them Black. That assurance took the form of Medicaid, a program that offered states federal funding but largely ceded control to state governments—a bow to “states’ rights.” And for the elderly, Medicare emulated private insurers by requiring substantial out-of-pocket payments in the form of copayments, deductibles, and uncovered services, gaps in coverage mostly absent from Canadian- and European-style universal healthcare.

But for all its faults, Medicare retained a universalist, New Deal ethos, covering all older adults—rich and poor—and granting access to virtually all doctors and hospitals. Not everyone had Medicare, but virtually everyone would upon turning 65, at which point their insurance and access to care would be, at least legally, the same. It was one federal program—which allowed the federal government to wield Medicare to desegregate Southern hospitals in the years after its passage: No hospital could afford to turn it down.

But soon, private insurers began to infiltrate Medicare. Legislation signed by President Ronald Reagan opened the door for private insurers to sell Medicare “managed care” plans that could retain as profit any funds not spent on enrollees’ care. The share of seniors enrolled in those privatized Medicare plans, less than 5 percent in 1985, rose to nearly 20 percent by the end of the 1990s. President George W. Bush’s 2003 Medicare Modernization Act created the current iteration of privatized Medicare, dubbed Medicare Advantage, which really opened the floodgates to insurers. Since then, the share of seniors enrolled in the privatized Medicare Advantage plans has progressively risen, topping 50 percent for the first time last year, when UnitedHealthcare (the nation’s largest insurer) garnered nearly half of its total premium revenues from Medicare Advantage, and another quarter from Medicaid managed-care contracts.

From its inception, privatized Medicare has been rife with fraud and mismanagement. The largest privatized Medicare contractor of the Reagan era—International Medical Centers (IMC)—enrolled 197,000 seniors before collapsing in 1987—leaving $200 million in unpaid bills from doctors, hospitals and other providers. During its short run, IMC spent lavishly on administrators and lobbyists, hiring at least nine former federal officials, including the former general counsel and chief of staff of the Department of Health and Human Services, and the head of the HHS agency that oversees Medicare. (The government/insurer revolving door persists: Obama’s Medicare chief left to head the insurance industry’s trade association, and Biden’s director of the Medicare “Innovation Center” previously served as vice president of an insurance giant.) IMC’s President Miguel Recarey—who had earlier been accused of embezzling funds from a children’s hospital and boasted about his relationship with mob boss Santos Trafficante—was accused of swindling $230 million from Medicare and fled to Spain after being indicted for bribery, conspiracy, and wiretapping, amid charges that IMC provided grossly inadequate care and pressured sick (and hence unprofitable) enrollees to disenroll; he remains a fugitive. The state of Florida ultimately seized the company and sold it off to Humana, which remains a leading MA insurer today.

While insurers have, over time, refined their profit-maximizing tactics, there is considerable continuity. Plans have long engaged in so-called “favorable selection”—recruiting healthier seniors with lower health costs (“cherry-picking”) and avoiding or ejecting the sicker ones whose high medical costs threaten plans’ profits (“lemon-dropping”). Insurers have used diverse means to achieve this, like holding enrollment seminars in non–wheelchair accessible buildings, offering gym memberships as a perk (which appeals to healthier, more physically active seniors), and running glossy TV commercials, many depicting robust elders mountain biking, skiing, or even jumping on a trampoline (signaling that such plans are not intended for frail elders).

MA plans coax expensively ill members to disenroll by, for instance, putting medications they need (e.g., cancer chemotherapies) into the highest drug benefit tier, which loads out-of-pocket costs onto the sickest patients. Similarly, unlike traditional Medicare, MA plans limit enrollees to narrow networks of doctors and hospitals, thwarting enrollees’ access to specialized providers like psychiatrists and cancer hospitals. For patients with complex illnesses, these managed-care restrictions can be a major barrier to care. Consequently, sicker and disabled seniors (such as those with dementia, or needing nursing home or rehabilitation care) disproportionately depart MA for traditional Medicare—further enriching the MA pool with healthier seniors, reducing insurers’ per-patient outlays for care and increasing their profits. The upshot is a windfall for insurers: MedPAC estimates that insurers will garner overpayments of $35 billion this year thanks to “favorable selection” alone.

