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Medicare Advantage Is Under Fire. What It Means for Your Health—and Wallet.

Medicare Advantage Is Under Fire. What It Means for Your Health—and Wallet.

By Elizabeth O’Brien
MSN, March 20, 2024

Marcia Mantell won’t be eligible for Medicare for a few years yet. But she’s sure of one thing: Pitchmen like William Shatner won’t be luring her into a Medicare Advantage plan.

“You are nickel-and-dimed to death,” says Mantell, 62, a retirement consultant in Plymouth, Mass. Out-of-pocket costs can add up quickly in the plans, she says. And once you’re in, it’s tough to go back to traditional Medicare. “It sounds on TV like you can switch whenever you want. You can’t. It’s a 30-year decision.”

No one has a crystal ball to see how their health will hold up through retirement. But concerns are mounting about Medicare Advantage, also known as Part C—the insurance plans that manage Medicare coverage for more than 30 million people. Some big players in Advantage —notably Humana—are reporting sharply higher costs and lower profits, causing their stocks to fall. If the trends continue, it could translate to ancillary benefit cuts and more denials of services.

Other pressures on Advantage are mounting. Some large hospital chains and medical providers have dropped Advantage plans, citing low payments and administrative hassles. The federal government is scrutinizing Advantage plans over insurance industry practices that are driving up costs. The Biden administration has also taken aim at Advantage marketing—featuring the likes of Shatner and football legend Joe Namath in TV ads—saying it may be misleading consumers.

How this will play out isn’t clear. What’s certain is that consumers are getting caught in a growing battle among the government, healthcare providers, and insurers. With cost pressures rising in the Medicare market, consumers face increasingly complex decisions over which plan to choose, with long-term consequences for their finances and, potentially, their health.

“Everyone involved is feeling cost pressures,” says Ron Mastrogiovanni, CEO of HealthView Services, a retirement healthcare data company. “By next year, they’re going to have to make some changes.”

Just over half of the eligible Medicare population is now enrolled in Advantage, which provides Part A hospital coverage, Part B outpatient coverage, and extras that aren’t offered by traditional Medicare, which is run by the federal government. The plans continue to rake in consumers: From 2023 to 2024, Advantage enrollment is projected to rise by 7%, according to the Biden administration.

For insurers, Advantage has been highly lucrative—but the economics are shifting. Rising healthcare costs are straining the ecosystem of patients, the government, insurers, and medical providers. Labor and other medical costs have risen sharply in the wake of the pandemic, fanning healthcare inflation.

Humana, one of the biggest players in Medicare Advantage plans, has sounded alarms. CEO Bruce Broussard told analysts in January that the whole industry will “possibly reprice” next year, saying the Advantage sector is navigating “unprecedented increases in medical cost trends.” A recent McKinsey & Company report said Advantage was undergoing its biggest shifts in more than two decades.

Current beneficiaries need not worry for now, as any changes to Advantage plans won’t go into effect until 2025, at the earliest. But today’s 65-year-olds weighing Advantage against traditional Medicare don’t have the luxury of time. While the decision isn’t irreversible, switching from Advantage back to traditional Medicare may not be possible if consumers want to add Medigap insurance for uncovered medical expenses, which provides both peace of mind and some assurance that medical costs won’t bankrupt you in retirement.

Advantage plans do look inexpensive. More than 70% of people in plans with prescription drug coverage pay $0 in monthly premiums; the average is just $18.50 a month. Premiums for traditional Medicare are usually costlier, since people typically add Part D drug coverage and often buy Medigap to limit out-of-pocket costs.

Yet, as for-profit entities, Advantage insurers can’t offer the same level of coverage as traditional Medicare plus Medigap. And the cheapest Advantage plans may have to be the most aggressive with care denials, says Louis Imbrogno, chief financial officer of Bariatric Centers of America and an industry consultant. Beneficiaries should ask themselves, “Why can they charge a lot less?”

Enrollees in Advantage still pay the Medicare Part B premium for outpatient services, which is $174.70 a month, or more for high-income beneficiaries. Most people have enough work history to qualify for $0 Part A premiums. Drug benefits are usually included in Advantage, so enrollees don’t need to buy a stand-alone drug plan. Other sweeteners often include free gym memberships and limited dental and vision coverage—none of which is covered under traditional Medicare.

Some studies find that there’s long-term savings for consumers in Advantage plans. According to the Employee Benefit Research Institute, a nonprofit partly funded by the healthcare industry, a couple enrolled in traditional Medicare plus a Medigap plan will need $351,000 to have a 90% chance of covering their medical expenses in retirement. A couple enrolled in Medicare Advantage would need $189,000.

Other analysts see a smaller payoff under Advantage. According to HealthView Services, a 65-year-old male with diabetes would need roughly $109,000 under Advantage versus $120,000 under traditional Medicare plus Medigap for lifetime medical expenses. For a 65-year-old female with cardiovascular disease, Advantage would cost $263,000 versus $315,000 under Medicare/Medigap.

In this analysis, traditional Medicare is so much costlier largely because of Medigap, which can add thousands of dollars a year in premiums. Medicare alone only pays 80% of covered services; patients must pay the rest with no annual caps on out-of-pocket costs. That’s why 41% of beneficiaries add Medigap—which, at its most comprehensive, typically helps cover 100% for tests, doctors visits, and other services after a $240 annual deductible.

Advantage plans also cap out-of-pocket costs—but there are limits. The maximum out-of-pocket allowed for 2024 is $13,300 for combined in- and out-of-network services. Many plans set lower limits, averaging from about $4,800 a year for in-network to $8,600 for combined, according to KFF. Consumers in Advantage plans can’t add Medigap.

Advantage has other drawbacks. A big one is that many plans are HMOs, with limited networks of participating doctors that are subject to change. If a specialist isn’t in-network, the visit generally won’t be covered at all in an HMO, and costs can mount, negating the savings from lower premiums. Plans also frequently require preapproval for certain procedures or tests. And if your care is denied—and/or your health deteriorates, requiring more care and specialists—Advantage can wind up being far costlier than Medicare plus Medigap. “Let’s say they’re not covering something,” Mastrogiovanni says. “You’re responsible.”

Whether the government is saving money with Advantage remains doubtful. Under Advantage, the government pays insurance companies a fixed amount per member based in part on each individual’s health status; under traditional Medicare, the government pays medical providers on a fee-for-service basis. The set payments in Advantage are supposed to serve as an incentive to avoid costly, unnecessary care and offer services that might not fit the Medicare billing system.

Yet some industry practices appear to be bloating costs. The Department of Justice has investigated insurers and charged some with gaming the system to extract higher payments by padding patients’ files with serious diagnoses, even if they aren’t being actively treated. The practice is called “upcoding” and the government is trying to rein it in: The Centers for Medicare and Medicaid Services has estimated that 9.5% of payments to Medicare Advantage organizations are improper, mostly due to upcoding.

The government is also paying more for healthcare overall under Advantage. In 2024, Advantage plans will receive an estimated $88 billion more than what would have been spent under fee-for-service Medicare, according to the Medicare Payment Advisory Commission, an independent Congressional agency that advises Congress on Medicare.

“This has been a highly attractive market for insurers for a long time,” says Gretchen Jacobson, vice president of Medicare at the Commonwealth Fund, a foundation advocating for affordable, quality healthcare.

Insurers, for their part, have long viewed Advantage as a big revenue and profit driver. Advantage has produced the strongest growth of any health-insurance segment, with the highest revenue and earnings per member, according to a recent report by Moody’s.

