By Brenda Gazzar
Code Wack Podcast, November 6, 2023

Medicare Advantage is overcharging the federal government – and you won’t believe by how much! How’s this affecting taxpayers like you and me and what can be done about it?

To find out, we spoke to Dr. Ed Weisbart, the national board secretary for Physicians for a National Health Program and president of the Consumers Council of Missouri.

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Transcript

Dispatcher: 911, what’s your emergency?

Caller: America’s healthcare system is broken and people are dying!

Welcome to Code WACK!, where we shine a light on America’s callous healthcare system, how it hurts us and what we can do about it. I’m your host, Brenda Gazzar.

(music)

This time on Code WACK! Medicare Advantage is overcharging the federal government – and you won’t believe by how much! How’s this affecting taxpayers like you and me and what can be done about this? To find out, we spoke to Dr. Ed Weisbart, the national board secretary for Physicians for a National Health Program and president of the Consumers Council of Missouri.

Welcome back to Code WACK! Dr. Weisbart.

Weisbart: Thanks, Brenda. How nice to see you again.

Q: So it’s Medicare open enrollment where people age 65 and older, and those with certain disabilities, are deciding whether they want traditional Medicare or Medicare Advantage. Today over half of Medicare beneficiaries have Medicare Advantage. What are a couple of key differences between these two programs for consumers?

Weisbart: So Medicare is the program that, you know, we know and love started in 1965. It covers your hospital stuff, it covers your doctor stuff. If you buy Part B and it’s traditional. We’ve had it for forever, and it’s seamless. They never say no, they never get in your way. You can go to almost any doctor in the country and there’s nobody trying to make a profit off of it. They operate with like a 2% overhead. It’s a terrific program.

Medicare Advantage is really neither Medicare nor an advantage. So instead of having the Medicare program just pay for your doctors and hospitals for you, instead of that, now, Medicare prepays insurance companies, like the insurance companies that do most of the employer kind of health care. So they prepay the insurance companies for every person that’s in there.

Pre-paid? Lucky them.

Weisbart: And of course, you know, once the insurance companies are prepaid for you, they don’t want to let go of that money. It’s in their bank account. They want to, they want to keep it. … So they have all sorts of games to kind of get in the way. They keep you from going to certain doctors and hospitals. They delay paying for your care, even just stand in the way for a week or two of being able to get care. That’s money that’s still in their bank that they can make a profit off of.

So they don’t want you to go get care, and they don’t want you to get it quickly, and they want you to go to the places that they pick.

And so that’s different from Traditional Medicare…

Weisbart: Medicare Advantage is completely different from Medicare. The only real advantage to Medicare Advantage is if you’re the CEO, you know, or the shareholders, the investment companies. I mean, nobody looks at Medicare and says, ‘gee, you know, what we really need are more bankers involved’ and that’s what you get with Medicare Advantage.

Q: And yet, more and more seniors are getting Medicare Advantage. Why is that?

Weisbart: It’s not because it’s any better, so it’s cheaper on the front end. What people don’t really realize is that although it may be cheaper initially, it’s not a lot cheaper and then they have somebody saying, ‘no, you can’t get the health care you want.’

So people in Medicare Advantage actually have more trouble accessing health care than people in good old traditional Medicare. People in Medicare Advantage have longer delays. Actually a new study came out recently that shows people in Medicare Advantage don’t go to the better hospitals as often. They have a longer time getting diagnosed. They have a longer time getting treated once they’re diagnosed with cancer, and they actually have higher death rates postoperatively if they have cancer surgery.

So, you know, you’re kind of taking a gamble when you’re going into Medicare Advantage. You’re gambling that spending a bit less money up front on premiums isn’t going to kill you. And sadly there’s evidence that it just might so it’s not a good choice.

Q: I see. So the single-payer advocacy group Physicians for a National Health Program recently released a bombshell report about Medicare Advantage overcharging titled “Our Payments, Their Profits: Quantifying Overpayments in the Medicare Advantage Program.” What were the key findings of this report?

Weisbart: The bottom line is that we overpay or they’re allowed to be overpaid by at least $140 billion.

Q: $140 billion?

