PNHP

A ‘giant shell game?’ The egregious gimmicks of corporate health care

A ‘giant shell game?’ The egregious gimmicks of corporate health care

By Brenda Gazzar
Code Wack Podcast, Oct. 7, 2024

Rebate aggregators? Group purchasing? Vertical integration? How exactly do Pharmacy Benefit Managers, or PBMs, operate to maximize profit? And how are everyday Americans suffering from these practices?

To find out, we spoke to Dr. Ed Weisbart, national board secretary of Physicians for a National Health Program, a single-payer advocacy coalition that boasts more than 25,000 members,  and former chief medical officer for one of the largest PBMs in the country. This is the second episode in a two-part series.

Check out the Transcript and Show Notes for more!

https://heal-ca.org…

Investors a Terrible Steward of Health Care

The US Senate placed in contempt the CEO of bankrupt Steward Health Care when he refused to testify about the abusive finances that left investors enriched and the provider organization in financial tatters. Health care should not be driven by investor profit motives.

US Senate votes unanimously to hold hospital CEO in criminal contempt, The Guardian, Sept. 25, 2024, by Maya Yang

The Senate voted to hold Ralph de la Torre, the CEO of Massachusetts-based, for-profit Steward Health Care, which declared bankruptcy earlier this year, in contempt of Congress after he ignored a congressional subpoena and failed to appear at a hearing over the hospital chain’s alleged abuse of finances.

Bernie Sanders, Vermont senator and chair of the Senate’s health, education, labor and pensions (Help) committee, said: “The passage of this resolution by the full Senate will make clear that even though Dr. de la Torre may be worth hundreds of millions of dollars, even though he may be able to buy fancy yachts and private jets and luxurious accommodations throughout the world, even though he may be able to afford some of the most expensive lawyers in America, no, Dr. de la Torre is not above the law.”

De la Torre was paid at least $250m by Steward Health Care as the hospital chain’s administrators struggled with facility problems, staffing shortages and closures. More than a dozen Steward Health Care patients died in recent years after being unable to receive adequate treatment while Dr. de la Torre embarked on various jet travels and private yacht excursions.

Senator Ed Markey said, “Steward, led by its founder and CEO Dr. Ralph de la Torre and his corporate enablers, looted hospitals across the country for their own profit, and while they got rich, workers, patients and communities suffered, nurses paid out of pocket for cardboard bereavement boxes for the babies to help grieving parents who had just lost a newborn. Dr. de la Torre is revealing himself for what he truly is – a physician who places personal gain over his duty to do no harm.”

Comment:

By Don McCanne, M.D.

Health Justice Monitor recently presented a brief summary of the Commonwealth Fund’s annual report once again demonstrating that, of the wealthy nations studied, the United States has the most expensive yet poorest performing health care system.

Most Americans tend to think that we have the greatest nation on earth, so what would account for the fact that our health care system performs so poorly? One basic fact is well understood. Though other higher performing nations insist that public policies are designed to assure that everyone is included in their systems, we do not. If we demanded that our elected legislators establish such policies, it would get done, or we wouldn’t elect them. As long as we insist on universal coverage, we could also insist on other public policies such as ensuring adequate capacity in the system and controlling wasteful costs, especially superfluous administrative expenditures and excessive profits of private insurance intermediaries.

A particularly onerous feature of our system is that we we allow private investors, the medical industrial complex, to assume ownership of large slices of provider capacity, enabling our health care dollars to bypass patients as they are diverted to investors. Today’s example shows how private equity can move in and buy up control of health care delivery, even physicians themselves through purchase of medical groups, convert much of the system to cash equivalents, and then disburse that value to the private investors … leaving the delivery system without adequate cash reserves and subject to bankruptcy. Result? We have the most expensive system with the poorest performance among wealthy nations.

How could we fix this system? First we need to remove private equity and other profit-seeking non-clinical investors from controlling and diverting our health care dollars. Then we need to set up a public healthcare financing system that is designed to direct funds to where they are clinically needed to ensure that everyone has affordable access to the medical care that they need. This would best be done by creating a public single payer system in the form of a carefully refined version of our current public Medicare system that is expanded to include everyone and cover everything. We also need improved public oversight and support for our dedicated clinical professionals who care primarily about the fate of patients and would be satisfied with a reasonable level of compensation for their services; that is, placing patients above profits.

