PNHP

Jayapal Leads 50+ Democrats in Urging Biden to End Trump-Era Assault on Medicare

Jayapal Leads 50+ Democrats in Urging Biden to End Trump-Era Assault on Medicare

A Medicare privatization scheme launched in the final months of Trump's presidency poses a grave "threat to patient care and outcomes," lawmakers warned.

By Jake Johnson
Common Dreams, January 5, 2022

The physician-led effort to kill a Trump-era Medicare privatization scheme gained fresh momentum Wednesday as Rep. Pramila Jayapal—the chair of the Congressional Progressive Caucus—led more than 50 House Democrats in urging the Biden administration to cancel the Direct Contracting pilot program.

In a letter addressed to Health and Human Services (HHS) Secretary Xavier Becerra and Centers for Medicare and Medicaid Services (CMS) head Chiquita Brooks-LaSure, the lawmakers warned that the under-the-radar DC experiment poses a grave “threat to patient care and outcomes due to the encroachment of profit-driven organizations.”

Launched during the final months of the Trump administration, the pilot program is similar to Medicare Advantage in that it inserts a private middleman—be it a Wall Street-backed startup or a for-profit insurance giant—between traditional Medicare and healthcare providers.

Under the DC pilot, the middlemen are known as Direct Contracting Entities (DCEs), and they’re paid monthly by CMS to cover a specified portion of a patient’s medical care. DCEs are then allowed to pocket what they don’t spend on care, prompting concerns that Medicare recipients will see the quality of their coverage decline as private firms seek to boost profits.

“These models ultimately aim to privatize traditional Medicare by funneling beneficiaries, without their knowledge, into a DCE,” the 54 House Democrats wrote in their letter to the Biden administration on Wednesday. “Unfortunately for patients in these entities, DCEs are incentivized to funnel patients to providers within their networks to maximize profits which can limit patients’ care options.”

“These models transform the care of a traditional Medicare beneficiary to care typically seen in a private Medicare Advantage (MA) plan despite the fact that the patient chose not to enroll in an MA plan,” the lawmakers added. “We ask that you permanently end the programs and coordinate the transition of traditional Medicare beneficiaries currently in these programs back into the traditional Medicare model by July 1, 2022.”

Signatories to the new letter include prominent progressives such as Reps. Alexandria Ocasio-Cortez (D-N.Y.), Ilhan Omar (D-Minn.), Rashida Tlaib (D-Mich.), Cori Bush (D-Mo.), and Barbara Lee (D-Wash.) as well as more moderate members of the House Democratic caucus, including Reps. Don Beyer (D-Va.) and Jim Cooper (D-Tenn.).

Despite mounting pressure to cut off the legally dubious pilot program, the Biden administration has allowed much of it to proceed as planned.

The 54 House Democrats sent their letter weeks after a group of doctors with Physicians for a National Health Program (PNHP) traveled to Washington, D.C. in an attempt to bring lawmakers’ attention to the little-discussed DC pilot and demand that HHS stop the experiment in its tracks.

Thus far, the pilot includes 53 DCEs in 38 states, Washington, D.C., and Puerto Rico. A majority of the current DCEs—which are approved by CMS without input or oversight from Congress—are controlled by investors, not healthcare providers.

Physicians fear that if the Biden administration doesn’t act, the DC pilot could result in the full-scale privatization of Medicare by 2030—without so much as a vote in Congress.

“HHS allows Direct Contracting Entities to keep as profit what they don’t pay for in medical services, establishing a dangerous incentive to ration and restrict seniors’ care,” Dr. Susan Rogers, president of the 24,000-member PNHP, said in a statement Wednesday. “If left unchecked, Medicare Direct Contracting will hand traditional Medicare to Wall Street investors, without input from seniors, doctors, or even Congress.”

“We applaud Rep. Jayapal and the more than 50 members of Congress who stood up to protect Medicare today and for future generations,” Rogers added.

https://www.commondreams.org…

Members of Congress Demand an End to Medicare Direct Contracting

In a letter to HHS Sec. Becerra, 54 members of Congress call for an end to the controversial Direct Contracting pilot program, which inserts profit-seeking middlemen into Traditional Medicare without seniors’ consent, funneling “taxpayer dollars into profits, not patient care”

For Immediate Release
January 5, 2022
Contact: Clare Fauke, Physicians for a National Health Program, clare@pnhp.org

Physicians for a National Health Program (PNHP), an organization of 24,000 physicians who support publicly financed Medicare for All, today applaud the 54 members of Congress who sent a letter to HHS Sec. Xavier Becerra demanding an end to the controversial Medicare Direct Contracting program. 

The letter, written by Rep. Pramila Jayapal (WA-07), was signed by several prominent members of Congress, including Rep. Rosa DeLauro (CT-03), Chair of the House Appropriations Committee and Chair of the Labor, Health & Human Services, and Education Appropriations Subcommittee; and Rep. John Yarmuth (KY-03), Chairman of the House Budget Committee. 

Direct Contracting is a pilot program launched late in the Trump Administration to change the way that Medicare pays for seniors’ care. Under this program, seniors who actively choose Traditional Medicare are automatically enrolled in third-party “Direct Contracting Entities (DCEs)” without their full knowledge or consent. Medicare then pays DCEs a lump sum to manage beneficiaries’ care, allowing DCEs to keep up to 40% of what they don’t pay for in medical services as profit — a dangerous incentive to ration and restrict care. Once a senior is auto-enrolled into a DCE, their only way out of the program is to change primary care providers. 

In the letter to Sec. Becerra, Rep. Jayapal and colleagues argue that “DCEs pose a threat to patient care and outcomes due to the encroachment of profit-driven organizations on their care,” noting that a majority of the 53 current DCEs are owned and controlled by investors such as private equity firms and large commercial insurers, not physicians. “This model disrupts the sanctity of traditionally public Medicare benefits by giving control of beneficiary care to private interests,” the letter reads.