Weisbart: I think the analysis is fair to say $140 billion and that’s just looking at the legal things. That’s not looking at fraud and abuse. That’s just looking at what’s legal. So I said $140 billion a year. It’s so hard to figure out. Is that a big number? You know, everybody in Medicare – just about – has to pay a part B premium, right? We spend about $170 out of pocket a month on our Part B premium so that we can get the Part B benefits, you know, go to the doctor and stuff.

But it usually comes out of your Social Security check… If you add up those $170 a month across everybody in Medicare, it comes to $131 billion. So we’re spending $131 billion on our Part B premiums, but the Medicare Advantage companies are getting $140 billion in overpayments.

Wow. So it sounds like the overpayments to Medicare Advantage plans could more than cover Medicare’s Part B premiums for doctor visits, outpatient hospital services and other medical services.

Weisbart: When I realized that that’s how the numbers work out, that all of my premium dollars for Part B and more are being diverted into Medicare Advantage companies for no reason, for worse outcomes. So all of our money is going to them and that just makes me mad that that should be happening.

And that’s one comparison to Part B premiums. You know, one of the things that is really troublesome in Medicare is the out-of-pocket costs. We have to pay 20% of our outpatient care. We have to pay, you know, $1,600 for a hospitalization, and if you have to go to the doctor once a year, 20% of one visit is probably something most can afford.

But if you’re sick and that’s why you have insurance and you have to go to a doctor once a month or once a week or two or three times a week, 20% of that is bankruptcy town and there’s no limit on that or $1,600 for a hospital stay, that’s already stuff that you need to take a loan out for and if you have to be hospitalized two or three times a year… So because of that, it’s a problem that Medicare doesn’t have a limit on how much those out-of-pocket costs can go to and this is directly relevant to our study because we found an analysis from the Urban Institute that looked at what would it cost to change Medicare and limit it so that nobody has to spend more than $5,000 out of pocket – $5,000’s still a lot, but it’s way the heck better than 20% of everything, you know?

Q: Interesting. And how much would it cost Medicare to implement a $5,000 out-of-pocket maximum for people?

Weisbart: $39 billion dollars. … So if we weren’t squandering our money, if the Medicare Advantage companies weren’t allowed to pilfer our money, we could do that.

Or the last piece, and then I’ll, you know, stop my little tirade here is if you look at the things that people also really want, they want dental insurance, right? They want hearing, they want vision. If you add that up, it comes up to, for everybody in Medicare and Medicaid together, it comes up to about $80 billion a year, $80 billion.

So that’s less, way less than what we give away to the Medicare Advantage companies.

In other words, we could have really nice things here. We could afford to have really good health insurance through the Medicare program and make it available to everybody in the country, but we have to stop the bleeding. You know, we have to stop letting these Medicare Advantage companies drain our funds, take it directly out of us. That’s not right. We shouldn’t be doing that. They’re giving us worse health care and we’re not getting anything for it.

Q: So you’re saying Medicare could have a $5,000 annual out-of-pocket cap, plus cover dental, vision and hearing for about what we’re paying the Medicare Advantage companies?

Weisbart: Yeah, we could fix all the things that are wrong with Medicare if we would just stop letting the Medicare Advantage corporations rip us off like this.

Q: Wow. So what are some of the ways that Medicare Advantage is grossly overpaid for the care and services it provides to beneficiaries?

Weisbart: Yeah, it comes down to four main ways.

The first is the way that’s sort of gotten the most attention, which is called upcoding. Upcoding means that they’re paid for the average person and then they get actually paid more if you’re sick. So Medicare Advantage companies long ago came to Congress and said, ‘Hey, you know, we have these really sick patients, you know, we deserve to be paid more than the average.’

So yeah, Medicare put in a program that said if your people are sicker, then we will pay you more and so it seemed to make sense. You know, maybe that makes a lot of sense, I don’t know. But it created this opportunity for the Medicare Advantage companies to pretend you’re sicker so they’ll send a nurse out to your house once to pick up diagnoses that your doctor didn’t think was clinically important.

They won’t send you out for home care, you know, you’re less likely to get home care, but they will send somebody to your house to get extra codes. They will very seriously pressure physicians to add diagnoses that are not of any real medical purpose so they can submit their claims to Medicare and say, ‘ see how sick people are here? And it’s really just not true. That’s called upcoding. And that one piece is pretty significant. That one piece is worth $20 billion. They’re overpaid by 5% just for that one piece and that’s actually the smallest of the ways.