That is not to say that Dr. Ralph de la Torre has not provided us with an important service. He has shown us beyond any doubt why we need to dump our current grossly inadequate and inhumane health care system and replace it with a benevolent public system that will ensure high quality health care for everyone – single payer Medicare for All.

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.

Improved Medicare for All is the solution

By Stephen Hessl M.D.
Aspen (Colo.) Daily News, Oct. 3, 2024

Editor:

How unfortunate that our school district finds itself in a quandary over providing health insurance for its teachers and staff (“Unexpected insurance costs put RFSD in $4-6 million hole,” Sept. 26, Aspen Daily News).

Every school district, city council and county commission in the country faces almost impossible annual choices and is forced to take calculated gambles with taxpayers’ money.

Don’t they all have enough challenges, educating our kids and running local governments? Wouldn’t we all be better off if they didn’t have to wrestle with this additional administrative roll of the dice?

There is a way: If we had, like almost every other modern nation, universal health care coverage, like Improved Medicare for All, this nagging problem would not exist. We would all — employers, employees, unemployed, retirees and children — have guaranteed health coverage for less than we’re all paying now.

Let’s educate ourselves about that!

https://aspendailynews.com…

‘Inhumane,’ ‘hazardous’: Legislators, advocates sound alarm on Medicare Advantage

By Katy Golvala
CT Mirror, October 2, 2024

In the spring of 2022, Gary Bent underwent surgery to remove a bleeding lesion in his brain resulting from melanoma. The procedure left him with severe mobility and cognitive impairments — he couldn’t walk or remember how to read a calendar.

Bent’s physicians said he needed intensive rehabilitation. Luckily, there was a spot available at one of only three facilities in the state that provide that level of care. Then, Bent’s Medicare Advantage plan denied the prior authorization.

“It boggles my mind that the physician and the physical therapist who are at his side every day say that he needs this care, and someone, somewhere in the Medicare Advantage plan who’s never even seen or met my husband says, ‘No,’” said Bent’s wife, Gloria, during a press conference at the state Capitol on Wednesday organized by lawmakers to call attention to problems with Medicare Advantage.

Medicare Advantage is a type of Medicare plan offered by a private company, and it’s come to dominate the market. Both nationally and in Connecticut, over half of Medicare beneficiaries are enrolled in Medicare Advantage as opposed to traditional Medicare.

These plans often have lower premiums, but are much more likely to have prior authorization requirements and limited provider networks, which can leave people stranded when they need care most. They are also more expensive on a per enrollee basis than traditional Medicare, which critics say is a waste of taxpayer dollars.

Retirees demand Adams drop Medicare appeals

Hundreds rallied Monday ahead of yet more court hearings

By Richard Khavkine
The Chief, October 1, 2024

Roberta Gonzalez made $5,200 a year when she came to work for the city in 1973, as a clerk with what was then the Department of Health, Hospitals, and Sanitation.

As the city’s fiscal picture grew ever more dire, and municipal posts started to dry up, she and her colleagues had clearly defined job descriptions. And they understood their roles, even if their salaries didn’t match the demands placed on them. “We are generally a dedicated and caring group,” Gonzalez, since retired, said late Monday morning in City Hall Park. “After all, we make the city run.”

What she and her coworkers did have, as part of what Gonzalez called “a reciprocal relationship with the boss” — aka, New York City officials — were assurances that they would receive a proper pension and good, lifelong health benefits when they retired.

But more than a decade into Gonzalez’s retirement, those guarantees remain under threat. As they have been for several years, as first the de Blasio administration and, since 2022, then the Adams administration have endeavored to shift roughly 250,000 retired municipal workers into a cost-saving, for-profit Medicare Advantage plan from their government-administered Medicare and supplemental insurance.

Although the retirees and their advocates, most prominently the New York City Organization of Public Service Retirees, have won successive victories in court challenging the city’s efforts, the Adams administration has filed appeal after appeal in a bid to push through the shift, which city officials have said would save the city some $600 million a year.

