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How UnitedHealth harnesses its physician empire to squeeze profits out of patients

How UnitedHealth harnesses its physician empire to squeeze profits out of patients

Investigation: Health Care’s Colossus

By Bob Herman, Tara Bannow, Casey Ross, and Lizzy Lawrence
STAT News, July 25, 2024

UnitedHealth Group started out as a small, Minnesota health insurance company and has since morphed into a modern-day Standard Oil, exerting unmatched dominance over health care in the United States.

It’s no secret that UnitedHealth is a colossus: It’s the country’s largest health insurer and the fourth-largest company of any type by revenue, just behind Apple. And thanks to a series of stealthy deals, almost 1 in 10 U.S. doctors — some 90,000 clinicians — now either work for UnitedHealth or are under its influence, more than any major clinic chain or hospital system.

But behind those statistics, there’s a lot UnitedHealth doesn’t want you to know. A STAT investigation reveals the untold story of how the company has gobbled up multiple pieces of the health care industry and exploited its growing power to milk the system for profit. UnitedHealth’s tactics have transformed medicine in communities across the country into an assembly line that treats millions of patients as products to be monetized.

Central to these tactics is UnitedHealth’s unrivaled leverage over physicians, whose diagnoses help determine how much private insurers get paid for covering older adults. Dozens of former doctors and employees at UnitedHealth medical practices told STAT how they became enmeshed in UnitedHealth’s strategy to make their patients seem as sick as possible. Doctors said the company had a fixation with medical coding to generate more revenue — encouraging clinicians through bonuses and performance reviews to identify more health problems in patients, even if those conditions seemed dubious.

By controlling doctors, UnitedHealth can lean on them to practice in ways that benefit the insurer, and use its insurance arm to funnel cash back to its clinicians — similar to how Standard Oil amassed power as both the buyer and seller in oil refining. Through these efforts, and by adeptly navigating the Medicare Advantage payment system, UnitedHealth has squeezed potentially tens of billions of extra dollars from taxpayers over the past decade, according to STAT estimations based on federal data. The relationship between UnitedHealth’s insurance company and physician practices is the focus of an ongoing Department of Justice antitrust probe.

Doctors interviewed by STAT said they were initially seduced by the company’s sales pitch that it would be hands-off and help them provide high-quality care, but they quickly became disillusioned. UnitedHealth has required some physicians to see as many as four patients per hour, a difficult task if any of those patients are new to a clinic, they said. Patients, meanwhile, are wondering why their doctors are rushing through their appointments — if they can get seen at all — and have expressed alarm when concerning diagnoses pop up in their medical records, many of which were never mentioned by their physicians.

Susan Baumgaertel experienced the shift firsthand. She is an internal medicine physician who spent 25 years — almost her entire career — at The Polyclinic, a large multispecialty group in Seattle. After UnitedHealth took over in 2018, Baumgaertel said the company pressured her and her colleagues to code patients for certain conditions, including some that the doctors didn’t think applied. She quit in 2021.

“We were not truly caring for patients anymore,” Baumgaertel said. “We were just micromanaging their care to bring in money. It just felt so unconscionable.”

She’s become an unofficial therapist for dozens of her colleagues who still work at UnitedHealth practices, dispensing advice and words of comfort over hours-long walks or coffee dates. Recently, Baumgaertel was on the phone with another physician who worked at a UnitedHealth-owned clinic at the time, and had just pulled up in front of her house.

“She was crying in her car. She said, ‘Susan, I can’t leave. I’m the breadwinner. I have to have insurance. My husband is a stay-at-home dad,’” Baumgaertel recalled. She could hear her friend’s kids knocking on the car window. “She felt trapped. I hear this over and over again.”

STAT’s reporting is based on interviews with more than two dozen current and former UnitedHealth doctors and executives conducted over the past six months. STAT also spoke with health policy experts and patients, examined court records, and read UnitedHealth’s 600-page medical coding bible. Many of the UnitedHealth doctors and executives, and even some patients, asked for anonymity — expressing concerns the company could take them to court, derail their careers, or alter their care.

Accounts from clinicians like Baumgaertel challenge UnitedHealth’s stated rationale for its increasing control over health care. The company says owning medical groups, while also being the insurer, will allow for better preventive care that is “value-based.” Why wait for people to show up in the emergency room with serious, costly issues when you can keep an eye on them in the clinic and intervene earlier?

UnitedHealth declined to make executives available for interviews and did not answer a detailed list of questions. In a statement to STAT, spokesperson Eric Hausman said the company’s “providers and partners make independent clinical decisions, and we expect them to diagnose and document patient information completely and accurately in compliance with [federal] guidelines. We provide training and other practice support to providers because it leads to better care management, coordination, and patient follow-up. Regulators routinely audit this documentation.”

From the start, the takeover of physician practices by the nation’s largest health care company has been carefully choreographed.

UnitedHealth’s leadership team is filled with people who have stayed at the company a long time, and have enriched themselves by doing so. Those executives have leveraged a system that has put patients’ medical charts at the center of how companies get paid. They have lobbied the government over policies that further entrench UnitedHealth’s market power. Several executives have held powerful federal health care positions of their own. And they have capitalized on the government nudging more older adults to enroll in privatized Medicare Advantage plans. UnitedHealth’s clinics and outpatient centers now provide care for about 103 million Americans, according to the company’s own estimates.

In 2007, at a Wall Street conference in a posh midtown Manhattan hotel, UnitedHealth’s then-CEO Stephen Hemsley telegraphed that UnitedHealth — already a rapidly expanding health care company — saw itself as much more than just an insurer. “I would ask you to begin to think about UnitedHealth Group and the construct of its business, its capabilities, its reach in the marketplace, as a health care system unto itself,” he said.