Such overpayments have persisted—indeed, increased—despite reforms specifically designed to rein in this misbehavior. Since 2004, government payments to MA plans insurers have been based on the average sickness levels (i.e., risk scores) of their beneficiaries, which the government calculates from diagnosis codes that the plan submits. Insurers quickly learned how to play that game. They began padding enrollees’ medical records with (often irrelevant) diagnoses to make them look sicker on paper—so-called “upcoding.” Regulators, in an effort to get ahead of insurers, slapped a discount on payments to MA plans to account for their upcoding. But insurers again outmaneuvered the regulators, coding ever more avidly, using innovative techniques like dispatching nurses to enrollees’ homes—not to treat enrollees but merely to put more diagnostic codes on paper, including some based on highly suspect in-home tests. Upcoding has allowed insurance firms to extract enormous overpayments—an estimated $50 billion in 2024 alone—on top of the aforementioned “favorable selection” bonanza.

Two of us (with Ida Hellander) previously estimated total taxpayer overpayments to Medicare Advantage plans at $282.6 billion from 1985 to 2013. Since then, overpayments have ballooned—totaling more than $400 billion over the past decade, according to MedPAC’s estimates. But even as overpayments deplete Medicare’s finances, Medicare Advantage poses another, even graver threat to the program: undermining its core commitment to equal access and equitable care.

Ironically, even as Medicare Advantage plans soak the taxpayers, their enrollees receive much less care than they would if covered by traditional Medicare. Insurers’ narrow provider networks and onerous prior authorization requirements restrict care through inconvenience and outright payment denials. And (unbeknownst to most patients) insurers often use bonuses or penalties to incentivize physicians—especially the tens of thousands that they now directly employ—to deny care. Reams of research has found that beneficiaries with Medicare Advantage (relative to those in traditional Medicare) receive less medical care, e.g., fewer home care visits from aides, speech therapists, physical therapists, or nurses. Among cancer patients requiring complex surgeries, Medicare Advantage beneficiaries are less likely to get surgery at high-volume cancer hospitals where quality is highest, and suffer longer delays in treatment and higher death rates. In effect, Medicare Advantage has introduced fresh inequities into Medicare. Increasingly, it is no longer one national program providing a single tier of access to nearly all providers: today, Medicare resembles our broader fragmented, multitiered and unjust insurance system.

Why, then, would beneficiaries enroll? Some are bamboozled by insurers’ slick and ubiquitous marketing. During Medicare’s seven-week open enrollment period in 2022, TV viewers were inundated by 643,852 English-language ads and more than 40,000 in Spanish. Plans also deploy some of their overpayments to offer some extra benefits—e.g., free eyeglasses or partial dental coverage—that are attractive to many seniors. And most importantly, insurers can reduce seniors’ monthly premiums for drug coverage—sometimes to zero—as well as their copayments for routine care like office visits.

Unsurprisingly, these perks are most attractive to beneficiaries with little cash to spare. Consequently, low-income and non-white seniors disproportionately “choose” Medicare Advantage—especially “zero-premium” plans and restrictive, HMO-style coverage. In other words, increasingly, Medicare beneficiaries are being sorted; even among Medicare Advantage plans, a socioeconomic gradient has emerged, with more restrictive plans enrolling poorer beneficiaries. And this sorting has medical consequences: One study found, for instance, that enrollees in stingier plans suffer higher death rates than those in less restrictive ones.

The harms resulting from Medicare Advantage plans’ privatization of Medicare are hence even more serious than is commonly realized. They don’t just extract tens of billions in overpayments from the federal treasury annually (though they do), or deny potentially life-saving care to the sickest enrollees (though they do that as well), and waste billions on the administrative bureaucracy needed to deny care (they do that, too). The very underlying “choice” that Medicare Advantage is said to offer undermines Medicare’s Great Society promise of equal and universal care for seniors.