On Monday, about 250 retirees gathered in City Hall Park to demand that the administration drop its effort and instead endorse retirees’ continued access to their current plan. Following the late morning rally at City Hall, the retirees and their advocates walked a mile northwest to Spring Street Park, across the street from Aetna’s city headquarters. The managed-care giant was awarded the city’s Medicare Advantage program in late March 2023

But pronounced opposition from retirees has stalled the agreement’s implementation, with courts repeatedly siding with the retired city workers’ contention that switching them to a private plan would break assurances made decades ago. The retirees, health care professionals and others argue that the private-plan’s provisions are inferior, at best, to current coverage. They note that unlike regular Medicare, for-profit Medicare Advantage plans typically require pre-approvals, some of which, they contend, follow determinations generated by artificial intelligence.

They and their advocates maintain that private health-care insurers, rather than medical practitioners, essentially dictate care, since plan administrators often have the final say on which procedures will be covered. Private providers’ profit motives by definition outweigh consumers’ health concerns, the retirees say.

They are now making several specific demands of the mayor, principally that he essentially ensures the retirees continued access to their traditional Medicare and supplemental plan, including by dropping the appeals to court cases regarding Medicare and a copay issue, the president of the New York City Organization of Public Service Retirees, Marianne Pizzitola, said.

Adams should also publicly state his support for a City Council resolution that would guarantee the retirees’ current benefits as well as for state legislation, introduced in January, that would prohibit public-sector employers from “diminishing health insurance benefits provided to retirees and their dependents.” The state bill would also preserve the public entities’ contributions toward the benefits.

Pizzitola, a retired city emergency medical technician, also wants the mayor to back congressional legislation that would expand traditional Medicare to cover vision, hearing and dental benefits, add a cap on out-of-pocket expenses for beneficiaries, and also work to recoup government overpayments to insurance companies that have been upcoding and overcharging for treatment.

“Anything less is a broken promise to retirees,” she told the gathering at City Hall Park. “Our fight to get what we were promised continues.”

City Hall did not immediately respond to a request for comment about the retirees’ demands.

‘Unequitable care’

The rally was among several Monday in cities and states across the nation where public-sector workers and retirees are also facing the prospect of losing their Medicare. Gatherings also took place in Hartford, Conn., and Philadelphia, and in Illinois, Maine and Wisconsin.

Dr. Donald Moore, who runs a full-time general medicine practice in Brooklyn and is a board member of the New York Metro chapter of Physicians for a National Health Program, said switching the retirees to a Medicare Advantage plan would mean a loss of options for patients across a wide range of services, some potentially consequential.

He urged the retirees to fight to not give up their current coverage. “If you do, you’re going to lose access. You’re going to lose choice. You’re going to get unequitable care,” said Moore, who is also an attending physician at New York Methodist Hospital and teaches at Weill Cornell Medical College.

“Rich people,” he said, have Medicare, while those with fewer means or even none must contend with Medicare Advantage. “We fragment our insurance so we can give different care to different people. We should all get the same care,” Moore said. “What we need to fight for is an expanded Medicare, traditional Medicare for all.”

Gonzalez, who retired from the Department of Health and Mental Hygiene in 2011, worked through the HIV and AIDS epidemic, raising funds and setting up testing and prevention programs, and instituting needle-exchange programs. Her city career would also span 9/11, the anthrax scares and budget battles. Through fiscal crises, transit strikes and blizzards, she and her colleagues came to work doing the jobs they were hired to do, she said.

“We often made personal sacrifices to work in the jobs that make the city work,” Gonzalez said.

She’s since battled lung and thyroid cancer, both tied to her work in the aftermath of the September 11 terror attacks. And now, she said, “I and 250,000, a quarter of a million or more of my colleagues, are being forced by the city to make new health care decisions that can mean life or death for each of us.”

The city’s effort, she said, “is unconscionable.”

“When current workers see how easy it is for the city to go back on its commitments, to bait and switch with unkept promises, how will those workers feel about making any necessary sacrifices for the city? Who will they trust?” Gonzalez continued. “Who will be compelled to act to protect the city, its people, when the city shows that it does not uphold its end of the bargain?”

https://thechiefleader.com…

The Medicare Advantage Influence Machine

By Fred Schulte and Holly K. Hacker
KFF Health News, September 30, 2024

Federal officials resolved more than a decade ago to crack down on whopping government overpayments to private Medicare Advantage health insurance plans, which were siphoning off billions of tax dollars every year.