That same year, UnitedHealth struck a deal for an insurance company that owned Southwest Medical Associates, a group of clinics located throughout Nevada — the company’s first large medical group. This happened as the health care industry was on the cusp of its biggest transformation since the advent of Medicare nearly five decades earlier — changes that would ultimately reinforce UnitedHealth’s new direction and spur it to double down on doctors.

The Affordable Care Act, which President Barack Obama signed into law in 2010, limited the amount of profit insurers could make on health insurance. That encouraged many insurers to branch into other lines of business where profit wasn’t capped — such as providing medical care. The law also sought to tweak how doctors and hospitals got paid by adding incentives for keeping patients healthy instead of just paying for every visit or procedure. That meant, of course, more collaboration between providers and insurers.

The result was consolidation across all corners of the industry: Insurers bought insurers. Hospitals bought hospitals. And doctors — many of them overwhelmed by new rules around documentation and using electronic health records — flocked to hospitals, private equity firms, and insurers that could handle the administrative burden. UnitedHealth’s Optum subsidiary was one of the biggest players in the feeding frenzy, bringing tens of thousands of doctors under its umbrella. Today, less than half of the country’s doctors work at physician-owned practices, according to the American Medical Association.

As for UnitedHealth, Hemsley, along with former Optum CEO Larry Renfro and several other top executives, positioned themselves as architects of the company’s physician empire. Hemsley still serves as UnitedHealth’s board chair and has his own investment firm. Renfro, who led Optum from its reorganization in 2011 until 2018, now works at UnitedHealth’s venture capital firm.

While UnitedHealth expanded in patient care, it also grew its dominance in Medicare Advantage, the alternative to traditional Medicare that is run by private insurers and now covers more than half of all Medicare beneficiaries. UnitedHealth has had the biggest slice of enrollment in the program for more than a decade, growing from 20% of Medicare Advantage enrollees in 2010 to almost 30% in 2023.

That simultaneous growth was no accident. Medicare Advantage insurers depend on clinicians to enter diagnosis codes into patients’ medical records. Those codes turn into risk scores that explain how sick the patient is and, in turn, how much money the government pays their insurer for their medical care.

Medicare Advantage insurers have gamed the system by excessively coding their members, resulting in massive overpayments to the companies. Overpayments based on coding alone are expected to total $50 billion this year, more than the Department of Justice’s entire budget, according to the Medicare Payment Advisory Commission, a group of experts that advises Congress on Medicare. Since 2007, MedPAC estimates Medicare Advantage insurers have reaped $217 billion in coding overpayments from the federal government.

As the country’s biggest Medicare Advantage insurer and its biggest physician group, nobody is better positioned to extract massive sums from the program than UnitedHealth. The company is still facing a federal lawsuit alleging it continued to collect government money based on millions of patient diagnoses it knew were incorrect. UnitedHealth has disputed the allegations and continues to contest them in court.

While UnitedHealth operates in a completely different industry than did Standard Oil, they have unmistakable similarities, starting with their ambitions to stealthily expand. When Standard Oil was acquiring competing oil refineries in the 1860s and 1870s, the conglomerate did so with little trace. Under its founder John D. Rockefeller, Standard Oil scooped up nearly all the refineries in the Cleveland area, but few newspapers were aware of the growing monopoly.

“It had all been accomplished in accordance with one of Mr. Rockefeller’s chief business principles — ‘Silence is golden,’” journalist Ida Tarbell wrote in “The History of the Standard Oil Company.”

UnitedHealth rarely announces its takeovers of physician clinics and outpatient centers. In part, that’s because the acquisitions are small compared with its overall size and therefore don’t have to be disclosed to financial regulators. It also has downplayed the number of physicians it controls through employment and other financial agreements.

Of UnitedHealth’s 90,000 physicians, 10,000 are employed, and the others are affiliated through “value-based care arrangements,” the company said. It’s unclear what the financial parameters of those affiliations are, and UnitedHealth declined to clarify. In a statement, UnitedHealth’s Hausman said, “The vast majority of the physicians we work with are independent and choose to work with us,” reiterating CEO Andrew Witty’s remarks to Congress.

But UnitedHealth has clearly targeted specific, important medical groups and outpatient surgery centers in markets where it also has the most Medicare Advantage enrollees. The company’s strategy goes like this: If UnitedHealth could get more of its insurance members to go to its own physicians, the company would get to pay itself with money that previously would have gone out the door.

“Controlling the physicians is incredibly lucrative for maximizing risk-coding payments. It’s hard to overstate just how lucrative this can be,” said Hayden Rooke-Ley, an Oregon-based attorney and senior fellow for health care at the American Economic Liberties Project. He has written about the risks of insurers owning physician groups. “This is the singular explanation for why insurance companies are getting into the business of care delivery, particularly of primary care.”

At the core of amassing its doctor empire was luring physicians. UnitedHealth quickly found the surest approach: Money, and a lot of it.

Some groups needed cash to invest in new electronic health records and other technology, or were facing financial distress. Physicians who bought into the idea of less wasteful care and more prevention opted to sell to UnitedHealth rather than to private equity or their local hospital systems. Plus, physicians nearing retirement were looking for a golden parachute, and UnitedHealth in some cases dangled huge sums of cash, according to multiple former physicians who sold practices to UnitedHealth and other employees.

“The doctors wanted the moolah, especially the older physicians,” said a former employee of a UnitedHealth clinic in the western U.S.