Medicare Advantage enrollment continues to rise: if that trend continues, insurers will come to entirely dominate the program. But traditional Medicare’s serious shortcomings, including inadequate benefits and high cost-sharing, should not be whitewashed. Fortunately, as it turns out, the two problems have a single solution: end Medicare Advantage and use the tens of billions in savings to expand benefits for all beneficiaries.

Or better yet, pass a nonprofit Medicare for All reform that would address these problems, and amend current Medicare payment policies that have tolerated, and even encouraged, healthcare profiteering and the corporate takeover of care. Such reform could deploy the even larger savings on administrative bureaucracy (about 17 percent of health spending, equivalent to $832 billion in potential savings this year) to improve coverage for everyone. What we must not do, however, is stand by and watch insurers privatize Medicare to the point where we can no longer recognize it.

Dr. Adam Gaffney is a critical care physician, an assistant professor at Harvard Medical School, and past president of Physicians for a National Health Program. Drs. David U. Himmelstein and Steffie Woolhandler are Distinguished Professors of Public Health at the City University of New York at Hunter College, and co-founded Physicians for a National Health Program.

https://www.thenation.com…

Critiquing Project 2025: Medicaid

Project 2025 lays out a sweeping reform plan for Medicaid, couched in mysterious bureaucratic jargon. We reveal the true intent: cut health care for the poor.

Project 2025 Mandate for Leadership: The Conservative Promise, April 2024, The Heritage Foundation & partner organizations, Chapter 14: Department of Health and Human Services

Medicaid Reform Proposals (pp. 466-472)
[HJM bolding of narrative]

Reform Financing: Allow states to have a more flexible, accountable, predictable, transparent, and efficient financing mechanism to deliver medical services. This system should include a more balanced or blended match rate, block grants, aggregate caps, or per capita caps. Any financial system should be designed to encourage and incentivize innovation and the efficient delivery of health care services. Federal and state financial participation in the Medicaid program should be rational, predictable, and reasonable.

Direct Dollars to Beneficiaries More Effectively and Responsibly: End state financing loopholes. Reform payments to hospitals for uncompensated care. Replace the enhanced match rate with a fairer and more rational match rate. Restructure basic financing and put the program on a more fiscally predictable budget.

Strengthen Program Integrity: Incentivize states to decrease waste, fraud, and abuse. Improve Medicaid eligibility standards to protect those in need. Conduct oversight and reform of managed care.

Incentivize Personal Responsibility: Ensure that Medicaid recipients have a stake in their personal health care and a say in decisions related to the Medicaid program. Implement work requirements and match Medicaid benefits to beneficiary needs.

Allow Private Health Insurance: Enable states to contribute to a private insurance benefit for all family members in a flexible account that rewards healthy behaviors.

Increase Flexible Benefit Redesign Without Waivers: Eliminate obsolete mandatory and optional benefit requirements for able-bodied recipients. Redesign eligibility, financing, and service delivery of long-term care.

Eliminate Current Waiver and State Plan Processes: Allow providers to make payment reforms without cumbersome waivers or state plan amendment processes. Shift the balance of responsibility for Medicaid program management to states.

Prohibit Planned Parenthood from Receiving Medicaid Funds: End taxpayer funding of Planned Parenthood and all other abortion providers. Redirect funding to health centers that provide comprehensive health care for women.

Withdraw Medicaid funds for states that require abortion insurance: Cut 10 percent of Medicaid funds

Comment:

By Jim Kahn, M.D., M.P.H.

In my previous post, I introduced Project 2025 and the threats that it presents overall. Today is the first focused post – detailing the attack on Medicaid, our primary health insurance for the poor.*

As for understanding Project 2025’s Medicaid policy agenda, let me cut to the chase. The proposed changes, despite being couched in bureaucratic buzzwords, have a straightforward and nefarious intent: Reduce health insurance coverage for the poor, by restricting both eligibility and benefits. And, equally worrisome, use Medicaid to suppress access to abortion.