But Centers for Medicare & Medicaid Services officials have yet to demand any refunds — and over the years the private insurance plans have morphed into a politically potent juggernaut that has signed up more than 33 million seniors and is aggressively lobbying to stave off cuts.

Critics have watched with alarm as the industry has managed to deflate or deflect financial penalties and steadily gain clout in Washington through political contributions; television advertising, including a 2023 Super Bowl feature; and other activities, including mobilizing seniors. There’s also a revolving door, in which senior CMS personnel have cycled out of government to take jobs tied to the Medicare Advantage industry and then returned to the agency.

Sen. Chuck Grassley (R-Iowa) said Medicare Advantage fraud “is wasting taxpayer dollars to the tune of billions.”

“The question is, what’s CMS doing about it? The agency must tighten up its controls and work with the Justice Department to prosecute and recover improper payments,” Grassley said in a statement to KFF Health News. “Clearly that’s not happening, at least to the extent it should be.”

David Lipschutz, an attorney with the Center for Medicare Advocacy, a nonprofit public interest law firm, said policymakers have an unsettling history of yielding to industry pressure. “The health plans throw a temper tantrum and then CMS will back off,” he said.

Government spending on Medicare Advantage, which is dominated by big health insurance companies, is expected to hit $462 billion this year.

New details of the government’s failure to rein in Medicare Advantage overcharges are emerging from a Department of Justice civil fraud case filed in 2017 against UnitedHealth Group, the insurer with the most Medicare Advantage enrollees. The case is pending in Los Angeles. The DOJ has accused the giant insurer of cheating Medicare out of more than $2 billion by mining patient records to find additional diagnoses that added revenue while ignoring overcharges that might have reduced bills. The company denies the allegations and has filed a motion for summary judgment.

Records from the court case are surfacing as the Medicare Advantage industry ramps up spending on lobbying and public relations campaigns to counter mounting criticism.

While critics have argued for years that the health plans cost taxpayers too much, the industry also has come under fire more recently for allegedly scrimping on vital health care, even dumping hundreds of thousands of members whose health plans proved unprofitable.

“We recognize this is a critical moment for Medicare Advantage,” said Rebecca Buck, senior vice president of communications for the Better Medicare Alliance, which styles itself as “the leading voice for Medicare Advantage.”

Buck said initiatives aimed at slashing government payments may prompt health plans to cut vital services. “Seniors are saying loud and clear: They can’t afford policies that will make their health care more expensive,” she said. “We want to make sure Washington gets the message.”

AHIP, a trade group for health insurers, also has launched a “seven-figure” campaign to promote its view that Medicare Advantage provides “better care at a lower cost,” spokesperson Chris Bond said.

Revolving Door

CMS, the Baltimore-based agency that oversees Medicare, has long felt the sting of industry pressure to slow or otherwise stymie audits and other steps to reduce and recover overpayments. These issues often attract little public notice, even though they can put billions of tax dollars at risk.

In August, KFF Health News reported how CMS officials backed off a 2014 plan to discourage the health plans from overcharging amid an industry “uproar.” The rule would have required that insurers, when combing patients’ medical records to identify underpayments, also look for overcharges. Health plans have been paid billions of dollars through the data mining, known as “chart reviews,” according to the government.

The CMS press office declined to respond to written questions posed by KFF Health News. But in a statement, it called the agency a “good steward of taxpayer dollars” and said in part: “CMS will continue to ensure that the MA program offers robust and stable options for people with Medicare while strengthening payment accuracy so that taxpayer dollars are appropriately spent.”

Court records from the UnitedHealth case show that CMS efforts to tighten oversight stalled amid years of technical protests from the industry — such as arguing that audits to uncover overpayments were flawed and unfair.

In one case, Jeffrey Grant, a CMS official who had decamped for a job supporting Medicare Advantage plans, protested the audit formula to several of his former colleagues, according to a deposition he gave in 2018.

Grant has since returned to CMS and now is deputy director for operations at the agency’s Center for Consumer Information and Insurance Oversight. He declined to comment.

At least a dozen witnesses in the UnitedHealth case and a similar DOJ civil fraud case pending against Anthem are former ranking CMS officials who departed for jobs tied to the Medicare Advantage industry.