Covering more than 5.8 million people in Advantage, Humana has the highest exposure to the program, accounting for about 81% of its total premium and services revenue, worth $85.7 billion in revenue last year. The company has built almost its entire business around Advantage, including about 3,500 telemarketing and sales representatives to sell the plans. It also markets Medicare prescription-drug benefits with Walmart.

A Humana spokesperson declined to comment and directed Barron’s to the company’s fourth-quarter earnings call and the website of the Better Medicare Alliance, an advocacy group for Advantage. An industry trade group, AHIP, referred Barron’s to a blog post by Mike Tuffin, CEO of AHIP, who defended Medicare Advantage, saying it has grown in popularity by providing “better care at lower costs.”

Yet insurers are starting to feel squeezed by cost pressures in the Medicare market and other factors, a point noted by Moody’s. Doctor visits have soared since a lull during the pandemic, pushing up insurers’ loss ratios, the portion of premium dollars spent on medical care. Demand trends are also pushing up utilization as the population ages, with some 11,200 baby boomers turning 65 each day.

Access to doctors and hospitals under Advantage may be a casualty, as insurers try to protect profits with skimpier payments to medical providers while providers push back.

Cameron Regional Medical Center, in rural Cameron, Mo., receives 20% less in reimbursements under most of its Advantage plans than it does under traditional Medicare, says Joe Abrutz, the hospital’s administrator. This has been financially devastating, he says, especially as the system’s Advantage population grows relative to patients on traditional Medicare.

Cameron Regional canceled its contracts with Humana and Cigna last year and plans to cancel its contract with Aetna around June or July, Abrutz says. Contracts with UnitedHealthcare and Blue Cross Blue Shield remain intact, he says. Falling revenue means the system has had to shutter two primary-care clinics that serve elderly and low-income patients. “If we can’t be funded properly, you don’t have a choice but to close specialty services you can’t underwrite,” Abrutz says.

Alongside lower payments, hospitals must shoulder higher administrative burdens under Advantage. Plans typically require prior authorization for many procedures outside of primary care, which means more paperwork and potential denials of services. “You’ve got the double whammy of getting paid less by Medicare plans, plus all the demands,” Imbrogno says.

There’s also evidence that Advantage plans are denying coverage for services that traditional Medicare would provide. Among prior-authorization requests that Advantage plans denied, 13% met Medicare coverage rules, according to a 2022 report from the U.S. Department of Health and Human Services Office of Inspector General. One example in the report is an Advantage plan requiring an X-ray before approving more-advanced imaging, which isn’t a criteria under traditional Medicare.

“These Medicare Advantage plans don’t properly care for patients,” Abrutz says. “You have an insurance company on the stock market managing and coordinating the care of a senior citizen.”

The Biden administration has said it is providing plenty of funds to Advantage insurers while trying to curb some of the industry’s bad practices. The administration has proposed a 3.7% increase in payments to insurers from 2024 to 2025, amounting to more than $16 billion. The actual amount will be released by April 1. The administration also aims to rein in upcoding, crack down on “predatory” marketing, and curb excessive compensation to brokers and agents.

TV advertising for Advantage, meanwhile, shows few signs of slowing. A study last year by KFF found 9,500 Medicare Advantage ads aired each day in the fall of 2022 around Medicare’s annual open-enrollment period. “They can’t have all those TV commercials if they’re not making money,” Abrutz says.

The Medicare vs. Advantage Gamble

Will you be better off under Advantage of traditional Medicare? There’s no easy answer.

By law, Advantage plans must cover all Part A hospital and Part B outpatient Medicare services. A 2022 KFF review of studies found no definitive evidence that Advantage or traditional Medicare offered better health outcomes. Patients reported similar rates of satisfaction with each plan. Advantage outperformed on measures such as preventive services, whereas traditional Medicare outperformed on measures such as receiving care in the highest-rated hospitals for cancer care.

The financial trade-offs aren’t clear, either. While Advantage might look cheaper, costs can pile up in the plans, negating the premium savings. And it’s when older adults get sick that the differences may really emerge.

One complication: limited networks of participating doctors and hospitals. In an HMO, a cancer patient might not be able to visit the premier specialist in their region. They might find certain treatments questioned under prior authorization. And Advantage plans tend to charge more at the point of care, including things like a $50 copay for specialists—something typically 100% covered by Medicare plus a comprehensive Medigap plan. A 2020 analysis by KFF found that at least half of Advantage enrollees would pay more than those on traditional Medicare for a five-day hospital stay.

By the time you’re sick, it’s often too late to ditch Advantage and go into Medicare plus Medigap. The only time you are guaranteed the right to purchase Medigap—outside of limited exemptions and a few states with different rules—is when you first enroll in Medicare, commonly around your 65th birthday. Outside that window, Medigap plans may charge more based on your health status or deny coverage altogether for conditions like cancer and poorly controlled diabetes.

The rules keep many people stuck in Advantage. Only 2% of Advantage enrollees switched to traditional Medicare in 2019-20, according to a 2022 study in JAMA Health Forum. Someone in traditional Medicare has the option every fall of switching to Medicare Advantage and, in theory, could also move in the opposite direction. But in practice, “it’s not a two-way street,” says David Lipschutz, associate director of the Center for Medicare Advocacy.

Even some people who sell Advantage plans have said they wouldn’t use them personally. In a focus group conducted by the Commonwealth Fund, most brokers and agents who sold Medicare plans said they personally would choose traditional Medicare with Medigap, believing it offered better coverage and choices than Advantage.

For now, Advantage plans can’t do much to change benefits or impose higher costs, as plans are already set for 2024. But if insurers’ profits continue to be squeezed, they are likely to try to recoup profits by ramping up coverage denials, says Abrutz. They may also reduce reimbursements to doctors and hospitals, and increase monthly premiums.

Another option for insurers is to curtail ancillary benefits, such as free gym memberships. Humana is likely to cut back on some benefits, according to a recent UBS research note. And Humana’s Broussard has warned of ongoing cost pressures. “I don’t know how the industry can take this kind of increase in utilization along with regulatory changes that will continue to persist in 2025 and 2026,” he said in January, noting that “disciplined pricing” will probably result.

As these trends play out, consumers should seek help from a neutral third party when enrolling in Medicare. In the Commonwealth Fund focus group, most insurance brokers and agents reported earning higher commissions for enrolling people in Advantage plans versus Medigap plans. You can find unbiased help through your local State Health Insurance Assistance Program.

Mantell, the retirement consultant, figures it’s better to pay more for Medicare and Medigap than take chances with an Advantage plan that might turn out to be costlier and offer less access to the specialists she and her husband may need as they age. “We are not interested in any restrictions,” she says. “Do you want to be 85 and have to ask for a referral to see a cardiologist because you have chest pain?”

https://www.msn.com…

Medicare for All Explained Podcast: Episode 109

Some Really Good Reasons Why We Need Medicare For All

March 15, 2024

Podcast host Joe Sparks reiterates some of the major benefits of single-payer reform. Improved Medicare for All would:

  • Save money by reducing administrative costs
  • Provide better and more comprehensive care
  • Prevent needed hospitals from closing
  • Increase disposable income for almost all Americans
  • Save tens of thousands of lives per year

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

https://medicareforallexplained.podbean.com

The Burdens of Prior Authorization

The NY Times posted a powerful video editorial on the major distraction, high cost, doctor-frustrating, and patient-harming effects of rising prior authorization requirements by private health insurers.