Here’s the translation of Project 2025 policy jargon:

A “balanced or blended match rate” means less federal money (currently the majority of Medicaid funding), imposing a larger financial toll on states and thus lowering overall funding. “Block grants” and “caps” means fixed funding, regardless of the size of eligible populations and their medical needs, and slow or no growth over time. “End state financing loopholes”, “reform payments”, and (again) “replace enhanced match rate” all mean: lower federal contributions. All this compromises providing care, see analyses here, here, and here.

“Improve Medicaid eligibility standards to protect those in need” means: cover only the very poorest and sickest, leaving out many who currently qualify and who, in today’s fragile health insurance environment, desperately need Medicaid.

“Incentivize personal responsibility” means – impose often onerous preconditions on getting Medicaid benefits. The example, “implement work requirements” — which don’t work.

“Allow private insurance” means abandoning the Medicaid public structure in favor of private insurance, which results in widespread under-insurance – especially dangerous for the poor.

“Eliminate 
 benefit requirements” means, well, removing requirements for specific medical services, thereby increasing risk. “Redesign 
 long-term care” means – undercut the mainstay of long-term care funding for the poor and middle class.

Layered onto this broad reduction in medical benefits is a full-bore attack on abortion services. I don’t think I need to translate the language excerpted above, which is atypically clear and direct. More on this topic in an upcoming post.

What’s amazing about Project 2025 is the ability to rhetorically cast dangerous policies as being about efficiency, generosity to the sickest, and personal virtue. In contrast, we know that true efficiency and generosity are available in true universal health insurance – single payer. The security of excellent health care access will go a long way toward increasing societal virtue.

* As I’ve written previously, I very much look forward to the day when the phrase “health insurance for the poor” no longer has meaning. Meantime 
 we must maintain the program that provides for the medical needs of the economically vulnerable.

https://healthjusticemonitor.org…

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Critiquing Project 2025

Project 2025 proposes a deeply worrisome policy transformation. We will scrutinize these policies in coming weeks.

Project 2025’s “Mandate for Leadership: The Conservative Promise,” released in April, threatens to replace modern American values with a retrograde vision. This 900-page action plan proposes a rapid, broad, and enduring transformation. It lays out sweeping policy shifts that favor the wealthy and undermine support for the poor, middle class, and minorities. Its detailed specification of practical implementation steps is chilling.

The Project 2025 policy scope is wide. On the economic side, it would make permanent the 2017 tax cuts for rich individuals and corporations, promote anti-union “right to work” laws, and reduce the power of public sector unions. In health, it would undermine the effectiveness of both public and private insurance, which we’ll explore thoroughly in subsequent posts. It would compromise pandemic response and end protections for abortion and reproductive health, as well as for LGBTQ rights.

Project 2025 would also fundamentally change how government and voting work, gutting the checks and balances built into our system. Specifically, it attacks the mechanisms that assure balance and continuity in how elected officials are chosen and how they must govern. In the area of voting, it promotes requirements for photo IDs and tighter absentee voting rules, both of which disadvantage minorities, the poor, and students. This would further weaken the voting power of these groups.

Its most insidiously consequential change concerns how the government operates. Project 2025 proposes use of a bureaucratic maneuver – “Schedule F” – to reclassify tens of thousands federal senior civil service employees (with job protections) into political appointees (who serve at the pleasure of the President). This means that the most technically skilled senior managers, who know the law and how to follow it, would be replaced with inexperienced and politically pliant newcomers who would be guided by presidential whims regardless of existing law. This undermines nearly a century of accumulated law, regulations, and professional governance.

HJM sees Project 2025 as a fundamental threat to progressive health policy. Thus, we’ll be writing about it regularly in coming weeks. Our focus will be on health policy – insurance, reproductive health, equity. But we’ll also veer into other topics.

Please let me (Jim) know if you have specific questions for us to address.

https://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.