Six former UnitedHealth doctors said that when UnitedHealth took over medical groups, nothing would immediately change. But as the weeks and months passed, UnitedHealth would begin to overhaul their schedules: They were expected to see more patients, perform more physicals, and conduct more annual wellness visits. Some said they were required to see three or even four patients per hour.

In 2022, UnitedHealth acquired Atrius Health, then the largest independent doctor group in Massachusetts. Eleanor Hobbs, an urgent care physician, soon began dreading her shifts because her new corporate owner required her to see patients every 20 minutes. Previously, she saw a patient every 30 minutes. Hobbs, 76, had planned to work longer, but instead retired earlier this year.

“When I retired, my feeling was: I feel just like an Amazon warehouse worker, where all I’m doing is 20 minutes, 20 minutes, 20 minutes, 20 minutes,” Hobbs said. “Just do it. Don’t ask how the patient feels about it. Don’t ask what kind of a moral injury it feels like to me. It was awful.”

The pressure to treat patients as if they were fields of medical codes to be harvested, instead of people who have complex histories, soon followed. More than a dozen former doctors and employees from seven different practices nationwide described how UnitedHealth pushed its clinicians to document as many ailments as they could by offering bonuses or reviewing the performance of those who were not coding as much as their peers.

“If your numbers aren’t great, they meet with you individually. It just felt like at every avenue possible, you were reminded of it,” a former Polyclinic provider said.

Nine clinicians told STAT they were instructed to document conditions they didn’t believe applied. Six former UnitedHealth physicians said the shift has been most apparent since the Covid-19 pandemic, as they’ve been encouraged to catch up on coding after patients stayed at home instead of going in for routine checkups.

“It’s very frustrating to me as a physician to see something that was really intended to be a way to pay primary care doctors to do good, preventive risk assessment,” a physician formerly at UnitedHealth’s New West Physicians group in Colorado said of risk scores and coding. “And it’s turned into this coding vehicle where, ‘How do we drop as many codes as we can?’”

Potentially improper coding routinely came up in the same categories, such as peripheral vascular disease and chronic kidney disease, former UnitedHealth doctors said. One study from 2022, crafted by UnitedHealth’s own physician researchers, shows that UnitedHealth’s physicians coded Medicare Advantage patients as having lung disorders, vascular conditions, and kidney disease at more than two times the rate of those in the traditional Medicare program.

A separate review of provider data suggests the trend was broader than just UnitedHealth. It shows the rate of vascular disease testing and diagnosis across providers in a national dataset more than doubled between 2018 and 2023 among patients aged 50 and older. The analysis, based on electronic health record data and conducted by the health analytics company Truveta for STAT, also showed the rate of testing and diagnosis decreased in spring 2024, after Medicare eliminated a particularly lucrative code for patients with peripheral vascular disease without complications.

Part of the issue is the difference in the federal programs. Traditional Medicare pays doctors for each service they provide, while the government pays Medicare Advantage insurers based on how sick their members are, as determined by codes from doctors. Health policy experts say traditional Medicare undercounts older adults’ ailments. Coding and documentation also can be more of an art than a science at times, especially for complex patients who have a lot of medical problems. But within Medicare Advantage, conditions that can be open for interpretation can be exploited.

“There are probably a subset of diagnostic codes that are kind of squishy. They’re kind of subjective. They’re kind of game-able,” said Chris Pope, a senior fellow at the Manhattan Institute, a conservative think tank, who has studied Medicare Advantage coding.

Four doctors told STAT it was common to get panicked calls from patients. They wanted to know why their online medical charts said they had chronic kidney disease or vascular disease even though their doctors hadn’t mentioned it during their visits. When Baumgaertel got those calls, she said she always tried to tell patients the truth, as uncomfortable as it was: I don’t really think you have that condition, but I’m supposed to code you as having it so that I get paid more.

“It was almost to the point of being embarrassing,” she said. “These are people I’ve known for a long time, and they’re like, ‘Susan, what’s going on?’”

Doctors said that UnitedHealth medical directors and administrators pressured them to increase codes for a variety of different ailments, even if they thought those codes didn’t fit patients’ conditions. As one example, more than a half dozen clinicians said UnitedHealth used an unreliable device to screen nearly all of its Medicare Advantage patients for peripheral arterial disease as a way to boost vascular disease diagnoses.

Another example is chronic kidney disease. It’s normal for people’s kidney function to decline as they age, but five doctors said UnitedHealth pushed them to code for that condition even if they felt the patients’ diminished kidney function was appropriate for their age and unlikely to cause harm.

“The number of elderly patients I had who had legit panic episodes when they went to their chart and found out they had chronic kidney disease,” a former Polyclinic doctor said. “I’d have to have this whole conversation with them about like, ‘No, your kidney function is actually not that abnormal for your age, but because of this coding thing, blah blah blah.’ That was awful.”

Daniel Weiner, a nephrologist at Tufts Medical Center, said many older adults meet the technical definition of having chronic kidney disease based on tests that examine their kidney function. The problem is there’s a limited number of codes for chronic kidney disease that cover a large group of people.

“There are clearly financial reasons to code people with chronic kidney disease, as some of these patients have extremely complex medical issues, but others, with the same code, are far healthier,” he said.

Nick Jones, a primary care physician who joined Oregon Medical Group in Eugene just before UnitedHealth bought the practice, said the inaccurate code he saw most frequently in patients’ records was long-term management of insulin. In some cases, he said, this code was applied to patients who received insulin once to lower their blood sugar before a surgery, but who never needed the drug again.

Jones said he finally got fed up when the Oregon Medical Group’s electronic health record started making it mandatory that doctors attest to whether patients’ Medicare Advantage codes had been checked off before they could close out a visit. The system gave the option to deny the codes, but that was more labor-intensive because it required an explanation for why the codes were wrong, he said.