A second way that they get overpaid is what’s called favorable selection, which is, as I said, they’re paid on the average with that little quirk of upcoding, but they’re paid on the average, but they don’t want you if you’re actually sick. So they have these ways of attracting healthier people, and it’s called favorable selection by attracting healthier people in all the ways I started to hint at. That gets them another $44 (billion) to $56 billion extra.

So that’s two key ways.

Q: So we’ve got upcoding and favorable selection. What are the other two ways?

Weisbart: And then the third way is a whole series of weird sort of benchmarks and bonuses that they have. And there’s a lot of those. But one in particular, I’ll just point out, ’cause it just really kind of is outrageous. They’re paid more, if they hit these quality targets, right? If it’s a better Medicare Advantage company, they’ll get paid more. That makes sense, except that the measurements of getting paid more don’t have anything to do with death rates and mortality rates and, and denials and delays in care. They’re kind of goofy things that aren’t that important.

And most interestingly, when a new Medicare Advantage company enters, they’re paid assuming that they’re going to be high quality, and even without any data at all, they’re given a three and half percent bonus for high quality when they haven’t done that yet.

So anyway, if you add all these crazy extra bonuses and benchmarks, that’s another $24 (billion) to $28 billion. So $20 billion on the upcoding, $44 (billion) to $56 (billion) on the favorable selection, $24 (billion) to $28 billion on the quality benchmarks and the quality bonuses and stuff that I’m talking about, if you add just those three factors together, you get to $88 (billion) to $104 billion that they’re overpaid.

And then there’s a fourth way, which is a little bit trickier. So we pay the Medicare Advantage companies as if they eliminate the financial barriers to care and as if therefore people could use health care more. But that’s not the case. They are not, they do not eliminate that.

In fact, we know the people in Medicare Advantage have more financial barriers to care than do people in traditional Medicare, but they’re paid as if they’ve eliminated them. That’s called induced utilization.

And that’s another 9%, and that’s $36 billion more. So if you add up the $44 billion to $56 billion from the favorable selection and the $20 billion from upcoding and the $24 to $28 billion from these benchmarks, and the $36 billion from induced utilization, that’s $124 to $140 billion.

And I think that’s very conservative and then, like I said, that doesn’t even begin to count the fraud and abuse and the illegal things that they do. So it’s a lot of money and it’s a lot of games. They’ve created an industry around maximizing how much they get out of each one of these games.

Q: What is the impact of these insurance company overcharges on taxpayers and Medicare beneficiaries, and why should we all be concerned about this?

Weisbart: And so here we are wasting, as I say, probably around $140 billion a year of our taxes … going to healthcare companies that actually make health care worse, not better.

So it’s a terrible impact on the taxes which we could fix. It’s interesting to note that Senators (Jeff) Cassidy and (Bill) Merkley, I believe, have submitted a bill called the No Upcoding Act, which would actually not deal with the $140 billion. It would deal with just the one that I was mentioning, the upcoding piece, which was about $20 billion.

If that bill that’s in the Senate got traction it would at least deal with that one piece. And that is actually like I told you four factors, and that was the smallest of the four factors. But if that bill got passed and became part of law, it would start the trend of reversing the tide of these overpayments. So I think, you know, the bill’s imperfect. It’s not anywhere near as strong as I would like it to be, but it’s still pretty darn good and it’s interesting to note that it’s sponsored by Senator (Jeff) Merkley, who is a Democrat and Senator (Bill) Cassidy, who’s a Republican.

So it’s literally got bipartisan appeal, and it’s not by an accident. The reason for that is because, frankly, you know, our fractured political landscape agrees in general that we don’t like wasting money, you know. This upcoding is a game that should not be allowed to steal our Medicare funds. So I think there’s hope for it.

Thank you, Dr. Ed Weisbart of Physicians for a National Health Program. Stay tuned for next time when we continue our discussion with Dr. Weisbart about Medicare Advantage overcharges and what can be done about them.

Do you have a personal story you’d like to share about our wack healthcare system? Contact us through our website at heal-ca.org.

Don’t forget to subscribe to Code WACK! wherever you find your podcasts. You can also find us on ProgressiveVoices.com and on Nurse Talk Media.