Denying Your Health Care Is Big Business in America, On YouTube, NYT Opinion Video, March 14, 2024, Video by Alexander Stockton

Doctors are often required to get insurance permission before providing medical care. This process is called prior authorization and it can be used by profit-seeking insurance companies to create intentional barriers between patients and the health care they need.

At best, it’s just a minor bureaucratic headache. At worst, people have died.

Prior authorization has been around for decades, but doctors say its use has increased in recent years and now rank it as one of the top issues in health care.

To produce the Opinion Video, we spoke to more than 50 doctors and patients. They shared horror stories 


Prior authorization has come under intense scrutiny in Congress in the past few years, but bipartisan proposals have repeatedly stalled. Under public pressure, some insurance companies — like United Healthcare and Cigna — have said they would reduce the use of prior authorization. And in January, the Biden administration finalized a plan to put limited guardrails around this practice. But doctors say that these efforts only scratch the surface and should go further.

This issue is ultimately about the role of insurance companies in American health care: Should they have more power than your doctor to decide what’s medically best for you?

From the video:


 An absurd process has infiltrated American Healthcare. It’s called prior authorization. Here’s how it works. Before your doctor provides a treatment, your insurance requires them to prove it’s necessary. This is often a time-consuming process that can cause dangerous delays.  


When your prior authorization is denied, you have three options. You could just pay out of pocket, but healthcare is so ridiculously expensive that that’s not realistic. You can give up. That’s what happens up to 80% of the time: a win for your insurance company. Or your doctor can go to bat for you.

When our prior authorizations get denied we have to do what’s called a peer-to-peer. A peer-to-peer is supposed to a phone call where you call somebody who is your peer to justify the treatment that you want to deliver. I’m a pediatrician and sometimes I’ll end up talking to a neurologist 
 people who couldn’t pronounce the names of the drugs I was trying to prescribe. Often times it’s not even a physician. Now imagine you have to do that five to 10 times a day. What’s even more ridiculous about this whole process is that after we go through all of this if you’re really a determined provider you’ll probably get your drug or your procedure authorized.


 By one estimate the US spends about $35 billion a year [HJM: $100 per person] on the administrative costs of prior authorization. These resources could be devoted to Patient Care. 


In many countries these tough ethical decisions about what is covered are made by governments, not for-profit insurance companies. The government should abolish prior authorization or at the very least reform it. Sen. Curt VanderWall: My goal with Senate Bill 247 is to reform the prior authorization process. House Bill 3459 creates a streamlined prior authorization process known as “gold carding.” 
 Doctors who have successfully obtained prior authorizations 
 are exempt from needing to obtain them again. All states and the federal government should pass laws like these. Your insurance should not be a barrier between you and the healthcare you need.

Comment:

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

In my opinion, thoughtful and well-circumscribed prior authorization has an appropriate role in medicine. It can work with other methods (e.g., training and peer review) to advance effective and quality care, weeding out clinically unnecessary services. As a health economist, I even understand its careful use to help wisely and equitably spend health resources.

Yet that’s not what’s happening in the US currently, according to various reports, both anecdotal and quantitative. The NY Times video effectively captures the burdens that prior authorization increasingly imposes on doctors (who spend far too much time pleading with insurers) and patients (whose care may be delayed and denied).

What’s the difference between ideal and problematic use of prior authorization? To paraphrase a famous political slogan, “It’s the profits, stupid.” When the financial well-being of insurance company executives and shareholders is conflated with fairness and efficiency in medicine, the balance will surely tilt away from optimization of health care for patients.

As the video says, other countries get it right. We can too, with single payer.

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.

Private Equity vs. Health Care

Private equity in health care is causing widespread problems. Regulation is not the solution. Comprehensive reform with a lead public role is.

Private Equity-Acquired Physician Practices and Market Penetration Increased Substantially. 2012-21, Health Affairs, March 2024, by Ola Abdelhadi, et al.

Private equity (PE) firms have consistently shown an upward trend and an increased interest in acquiring various medical specialties within physician practices. Our analysis revealed evidence of a recent increase in PE market penetration at the physician level across multiple specialties, particularly gastroenterology, dermatology, and urology. We found that specialties such as primary care, obstetrics-gynecology, radiology, orthopedics, and oncology also showed considerable increases from 2012 to 2021. Acquisition of these practices may be attractive to PE firms because of the fragmentation of the practices and increasing patient demands as the result of an aging population and rising private insurance coverage.

This upsurge in acquisitions, particularly after 2010, has raised concerns about their impact on PE market penetration. Previous studies showed an increase in PE acquisitions of physician practices between 2013 and 2016, resulting in expansion and higher prices without any impact on the quality of health care services. Our findings indicate that in specific local markets, PE firms hold market shares exceeding 30 percent and 50 percent, sometimes by a significant margin. This trend raises concerns about its potential impact on competition, patient care, and prices in those local markets.

PE firms tend to prioritize short-term profit maximization over long term investment in patient care and infrastructure, implement aggressive acquisition strategies that may curtail patient choice and competition, use complex financial structures and leverage to finance acquisitions, and possess limited experience in the health care industry – all of which may lead to difficulties in managing and enhancing patient care.

The findings raise concerns about competition and call for closer scrutiny by the Federal Trade Commission, state regulators, and policy makers.

Private Capital, Public Impact: An FTC Workshop on Private Equity in Health Care, Video here, March 5, 2024 

Opening Remarks:

  • Lina M. Khan, Chair, Federal Trade Commission
  • Jonathan Kanter, Asst. Attorney General of the Antitrust Division, Dept. of Justice
  • Christi A. Grimm, Inspector General, Dept. of Health and Human Services
  • Jonathan Blum, Principal Dep. Administrator & COO, Centers for Medicare & Medicaid Services

Comment:

By Patty Harvey

The March 5 webinar on private equity et al. in health care carefully enumerated the drawbacks and dangers of privatized health care in the U.S. All of this was duly documented and verified by the speakers as well as by personal anecdotes. We all have had brushes with the downsides of a health-care system that prioritizes profit and the experiences of Atty General of R.I., Peter Neronha, were especially revelatory as he described endless battles against phalanxes of high powered and richly funded attorneys protecting the private equity juggernaut. He observes, briefly in conclusion, that ‘all private equity should be kept a thousand miles from health care.’ When panelists were asked for real remedies for this worrisome privatization scourge, the band aids proposed were: “increase transparency, close loopholes and levy fines for malfeasance.” What is strange is that the obvious was never suggested even while it was implied by Mr. Neronha: that no matter what regulations, punishments or vigilance is brought to profiteering, those who stand to profit will never cease to find ways to accomplish their goal. Given this reality, why are we ignoring the obvious solution; namely, a healthcare system that is publicly provided by a single payer, especially a governmental agency, that takes no profit and streamlines in its singularity all administrative activity, that would, at the same time, obviate the need and role for these predatory profit seekers? We don’t allow a profit motive in many of our public institutions—police, fire, public education, libraries and many more operate for the common good. How much more crucial to universal human need is the need for life-saving medical support? Why do we allow profit-seeking middlemen to take over this job, when the result is universally lower quality and higher cost? We need to petition the CMS to adopt pilot programs that explore the implementation of a universal, guaranteed, single-payer, not-for-profit healthcare system instead of grinding us down with these bogus, dangerous and destructive privatization programs. The March 5 webinar exposed many important realities. The neglect was to ignore the most obvious solution.

Comment:

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

The negative consequences of the role of private equity in our health system are finally receiving much-needed attention. We can now see why health care costs have been increasing without the improvement in quality and expanded coverage that we would expect for what we spend.