UnitedHealth would regularly host educational sessions where company representatives spent hours teaching Oregon Medical Group doctors how to code Medicare Advantage patients, Jones said. He found it frustrating because the sessions never covered new research into specific conditions or resources available for patients, like nutritionists or case managers.

“I don’t give a damn about what reimburses for what,” said Jones, who now runs a practice called Clear Health Direct Primary Care. “I’m just going to code what I addressed during that visit.”

Even surgeons were roped in, according to one who used to work at The Polyclinic.

“It just didn’t make a lot of sense for a surgeon to talk to patients about chronic illnesses that didn’t necessarily have a lot to do with their presenting complaint,” he said. “We’re not frankly specialized or qualified to do it.”

Nine doctors reported being rewarded with bonuses if they met UnitedHealth’s coding expectations. One former Polyclinic surgeon said it could be upwards of $30,000 per year. But if doctors didn’t comply, it affected their entire department, that surgeon said. UnitedHealth declined to respond to questions about whether it encouraged coding through bonuses and performance reviews, and whether it encouraged doctors to use specific codes that exaggerated patients’ conditions.

“So are you going to be the turd — sorry — are you going to be the doctor, who is not compliant and causing your partners to lose thousands of dollars? No. And ultimately, that’s what got me to be compliant,” the former Polyclinic surgeon said. Eventually, he and his colleagues left for a different medical group.

Top UnitedHealth executives have gushed to investors over the past 15 years that thoroughly documenting patients’ conditions is an untapped line of recurring revenue. UnitedHealth has become such an expert on the topic that it sells a coding bible to the medical community for $165.95. The 592-page book explains how the government’s payment system works and provides advice on how to “capture” more conditions.

The tips give a sense for how the company views coding and documentation: as a way to distill patients to a series of numbers and decimals that translate into big dollar figures. Coders are taught that every 0.1 in coding equates to $1,000, more or less, from the government per year.

Does a patient have diabetes? That adds 0.166 to the risk score, according to the government’s 2024 risk adjustment system, equating to $1,700 in annual Medicare payments. Congestive heart failure? That’s another 0.36 to the patient’s score, or $3,600. Severe obesity, cocaine use, Medicaid eligibility — all descriptors that lead to more money.

Some may assume Medicare Advantage insurers push for more documentation of these diagnoses because of a “desire to make a profit,” UnitedHealth’s 2024 coding guide reads. “This is a half-correct assumption,” the guide concedes, before saying coding also ensures companies get enough money from the government to cover care.

UnitedHealth’s guide emphasizes how coders should scour physicians’ notes to see if there are other illnesses that aren’t being captured. For example, it says doctors should mark down a patient’s cancer diagnosis when they come in for an unrelated issue like a high cholesterol reading if that patient’s records show they are actively seeing an oncologist and on cancer medication.

Richard Lieberman, a medical coding expert who helped develop the government’s risk adjustment system, said there is “far too much gaming of risk coding, but also of documentation.” Big companies like UnitedHealth have insulated themselves from more sweeping government investigations by justifying everything in medical charts, even if the diagnoses are wrong or based on flawed diagnostic tools, he said.

“It becomes sort of like a ‘Catch Me If You Can’ kind of scenario,” Lieberman said. “Only when you get audacious is your number often up.”

One doctor who used to work at UnitedHealth’s WellMed practice in Florida told STAT that managers set a troublesome expectation that risk scores could only go up, not down. UnitedHealth’s guide also explains how doctors and coders can “recapture” as many prior health conditions as possible. Things like fractures that have healed will fall off, but chronic conditions are expected to carry over. The assumption is that as people get older, they will have more diseases.

“There are a lot of targets that are just set to meet some obvious financial endpoint. They were unrealistic,” the former WellMed physician said. “People like me didn’t feel comfortable that these targets are the ones that we are getting our bonus based on, or people will even chase you and get you out of the company if you’re not producing like other physicians.”

UnitedHealth’s coding book attempts to help people determine if conditions are appropriately documented. All they have to do is remember this mnemonic device: treatment, assessment, monitor, plan, evaluation, and referral — or TAMPER.

Hundreds of people across the country have taken to Yelp and Google to gripe about longer waits for appointments and doctors quitting after UnitedHealth assumed control of their clinics. It became tough to get a real person on the phone, even after waiting for hours on hold. Billing mistakes became more common and difficult to resolve. Appointments felt rushed.

At the Polyclinic in Seattle, patient Todd Anderson said that after UnitedHealth took over, it became clear the company was trying to cut costs in every way possible. Check-in became centralized in a way that created a lot of confusion. Then came easily avoidable mistakes. The clinic sent the Seattle retiree’s bill to the wrong health insurer, so it was rejected. Despite Polyclinic’s repeated promises to fix the problem, Anderson was sent to collections. Then he was told if he wanted to stay on as a patient, he’d have to switch from his Aetna Medicare Advantage plan to a UnitedHealthcare one.

“Things changed rather dramatically, and it was pretty visible,” Anderson said.

For some patients, waiting longer to be seen had serious consequences. Connecticut resident Sharon Maloney believes her husband might still be alive if he’d been able to see his doctor right away, as he’d been able to before UnitedHealth took over ProHealth Physicians in 2015. In the past, she said, ProHealth had reserved time for sick patients to be seen the same day.

Maloney’s husband had several health issues, and he was taking medications for ulcerative colitis, chronic inflammation of the large intestine or rectum, that made him more susceptible to infections. In October of 2022, Maloney’s husband had all the telltale signs of a UTI, but ProHealth couldn’t get him in for three days. The day after he called ProHealth, his symptoms got so bad, Maloney took him to the hospital. By then, the infection had spread into his kidneys, leading to sepsis, antibiotics, a hospital-acquired infection, and, ultimately, his death last year.