Code WACK! is powered by HEAL California, uplifting the voices of those fighting for healthcare reform around the country. I’m Brenda Gazzar.

https://heal-ca.org…

By Gretchen Morgenson
NBC News, October 31, 2023

For decades, Rose Stone counted on the Alliance HealthCare System in rural Holly Springs, Mississippi, for her medical needs. But after she retired and signed up for a Medicare Advantage plan, she was surprised to learn it didn’t cover her visits to nonprofit Alliance, the only health-care provider within 25 miles. Stone had a choice: use her own money to keep seeing her regular doctor or drive out of town to see a physician she didn’t know but whose costs were covered.

“It was a mess,” Stone told NBC News. “I didn’t go to the doctor because I was going to have to pay out-of-pocket money I didn’t have.”

Some 31 million Americans have Medicare Advantage plans, private-sector alternatives to Medicare introduced in 2003 by Congress to encourage greater efficiency in health care. Just over half of Americans on Medicare are enrolled in one of the plans offered by large insurance companies, including UnitedHealthcare and Humana.

Problems are emerging with the plans, however. Last year, a federal audit from 2013 was released showing that 8 of the 10 largest plans had submitted inflated bills to Medicare. As for the quality of care, the Medicare Payment Advisory Commission, a non-partisan agency of Congress, said in a March report that it could not conclude Medicare Advantage plans “systematically provide better quality” over regular Medicare.

Even worse, because the plans routinely deny coverage for necessary care, they are threatening the existence of struggling rural hospitals nationwide, CEOs of facilities in six states told NBC News. While the number of older Americans who rely on Medicare Advantage in rural areas continues to rise, these denials force the hospitals to eat the increasing costs of care, causing some to close operations and leave residents without access to treatment.

“They don’t want to reimburse for anything — deny, deny, deny,” Dr. Kenneth Williams, CEO of Alliance HealthCare, said of Medicare Advantage plans. “They are taking over Medicare and they are taking advantage of elderly patients.”

Williams is something of a local hero in Holly Springs. When the area hospital was in danger of closing in 1999, he marshaled resources and bought it to keep it open. Alliance serves a county with 38,000 people.

Still, this spring he had to shut down a long-time geriatric psychiatry program that had served the community for over eight years. Coverage denials from Medicare Advantage plans killed the program, Williams said.

Medicare Advantage plans are sold assiduously by celebrity pitchmen — one is Joe Namath — as a better way for Americans who qualify for Medicare to get insurance coverage. Many plans add services such as dental and hearing care and wellness programs not offered under traditional Medicare, for which beneficiaries pay extra.

The U.S. government pays most of beneficiaries’ premiums to the insurers offering the plans.

If the government hoped Medicare Advantage plans would reduce the costs of care, that has not been the outcome. Medicare pays the plans 6 percent more than it would spend if plan enrollees were covered under regular, fee-for-service Medicare, the MedPAC report found. Medicare payments to the plans will total $27 billion more in 2023 than if patients were enrolled in traditional Medicare, the report projected.

A new enrollment period for the plans began this month. State insurance commissioners told NBC News they, too, receive many complaints from customers saying they were sold Medicare Advantage plans without understanding their limitations. A major complaint, said Mike Chaney, the Mississippi Insurance Commissioner: “Consumers are not aware their doctors are likely to change under the Medicare Advantage plans.”

‘We can’t pay our bills’

Medicare Advantage plans have grown in popularity in recent years, with enrollment more than doubling nationwide since 2013. One explanation: The plans are often cheaper than paying for a Medicare supplement, sometimes referred to as Medigap.

Another reason for the growth may be the significantly larger commissions the government pays to brokers selling Medicare Advantage plans. In 2024, the Centers for Medicare and Medicaid will pay brokers a commission of between $611 and $762 for the first year of a Medicare Advantage plan, depending on the state, and roughly half that on annual renewals. On Medicare supplements, by contrast, brokers receive around $300 on average in year one.

Brokers selling the so-called advantage plans aren’t the only ones making money on them. UnitedHealth Group, the largest Medicare Advantage provider with 7.6 million people in its plans, generated $257 billion in premium revenues in 2022, some 13% over the previous year. A significant driver of that growth was its Medicare Advantage plans, the company’s financial filings said. Humana, the next largest provider, counts 5.3 million Medicare Advantage customers; during the six months that ended June 30, almost 80% of Humana’s $51 billion in premium revenues came from individual Medicare Advantage plans, its filings show.