What is sad is that Arnold Relman warned us so long ago about the medical-industrial complex, and we did nothing. Then, more recently, individuals such as Laura Katz Olson in her book “Ethically Challenged” sounded the alarm about private equity (HJM post), and we still haven’t done what is needed to correct these deficiencies.

While we dither, afraid of a core public role in health care, the private equity market is exploding, lucrative for investors and deleterious for health care providers and, above all, patients.

The US government workshop convened on March 5th focused attention on this profound problem. Yet, as Patty Harvey’s comment so poignantly highlights, there was no mention of the real solutions — a “universal, guaranteed, single-payer, not-for-profit healthcare system.”

Although single payer financing would resolve many issues in ensuring access to affordable health care for all, the issue of provider ownership must also be addressed to avoid the adverse consequences caused by private equity. Wouldn’t it be better for doctors and hospitals to be publicly owned wherein they deliver health care to patients without profits for passive investors? Everyone can receive care from public-spirited providers, without accruing medical debt, fairly funded by progressive taxes.

The article authors and webinar presenters argue for transparency and regulation of the private owners. But with public ownership, transparency would be automatic since we would all be owners.

The authors correctly state that rising private insurance coverage has made private health care system purchases more attractive to private equity. Yet private insurance itself has been a major contributor to our health care inequities and dysfunctions – one more compelling reason to switch to single payer.

Suppose we listen to those people who say that we don’t want the government involved in ownership. Who would pay the outrageous purchase prices that private equity firms want when they sell entities that they have drained of value? Where in the private sector is the money going to come from? Inevitably it would still be some form of private equity, with or without health care providers 
 buying money opportunities, not health care.

Regulators alone are not going to save us from the billionaire private equity predators. The only way we are going to take health care back is for all of us to take public ownership together. No? Then read the full Health Affairs article and listen to the workshop to understand what to expect in the near future – venture capitalists have all the money and we have a seriously underperforming, dysfunctional mess of a health care system. Not that we aren’t already well on our way there.

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 Worsens Coverage

A national survey of Medicare beneficiaries quantifies the coverage experience. Bottom line: Medicare Advantage (MA) underperforms traditional Medicare for most metrics. MA has more care delays and financial barriers, and similar care coordination burden, despite massive overpayment of MA plans.

What Do Medicare Beneficiaries Value About Their Coverage?, Findings from the Commonwealth Fund 2024 Value of Medicare Survey, February 22, 2024, by Gretchen Jacobson, et al.

Survey Highlights:

  • Whether enrolled in Medicare Advantage or traditional Medicare, about two in three beneficiaries overall said their coverage has fully met their expectations. Those who said it fell short of expectations pointed to a lack of coverage for needed services, high costs, or uncertainty about what benefits are covered.
  • Larger shares of beneficiaries in MA plans than in traditional Medicare reported they experienced delays in getting care because of the need to obtain prior approval (22% vs. 13%) and couldn’t afford care because of copayments or deductibles (12% vs. 7%). By other metrics, access to needed health care was similar. For example, more than a third of beneficiaries in each type of Medicare coverage said they had to wait over a month to see a doctor.
  • Three in five beneficiaries in MA plans and one-quarter in traditional Medicare said they were asked to undergo a health assessment, which most frequently resulted in a discussion with their doctor. Few said it resulted in any changes to their care plan or in more services or benefits being offered.
  • Seven in 10 beneficiaries in MA said they used some of their plan’s supplemental benefits in the past year; three in 10 did not use any. Four in 10 reported using their dental or vision benefits or an allowance for over-the-counter medications.

Administrative Burdens: Getting medical bills paid by their Medicare plan is one of the often time-consuming administrative tasks that beneficiaries must handle themselves. A somewhat larger share of beneficiaries in MA plans compared to traditional Medicare reported a delay in getting health care in the past 12 months because of administrative paperwork (9% vs. 6%; data not shown) or difficulty obtaining approval from their Medicare coverage (15% vs. 9%; data not shown).

More dual-eligible beneficiaries in Medicare Advantage than in traditional Medicare said their coverage has fully met their expectations.

Comment:

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

Talking with Medicare beneficiaries is the best way to assess their coverage experience. What we learn is that two-thirds of enrollees are happy with coverage, but one third are dissatisfied due to coverage gaps, costs, and benefit uncertainty.

Importantly, Medicare Advantage (MA) beneficiaries are more likely to experience care delays due to prior approvals and can’t afford care due to out-of-pocket costs. That is, access to care is worse in MA than in traditional Medicare (TM), despite overpayments of about $100 billion per year.

MA enrollees do, however, get more health assessments – 60% vs 25% in TM. Why? Because that’s a tactic that MA plans use to add diagnostic codes to game risk adjusted payments (discussed in our most recent HJM). Typically without “changes to their care plan or more services or benefits”.

Supplemental benefits in MA are used by most, though any particular benefit is not used much.

Being in MA increasing the likelihood of care delay due to paperwork and approvals. Strikingly, despite the claim that MA plans integrate care, MA enrollees are just as likely as TM enrollees to coordinate their own care.

One finding favors MA: Among Medicaid-Medicare dual eligibles (typically with complex medical issues), those in MA are a bit happier with coverage than those in TM. Not sure what that’s about, and no explanation is offered.

Overall, negative coverage value for the huge added expense of MA. Time to switch to an (improved) traditional Medicare for All – single payer.

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: How Private Insurers Exploit Medicare

An excellent interview with the former head of CMS, which oversees Medicare, lays out how Medicare Advantage insurers manipulate costs and quality, grabbing massive profits from public funds with no clinical benefits for patients. He wants its growth stopped and its problems fixed.

Obama CMS Chief: Medicare Advantage Plans Game the System, MedPage Today, March 1, 2024, by Cheryl Clark

(HJM bolding)

Donald Berwick, M.D., M.P.P. was the administrator of the Centers for Medicare & Medicaid Services (CMS) during the Obama administration and is president emeritus and senior fellow at the Institute for Healthcare Improvement.

MedPage Today interviewed him about his concerns that too many Medicare beneficiaries are being misled into enrolling into private Medicare Advantage plans, which he said should be slowed or stopped because the plans have gamed the system to receive billions more than what is spent for traditional Medicare beneficiaries’ care.

Cheryl Clark: Medicare Advantage, or MA, plan enrollment has been growing so fast; 52% of beneficiaries are now enrolled, with 60%, 70% projected in a few years. 
 I hear a traditional Medicare patient can’t find a primary care provider in some parts of the country because all the doctors are locked in MA.

Will every eligible beneficiary have no choice but Medicare Advantage? 
 And is that a good idea, given your concern about how MA plans have gamed the system to get more money?

Berwick: I think MA growth should be slowed or stopped, at least until we end the extraordinarily high subsidies for MA plans, which are unfair to traditional Medicare and burdensome to the public treasury and many beneficiaries. Many beneficiaries can get better care for themselves and greater choice through traditional Medicare, and that option should remain robust and available. 


Clark: Let’s talk about 
 how MA plans are overpaid. They’ll receive $88 billion more this year than what is spent for the same patients in traditional Medicare. That is a huge concern. But I don’t think it’s clear to readers how the plans are paid, that it’s not necessarily for better care.

Berwick: It’s a really complicated process and, I must say, possibly intentionally so, because I think it serves the interests of the private plans to have payment rules that are so hard to understand.