Marilyn Tavenner is one. She led the agency in 2014 when it backed off the overpayment regulation. She left in 2015 to head industry trade group AHIP, where she made more than $4.5 million during three years at the helm, according to Internal Revenue Service filings. Tavenner, who is a witness in the UnitedHealth case, had no comment.

And in October 2015, as CMS department chiefs were batting around ideas to crack down on billing abuses, including reinstating the 2014 regulation on data mining, the agency was led by Andy Slavitt, a former executive vice president of the Optum division of UnitedHealth Group. The DOJ fraud suit focuses on Optum’s data mining program.

In the legal proceedings, Slavitt is identified as a “key custodian regarding final decision making by CMS” on Medicare Advantage.

“I don’t have any awareness of that conversation,” Slavitt told KFF Health News in an email. Slavitt, who now helps run a health care venture capital firm, said that during his CMS tenure he “was recused from all matters related to UHG.”

‘Improper’ Payments

CMS officials first laid plans to curb escalating overpayments to the insurers more than a decade ago, according to documents filed in August in the UnitedHealth case.

In a January 2012 presentation, CMS officials estimated they had made $12.4 billion worth of “improper payments” to Medicare Advantage groups in 2009, mostly because the plans failed to document that patients had the conditions the government paid them to treat, according to the court documents.

As a remedy, CMS came up with an audit program that selected 30 plans annually, taking a sample of 201 patients from each. Medical coders checked to make sure patient files properly documented health conditions for which the plans had billed.

The 2011 audits found that five major Medicare Advantage chains failed to document from 12.3% to 25.8% of diagnoses, most commonly strokes, lung conditions, and heart disease.

UnitedHealth Group, which had the lowest rate of unconfirmed diagnoses, is the only company named in the CMS documents in the case file. The identities of the four other chains are blacked out in the audit records, which are marked as “privileged and confidential.”

In a May 2016 private briefing, CMS indicated that the health plans owed from $98 million to $163 million for 2011 depending on how the overpayment estimate was extrapolated, court records show.

But CMS still hasn’t collected any money. In a surprise action in late January 2023, CMS announced that it would settle for a fraction of the estimated overpayments and not impose major financial penalties until 2018 audits, which have yet to get underway. Exactly how much plans will end up paying back is unclear.

Richard Kronick, a former federal health policy researcher and a professor at the University of California-San Diego, said CMS has largely failed to rein in billions of dollars in Medicare Advantage overpayments.

“It is reasonable to think that pressure from the industry is part of the reason that CMS has not acted more aggressively,” Kronick said.

CMS records show that officials considered strengthening the audits in 2015, including by limiting health plans from conducting “home visits” to patients to capture new diagnosis codes. That didn’t happen, for reasons that aren’t clear from the filings.

In any case, audits for 2011 through 2015 “are not yet final and are subject to change,” CMS official Steven Ferraina stated in a July court affidavit.

“It’s galling to me that they haven’t recovered more than they have,” said Edward Baker, a whistleblower attorney who has studied the issue.

“The government needs to be more aggressive in oversight and enforcement of the industry,” he said.

Senior CMS official Cheri Rice recommended in the October 2015 email thread with key staff that CMS could devote more resources to supporting whistleblowers who report overbilling and fraud.

“We think the whistleblower activity could be as effective – or even more effective – than CMS audits in getting plans to do more to prevent and identify risk adjustment overpayments,” Rice wrote.

But the handful of cases that DOJ could realistically bring against insurers cannot substitute for CMS fiscal oversight, Baker said.

“Unfortunately, that makes it appear that fraud pays,” he said.

Document: October 2015 email with Rice and other CMS officials

Spending Surge

In December, a bipartisan group of four U.S. senators, including Bill Cassidy (R-La.), wrote to CMS to voice their alarm about the overpayments and other problems. “It’s unclear why CMS hasn’t taken stronger action against overpayments, despite this being a longstanding issue,” Cassidy told KFF Health News by email.

In January, Sen. Elizabeth Warren (D-Mass.) and Rep. Pramila Jayapal (D-Wash.) called for CMS to crack down, including by restricting use of chart reviews and home visits, known as health risk assessments, to increase plan revenues.

Cassidy, a physician, said that “upcoding and abuses of chart review and health risk assessments are well-known problems CMS could address immediately.”