“The Medicare Direct Contracting program is a threat to the health of seniors and to the future of Medicare itself,” said Dr. Susan Rogers, a retired internal medicine doctor and president of PNHP, noting that because Direct Contracting is a pilot program of the Center for Medicare and Medicaid Innovation, it can be scaled up to all of Medicare without Congressional approval. “If left unchecked, Direct Contracting will hand Traditional Medicare to Wall Street investors, without input from seniors, doctors, or even Congress. We applaud Rep. Jayapal and the 54 members of Congress for taking action to protect Medicare today and for future generations.” 

In late November, Dr. Rogers led a delegation of physicians to deliver a petition to Sec. Becerra, demanding an immediate end to Medicare Direct Contracting. 

Today’s LETTER is signed by: 

Alma Adams (NC-12)
Karen Bass (CA-37)
Donald S. Beyer Jr. (VA-08)
Earl Blumenauer (OR-03)
Suzanne Bonamici (OR-01)
Jamaal Bowman, Ed.D. (NY-16)
Cori Bush (MO-01)
Salud Carbajal (CA-24)
Andre Carson (IN-07)
David Cicilline (RI-01)
Yvette D. Clarke (NY-09)
Steve Cohen (TN-09)
Gerald E. Connolly (VA-11)
Jim Cooper (TN-05)
Jason Crow (CO-06)
Danny K. Davis (IL-07)
Peter A. DeFazio (OR-04)
Rosa L. DeLauro (CT-03)
Mark DeSaulnier (CA-11)
Debbie Dingell (MI-12)
Mike Doyle (PA-18)
Adriano Espaillat (NY-13)
Sylvia R. Garcia (TX-29)
Jesús G. “Chuy” García (IL-04)
Raúl M. Grijalva (AZ-03)
Jared Huffman (CA-02)
Pramila Jayapal (WA-7)
Mondaire Jones (NY-17)
John B. Larson (CT-01)
Barbara Lee (CA-13)
Mike Levin (CA-49)
James P. McGovern (MA-02)
Joseph Morelle (NY-25)
Jerrold Nadler (NY-10)
Joe Neguse (CO-02)
Marie Newman (IL-03)
Eleanor Holmes Norton (DC-00)
Alexandria Ocasio-Cortez (NY-14)
Ilhan Omar (MN-05)
Donald M. Payne, Jr. (NJ-10)
Mark Pocan (WI-02)
Katie Porter (CA-45)
Ayanna Pressley (MA-07)
Jamie Raskin (MD-08)
Jan Schakowsky (IL-09)
Robert C. “Bobby” Scott (VA-03)
Mary Gay Scanlon (PA-05)
Mark Takano (CA-41)
Dina Titus (NV-01)
Rashida Tlaib (MI-13)
Bonnie Watson Coleman (NJ-12)
Peter Welch (VT-At Large)
Nikema Williams (GA-05)
John B. Yarmuth (KY-03)

Physicians for a National Health Program (pnhp.org) is a nonprofit research and education organization whose more than 24,000 members support single-payer Medicare for All reform.

Temporary & Tenuous Health System Boosts Don’t Cut it

Summary: The ACA is currently more generous and thus popular, but it’s time-limited. The “Build Back Better” bill proposes some incremental fixes, but they’re tenuous. Meantime individuals in medical and financial crisis resort to GoFundMe. Only in the US could the health care financing “system” so systematically fail.

If you haven’t already, see our Jan 1 post Single Payer Overview 2021 & 2022. Please email us with any further ideas to advance single payer in 2022, for an upcoming post.

On More Generous Terms, Obamacare Proves Newly Popular, The New York Times, Dec. 22, 2021, by Margot Sanger-Katz

A record number of Americans — 13.6 million — have signed up for health plans through the Affordable Care Act’s marketplaces for 2022. The major reasons for the rise appear to be: Congress lowered the cost of Obamacare insurance; the Biden administration increased advertising for the program; and the pandemic disrupted many Americans’ employer-provided coverage.

“What a great day it is to really see how the programs are working as they are intended,” Chiquita Brooks-LaSure, the administrator for the Centers for Medicare and Medicaid Services, told reporters on a conference call.

But those gains may be fragile. The enhanced subsidies are scheduled to expire at the end of 2022.

Congress is on the brink of an immense health policy failure, Vox, Dec. 20, 2021, by Dylan Scott

Covid-19 exposed many of the flaws in the US health care system. Congress might not do anything to fix them.

Comment:

By Don McCanne, M.D.

Can we begin the new year by celebrating success in increased health plan enrollment through a temporary government program that expires at the end of the year?

We will still have tens of millions who are uninsured, even greater numbers who are underinsured due to excessive deductibles, copayments, coinsurance, and lack of covered services; limited access due to narrow physician networks; high prices reflected in insurance premiums, cost sharing, and higher taxes; and profoundly excessive administrative costs and profits that are wasted on the medical-industrial complex rather than directed to patients, all resulting in the most expensive health care system in the world with one of the poorest performances of all modern nations. Is this really cause for celebration?

But what is making the health care news now? Proposals for minor tweaks to the Affordable Care Act, many of which are being rejected anyway. So what reform should we be supporting, and what is the opposition?

Shouldn’t we be supporting health care coverage for everyone? Shouldn’t the system be designed primarily to serve patients rather than private corporate interests? Who would be opposed to that, and why?

Shouldn’t the system be designed to be comprehensive so that it provides all reasonable health care needs? If not, why not?

Shouldn’t we increase the value of that coverage by reducing the administrative waste of the superfluous insurance intermediaries. Shouldn’t we use more efficient public administration such as with Medicare? Besides the insurance industry, who else would be opposed, and why?

Shouldn’t we use effective economic tools such as modern monetary theory and progressive taxes to publicly fund the system so that it would be equitable and affordable for each individual? Who would be opposed to that, and why?

Obviously, for the new year, if we want to fix our health care financing system so it works well for everyone, the Affordable Care Act won’t do it, and we need to replace it with a system that will. A single payer, improved version of Medicare that covers everyone is just what we would need to meet all of these requirements.