“If he had been able to get a visit that day, if they had been able to identify the culture, and if they had gotten him on the antibiotic in the first couple of days, this slope would not have even started,” Maloney said.

UnitedHealth didn’t respond to questions about the care of Maloney’s husband.

Former longtime Polyclinic patient Mary Woodbery said things that used to be simple now require a maze of specialist referrals and seemingly unnecessary tests. One time, her teenage son had a tiny cyst on his neck that she suspected was an ingrown hair. Instead of letting him see a dermatologist straight away, The Polyclinic first made him see a radiologist who performed an ultrasound and then a neck specialist. Finally, a dermatologist confirmed it was an ingrown hair. Woodbery was exasperated.

“They have answers. They just don’t want to give them to you because they want to drag you through this endless chain of referrals so they can make sure all their departments are utilized,” said Woodbery, a speechwriter living in Seattle who had seen the same Polyclinic doctor for over two decades before that doctor left.

UnitedHealth continues to absorb medical groups, including a contentious battle over The Corvallis Clinic in Oregon. Regret is starting to set in for some physicians who took UnitedHealth’s offer. The coding dictates became too much for many to handle. For one former ProHealth physician in Connecticut, remorse builds even more after hearing from longtime patients who are wondering why they can’t get an appointment or why they have been mistakenly billed.

“Everybody thinks it was a catastrophe,” the former ProHealth physician said. “They destroyed our practice.”

https://statnews.com…

Dr. Diljeet Singh on “HEALTH CARE un-covered”

PNHP Vice President Dr. Diljeet Singh spoke with Wendell Potter’s “HEALTH CARE un-covered” for a video that was posted on July 24, 2024. Dr. Singh discussed how so-called “Medicare Advantage” plans are fleecing taxpayers to the tune of $140 billion each and every year—and routinely delaying or denying care, with often deadly results.

“I try to help people understand Medicare Advantage will make it hard for them to get health care,” said Dr. Singh. “They have a very good chance of having prior authorizations lead them to getting their care delayed unnecessarily—or even just denied.”

Medicare for All Prospects in a New Presidential Administration

Medicare for All received partial and ambiguous endorsement in the past by one presidential candidate. The major challenge ahead is achieving overwhelming and irresistible public support for the pure single payer system we need.

Where Kamala Harris stands on health care issues, The Hill, July 22, 2024, by Nathaniel Weixel

While running against Biden in the 2019 Democratic primary, Harris tried to present herself as someone between moderates like Biden and progressives like Sens. Elizabeth Warren and Bernie Sanders. She endorsed the Medicare for All bill introduced by Sanders, but also backed an array of moderate alternatives, including a “private option” plan that would transition to Medicare for All by allowing private insurance plans to compete with public plans.

Still, experts agree, she Is a staunch supporter of expanding ObamaCare and making health care more affordable for millions of Americans – something that is likely to be one of the biggest health care fights in Congress in 2025.

“Harris’ previous support for Medicare for All with a private insurance option is suggestive of her values, but I doubt it will be a big emphasis for her in the current campaign,” Larry Levitt, executive vice-president for health policy at KFF, said in an email. “I think Harris will lean much more into the Biden-Harris record on health care than policies she proposed in the 2019 primary. The political and policy context have changed quite a bit since 2019.”

Comment:

By Don McCanne, M.D. and Jim Kahn, M.D., M.P.H.

So does Kamala Harris support single payer / Medicare for All strongly enough to move it forward were she elected president? Many politicians include Medicare for All in the list of policies they support, but, after they are elected, it is moved off their desks as they deal with other pressing policies.

We must also note that including a private insurance option has major downsides. First, if private plans recruit and retain lower cost individuals while avoiding costly ones (in geek speak, risk selection), the system might split into a financially challenged public system for the sickest, and a highly profitable private system for the healthier. In addition, the added billing and insurance-related burden on providers and insurer profits would deprive our health care system of the efficiency we need and deserve to cover everyone while still controlling costs. So, from a technical perspective, all-in public insurance is best, as seen in many wealthy nations. Finally, a split system attenuates public insistence on an optimally functioning public system.

There is also an advocacy challenge. The enthusiasm for single payer in 2019, and still today, is high, about 2/3 of adults in fair polling questions. But under assault it is not as robust as we advocates would like. As an example, a panel debate including former PNHP president Adam Gaffney and the Pacific Research Institute’s Sally Pipes showed that, in spite of an excellent presentation by Gaffney, the audience support for Medicare for All declined significantly (YouTube video and transcript). This type of debate + polling is tricky to generalize, but is nonetheless a harbinger of fights ahead of us when single payer is under serious consideration.

We still have a lot of work ahead to persuasively convince the public of the clearcut advantages of properly public health insurance that would provide comprehensive care equitably to absolutely everyone, at a lower cost than the vast majority of us are paying now, thanks to progressive financing. Once these ideas are fully grasped by the public – which then raises voices in unison demanding its enactment and implementation – a President Harris would very likely respond positively.

https://healthjusticemonitor.org…

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Three Crumbling Health Insurance Pillars

Three recent stories remind us that fundamental pillars of successful health insurance—affordability, provider payment, and use of resources for care—are egregiously failing.

Healthcare Affordability and Value Indexes 2021-2024, West Health-Gallup, July 2024

Cost security among U.S. adults dipped to its lowest level ever in 2024, down 6 points since 2022, to just 55%. This decline mainly reflects adults aged 50 to 64 (down 8 points to 55%) and 65 or older (down 8 points to 71%). Adults under 50 dropped 5 points to 47% in 2024. For all three groups, these are historic lows.