Meanwhile, CEOs of rural nonprofit hospital systems in Arkansas, Colorado, Mississippi, Missouri, South Dakota and Texas told NBC News that Medicare Advantage plans repeatedly refuse to reimburse them for the care they provide. Some 170 rural hospitals are at risk of closing in those six states alone, according to a report from the Center for Healthcare Quality and Payment Reform, a nonprofit advocacy organization.

While there are multiple reasons for rural hospitals’ financial woes, coverage denials from Medicare Advantage plans play a big part, said Harold Miller, president of the Center that conducted the study. For years, Medicare Advantage plans had been rare in rural areas, now they are becoming ubiquitous. In 2022, enrollment in Medicare Advantage plans grew 13 percent in rural areas versus 7 percent in urban zones, according to the MedPAC report.

Mary Beth Donahue, president of the Better Medicare Alliance, an advocacy group that supports Medicare Advantage plans, said in a statement: “We acknowledge the challenges facing some health systems, but we need to ensure coverage is maintained for millions of seniors. As Medicare Advantage continues to grow, it is essential that hospitals provide access for seniors and people with disabilities who rely on this program.”

A UnitedHealthcare spokeswoman said in a statement, “Over 6,000 hospitals participate in our UnitedHealthcare network, and we have built collaborative relationships with them to help ensure we are meeting our shared goal of providing quality care to the people we serve.”

By law, Medicare Advantage plans are supposed to base their reimbursements on Medicare rules. But there’s room for interpretation, says the Department of Health and Human Services. For example, insurers can use their own clinical criteria to determine whether to authorize or pay for care. A report last year by the department’s Inspector General found that in June 2019, the 15 top Medicare Advantage plans denied authorization for 13 percent of claims that had met Medicare rules. The plans also denied payment for 18 percent of claims that met Medicare coverage and billing rules, the report said.

Even when the plans pay, they reimburse providers far less than traditional Medicare, rural hospital CEOs and doctors told NBC News. The plans are effectively rationing health care, these providers said.

For example, the hospital officials cited specific cases in which plans take a week to approve care but agree to pay only for a three-night stay; deny coverage after approving it, clawing money back from hospitals; or contend a provider is “out of network” when it isn’t. They also deny routine tests and refuse to pay for rehabilitation, saying patients should go home before their doctors think it’s wise.

“Any study we order — X-ray, CT scan, MRI, stress tests — they’re going to deny,” said Craig Pendergrass, a doctor at Ozarks Community Hospital, a nonprofit critical access hospital in Gravette, Arkansas, in the northwest corner of the state. “With straight Medicare we just schedule it.” He estimated that his staff spends one-quarter of each week trying to persuade the plans not to deny the tests or treatment.

Large hospital systems with big staffs can dedicate time and energy to fighting claims denials, the American Hospital Association says. Small rural hospitals cannot. In response, some smaller systems are starting to reject Medicare Advantage plans. This summer, Jason Merkley, chief executive of Brookings Health System, a highly rated nonprofit hospital chain in South Dakota, stopped accepting the plans because of coverage denials and pre-authorization problems. Only a small percentage of the system’s patients had Medicare Advantage plans, Merkley told NBC News, but the effort required to battle the denials was considerable.

A Humana spokesman provided this statement: “In our Medicare Advantage hospital contracts, Humana pays rates, on average, that are above fee-for-service Medicare rates. Moreover, the fee-for-service Medicare reimbursement model is focused on patient volume and the quantity of services provided, whereas we are focused on delivering better outcomes for patients.”

In mid-September, Samaritan Health Services, a five-hospital system in Oregon, said it ended its contract with UnitedHealthcare, including its Medicare Advantage plans. “United Healthcare’s processing of requests and claims has made it difficult for Samaritan to provide timely access to the appropriate care to United’s members,” the system said.

Refusing to accept Medicare Advantage plans is not an option for hospitals with many plan customers and whose facilities are the only ones in their rural areas, the CEOs say. If they stopped accepting the plans, their communities would have to forego local health care.

“We’re a system with a proud history of taking all patients, insured or not,” said Paul Taylor, CEO of the 25-bed Ozarks Community Hospital. “But this makes it really difficult for us to continue to care for at-risk patients. We can’t pay our bills.” Medicare Advantage plans make up 40% of his reimbursements now, up from 20% a few years ago, he said.