The problem is that people keep telling us that they are opposed, yet they haven’t explained why, at least in a manner that is satisfactory to us. Since the model would provide us with the changes that we need, they owe us an explanation as to precisely why they are opposed. Political rhetoric is not an explanation, not when you have millions with medical needs that are unmet merely because we have rejected a morally superior system based on health care justice that would take care of all of us.

On a personal note, my nephew has metastatic gastrointestinal cancer, and “Health insurance hasn’t been on his side,” so he is now on GoFundMe. I really need to hear a good explanation on why we should not have a system that works well for all of us, and GoFundMe isn’t it.

http://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.

It’s time for you to care about Medicare

By George Bohmfalk, M.D.
The Aspen (Colo.) Times, January 2, 2022

My main area of advocacy is Medicare for All, which I believe to be the best solution to nearly all of our nation’s health care shortcomings. However, as of the last days of the Trump administration, Medicare itself is being subjected to a potentially fatal attack.

Without congressional authorization, bureaucrats in Trump’s administration developed a program openly designed to privatize Medicare. Called Medicare Direct Contracting (DC), this program allows commercial insurers and other for-profit middlemen to “manage” care for seniors enrolled in Traditional Medicare. This is in addition to the for-profit Medicare Advantage programs, which for years have cost taxpayers more than Traditional Medicare while restricting their choice of physicians and hospitals and providing no improvement in health care outcomes.

Slowly but surely, millions of seniors who deliberately chose Traditional Medicare are quietly being enrolled into Direct Contracting Entities (DCEs) without their full knowledge or consent.

Virtually any type of company can apply to be a DCE, including venture capital investors. There isn’t even a requirement that DCEs be majority-owned by health care providers, opening the door to ownership by profit-driven entities with no health care expertise whatsoever.

Traditional Medicare spends an impressive 98 percent of its budget on patient care. But DCEs are allowed to operate with very loose restrictions on how much of their revenues must go to patient care. This incentivizes them to limit payouts by rationing care and keep even more than the 15% that Medicare Advantage programs are allowed for their own profit and overhead. This detail alone should alarm taxpayers.

As this is a creation of the Center for Medicare and Medicaid Services’s “Innovation Center,” this pilot program can be scaled up to cover all of Medicare without so much as a vote or hearing in Congress. Very few Members of Congress appear to be even aware of its existence or its existential threat to Traditional Medicare.

To prevent Medicare from becoming completely and stealthily privatized, this program must be stopped in its tracks. The only way to stop it is by order of President Biden or insistence by enough Members of Congress.

Please make it your New Year’s resolution to help the millions of seniors and Americans living with disabilities who depend on Medicare, bring this nefarious program to a quick end. Please contact U.S. senators Hickenlooper and Bennet and your Congressional representatives and implore them to instruct Health and Human Services Secretary Xavier Becerra to terminate the Direct Contracting program immediately. The Capitol switchboard at 202-224-3121 can connect you with the office of any elected official.

Most seniors love Medicare. It is simple, efficient, and empowers them to manage their health. Traditional Medicare has proven its value for more than half a century. Rather than sell it off to the highest profit-driven bidder, we should strengthen and improve its benefits while working to expand it to cover every American.

Dr. George Bohmfalk is a retired neurosurgeon and a member of Physicians for a National Health Program.

https://www.aspentimes.com…

Medicare Advantage Overpayments

An unsustainable future

By Kip Sullivan, J.D.
Minnesota Physician, January 2022

This year marks the 50th anniversary of a law that permitted health insurance companies to participate in Medicare. The law, known as the Social Security Amendments of 1972, permitted what was then a new form of health insurance, the health maintenance organization, to enroll Medicare beneficiaries. The law explicitly stated that HMOs could not be paid more per enrollee than Medicare would have paid if the enrollee had remained in the traditional Medicare program. In fact, Congress expected HMOs to reduce Medicare costs because, unlike traditional insurance companies, HMOs used managed care tactics to reduce utilization of medical services. These tactics includes incentives to order fewer services, limiting patient choice of doctor and hospital and micromanaging doctors.

But the introduction of HMOs (and after 1997, all types of insurance companies) into Medicare did not cut Medicare’s costs. Throughout the half century during which insurance companies have participated in Medicare, they have raised Medicare’s costs. They have been paid more, at times much more, to insure their enrollees than if those enrollees had remained in the original Medicare program.

The Medicare Advantage program

Not surprisingly, the large overpayments have facilitated enormous growth in the Medicare Advantage program, the current name of the Medicare program in which insurance companies participate. Today, 46% of all Medicare beneficiaries in the country, and 56% of beneficiaries in Minnesota, are enrolled in one of the Medicare Advantage insurance companies. Minnesota’s rate is second only to the 57% rate for Hawaii. Ten giant insurance companies, led by UHC Healthcare, Humana and CVS Health Corporation, account for four-fifths of the enrollment in Medicare Advantage plans.

How did this happen? Medicare was enacted, after all, because the insurance industry did not want to insure the elderly. And HMOs were allowed into Medicare only because they were expected to lower Medicare’s costs. Why has Medicare overpaid insurance companies for half a century?

We can eliminate one explanation immediately: that Congress didn’t know about the overpayments. Beginning in 1980, analysts inside and outside the federal government regularly published research demonstrating that Medicare was overpaying HMOs. Note that the phrase fee-for-service (FFS) refers to the traditional Medicare program in which doctors and hospitals are paid a fee only after they render a service. In contrast, Medicare Advantage insurance companies are paid a lump sum per enrollee in advance. In a 1995 report to Congress entitled “Growing Enrollment Adds Urgency to Fixing HMO Payment Problem,” the US General Accounting Office (GAO) stated, “Medicare has paid HMOs more than it would have paid for the same patients’ care by fee-for-service providers.” In a 2005 report entitled “Payments Exceed Cost of Fee-for-Service Benefits, Adding Billions to Spending,” the GAO stated, “It is largely . . . excess payments, not managed care efficiencies, that enable plans to attract beneficiaries by offering a benefit package that is more comprehensive than the one available to FFS beneficiaries, while charging modest or no premiums. Nearly all of the 210 plans in our study received payments in 1998 that exceeded expected FFS costs….”