Cost Insecure (37%): Recently unable to pay for care or medicine or to easily access quality care. 3-4 times more likely to cut back on basic household spending and to skip a medical procedure due to the cost.

Cost Desperate (8%): Recently unable to pay for care or prescribed medicine and feel that they lack access to affordable quality care. Half are “extremely concerned” about being able to pay for prescriptions and healthcare in the next 12 months.

2025 Proposed Medicare Physician Fee Schedule Highlights Urgent Need for Medicare Payment Reform, Press Release from Steven P. Furr (President, American Academy of Family Physicians), July 10, 2024

The Medicare program is essential in helping millions of people access comprehensive, continuous primary care. While the proposed 2025 Medicare physician fee schedule includes some proposals to strengthen primary care, its 2.8% reduction in the Medicare conversion factor once again highlights the urgent need for congressional action to ensure that physician payments keep up with the costs of running a practice.

Family physicians provide high-quality care to our patients and communities, but inadequate, falling Medicare payment rates create barriers to care for beneficiaries and strain physician practices. As a first step, Congress must enact an annual inflationary update to help physician payment rates keep pace with rising practice costs. Any payment reductions will threaten practices and exacerbate workforce shortages, preventing patients from accessing the primary care, behavioral health care, and other critical preventive services they need.

Private Medicare Plans and Vertical Integration Yield UnitedHealth $15.8 Billion in Profits Between January and June, HEALTH CARE un-covered, by Wendell Potter, July 15, 2024

UnitedHealth Group, the largest health insurance conglomerate by far, continues to show how rewarding it is for shareholders when corporate lawyers find loopholes in well-intentioned legislation – and game the Medicare Advantage program in ways most lawmakers and regulators didn’t anticipate and certainly didn’t intend – to boost profits.

UnitedHealth announced this morning that it made $15.8 billion in operating profits between the first of January and the end of June this year. That compares to $4.6 billion it made during the same period in 2014. One way the company is able to reward its shareholders so richly these days is by steering millions of people enrolled in its health plans to the tens of thousands of doctors it now employs and to the clinics and pharmacy operations it now owns. This is the result of the hundreds of acquisitions UnitedHealth has made over the past 10 years in health care delivery as part of its aggressive “vertical integration” strategy.

Comment:

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

Three pillars of functional health insurance are: (1) assuring financial access for patients, (2) paying providers fairly, and (3) directing financial resources to care.

But these pillars are crumbling:

(1) Nearly half of adults lack secure financial access due to lack of insurance and under-insurance, with one in 12 “cost desperate”.

(2) In Medicare, while Medicare Advantage plans overcharge by >$100 billion per year, front-line doctors face pay cuts. I think this reflects a CMS determination (terribly misguided) to grow Medicare Advantage. There are similar or worse underpayments in Medicaid (health care for the poor) across the nation. While there are discussions of payment reform, they typically steer clear of single payer.

(3) Insurer-conglomerates rake in tens of billions in profits, enriching shareholders while stiffing providers, patients, and pharmacies. (Add to this the administrative burden on providers of dealing with hundreds of insurance plans.)

We’ve reported elsewhere on falling longevity in the US, worse than in other nations.

The failure of our fragmented, profit-driven insurance couldn’t be clearer. The success of unified, not-for-profit insurance in >30 other wealthy nations couldn’t be clearer. It is efficient and humane to cover everyone with the same excellent insurance. Patients prosper, providers prosper. Investors play in other economic sectors.

Alas, too many groups have an ideological and/or financial stake in the current exploitive and deadly mess. We must stay the course; eventually sanity and single payer will prevail.

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.

The Real Impact of Medicare Advantage for Beneficiaries and Medicare Funding

By David Lipschutz
Center for Medicare Advocacy, Special Report, July 18, 2024

At a time when over half of all Medicare beneficiaries are enrolled in Medicare Advantage (MA) plans, the MA program is costing significantly more than what traditional Medicare spends on a given beneficiary, adding stress to Medicare’s finances. As discussed below, this extra spending, however, does not translate to better health outcomes or more affordable care for those enrolled in MA plans. Funds from reining in excessive and wasteful payments to MA plans would be better spent shoring up the traditional Medicare program, which would benefit all Medicare beneficiaries – including those in MA plans.

Overwhelming Evidence of MA Overpayments

As described in a recent Health Affairs Forefront article titled “Estimating Overpayments To MA Plans: MedPAC Critics Get It Wrong” by Steven M. Lieberman, Paul B. Ginsburg, Donald M. Berwick and Richard Gilfillan (July 1, 2024), the Medicare Payment Advisory Commission (MedPAC) concluded in their March 2024 report that,

upcoding and favorable selection paid MA plans $83 billion (22 percent) more than what Medicare would have paid if MA enrollees were in [traditional Medicare]” in 2024 alone.

In describing “upcoding” in the current risk-adjusted payment system for MA plans, the authors note that “[r]eporting more diagnoses can increase risk scores, and higher risk scores increase monthly capitation payments. Many MA plans provide financial incentives to physicians and use other mechanisms to generate additional diagnostic codes that increase revenue.” The authors also describe MedPAC’s evidence for finding “substantial favorable selection into MA and sicker beneficiaries being more likely to disenroll from MA, as well as describing in detail its modeling methodology and assessing other studies of favorable selection. Extensive evidence shows [traditional Medicare] beneficiaries are, on average, sicker than MA beneficiaries, even after risk adjustment, not the other way around.”(Emphasis added.)