What the benchmark begins with is a comparison to the traditional Medicare population: people like me, who are in fee-for-service, traditional Medicare. There’s a calculation of the cost of my expected care
 based on demographics and county, because care is more expensive in some counties than others. …

Most importantly, the amount that an MA plan gets is adjusted for the number of codes for diagnoses that a beneficiary has, like atrial fibrillation or diabetes, and for each code the plan gets more money, supposedly reflecting the additional care the patient needs. And that’s where the gaming nonsense occurs. Many codes have no real implications at all for evidence-based clinical care, but they carry with them extra payment nonetheless. The coding system has created opportunities for these plans to upcode. They comb through patients’ histories and try to stuff in as many diagnoses as they possibly can, even if they have nothing to do with the care of the patient.

Clark: During a January 12 MedPAC meeting, one of the commissioners mentioned that the plans were paying doctors to go through each record and look for anything that could add to capitated payment.

Berwick: That’s right. That’s worth a bit of a dive. There are three ways health plans manipulate the coding processes. What they’re after is what you said, which is, comb through the patient’s record, send a nurse into the patient’s home to find additional diagnoses. Sometimes, in some of the MA systems, they actually pay the doctor to code using a software package the insurance plan gives to the doctor. 


And a third and now much more popular, certainly to insurers, is to simply employ the doctors. Once the doctor is an employee, then you can set up all sorts of ways to accelerate upcoding. You can train the doctors or give them incentives to upcode. And now, the largest employer of doctors is a health plan, an MA plan. In this third tactic, the MA plan gets the benefit of all the upcoding, and that’s part of the game they are playing.

Now rather than lower costs, MA has much higher costs — something to the tune of $80 billion a year. Other estimates are as high as $120 billion. For the most part, that money doesn’t represent the needs of the patient. In fact, we know that beneficiaries in MA are, on the whole, healthier than those in traditional Medicare, and ought to cost less, not more.

It’s just a transfer of money to the private sector. Most of that goes to profit for the plan, or for stock buybacks, high compensation for plan executives, 


And further, because of all the gaming of diagnoses, it gets really, really hard to compare quality of care and outcomes between Medicare Advantage and traditional Medicare patients.

Clark: You’ve said you think MA plans should be slowed or stopped. How do you think that should happen?

Berwick: 
 We need to stop these abuses as quickly as possible. And we need simultaneously to improve the attractiveness of traditional Medicare, which is what tens of millions of Americans still have. 


Clark: [The MedPAC director] said that for chronic conditions, there is evidence that MA plans deliver better care.

Berwick: 
 There is some information that suggests that for some conditions, some MA plans do offer better chronic care but that’s a really hard statement to prove, and it certainly doesn’t apply across the board. And remember: MA plans are upcoding patients, so they make the patients look sicker, so when you try to assess outcomes, adjusted for severity, you’ve already fallen into the hole created by this game in which you’re no longer comparing apples to apples
.

Clark: You spoke of the quality bonus program, which is a factor in MA capitated payments. How does it work?

Berwick: 
 the quality bonus system needs a big overhaul. It now has been pretty thoroughly gamed by MA plans. They focus on the scored variables, not overall better care – “teaching to the test,” as it were. Something like 80% of plans now are four-star or five-star on a five-star scale. I call that the “Lake Wobegon” effect, where everybody is above average. It’s a tricky system with unintended consequences. For example, when you’re treating a very distressed population with limited resources and there are barriers to treatment, you don’t want to take money away from the very organizations that need more money because their populations are harder to treat. But it has just become too easy to get a high score. 


Comment:

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

Don Berwick is a hero for many of us, for his decades of foundational work in quality of medical care and his forthright criticism of Medicare Advantage, the private insurance arm of Medicare.

In this interview, he reviews how insurers thoroughly game the MA systems for payment and quality rating, yielding tens of billions in excess payments with no evidence of clinical benefit. Indeed, there is evidence of impaired access to care for the sickest and poorest, and financial harm to providers who treat the most needy.

You should read the entire interview, it’s wide-ranging and informative, and only a little technical. We’ll be writing more on Medicare Advantage issues in coming days.

As Dr. Berwick points out, traditional Medicare – in which the government pays providers directly – works more efficiently to assure access to care. But it needs some coverage gaps closed. That is, we need an improved traditional Medicare. Then we could extend that to everyone. That’s an “improved Medicare for All”. Aka: single payer.

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 effect of health-care privatisation on the quality of care

By Benjamin Goodair, M.Sc. and Aaron Reeves, Ph.D.
The Lancet Public Health, March 2024

Summary: Over the past 40 years, many health-care systems that were once publicly owned or financed have moved towards privatising their services, primarily through outsourcing to the private sector. But what has the impact been of privatisation on the quality of care? A key aim of this transition is to improve quality of care through increased market competition along with the benefits of a more flexible and patient-centred private sector. However, concerns have been raised that these reforms could result in worse care, in part because it is easier to reduce costs than increase quality of health care. Many of these reforms took place decades ago and there have been numerous studies that have examined their effects on the quality of care received by patients. We reviewed this literature, focusing on the effects of outsourcing health-care services in high-income countries. We found that hospitals converting from public to private ownership status tended to make higher profits than public hospitals that do not convert, primarily through the selective intake of patients and reductions to staff numbers. We also found that aggregate increases in privatisation frequently corresponded with worse health outcomes for patients. Very few studies evaluated this important reform and there are many gaps in the literature. However, based on the evidence available, our Review provides evidence that challenges the justifications for health-care privatisation and concludes that the scientific support for further privatisation of health-care services is weak.

Effects on health outcomes: At an ecological level, high rates of privatisation and outsourcing almost always corresponded with worse health outcomes in the studies included in this Review. Two articles looked at regional levels of privatisation for an entire country and both found that increases in the percentage of outsourcing corresponded with higher avoidable mortality rates than before outsourcing took place. The only other article that assessed mortality rates did so in incarcerated populations, and also found increased avoidable mortality rates as the proportion of outsourced health care increased. Additionally, outsourced cleaning services corresponded with higher rates of inpatient infection than internal cleaning services. More nuanced results were found in Sweden when outcomes in avoidable hospitalisations improved across the country after a privatising reform to primary care; results from this study did not show dose-response variation—ie, areas that reformed first or had the highest increases in private providers did not show the biggest improvements in quality of care—and this factor therefore is not attributable to finding causality. No studies in this Review found that increased privatisation corresponded with better health outcomes for patients. None of the articles that assessed hospital conversions included health outcomes, an important gap in the literature identified in this Review.

Conclusion: There is only a small number of studies addressing the effect of privatisation on the quality of care offered by health-care providers, and yet within this small group of longitudinal studies, we find a fairly consistent picture. At the very least, health-care privatisation has almost never had a positive effect on the quality of care. But outsourcing is not benign either, as it can reduce costs, but seems to do so at the expense of quality of care. Overall, our Review provides evidence challenging the justifications for health-care privatisation and concludes that the scientific support for further privatisation of health-care services is weak.

full study:
https://www.thelancet.com…

In 2023, Big Drug Companies Raked in $684 Billion and Spent $106 Billion Rewarding Shareholders

Protect Our Care, Greed Watch, February 28, 2024

Protect Our Care is releasing a new report detailing pharmaceutical companies’ sky-high revenues as they continue charging unaffordable prices to patients. The report found that in 2023, 16 of the largest drug companies raked in $684 billion, and they spent $106 billion rewarding shareholders. For too long, drug companies have been allowed to charge whatever they want, gouging patients to the point that more than 1 in 3 Americans report cutting pills or skipping doses because they can’t afford their medication.