The explanation for the overpayments is two-fold: the insurance companies have always enrolled healthier beneficiaries (a problem known as favorable selection), but they have been paid as if they attracted beneficiaries of average health. For example, if the average annual cost of insuring a beneficiary in the traditional Medicare program was $10,000 and United Healthcare (UHC) enrolled healthier beneficiaries whose average cost was $9,000, it could be said UHC enjoyed favorable selection. If the Centers for Medicare and Medicaid Services (CMS, the current name of the agency that runs Medicare) were to pay United $10,000 for each enrollee, the overpayment would equal $1,000 per enrollee. The obvious solution would be for CMS to pay UHC a premium commensurate with the health status of its enrollees – in this case, $9,000. But CMS has never been able to reduce its payments to insurance companies to match the lower cost of the healthier beneficiaries they enroll.

There is no solution to either problem. The favorable selection problem will persist as long as a Medicare Advantage program exists alongside the traditional program. CMS’s effort to improve the accuracy of its payments to Medicare Advantage plans only made the problem worse.

Favorable selection

Medicare beneficiaries and Medicare Advantage plans both contribute to the favorable selection problem.

Medicare beneficiaries contribute because they vary in their willingness to give up choice of provider (doctor and hospital) in exchange for the extra services the Medicare Advantage plans can afford to offer (because they are overpaid). Sicker beneficiaries are less likely to want to join an HMO or any other type of insurance company that limits choice and attempts to influence physician-patient decisions.

The insurance companies aggravate favorable selection by their advertising and recruiting tactics (cherry-picking) and their treatment of the sicker enrollees they cannot avoid (lemon-dropping). Medicare Advantage plans are not allowed to refuse to enroll applicants, but they can encourage healthier beneficiaries to apply by their marketing tactics (where they market, what they say in their advertisements and what they cover at little or no expense to the enrollee), and they can encourage sicker enrollees to disenroll and return to traditional Medicare by denying or delaying services.

Dozens of studies published over the last half century have shown that insurance companies that participate in Medicare have enjoyed favorable selection. Here are five examples spanning the last 40 years.

A study published by Paul Egger in 1980 concluded that beneficiaries who joined Group Health Cooperative of Puget Sound (one of the nation’s oldest HMOs) “had a rate of hospital inpatient use over 50% below the comparison group” consisting of beneficiaries in traditional Medicare.

A 1988 report to the Health Care Financing Administration (the former name of the agency that runs Medicare) stated that the beneficiaries who enrolled in Medicare HMOs cost 21% less than those who stayed in traditional Medicare.

A study published in “Medical Research and Review” in 1997 concluded “in the six months prior to their enrollment, new HMO enrollees use on average 37% fewer services than do beneficiaries in traditional fee-for-service Medicare. Furthermore, HMO disenrollees use 60% more services in the six months after disenrollment than do fee-for-service beneficiaries.”

A study published in the “New England Journal of Medicine” in 1997 found HMO enrollees were much healthier than traditional Medicare beneficiaries when they signed up with HMOs, and those that later disenrolled from HMOs were much sicker. The authors reported, “Before their enrollment in HMOs, the HMO enrollees had a rate of hospital admissions that was two-thirds the rate in the fee-for-service group.The members of the HMO-disenrollment group had a substantially higher rate of [hospital] admissions than the fee-for-service beneficiaries…” The title of this article was, appropriately enough, “The Medicare-HMO revolving door: The healthy go in and the sick go out.”

A study published by the Kaiser Family Foundation in 2019 found that Medicare beneficiaries who enrolled in a Medicare Advantage plan were 13% less expensive than the average cost of a traditional Medicare enrollee. In 2016, beneficiaries who stayed in traditional Medicare incurred Part A (hospital) and B (physician) medical expenses of $9,362 on average, while those who signed up with a Medicare Advantage plan cost just $8,109.

Risk adjusting premiums accurately is impossible

If favorable selection and the overpayments have been obvious for four decades, why hasn’t CMS eliminated the overpayments? Why doesn’t CMS just reduce the premiums down to a level commensurate with the better health–the lower cost–of the insurance companies’ enrollees? Answer: because CMS sets the premiums prior to the year for which the beneficiaries are enrolled, and predicting what each insurance company’s pool of enrollees will cost the next year is a primitive science.

Between 1973 and 2004, CMS (and its predecessor, the Health Care Financing Administration) tried to risk adjust premiums downward using four factors: age, sex, Medicaid status and nursing home status. Although each of these factors is correlated with medical spending (80-year-olds typically cost more than 65-year-olds, for example), the correlation between these demographic factors and spending is very weak. They only predict one percent of the variation in spending. To explain what that means, let’s go back to the United Healthcare example. If UHC was overpaid by $1,000, CMS’s demographic risk adjuster would only call for reducing UHC premium payments by one percent, or $10, from $10,000 to $9,990. UHC would still be overpaid by $990.

In the Balanced Budget Act of 1997, Congress instructed CMS to improve the risk adjuster by adding diagnoses to the four demographic factors. It’s easy to see the logic in that proposal: People diagnosed with diseases and conditions cost more than people with no diagnoses, and people with serious diagnoses cost more than those with mild or temporary diseases or conditions. Medicare beneficiaries with diabetes, for example, cost 1.5 times as much as the average beneficiary; beneficiaries with a cancer diagnosis cost 1.7 times as much. CMS spent the next seven years preparing a new risk adjuster called the Hierarchical Condition Categories (HCC) risk adjuster. To the four demographic factors, CMS added 3,000 codes for diagnoses.

The addition of all those codes greatly improved the accuracy of the risk adjuster. The new HCC could predict 11%, and within a few years, 12% of the variation in spending between individual beneficiaries. But 12% is still negligible. To return to our United Healthcare example, now CMS can reduce UHC’s overpayment by 12% from $1,000 to $880. The overpayment is still immense. Twelve percent is obviously 12 times better than one percent, but it still gives Medicare Advantage plans an enormous incentive to continue cherry-picking and lemon-dropping.