The Wall Street Journal recently published findings of their own investigation into MA upcoding.  An article titled “Insurers Pocketed $50 Billion From Medicare for Diseases No Doctor Treated” by Christopher Walker, Tom McGinty, Anne Wilde Mathews and Mark Maremont (July 8, 2024) describes the paper’s analysis, which finds that:

[p]rivate insurers involved in the government’s Medicare Advantage program made hundreds of thousands of questionable diagnoses that triggered extra taxpayer-funded payments from 2018 to 2021, including outright wrong ones [
] [t]he questionable diagnoses included some for potentially deadly illnesses, such as AIDS, for which patients received no subsequent care, and for conditions people couldn’t possibly have [
] [o]ften, neither the patients nor their doctors had any idea.

The Journal’s analysis found that “Medicare paid insurers about $50 billion for diagnoses added just by insurers in the three years ending in 2021
” The analysis suggests that in the current MA risk-adjusted payment system, insurers seek out diagnoses that pay the most extra money.  The analysis found, for example, that “[i]nsurer-driven diagnoses by United Health for diseases that no doctor treated generated $8.7 billion in 2021 payments to the company
” UnitedHealth, the largest MA insurer, “added diagnoses at a far higher rate than other major insurers.”  For example, the reporters found that UnitedHealth members were about 15 times as likely to be diagnosed with diabetic cataracts as the average patient in traditional Medicare, one of the “most heavily used diagnoses” to increase MA payment.

A recent Journal of American Medical Association (JAMA) Viewpoint article juxtaposes MA overpayments with how much plans actually spend on medical services, given significant overhead and restrictions on care such as limited provider networks and prior authorization. The article, titled “Less Care at Higher Cost – The Medicare Advantage Paradox” by Adam Gaffney, Stephanie Woodhandler and David Himmelstein (June 10, 2024) opens by citing a declaration by insurance industry trade group AHIP that MA is “a good deal for members and taxpayers” and responds that “[t]he first part of the claim is debatable, while the second part is false.”  The article cites diagnosis upcoding along with “cherry picking” healthier enrollees and “lemon dropping” sicker and more expensive ones as contributing to MA overpayments. The authors state:

Paradoxically, despite those overpayments, MA plans spend 9% less on medical services than FFS Medicare spends for comparable enrollees. Most MA plans offer helpful supplementary benefits, for example, eyeglasses, some dental coverage, and reduced Part D (and occasionally Part B) premiums and out-of-pocket costs. But their savings from managed-care techniques, including network restrictions, prior authorization requirements, and financial incentives for health care centers and clinicians to curtail expensive care, more than offset MA plans’ extra spending for supplementary benefits. Unfortunately, MA’s managed-care techniques reduce both high-value and low-value services, that is, MA is a “blunt instrument for reducing health care utilization.” But even blunt instruments can inflict harm, especially on vulnerable patients. [citations omitted]

Citing a 2023 report by Milliman, the JAMA article notes that MA plans “incur extra expenses for television advertisements, health care network management, benefit design, executive salaries, health care utilization review, prior authorization, and shareholder profits, driving their overhead up to 14% (just below the limit set by the Affordable Care Act).” Based on CMS, GAO and Milliman data, the authors state that “MA overhead for 2007 to 2024 totals $592 billion— equivalent to 97% of taxpayers’ $612 billion overpayments to them during that period.” (Emphasis added.)

An article in Common Dreams titled “A $600 Billion Swindle: Study Makes Case to ‘Abolish’ Medicare Advantage” by Jake Johnson (June 10, 2024) describes the JAMA article and quotes the lead author, Dr. Adam Gaffney from Harvard Medical School:

Money that could be used to eliminate all copayments or shore up Medicare’s Trust Fund is instead lining insurers’ pockets,” said Gaffney. “And the private insurers keep Medicare Advantage enrollees from getting needed care by erecting bureaucratic hurdles like prior authorizations and payment denials.

The JAMA authors conclude: “We think the time has come to declare MA a failed experiment and abolish it. That would allow redeploying the $88 billion taxpayers will overpay MA this year to upgrade benefits for all Medicare beneficiaries.”

Health Outcomes Not Better, Not More Affordable for MA Enrollees

Overwhelming evidence shows that wasteful overpayments to MA plans cost the Medicare program more than traditional Medicare.  But what do MA enrollees get, in turn?  In response to the Wall Street Journal’s analysis of MA overpayments due to unconfirmed diagnoses described above, a UnitedHealth spokesperson disputed the Journal’s findings, and was quoted in the article offering a common insurance industry retort to claims that plans are improperly paid – “that Medicare Advantage ‘provides better health outcomes and more affordable healthcare for millions of seniors’ than traditional Medicare.” As outlined below, neither of these claims holds up.

“Better” Health Outcomes?

The JAMA Viewpoint article by Gaffney, Woodhandler and Himmelstein discussed above notes that according to MedPAC, “data limitations preclude drawing conclusions about MA’s effect on overall quality of care” but notes that “MA enrollees requiring complex cancer surgeries are less likely to be treated at specialized centers, experienced longer delays and higher mortality than beneficiaries in [traditional] Medicare.”

When putting aside insurance industry-funded and promoted reports about health outcomes of MA enrollees, the results are decidedly mixed. As noted by the Commonwealth Fund in their “Medicare Advantage: A Policy Primer” (January 2024):

Most evidence shows that the quality of care delivered through Medicare Advantage plans and through traditional Medicare is equivalent overall. However, some studies suggest that Medicare Advantage plans, on average, are associated with better-quality care on certain metrics, particularly those related to preventive care and unnecessary hospital admissions. Other evidence suggests that Medicare Advantage does not outperform traditional Medicare on several significant measures, including mortality, readmission rates, patient experience, and racial and ethnic disparities [citations omitted].