Many of the drugmakers highlighted in the report are the same companies in court now to stop Medicare’s ability to negotiate lower drug prices under the Inflation Reduction Act. Drug companies have also been working behind the scenes with Republican lawmakers to repeal all of the Inflation Reduction Act’s provisions to make prescription drugs more affordable for millions of seniors. Big drug companies claim that the new law to make drugs more affordable will harm patients, but in reality, they’re telling investors the opposite and spending billions on rewarding their investors through stock buybacks and dividends, paying their executives millions, and spending millions lobbying to keep their prices high.

Key Points:

  • Protect Our Care followed the 2023 earnings reports of 16 drug companies.
  • These 16 companies reported $684.1 billion in total global revenue and have announced dividend payments and stock buybacks totaling $105.9 billion.
  • The seven publicly held companies currently suing to ban Medicare from negotiating lower drug prices reported $343 billion in revenue. Those same companies reported shareholder compensation in the form of stock buybacks and dividends totaling $53 billion.

full report:
https://www.protectourcare.org…

Veterans Care Under Attack

An article in the American Prospect lays out how the Veterans Health Administration public approach to care – effective & efficient – is under siege, pushed at great cost to privatization. Not only by the proposed GOP/MAGA gutting, but by a complicit current administration.

Trump’s VA Plans Look Too Much Like Biden’s VA Reality, The American Prospect, Feb. 19, 2024, by Suzanne Gordon and Steve Early

While Project 2025 plots VA dismantling, its Biden-appointed leader tells workers to ‘stay out of politics.’

During a recent campaign speech in North Carolina, former President Donald Trump claimed that, when he first entered the White House seven years ago, there were “sadists” working at the VA who “would beat up old wonderful soldiers. Beat the hell out of them 
 and we weren’t allowed to fire them.” In a meeting with New Hampshire veterans, Trump urged them to support his re-election effort so, next year, he can fire “every corrupt VA bureaucrat who Joe Biden has outrageously refused to remove from the job or put back in the job.”

Such threats are not MAGA rally rhetoric. They constitute Trump’s plan of action for the Department of Veterans Affairs (VA), which has the second-largest workforce and third-largest budget of any federal agency.

As the Prospect and other media outlets have warned, Trump and his supporters will be much better prepared next January to seize the levers of power than they were in 2017. According to one former Trump official, their collective mission will be to act as a “wrecking ball” aimed at “the administrative state [from] Day One.”

Right-wing policy wonks, who are part of a Heritage Foundation–sponsored group called Project 2025, have developed a detailed agenda to slash federal spending and cut taxes, dismantle key agencies, strip 50,000 workers of civil service protections, renegotiate union contracts, and privatize even more government functions, like providing medical care to nine million patients of the VA-run Veterans Health Administration (VHA). 


[T]he current administration does not offer enough of an alternative to Trump’s own VA agenda, past and future. Biden’s VA leaders continue to ignore the elephant in the room: the already swinging wrecking ball of privatization. One sign of this is the rare Project 2025 praise of Biden appointees, for “adopt[ing] some of their predecessors’ governance processes” at the VA.


 Biden’s VA secretary Denis McDonough has dragged his feet on reversing Trump-era administrative rules determining veteran eligibility for private-sector care. The Veterans Community Care Program (VCCP), launched by his Republican predecessor and authorized by the MISSION Act, has been expanded to include 1.6 million outside medical care vendors. VCCP utilization is growing by 17 percent a year, 42 percent of VA patients are now channeled into the private sector, and the program is consuming over 30 percent of the VHA’s clinical care budget. That has, of course, weakened the VA’s direct-care capacity, strained its finances, and made working conditions worse for frontline caregivers.

As a result of this and other management decisions, the VHA is now facing a $4 to $5 billion budget deficit and will have to curtail new hiring. 


VA headquarters has already informed local and regional medical center leaders that they must maintain “neutral FTE’s.” Dr. Shereef Elnahal, the VA’s current under secretary for health, has repeatedly acknowledged that the resulting workload increases will add to job stress and burnout. But he is already contributing to that with his drive to increase patient loads for clinicians via a much-disliked system of “bookable hours,” a productivity measurement of the sort favored by Project 2025.

Prospect interviews with VHA facility managers around the country reveal that they are warning VA headquarters that local program cuts and staff layoffs will be necessary soon, if outsourcing costs continue to drain local budgets. As one VA medical center chief of staff predicted, “If the Secretary does not revise the access standards to community care so we are actually able to meet them, in five years, we won’t be able to deliver care, we’ll be just another insurance company.”


 the Biden administration plans to spend $23.5 billion over the next decade on an “Integrated Critical Staffing Program” (ICSP), a gravy train for HR outsourcing firms that will fill VA jobs by hiring non-union temps. Another just-announced initiative allocates $14 billion to hire “commercial health care consultants” and other vendors who will advise the agency on modernization of its service provision. The VA will be adding many more contractors to its roster even though its own Office of Inspector General has just released a report documenting that the agency isn’t adequately vetting and monitoring those already on the payroll.

Both initiatives are very much in the spirit of Project 2025’s encouragement of private-sector partnerships “to improve the overall patient experience,” which most studies confirm is better inside, rather than outside, the VHA. 


In a New Year’s message, the VA secretary warned about “controversies and challenges 
 that will get accentuated during this presidential election year.” During this trying period, he wrote, “our noble mission, our singular purpose and our critical responsibility to always keep Veterans at the heart of everything we do 
 requires each of us to stay out of politics” (emphasis added).


As one former AFGE official told us, “That message was threatening, dangerous, and factually wrong—something you’d expect of his Republican predecessor. The original intent of the Hatch Act was to protect federal workers from political pressure and patronage. It does not mean they should ‘stay out of politics.’”


This year’s general-election contest will indeed be noisy, but 2024 is not a year for political inaction by federal workers, either organizationally or individually. At the VA, where a third of the health care workforce consists of former service members like Hayes himself, nobody is better positioned to counter Trump’s demonization of “VA bureaucrats” as “sadistic” and “corrupt” than its frontline caregivers.

Only they can put a human face on who actually delivers “high-quality care” and helps veterans gain “timely access” to other service-related benefits. And if they fail to do that in sufficient numbers, particularly in key battleground states, just 11 months from now the keys to VA headquarters will be handed over to conservative promise-keepers from the Heritage Foundation. Their agenda has already proved disastrous, for VHA patients and providers, during Trump’s first term and, unfortunately, in its Biden-era iteration as well.

Comment:

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

The Veterans Health Administration provides some of the most efficient and clinically effective care in the US, as revealed in various studies, many covered in HJM. It is living proof of the benefits of a mission focused on patient care and simplified (single payer!) financing.

Yet it is under attack by the MAGA GOP, as described in the Project 2025 plan. But also by the Biden administration with the current VA leadership pushing the ill-conceived privatization and incorrectly discouraging political involvement by employees in the pivotal upcoming election.

To be clear, a GOP/MAGA White House will destroy the VHA. A Democrat administration will permit us to fight for the integrity of the public VHA.

We, the people, must elect government legislators and administrators who do understand how well the public policies have been working for our veterans – officials who are dedicated to supporting them. Not only do we have to go to the polls to prevent the turnover of control to the Heritage extremists and their ilk, but we must communicate clearly to the current administration that we need to perpetuate the public VAH program that has served our veterans (and the taxpayers!) so successfully. We owe that to them!

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.

How Medicare ACOs restrict care and offer dangerous incentives

By Brenda Gazzar
Code Wack Podcast, February 26, 2024

Why is tying a medical provider’s pay to the outcomes of their patients a bad idea? Why else should we be concerned about Accountable Care Organizations (ACOs) and the privatization of traditional Medicare?