Advocates for Medicare Advantage plans, whose more than 33 million members comprise over half of people eligible for Medicare, worry that too much focus on payment issues could harm seniors. Their research shows most seniors are happy with the care they receive and that the plans typically cost them less out-of-pocket than traditional Medicare.

Buck, the spokesperson for the Better Medicare Alliance, said that as the annual open enrollment period starts in mid-October, seniors may see “fewer benefits and fewer plan choices.”

The group has ramped up total spending in recent years to keep that from happening, IRS filings show.

In 2022, the most recent year available, the Better Medicare Alliance reported expenses of $23.1 million, including more than $14 million on advertising and promotion, while in 2023, it paid for a Super Bowl ad featuring seniors in a bowling alley and left viewers with the message: Cutting Medicare Advantage was “nuts.”

Bruce Vladeck, who ran CMS’ predecessor agency from 1993 through 1997, said that when government officials first turned to Medicare managed care groups in the 1990s, they quickly saw health plans enlist members to help press their agenda.

“That is different from most other health care provider groups that lobby,” Vladeck said. “It’s a political weapon that Medicare Advantage plans have not been at all reluctant to use.”

The Better Medicare Alliance reported lobbying on 18 bills this year and last, according to OpenSecrets. Some are specific to Medicare Advantage, such as one requiring insurers to report more detailed data about treatments and services and another to expand the benefits they can offer, while others more broadly concern health care costs and services.

Proposed reforms aside, CMS appears to believe that getting rid of health plans that allegedly rip off Medicare could leave vulnerable seniors in the lurch.

Testifying on behalf of CMS in a May 2023 deposition in the UnitedHealth Group suit, former agency official Anne Hornsby said some seniors might not “find new providers easily.” Noting UnitedHealth Group is the single biggest Medicare Advantage contractor, she said CMS “is interested in protecting the continuity of care.”

https://kffhealthnews.org...

Dr. Dan Doyle on WBOY 12 News

PNHP-WV chapter leader Dr. Dan Doyle was interviewed by WBOY News 12 for a segment on September 30, 2024. Dr. Doyle helped lead a rally outside the offices of Peak Health in Morgantown as part of a national day of action highlighting the dangers of so-called “Medicare Advantage” plans.

Corporate health insurers are “making huge profits” from privatized Medicare he said. “The way they do it is by denials of care, delays of care, nonpayment of care, and restricted networks.”

“Incestuous exploitation?” PBMs and corporate healthcare consolidation

By Brenda Gazzar
Code Wack Podcast, Sept. 30, 2024

We’re taking another look at Pharmacy Benefit Managers or PBMs. Why were PBMs started and how did they morph to become one of the most powerful entities in health care? Why have they caught the attention of the Federal Trade Commission? How are they a threat to consumers?

To find out, we spoke to Dr. Ed Weisbart, the national board secretary of Physicians for a National Health Program and former chief medical officer of one of the biggest PBMs in the country. This is the first episode in a two-part series.

Check out the Transcript and Show Notes for more!

https://heal-ca.org…

Medical Debt

By George Bohmfalk, M.D.
The Charlotte Observer, Letters, Sept. 29, 2024

Regarding “Inside North Carolina’s fight to make hospitals relieve billions of patient debt” (Sept. 23) and other reports:

So Atrium/Advocate finally decided to do the right thing after filing around 500 debt collection lawsuits per year. Most people who don’t pay their medical bills just don’t have the money. How much has Atrium spent on armies of lawyers to file these low-yield lawsuits?

We wonder why one-third of every healthcare dollar is wasted on administrative overhead. There is a better way. Under an Improved Medicare for All system, medical debt simply would not exist. No fire department ever sued a home or business owner after saving their building. Health care can work the same way.

https://charlotteobserver.com…

Wendell Potter on MoveOn

Former Cigna VP (and insurance industry whistleblower) Wendell Potter spoke with MoveOn for a social media segment that was posted on September 29, 2024. Mr. Potter discussed the under-reported threat that Project 2025 poses to Medicare—by making so-called “Advantage” plans the default option for enrollees.

Under the Heritage Foundation plan, people on Medicare “will not have access to the doctors they want to see, or the hospitals they want to be treated at, or even the medications that they [need],” he said, “because the insurance companies will be in control of all of that.”