Another way to illustrate the crudeness of the HCC risk adjuster is to demonstrate its disparate impact on the healthy and the sick. According to the Medicare Payment Advisory Commission (MedPAC, an agency created by the Balanced Budget Act of 1997 to advise Congress on Medicare), the HCC results in huge overpayments for the healthiest beneficiaries and enormous underpayments for the sickest. For example, looking at the healthiest 20% of beneficiaries; it overpays by 62% but for the sickest one percent, it underpays by 29%. MedPAC and researchers at CMS who were hired to develop the HCC have made it clear that for both technical and financial reasons it is not possible to improve the HCC by even a small amount.

The HCC was implemented between 2004 and 2007. It backfired immediately. It gave the insurance companies an incentive to make sure every disease and condition is listed in patients’ medical records (which is legal), as well as an incentive to add diagnoses to medical records that are inaccurate (they overstate the seriousness of the condition), inappropriate (the diagnosis was made by someone not authorized to make the diagnosis) or flat out fraudulent. Adding inappropriate or fraudulent codes is called upcoding. Both behaviors–more thorough listing of legitimate diagnoses and upcoding– increased CMS’s payments to the Medicare Advantage plans more than the increased accuracy of the HCC reduced them.

This conclusion is supported by the Medicare Advantage plans’ behavior following the implementation of the HCC. Medicare Advantage plans began to advertise richer benefits for lower premiums, and that in turn caused enrollment to soar–from 13% of all beneficiaries in 2005 to 46% in 2020. Congress has tried to address the upcoding issue by instructing CMS to reduce plan payments by a few percentage points each year, but that approach has not stopped upcoding or overpayments. Over the last several years, federal prosecutors have sued several of the larger Medicare Advantage plans for defrauding Medicare–UHC, Anthem and Kaiser Permanente (Kaiser)–for example. A complaint filed by the US Department of Justice against Kaiser last August stated that each additional diagnosis was worth $3,000 to Kaiser.

How much is enough?

Insurance companies cannot make a profit off Medicare beneficiaries if they are paid no more than what those beneficiaries would have cost had they remained in traditional Medicare. The reason is their high overhead.

UHC and all other Medicare Advantage plans incur administrative costs equal to about 15% of their total Parts A and B expenditures on average. Those costs include the cost of advertising, creating networks of providers that enrollees must use, influencing and overruling doctors, lobbying and profit. Profit constitutes a quarter to a third of that 15% figure. But insurance companies cannot cut spending on hospitals and clinics by 15%. Experts guesstimate they can only cut medical spending by about five percent. Research on how much Medicare Advantage plans reduce utilization of medical services is sparse and inaccurate because plans do not publish information on how they allocate their revenues. This means insurance companies must be overpaid by at least 10% in order to induce them to participate in Medicare Advantage. And since insurance companies need additional overpayments to finance the extra benefits, e.g., dental care, eye glasses, hearing aids, that lure beneficiaries out of the traditional program into Medicare Advantage, the overpayments must be even higher than 10%.

Bruce Vladeck, who administered CMS during Bill Clinton’s presidency, discussed this issue in an article he co-authored two decades ago for the journal “Health Affairs.”

Managed care plans do not have to be just more efficient than FFS Medicare,” he wrote, “they have to be a lot more efficient. With administrative expenses in the range of 8 to 25%, [plans] have to incur medical expenditures 10 to 20 % less than FFS…just to break even. In most markets…plans cannot attract enrollees unless they offer additional benefits, which also cost money…”

The subtitle of Vladeck’s article was “Theory meets reality, and reality wins.” That accurately sums up the problem: the theory that insurance companies could save Medicare money was always inconsistent with reality. It was based on hype, not evidence. If it wasn’t inconsistent with reality, why did Congress need to enact Medicare in the first place? Congress enacted Medicare because the insurance industry did not want to insure the elderly (or the disabled, who were added to Medicare in 1972). Overpayment is the reason 46% of all Medicare beneficiaries are insured by health insurance companies today, 50 years after Congress first allowed HMOs into Medicare. If they were paid no more than CMS pays for traditional beneficiaries–a requirement Congress wrote into the original 1972 law allowing HMOs into Medicare–they would not participate.

A deadline looms

Payments to Medicare Advantage plans (including the overpayments) are financed directly by taxpayers and indirectly by lower reimbursements to doctors and hospitals that treat Medicare patients. Taxpayers include: people of all ages who pay the Medicare payroll tax that funds Medicare’s Part A trust fund, all Americans who pay federal taxes and all Medicare beneficiaries who pay what are called Medicare Part B premiums. Thus, virtually all health care professionals and all Americans have a stake in terminating the Medicare Advantage overpayments.

It is true that people who enroll in Medicare Advantage plans are getting some of the benefit of the overpayments in the form of coverage for services they couldn’t get if they remained in traditional Medicare. But those services are being purchased by the taxpayer at an unnecessarily high price. Money spent on insurance company administrative costs would be far better spent extending coverage for those same services–dental, vision, hearing, etc.–to the 38 million beneficiaries in traditional Medicare. After all, those 38 million people paid the same taxes the Medicare Advantage enrollees paid to finance Medicare. Why shouldn’t they enjoy the same coverage? Alternatively, the money currently spent on insurance companies’ overhead could be used to raise reimbursements to doctors and hospitals or could be added back to Medicare’s trust funds to lower costs for future taxpayers and Medicare beneficiaries.

Congress will soon have an opportunity to debate the overpayments. Medicare’s trustees predict that the Part A trust fund (the one that funds hospital services) will run short of revenues beginning in 2026. Part A is financed by a payroll tax paid half by employers (1.45%) and half by employees (1.45%). Congress will be under great pressure to raise that tax as 2026 approaches. Medicare Advantage plans will probably not lobby Congress to raise the payroll tax (at least not openly), but we can be sure they will tell Congress not to reduce their overpayments.