Taylor recently conducted a two-year study of what his hospital received treating traditional Medicare patients versus what it received from Medicare Advantage plans. He found that the plans paid $4.5 million less than he received under Medicare for the same treatments. That’s roughly what his facility generates in revenues each month.

Ozarks Community, which serves approximately 30,000 people, narrowly averted a bankruptcy filing this spring, Taylor said. He is selling assets to stay afloat.

$29,458 of care denied

In late August, a patient with chronic obstructive pulmonary disease and Covid arrived at San Luis Valley Health Regional Medical Center, a 49-bed, level 3 trauma center in Alamosa, Colorado. The nonprofit hospital serves a six-county region in south central Colorado that’s home to about 50,000 people. Roughly the size of Delaware, the area is one of the poorer in the state, said Konnie Martin, San Luis Valley Health’s chief executive.

The doctor handling the patient recommended admitting her to the hospital, but her UnitedHealthcare Medicare Advantage plan balked. They agreed to pay only for “observation” of the patient, a lower standard of care that generates much smaller reimbursements.

The facility went ahead and treated her as an inpatient for two weeks, a stay that cost $29,458, all of which San Luis Valley Health absorbed, it said. Had the Medicare Advantage plan agreed to cover the claim, it would have paid one-third, the hospital estimated.

“This is the norm — they push back on people to try to keep them out of the hospital or delay their hospital care,” Martin said. The hospital’s staff has to spend time resubmitting claims, she added, saying: “It costs us 2 or 3 times the amount of labor and investment to collect on one claim.” Her staff provided documentation of four recent denials of coverage by United Healthcare in one week.

The coverage denials the CEOs described to NBC News are similar to those found in last year’s Health and Human Services report. They included erroneous rejections of MRIs and CT scans, paying only for “observation” rather than inpatient care, denials of long-term acute care, rehab, lab tests and medical equipment.

The Inspector General said that “human error” and “system processing error” caused most of the denials by Medicare Advantage plans. But the hospital executives NBC News spoke with say they believe the denials are a strategy by insurers to improve their profits by refusing to pay claims.

“This world of medical billing is so automated if you’re denying a claim, you’re doing it intentionally,” said Martin, of San Luis Valley Health.

UnitedHealthcare declined to comment.

The Cuero Regional Health System, a small hospital in Cuero, Texas, serves a population of 22,000. Its officials say Medicare Advantage plans often deny care based on the insurers’ internal determinations about the type of care required, overruling the physicians handling the cases. When the hospital questions a determination — called a peer-to-peer review — officials often have to argue with a physician who doesn’t specialize in the care the patient requires, said Lynn Falcone, its chief executive.

A Medicare Advantage plan recently denied a referral to long-term acute care for a patient with sepsis, Falcone said. When the family practice doctor overseeing the case asked for a peer-to-peer review, the insurance company physician defending the denial was an ob-gyn specialist. “A surgeon that delivers babies maybe isn’t used to handling sepsis,” Falcone said.

‘It had to be extreme’

Sandra Tate of Cuero, Texas, said her family’s Medicare Advantage plan created problems for her family in Feb. 2022. Her husband required physical and respiratory therapy after a 10-day stay in the ICU at Cuero Regional Health, she said; although a previous plan from Humana had paid for this treatment four years earlier, the second request for reimbursement was denied under her new plan from United Healthcare. After arguing with the insurer for 30 minutes, Tate, a former school nurse, said she was never told why.

“I pay my Medicare premiums and also my insurance premiums,” Tate told NBC News. “I don’t understand why Medicare Advantage is not wanting to pay the rural hospitals that are taking care of you.”

The UnitedHealthcare spokeswoman said the company could not comment on Tate’s experience unless she signed a waiver; Tate declined to do so.

In its financial filings, United Healthcare describes how rates paid by the government on Medicare Advantage plans can fall below what the insurer calls its “cost trends.” To combat these profit pressures, the insurer said, it “can seek to intensify our medical and operating cost management” and “adjust member benefits.”

For eight-and-a-half years, Alliance HealthCare System’s inpatient geriatric psychiatry program helped older patients in Holly Springs, Mississippi, with depression and other mental health issues. The 15-bed facility offered group and family therapy as well as an inpatient program that could run from one to three weeks, said Ejerra J. Selma Dukes, its former director.