Similarly, in September 2022 KFF published a report titled “Beneficiary Experience, Affordability, Utilization, and Quality in Medicare Advantage and Traditional Medicare: A Review of the Literature,” which examined 62 studies published since 2016 that compare Medicare Advantage and traditional Medicare based on measures of beneficiary experience, affordability, service utilization, and quality. KFF noted that:

We found few differences between [MA] and traditional Medicare that are supported by strong evidence or have been replicated across multiple studies. Both [MA] and traditional Medicare beneficiaries reported similar rates of satisfaction with their care and overall measures of care coordination. [MA] outperformed traditional Medicare on some measures, such as use of preventive services, having a usual source of care, and lower hospital readmission rates. However, traditional Medicare outperformed [MA] on other measures, such as receiving care in the highest-rated hospitals for cancer care or in the highest-quality skilled nursing facilities and home health agencies. Additionally, a somewhat smaller share of traditional Medicare beneficiaries than [MA] enrollees experienced a cost-related problem, mainly due to lower rates of cost-related problems among traditional Medicare beneficiaries with supplemental coverage. Several studies found lower use of post-acute care among [MA] enrollees but were inconclusive as to whether that was associated with better or worse outcomes [emphasis added].

“More Affordable”?

The insurance industry often promotes self-funded research that purports to show that MA enrollees spend less than people in traditional Medicare. For example, as discussed in a HEALTH CARE un-covered post titled “While an Insurance Industry Front Group Pushes Against Medicare Advantage Scrutiny, Rural Hospitals Remain Unswayed” by Trudy Lieberman (July 8, 2024), an insurance industry advocacy group published a report claiming that traditional Medicare beneficiaries living in rural areas spend significantly more on health care premiums and out-of-pocket costs than people enrolled in Medicare Advantage plans.  Lieberman contrasts this claim with reports of hospitals and other providers in rural areas dropping their contracts with, and issuing general complaints about, MA plans.  The Nebraska Rural Health Association, for example, released a report that “warned that Nebraskans with Advantage plans ‘have created such a financial burden for rural residents’ that when they get sick, those with Medicare Advantage coverage ‘represent the largest growing segment of charity care for Nebraska’s rural hospitals.’”

Analyses independent of the industry paint a more damning picture. An article in The Guardian titled “Delays, Denials, Debt and the Growing Privatization of Medicare” by Micheal Sainato (June 3, 2024), for example, notes that “[o]lder adults with Medicare Advantage are significantly more likely to struggle with medical bills or debt than those under traditional Medicare plans, according to a 2023 report by the Commonwealth Fund.”

More recently, the Annals of Internal Medicine published a study titled “Association of Medicare Advantage Enrollment With Financial Burden of Care” by Sungchul Park, PhD; David J. Meyers, PhD; and Amal N. Trivedi, MD, MPH (June 25, 2024) which examines whether the financial burden of care decreased for people switching from traditional Medicare to Medicare Advantage relative to those who remain in traditional Medicare.  While the study concluded that differences in financial outcomes between these groups “were small,” the authors found that out-of-pocket costs increased for those switching to MA and, rather alarmingly, “we found that switching to MA was associated with increased financial burden among vulnerable populations, especially those with low incomes [emphasis added].” The authors note:

Our findings contrast with the notion that MA’s apparently more generous health insurance benefits lead to financial savings for enrollees. Surveys and focus groups of Medicare beneficiaries suggest that a primary driver of MA enrollment is the perception of lower out-of- pocket costs. This claim is also touted in MA insurers’ marketing materials [citations omitted].

In an accompanying Editorial published in the Annals of Internal Medicine titled “Medicare Advantage: High Costs and Poor Protection” by Steffie Woolhandler and David Himmelstein (June 25, 2024), the authors ask what people get in return for an estimated $83 billion in overpayments to MA plans this year, stating that, according to the study cited above, it is “[n]ot financial protection,” Describing how the researchers analyzed data, the Editorial notes that in the second year after people who switched from traditional Medicare [TM] to MA,

beneficiaries switching to MA were no better insulated from medical costs than those remaining in TM. Indeed, nonsignificant trends suggested that, if anything, MA offered worse protection, particularly for lower-income enrollees.

As explained in an article published by MDedge titled “Medicare Advantage Plans Not Always Advantageous” by Diana Swift (June 24, 2024) that examines both the study and the editorial published in the Annals, the researchers found:

Although the overall out-of-pocket differences for MA were minimal and amounted to less than 1% of total healthcare expenses, MA was associated with a greater financial burden in vulnerable, especially in low-income populations. For every 100 beneficiaries with family incomes below 200% of the federal poverty level, one to six more switchers faced a catastrophic financial burden, with their out-of-pocket costs consuming more than 40% of household income in the year after switching. (Emphasis added.)

Conclusion

Wasteful overpayments to Medicare Advantage plans do not serve any public good. Despite some recent attempts by the Centers for Medicare & Medicaid Services (CMS) to address some of the factors leading to overpayments, most policymakers continue to look the other way.

The authors of the Editorial in the Annals of Internal Medicine, cited above, conclude:

The privatization of Medicare through MA has been costly for taxpayers yet has offered seniors little or (per Park and colleagues’ findings) no respite from burdensome costs. Redeploying MA overpayments to improve TM coverage would better serve seniors and impede the accretion of medical resources by investors whose profit seeking too often overrides patient care priorities. (Emphasis added.)

Advocates for beneficiaries and the welfare of the Medicare program concur. It is past time to fix wasteful Medicare Advantage policies and practices.

https://medicareadvocacy.org…

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…

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