Next steps

Taxpayers of all ages should let members of Congress know how they feel about the overpayments. Unfortunately, the American taxpayer is not represented by well-heeled organizations. But physicians and hospitals do have trade associations with a long history of representing their members in Congress. The American Medical Association, the American Hospital Association and the numerous other organizations that represent the professionals and institutions which treat patients insured by Medicare should speak out now in favor of terminating the overpayments to Medicare Advantage plans. They should also promote legislation that ensures that all Medicare enrollees have access to the extra benefits Medicare Advantage plans offer now, thanks to their overpayments. Doing so would undermine the counterargument we can expect from the insurance industry: That ending the overpayments means ending the extra services the overpayments finance. Change happens only when Congress feels pressure for change. The public and providers must let Congress know they want the overpayments stopped.

Kip Sullivan, J.D., is a member of the Health Care for All Minnesota Advisory Board. He was a member of Gov. Perpich’s Health Plan Regulatory Reform Commission. His articles have appeared in the New England Journal of Medicine, Health Affairs, and other peer-reviewed journals.

https://www.mnphy.com…

Single Payer Overview 2021 & 2022

Summary: The 2021-2022 transition invites contemplation of health reform over the past year and upcoming. We process last year via a perusal of HJM. We offer thoughts on the future. And we solicit comments from you — HJM readers. Email us. We’ll share your musings in early 2022. Meantime, Happy New Year!

Comment:

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

How should we think about the 12 months past and next in the single payer movement? A review of HJM posts since our May launch guided me to key themes from 2021. I provide links to posts and a few other resources in case you want to dig in. Please also read and reflect on what might be in store for 2022. BTW I’m rather fond of alliterative triplets …

2021 – Revelations, Resolve, Resistance

Revelations – What did we learn (or learn again)?

Our system is failing, more clearly than ever: We see it in health, cost, and welfare statistics as well as shocking stories. Lacking insurance is deadly. So is underinsurance: financial barriers such as high deductibles and medication cost-sharing cause deaths, and are rising in ACA plans. Quality of chronic illness care is slipping. Insurance complexity imposes huge care and cost burdens for patients, alongside ever-rising costs for work-based insurance. Medical debt now surpasses all other debts, likely further harming health. Overall, high costs and poor performance: we’ve got nothing to crow about.

The US compares dismally with other wealthy nations: The diverging longevity and cost lines are stunning. Even the US privileged fare worse than average elsewhere, with cross-national mortality differences and racial disparities increasing since 1990. Why? The US underperforms other countries on dozens of health system performance measures, provides worse critical care, charges for medications, and has poor access to mental health care. And although excess mortality drops after age 65, financial barriers are increasing for seniors.

COVID revealed & exacerbated the problems: Millions lost insurance due to layoffs. Among the insured, testing and care costs borne by patients have sometimes been huge, despite promises of protection … even as insurers profited immensely from lower overall care utilization. Pandemic control lags other countries, increasing life expectancy gaps, while vaccine profit margins soar.

Racial disparities in health care are pervasive: There are large racial differences in insurance rates, as well as access and mortality. A universal public program like Medicare lowers disparities. With current insurance patterns, medical debts are more common in Black households. Social stresses exacerbate health differences.

System tweaks accomplish nothing: “Fix the current system” approaches aren’t working. Even a much-hyped Buffett-Bezos-et al work-based insurance scheme bailed. Pay for performance burdens physicians, and its showcase Accountable Care Organizations failed to save money for Medicare. Posting care prices is chaotic and unusable at hospitals and even when patients know prices it doesn’t influence care choices.

A growing profit focus is largely to blame: For-profit ownership of insurers and providers increasingly permeates our system, and even large non-profits focus on financial gain. This produces broad and worrisome distortions of care. Negative consequences are pervasive: providers burn out at higher rates, quality of care suffers, mortality rises. Gaming the rules through aggressive & illegal billing and restructuring businesses shift hundreds of billions from care to investors. This private for-profit threat is massive in Medicare.

Medicare is under attack: Our huge and revered public insurance program is in extremis. Medicare Advantage continues to cost the government more over time in part by skipping out on end-of-life care and imposing financial burdens on sick patients. Reports of excessive and fraudulent billing using risk reporting multiply: cheating, cheating, and cheapness combined with massive overpayment. MA plans suffer from variable mortality rates without disclosure. And now traditional fee-for-service Medicare is profoundly threatened with privatization via Direct Contracting Entities (DCEs), which will import the extractive profit style of Medicare Advantage.

Resolve – How did we demonstrate ongoing broad commitment to single payer?

Counteracting the bad news about our health system are several inspiring nuggets in our battle for single payer.

First, new evidence demonstrated that public insurance works. It provides better access, financial protection, and satisfaction than private insurance. Medicaid improves health and saves money for society. Medicare, as noted above, lessens disparities among US populations over 65 years old and compared with other nations.

Second, public support for single payer remains high. California polls in 2021 indicated >50% – 75% support among voters and key stakeholder groups. Past national polls have been similar.

Third, public discussion about reform retains a robust single payer component. The Healthy California for All Commission, which will report in early 2022, has seen much evidence favoring single payer and has strong commissioner advocates for it. In Washington DC, Rep. Pramila Jayapal (D-WA) submitted the latest single payer bill, HR 1976 The Medicare for All Act of 2021, with a record 118 co-sponsors.

Finally, the Build Back Better Act, now in final negotiations, though it falls far short of single payer, includes provisions that move in the right direction, most notably Medicare drug benefit price negotiations (for a few drugs) and out-of-pocket limits, a hearing benefit, and better ACA exchange subsidies for the poor in non-Medicaid expansion states.

Resistance – Where did we fight back against anti-reform actions?