Medicare always paid for the services, Dukes said. But a few years ago, she started seeing more patients with Medicare Advantage plans declining to pay. The insurers would reject claims for patients with depression and dementia, she said, agreeing to reimburse only for those who were suicidal, paranoid or homicidal. “It had to be extreme for them to say we will allow you all to bring them in,” Dukes told NBC News.

On March 28, the program closed its doors, Dukes said, a result of the denials. “It was heartbreaking, especially with those who had been dealing with us a long time,” she recalled. “You know you can help, but you can’t bring people in for free.”

Meanwhile, Rose Stone is once again receiving care at Alliance HealthCare System. She junked her Medicare Advantage Plan and returned to Medicare, with a supplement. “Everything is fine now,” she said.

https://www.nbcnews.com…

By Ken Alltucker
USA TODAY, October 27, 2023

One large health system with hospitals in Virginia and Ohio this year cut off in-network access to consumers enrolled in some Anthem Blue Cross Blue Shield Medicare and Medicaid health insurance plans.

Two doctors groups with Scripps Health in San Diego are terminating contracts with private Medicare plans over concerns about payments and routine denials.

For years, hospitals, doctors and health insurance companies have squared off over how much to pay for medical services. Insurers negotiate contracts with hospitals and doctors so their customers can get lower, in-network rates at those facilities. These negotiations, usually hammered out behind the scenes, are becoming increasingly tense and public as hospitals seek adequate payments and health insurance companies attempt to check spiraling medical bills.

Experts say these disputes could be an early warning sign of more contract terminations ahead as hospitals and large doctor groups seek lucrative payments to offset inflation, healthcare workers’ double-digit raises and escalating prices for medical supplies.

But for patients caught in the middle of these disputes, the results can be devastating. Some need to switch doctors or insurance plans or potentially pay higher, out-of-network rates at a time when half of Americans are struggling to afford the rising cost of medical care.

Scripps Health ended the 2024 Medicare Advantage plan contracts with two medical units, called Scripps Clinic and Scripps Coastal. The decision will affect about 32,000 patients who will either need to switch Medicare plans or find new doctors.

“We’re unfortunately on the vanguard of what I think is going to be a very ugly few years between hospitals and commercial insurance companies,” said Chris Van Gorder, President and CEO, Scripps Health.

Hospitals target private Medicare plans

Many contract terminations involve hospitals rejecting terms for private Medicare insurance plans, known as Medicare Advantage plans. While traditional, government-run Medicare allows enrollees to choose from a wide variety of doctors and hospitals, private Medicare plans restrict access through networks and impose some cost-sharing requirements such as copayments or deductibles.

Hospitals that are rejecting private Medicare plans say they don’t reimburse at the same levels as traditional Medicare, delay or deny care through prior authorizations or impose other limitations.

Van Gorder said Scripps’ Medicare Advantage exit was a “very difficult decision” but one he had to make due to more than $75 million in annual losses. He tried to negotiate more lucrative reimbursement rates, but those talks fizzled.

While private Medicare plans are funded by government-run Medicare, they’re also profitable because insurers keep a portion of those payments before paying for care, he said.

Van Gorder described private Medicare offerings as “delay, deny or don’t pay” plans. “They’re in the business of making money,” he said.

Hospitals cut off insurers that ‘don’t reimburse us adequately’

Doctors groups and hospitals are more willing to air frustrations over private Medicare plans after think tanks and government watchdog agencies have issued critical reports about these insurers’ profits and practices, said David Lipschutz, associate director and senior policy attorney for the Center for Medicare Advocacy.

In 2022, a government watchdog report said private Medicare plans routinely rejected claims that should have been paid and denied services found to be medically necessary. These private plans rejected nearly one in five claims allowed under Medicare coverage rules and denied 13% of authorizations for medical services that government-run Medicare would have allowed, the U.S. Department of Health and Human Services inspector general investigators found.

Doctors and hospitals “are more willing to publicly express their frustration,” Lipschutz said, because these private Medicare plans get what “many people would characterize as overpayments.”

More than a half dozen other hospital systems from Bend, Oregon to Nashville, Tennessee have announced private Medicare contract terminations or lapses.

St. Charles Health System in Bend said it will end Medicare contracts next year with Humana, HealthNet and WellCare.

Mark Hallett, St. Charles’ chief clinical officer, said sticking with those private Medicare plans would “result in restrictions to patient care, longer hospital stays and administrative burdens” for doctors.