To find out, we spoke to Dr. Ana Malinow,  who spent three decades working as a pediatrician with immigrant, refugee and underserved children before retiring as Clinical Professor of Pediatrics from the University of California San Francisco School of Medicine. She’s past president of Physicians for a National Health Program and is currently a lead organizer for National Single Payer and The Movement to End Privatization of Medicare.

This is the second episode in a two-part series with Dr. Malinow.

Check out the Transcript and Show Notes for more!

https://heal-ca.org…

Failure to Address Homelessness Harms Health

Finland is effectively addressing issues of homelessness, says a new report. Being unhoused is associated with health problems and high medical costs. Yet homelessness is growing in the US, despite our massive resources. We must seriously address this problem.

Finland Sees Housing and Health as Inextricably Linked, The Commonwealth Fund, International Insights, Vol. 24, by Munira Z. Gunja

It’s hard to imagine that just four decades ago, there were some 20,000 people in Finland without a home. By last year, this number had fallen to less than 3,700, a roughly 82 percent decline that represents the most significant decrease in homelessness within the European Union.

It’s a completely different story in the United States, where the number of people experiencing homelessness is the highest it’s been in decades. About 20 of every 10,000 Americans lacked stable housing in 2023, a 12 percent increase over the previous year. Black people, Native Americans, and Pacific Islanders are unhoused at disproportionately high rates, while Asian Americans had the sharpest percentage increase in homelessness compared to all other races and ethnicities.

The health consequences of not addressing the U.S. housing crisis are clear:

  • People who experience homelessness have higher rates of illness and die an average of 12 years earlier than the general U.S. population.
  • Unhoused people are more likely to have behavioral health needs.
  • Low-income and unhoused people are the top 5 percent of hospital users and account for 50 percent of health care costs.
  • One-third of emergency department (ED) visits are made by people experiencing homelessness, with nearly 80 percent of those visits for concerns that could have been preempted with preventive care. ED visits are estimated to cost $18,500 annually for each unhoused person.

The evidence shows that stable, affordable housing improves mental and physical health outcomes.  Finland’s government recognizes this and has worked to ensure that thousands of its residents who would otherwise be forced to sleep on the streets have access to dignified housing.

(Finland’s) Housing First moves people into stable housing right away – with no conditions – and then provides additional social services as needed. People receive a rental unit as well as access to support staff to help them navigate their finances, find jobs, and address any other needs. To build community, tenants are invited to participate in group activities and undertake charity work. To foster financial independence, they pay a percentage of the overall rent with the help of financial subsidies, if needed.

How is the U.S. addressing homelessness?

The federal government encourages the use of Housing First practices, and several U.S. cities and states have adopted the model.

But success hinges on filling significant gaps in funding. Currently, communities across the U.S. lack the financing necessary to provide housing for everyone who needs it, a problem that will likely get worse. Nationally, the number of people losing housing each year is outpacing the number of people gaining it.

Half of U.S. primary care physicians report a lack of sufficient coordination with specialists and hospitals for their patients’ care. But fully addressing the needs of unhoused patients, such as through community-based care models that offer supportive housing, requires just that.

Comment:

By Don McCanne, M.D.

Whoa. Didn’t we end this article synopsis with the resolution of this crisis up in the air? If we go ahead and address the problem of homelessness, we can simultaneously address the problem of deficiencies in mental and physical health and also the increasing need for other social services as well.

This report states that many communities lack the financing necessary to provide adequate housing, but the nation as a whole certainly does not lack the potential resources. We now have large numbers of individuals and corporate entities with great wealth which would not be impacted at all negatively by relatively modest tax policies that would be required to ensure the presence of community-based care models that included assurances of adequate housing. They’ve done it in Finland; we can surely do it here in “the greatest nation on earth.” Or are those with mega wealth going to argue that this is no longer the greatest nation?

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.

Company Behind Joe Namath Medicare Advantage Ads Has Long Rap Sheet of Misconduct

The firm formerly known as Benefytt pocketed millions selling sham insurance to seniors and other consumers.

By Matthew Cunningham-Cook
The American Prospect, February 22, 2024

Former New York Jets superstar Joe Namath can be seen every year during Medicare open enrollment hocking plans that tell seniors how great their life would be if only they signed up for a Medicare Advantage plan. From October 15 to December 7 last year alone, Joe Namath ads ran 3,670 times, according to iSpot, which tracks TV advertising.

But the company behind those ads, now called Blue Lantern Health, and their products, HealthInsurance.com and the Medicare Coverage Helpline, have an expansive rap sheet of misconduct, including prosecutions by the Securities and Exchange Commission and the Federal Trade Commission, and a recent bankruptcy filing that critics say is designed to jettison the substantial legal liabilities the firm has incurred. In September 2023, the company became Blue Lantern; before that, it was called Benefytt; and before that, Health Insurance Innovations. Forty-three state attorneys general had settled with the company in 2018, with it paying a $3.4 million fine. A close associate of the company, Steven Dorfman, has also been prosecuted by the FTC, in addition to the Department of Justice.

Namath himself has a bit of a checkered past when it comes to his business associates—in the early 1970s, he co-owned a bar frequented by members of the Colombo and Lucchese crime families, according to reporting at the time cited in a 2004 biography. Due to the controversy surrounding the bar, Namath was forced by the NFL Commissioner to sell his interest in it. Last year, it was revealed that Namath had employed a prolific pedophile coach at his football camp, also in the 1970s, and the 80-year-old ex-quarterback is now being sued by one of the coach’s victims.

The Namath ads are the main illustration of the behemoth Medicare Advantage marketing industry, which is designed to herd seniors into Medicare Advantage plans that restrict the doctors and hospitals that seniors can go to and the procedures they can access through the onerous “prior authorization” process, and it costs the federal government as much as $140 billion annually compared to traditional Medicare. Over half of seniors—nearly 31 million people—are now in Medicare Advantage, and there is little understanding of the drawbacks of the program. Seniors are aware that they may receive modest gym or food benefits but typically do not realize that they may be giving up their doctors, their specialists, their outpatient clinics, and their hospitals in favor of an in-network alternative that may be lower quality and farther away.

How So Many Seniors Are Lured Into Medicare Advantage

Blue Lantern—with its powerful private equity owner Madison Dearborn—may be the key to understanding how so many people have been ushered into Medicare Advantage—and the pitfalls that private equity’s rapid entrance into health care can create for ordinary Americans. While Blue Lantern is just one company, it is a Rosetta Stone for everything that is wrong with American health care today—fraud, profiteering, lawbreaking, no regard for patient care—where only the public comes out the loser.

Blue Lantern uses TV ads and, at least until regulators began poking around, a widespread telemarketing operation, being one of the main firms charged with generating “leads” that are then sold to brokers and insurers, as Medicare Advantage plans are banned from cold-calling. Court filings reviewed by HEALTH CARE Un-Covered allege that after legal discovery, Blue Lantern (then known as Benefytt) at minimum dialed seniors over 17 million times, potentially in violation of federal law that requires telemarketers to properly identify themselves and who they are working for—ultimately, in this case, insurers that generate huge profits from Medicare Advantage.