The huge threat in 2021 was – and remains – the CMS plan to replace traditional fee-for-service Medicare with mainly for-profit corporate DCEs using various financial designs including full capitation. If they can’t oppose “Medicare for All”, they’ll undermine Medicare. This is a complete shift from ACOs used in traditional Medicare, which although they didn’t work, at least focused on provider (non-investor) organizations and didn’t force enrollees to participate in capitation. DCEs started in the Trump administration, with corrupt corporate influence. Under Biden, the worst version (geographic) has been set aside, but CMS is forging ahead with other DCEs. PNHP, JustCare, and other groups are organizing public awareness and opposition.

Another, less immediate but more direct, threat to single payer is “Medicare Advantage for All”. This is a private insurance structure that will undermine the efficiency and generosity of public financing. We push back here.

2022 – Persistence, Pursuit, Partnership

Where do we expect and want to go in 2022? Please email your ideas and suggestions … which we’ll share.

Persistence – in fighting DCEs and Medicare Advantage. Both undermine our most successful public insurance program for the general population. Learn more about DCEs in particular, since the issue is urgent — and actively support efforts to force CMS to reverse course.

Pursuit – of single payer, of course. We have (at least) one more year of a Democratic Congress. Once work on COVID response and social infrastructure is complete, we can expect Congressional progressives to return to HR 1976, a Senate bill, and associated activities – hearings in DC and elsewhere, discussion of potential state experiments, and policy research.

And we’ll pursue state opportunities. Here in California, that means building on Commission findings and the state single payer bill (currently AB 1400) – publicizing the single payer results, conducting relevant follow-up research, linking community and business organizations, organizing meetings and hearings, discussing and launching strategy.

Partnership – Alliances with other progressive social causes is natural and essential. So is working with the business community, though many in that quarter may need convincing. We’ll write on this issue in 2022.

http://healthjusticemonitor.org…

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Pressure Grows on Biden to Shut Down Trump-Era Medicare Privatization Scheme

A petition calling on the president to end the Medicare Direct Contracting pilot program has now garnered more than 10,000 signatures.

By Jake Johnson
Common Dreams, December 30, 2021

Calls are mounting for President Joe Biden to terminate an under-the-radar Trump-era pilot program that—if allowed to run its course—could result in the complete privatization of traditional Medicare by the end of the decade.

A petition recently launched by Physicians for a National Program (PNHP) has garnered more than 10,000 signatures as doctors and other advocates work to raise public awareness of the Medicare Direct Contracting program, which the Trump administration rolled out during its final months in power.

“Under this model,” the petition warns, “the Centers for Medicare and Medicaid Services (CMS) could move more than 30 million traditional Medicare beneficiaries into mostly commercial, for-profit plans called Direct Contracting Entities (DCE) without the enrollees’ understanding or consent.”

“In ways similar to commercial Medicare Advantage plans, DCEs have the potential to interfere with care decisions and waste taxpayer money when compared with the efficiency of traditional Medicare,” the appeal continues. “The Biden administration is moving the DCE program forward, threatening the future of Medicare as we know it. We, the undersigned, demand that CMS immediately stop the DCE program to keep Medicare public and nonprofit for future generations.”

Late last month, as Common Dreams reported, a group of physicians from across the U.S. traveled to the headquarters of the Health and Human Services Department in Washington, D.C. to demand that HHS Secretary Xavier Becerra halt the pilot program in its tracks.

The doctors were ultimately blocked from delivering a petition signed by around 1,500 physicians calling for an end to the privatization scheme, which inserts profit-seeking companies between traditional Medicare and healthcare providers.

“Just like corporate middlemen stand between patients and the healthcare they need, security staff stood between PNHP doctors and the policymakers who want to privatize Medicare,” PNHP tweeted during the demonstration at the nation’s capital.

While the doctor-led protest was followed by a brief uptick in reporting on the obscure initiative, Biden’s HHS has yet to act and few members of Congress have publicly spoken out against the Direct Contracting program despite the massive implications for the future of Medicare and its tens of millions of beneficiaries.

“People don’t know that it’s happening,” Dr. Ed Weisbart, chair of PNHP’s Missouri chapter, told Common Dreams in an interview last month. “Most people in Congress don’t know that it’s happening. We’ve started having some of these conversations with congressional staff… but it’s not on their radar either.”

One notable exception is Rep. Pramila Jayapal (D-Wash.), chair of the Congressional Progressive Caucus. Earlier this month, Jayapal penned an op-ed with PNHP president Dr. Susan Rogers urging Biden to stop the Direct Contracting program “while we have the chance.”

According to PNHP, Jayapal is collecting signatures from fellow lawmakers’ for a letter pressuring Biden to shut down the pilot, which sparked legal concerns and general revulsion among career CMS staff when it was launched toward the end of former President Donald Trump’s White House tenure.

“This shit is so fucking gross,” one staffer wrote in a group text viewed by The Intercept.

In their op-ed for The Hill earlier this month, Jayapal and Rogers warned that the Direct Contracting program “could radically transform Medicare within a few years, without input from seniors or even a vote by Congress.”

“After our experience with commercial Medicare Advantage plans,” they added, “we already know that inserting a profit-seeking middleman into Medicare ends up costing taxpayers more, with fewer choices and worse outcomes for seniors.”

https://www.commondreams.org…

Stealthy effort to privatize Medicare should alarm all Americans

Scheme initiated in waning days of Trump administration poses an existential threat; Biden should repeal it

By George Bohmfalk, M.D.
The Pulse Blog, NC Policy Watch, December 30, 2021

As someone who has spent his professional life in healthcare, it’s clear to me that Medicare for All is the best solution to nearly all of our nation’s healthcare shortcomings. However, as of the last days of the Trump administration, Medicare itself is being subjected to a potentially fatal attack.

Without congressional authorization, bureaucrats in Trump’s administration developed a program openly designed to privatize Medicare. Called Medicare Direct Contracting (DC), this program allows commercial insurers and other for-profit middlemen to “manage” care for seniors enrolled in Traditional Medicare. This is in addition to the for-profit Medicare Advantage programs, which for years have cost taxpayers more than Traditional Medicare while restricting their choice of physicians and hospitals and providing no improvement in healthcare outcomes. Beginning this year, millions of seniors who deliberately chose Traditional Medicare are quietly being enrolled into Direct Contracting Entities (DCEs) without their full knowledge or consent.