Medicare Advantage plans are the junk bonds of health care

By James Fieseher, M.D.
New Hampshire Union Leader, Sept. 24, 2024

September starts the open enrollment period for seniors choosing a health care plan, either traditional Medicare (TM) or any one of a number of commercial “Medicare Advantage” plans. Picking the one plan that is right for you depends upon your overall health status, your financial situation, and your ability to predict your health in the future.

For the next three or four months, you’re going to be flooded with advertisements for various Medicare Advantage plans, pitched by older celebrities. You’ll hear them say the word “free” a lot, and if you think commercial health care is being offered for free, there’s a famous bridge in Brooklyn you might be interested in buying.

Congress established Medicare in 1965 to provide a highly transparent, cost-effective way to publicly fund the health care needs of seniors. It came with a set of clear guidelines for doctors and patients letting them know which services would be paid and which were not. Then, 98% of taxpayers’ dollars through Social Security went directly back to medical costs for seniors while roughly 2% went to administrative fees. Once the doctor and patient agreed on the medical services needed, those costs were promptly paid. That same formula is still in effect today, 59 years later, although the administrative costs are now closer to 3%.

By contrast, Medicare Advantage plans started in the 1970s and came into their own in 2004, when commercial insurers started aggressive advertising. They boasted “free” everything as well as dental and eye coverage — “depending upon your zip code.” Clearly, their health care isn’t free, they bill the Medicare Trust Fund directly, with a built-in 10% profit margin for administrative services.

Commercial health insurers found loopholes in the way Medicare Advantage (a.k.a. Medicare Part C) was structured enabling them to increase profit margins at least threefold. One of these was that medical insurers would self-regulate, so little chance that outright fraud would be detected. Last year alone, commercial insurers overcharged CMS (the Center for Medicare and Medicaid Services) an estimated $88 billion. But because of a lack of transparency, that number could be as high as $140 billion.

What does that mean to you when deciding on a plan?

One of the ways commercial Medicare Advantage insurers can extract more money from the Medicare Trust Fund is through a process known as “upcoding.” This is a way of taking a past or present medical condition and redefining it as a more serious problem than your medical practitioner originally listed. Suddenly elevated blood pressure is redefined as a serious blood pressure problem, or pre-diabetes becomes uncontrolled diabetes. This enables the private insurer to bill CMS at a higher rate.

Commercial insurers have the right to “manage” your health care having a say whether or not they will pay for a medication or procedure that you and your doctor have decided is necessary through “prior authorization.” Waiting for a for-profit insurer to approve treatment has caused serious delays or outright denials of urgently needed care, often resulting in patients paying the entire cost out of pocket, saving the insurer millions.

Because of upcoding, Medicare Advantage patients appear to have more serious health problems than patients on traditional Medicare, while at the same time those same patients receive fewer medications and procedures due to prior authorization denials. Advantage plans may save money in the up-front costs and added benefits such as hearing and dental, but you’ll lose your shirt and a lot more if you develop more than a minor medical condition.

In many ways, Medicare plans resemble the bond market. Traditional Medicare, managed by the U.S. government is like treasury notes, they’re AAA rated, a guaranteed safe investment. Medicare Part C “Advantage” plans are like C rated bonds (a.k.a. “junk bonds”), they entice with higher yield offerings, but the pay-off is risky.

If you’re on a Medicare Advantage plan and want to switch back to traditional Medicare, you might not be able to, or it might cost you a higher rate depending upon your health and the number of years you’ve been on an Advantage plan. There are commercial plans that cover “gaps” in traditional Medicare, such as hearing, dental, and eye care. These can be covered at fairly low cost through supplemental plans known as “Medigap” plans. But if you have a pre-existing condition, especially if it’s serious, you might be ineligible or have to pay a much higher rate for any of the Medigap coverage plans. Plus, switching is intentionally difficult, even if you don’t have a pre-existing condition.

If you think you’ll never need any serious hospitalization or surgery for the rest of your life, an Advantage plan might be right for you. For the rest of us, I would suggest sticking to the tried-and-true; traditional Medicare will save you lots of money in the long run and will avoid the frustrating delays in care.

Dr. James Fieseher is a retired physician and member of Granite State Physicians for a National Health Program.

https://www.unionleader.com…