The Namath ads have been running since 2018 when the company was named Health Insurance Innovations—the same year the FTC began prosecuting Simple Health Plans, along with its then-CEO Steven Dorfman. The Fort Lauderdale Sun-Sentinel identified Health Insurance Innovations as a “successor” to Simple Health Plans. After five years of likely exceptionally costly litigation, for which Dorfman is represented by jet-set law firm DLA Piper, on February 9, the FTC won a $195 million judgment against Simple Health Plans and Dorfman. The FTC alleged in 2019 that Dorfman had lied to the court when he said that he did not control any offshore accounts. The FTC found $20 million, but the real number is probably higher.

Friends in High Places

In February 2020, Trump’s Secretary of Health and Human Services, Alex Azar, said that the Namath ads might not “look or sound like the future of health care,” but that they represented “real savings, real options” for older Americans.

In March 2020, Health Insurance Innovations (HII) changed its name to Benefytt, and in August 2020, it was acquired by Madison Dearborn Partners. Madison Dearborn has close ties to the Illinois Democratic elite, pumping over $916,000 into U.S. Ambassador to Japan Rahm Emanuel’s campaigns for Congress and mayor of Chicago.

In September 2021, HII settled a $27.5 million class action lawsuit. The 230,000 victims received an average payout of just $80.

In July 2022, the SEC charged HII/Benefytt and its then-CEO Gavin Southwell with making fraudulent representations to investors about the quality of the health plans it was marketing. “HII and Southwell 
 told investors in earnings calls and investor presentations that HII’s consumer satisfaction was 99.99 percent and state insurance regulators received very few consumer complaints regarding HII. In reality, HII tracked tens of thousands of dissatisfied consumers who complained that HII’s distributors made misrepresentations to sell the health insurance products, charged consumers for products they did not authorize and failed to cancel plans upon consumers’ requests,” the SEC found, with HII/Benefytt and Southwell ultimately paying a $12 million settlement in November 2022.

By August 2022, Benefytt had paid $100 million to settle allegations that it had fraudulently directed people into “sham” health care plans. “Benefytt pocketed millions selling sham insurance to seniors and other consumers looking for health coverage,” the FTC’s Director of Consumer Protection, Samuel Levine, said at the time.

Bankruptcy and Another Name Change

In May 2023, Benefytt declared Chapter 11 bankruptcy—where the company seeks to continue to exist as a going concern, as opposed to Chapter 9, when the company is stripped apart for creditors—in the Southern District of Texas. The plan of bankruptcy was approved in August. The Southern Texas Bankruptcy Court has been mired in controversy in recent months as one of the two judges was revealed to be in a romantic relationship with a woman employed by a firm, Jackson Walker, that worked in concert with the major Chicago law firm Kirkland and Ellis to move bankruptcy cases to Southern Texas and monopolize them under a friendly court. While the other judge on the two-judge panel handled the Benefytt case, Jackson Walker and Kirkland and Ellis were retained by Benefytt, and the fees paid to Jackson Walker by Benefytt were delayed by the court as a result of the controversy.

In September 2023, Benefytt exited bankruptcy and became Blue Lantern.

The August approval of the bankruptcy plan was vocally opposed by a group of creditors who had sued Benefytt over violations of the Telephone Consumer Privacy Act (TCPA). The creditors asserted that Benefytt had substantial liabilities, with millions of calls made where Benefytt did not identify the ultimate seller—Medicare Advantage plans run by UnitedHealth, Humana, and other firms prohibited from directly contacting people they have no relationship with—and violations fined at $1,500 per willful violation.

Attorneys for those creditors stated in a filing reviewed by HEALTH CARE Un-Covered that Madison Dearborn always planned “to steer Benefytt into bankruptcy,” if they were unable to resolve the substantial liabilities they owed under the TCPA.

Madison Dearborn “knew that Benefytt’s TCPA liabilities exceeded its value, but purchased Benefytt anyway, for the purpose of trying to quickly extract as much money and value as they could before those liabilities became due,” the August 25, 2023, filing stated on behalf of Wes Newman, Mary Bilek, George Moore, and Robert Hossfeld, all plaintiffs in proposed TCPA class action suits. The filing went on to say that the bankruptcy was inevitable “if—after siphoning off any benefit from the illegal telemarketing alleged herein—[Madison Dearborn] could not obtain favorable settlements or dismissals for the telemarketing-related lawsuits against Benefytt.”

Under the bankruptcy plan, Blue Lantern/Benefytt is released from the TCPA claims, but individuals harmed can affirmatively opt out of the release, which is why the bankruptcy court justified its approval. Over 7 million people—the total numbers in Benefytt’s database, according to the plaintiffs—opting out of the third-party release is an enormous administrative hurdle for plaintiffs’ lawyers to pass, massively limiting the likelihood of success of any class action litigation against Blue Lantern going forward.

Their attorney, Alex Burke, stated in court that “[t]his bankruptcy is an intentional and preplanned continuation of a fraud.” His statement was before 3,670 more Namath ads ran during 2023 open enrollment.

In response to requests for comment from HEALTH CARE un-covered, the Centers for Medicare and Medicaid Services did not answer questions about Benefytt and why the company was simply not barred from the Medicare Advantage market altogether.

Corporations have used the bankruptcy process in recent years to free themselves from criminal and civil liability, with opioid marketer Purdue Pharma being the most prominent recent example. The Supreme Court is reviewing the legality of Purdue’s third-party releases currently, with a decision expected in late spring.

The role that private equity plays in keeping Benefytt going cannot be overstated. Without Madison Dearborn or another private equity firm eager to take on such a risky business with such a long history of legal imbroglios, it is almost certain that Benefytt would no longer exist—and the Joe Namath ads would disappear from our televisions. Instead, Madison Dearborn keeps them going, suckering seniors into Medicare Advantage plans.

This is part and parcel of the ongoing colonization by private equity into America’s health care system. Private equity is making a major play into Medicare Advantage. It has pumped billions of dollars into purchasing hospitals. It has invested in hospice care. It is gobbling up doctors’ groups. It is acquiring ambulance companies. It is hoovering up nurse staffing firms. It is making huge investments into health tech. It is in nursing homes. And it is in health insurance. Nothing about America’s health care system is untouched by private equity. That’s a problem, experts say.

“I’ve been screaming at the TV every time Joe Namath gets on—it is not an official Medicare website,” said Laura Katz Olson, a professor of political science at Lehigh University who has written on private equity’s role in the health care system. “Private equity has so much money to deploy, which is far more than they have opportunities to buy. As such, they are desperately looking for opportunities to invest. There’s a lot of money in Medicare Advantage—it’s guaranteed money from the federal government, which makes it perfect for the private equity playbook.”

Eileen Appelbaum, the co-director at the Center for Economic and Policy Research, who has also studied private equity’s role in health care, concurred that private equity was a perfect fit for Medicare marketing organizations. “I think basically the whole privatized Medicare situation is ready for all kinds of exploitation and misrepresentations and denying people the coverage that they need,” she said. “My email is inundated with these totally misleading ads. Private equity took a look at this and said, “look at that, it’s possible to do something that’s misleading and make a lot of money.”

Madison Dearborn receives a large portion of its capital from public pension funds like the California Public Employees Retirement System (CalPERS) and the Washington State Investment Fund—people who are dependent on Medicare. Appelbaum said that the pension funds exercise little oversight over their investments in private equity. “Pension funds may have the name of the company that they are invested in, they’re told that it’s ‘part of our health care investment portfolio,’ but they don’t find out what they really do until there’s a scandal. It is amazing that pension funds give so much money to private equity with so little information about how their money is being spent.”

Madison Dearborn did not respond to a request for comment from HEALTH CARE un-covered.

This article is a co-publication with HEALTH CARE un-covered, a website about the health insurance industry. It is available at wendellpotter.substack.com.

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