Virtually any type of company can apply to be a DCE, including venture capital investors. There isn’t even a requirement that DCEs be majority-owned by health care providers, opening the door to ownership by profit-driven entities with no health care expertise whatsoever.

Traditional Medicare spends an impressive 98 percent of its budget on patient care. But DCEs are allowed to operate with very loose restrictions on how much of their revenues must go to patient care. This incentivizes them to limit payouts by rationing care and keep even more than the 15 percent that Medicare Advantage programs are allowed for their own profit and overhead. This detail alone should alarm taxpayers.

As this is a creation of the Center for Medicare and Medicaid Services’ “Innovation Center,” this pilot program can be scaled up to cover all of Medicare without so much as a vote or hearing in Congress. Very few Members of Congress appear to be even aware of its existence or its existential threat to Traditional Medicare. To prevent Medicare from becoming completely and stealthily privatized, this program must be stopped in its tracks. The only way to stop it is by order of President Biden or insistence by enough Members of Congress.

Please help me, and the millions of seniors and Americans living with disabilities who depend on Medicare, bring this nefarious program to a quick end. Please contact your Congressional representatives and implore them to instruct Health and Human Services Secretary Xavier Becerra to terminate the Direct Contracting program immediately.

Most seniors love Medicare. It is simple, efficient, and empowers them to manage their own health. Traditional Medicare has proven its value for more than half a century. Rather than sell it off to the highest profit-driven bidder, we should strengthen and improve its benefits while working to expand it to cover every American.

Dr. George Bohmfalk is a retired neurosurgeon and a member of Physicians for a National Health Program (PNHP.org) and the North Carolina Medicare for All Coalition (NCM4A.org).

https://pulse.ncpolicywatch.org…

Bonuses Fail to Improve Clinical Quality in Medicare Advantage

Summary: A new study finds that financial incentives failed to raise clinical quality measures in Medicare Advantage plans. This completes HJM Medicare Advantage week, in which we highlighted the numerous serious problems arising from using private insurers as intermediaries for public health insurance.

Next week we’ll relax our usual blogging pace. We’ll offer some reflections on the year past and what lies ahead. Happy Holidays! – JGK

The Medicare Advantage Quality Bonus Program Has Not Improved Plan Quality, Health Affairs, December 6, 2021, by Adam Markovitz et al.

In 2012 Medicare introduced the quality bonus program, linking financial bonuses to commercial insurers’ quality performance in Medicare Advantage (MA). Despite large investments in the program, evidence of its effectiveness is limited. We analyzed insurance claims from the period 2009–2018 from the nation’s largest MA claims database for 3,753,117 MA beneficiaries (treatment group) and 4,025,179 commercial enrollees (control group). Using a difference-in-differences framework, we evaluated changes in performance on nine claims-based measures of quality [for disease screening & monitoring, medication adherence] in both groups before and after the start of the bonus program and with adjustment for differential pre-period trends. We observed no consistent differential improvement in quality for MA versus commercial enrollees under the quality bonus program. Program participation was associated with significant quality improvements among MA beneficiaries on four measures, significant declines on four other measures, and no significant change in overall quality performance (+0.6 percentage points). Together, these results suggest that the quality bonus program did not produce the intended improvement in overall quality performance of MA plans.

Comment:

By Isabel Ostrer, M.D.

Despite the federal government pouring $6 billion dollars into the quality incentive program for Medicare Advantage (MA) plans, the effectiveness of the program is sorely lacking.

A new study in Health Affairs finds that despite this huge investment, the program failed to actually improve the quality of MA plans. The authors state, “In this national study of the impact of the Medicare Advantage quality bonus program, we observed little evidence that the program was associated with incremental improvements to quality performance for MA beneficiaries.”

42% of Medicare beneficiaries, which translates to millions of elderly Americans, are now enrolled in MA plans. These plans are often billed as cheaper, more robust, and higher quality than other health plans. In his HJM piece earlier this week, Don McCanne debunked the claims that MA plans are cheaper than traditional Medicare plans and provide better benefits. This study debunks the final claim – even when offered billions of dollars in incentives, the quality of care in MA hasn’t budged.

It’s time to eliminate the MA quality incentive program. And while we’re at it, we should turn our focus towards streamlining health care delivery in the U.S. As Don wrote, “What we need is an equitable, publicly administered and publicly financed health care program for everyone: a single payer, improved Medicare for All.”

http://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 for All: A Bad Idea for Single Payer

Summary: A recent commentary in JAMA proposed using private insurance health plans as intermediaries in a universal health insurance system, instead of direct payments from a public payer to providers, as under “traditional” Medicare for All / single payer. The supporting arguments, though perhaps appealing on a first read, don’t withstand scrutiny.

Medicare Advantage for All: A Potential Path to Universal Coverage, JAMA, December 16, 2021, by Greg J. Zahner et al.

Medicare Advantage (MA) for All—which would create a national guarantee for health insurance while maintaining private-sector involvement in health insurance administration—represents an alternative path to achieving universal health insurance that could mitigate many of the disadvantages of Medicare for All. This Viewpoint outlines what MA for All might look like and describes potential benefits, limitations, and risks.

MA for All: How It Might Work:

The MA program allows MCOs to provide coverage for Medicare-eligible populations and has become increasingly popular, with an estimated 42% of Medicare beneficiaries now enrolled in MA plans. At a high level, MA for All could be structured and funded as follows: all existing non-Medicare insurance funding (eg, employer-sponsored coverage, commercial insurance, Children’s Health Insurance Program, and Medicaid federal funding) would initially flow through CMS. Employers would pay a health benefit tax to CMS rather than directly pay for health insurance, and state contributions for Medicaid would shift to federal responsibility. Private health plans would then apply to become CMS-approved MA MCOs. These MCOs would provide coverage not just for Medicare beneficiaries but also for children, low-income individuals, and people previously insured through employer-sponsored plans.

Flexibility and Equity:

Unlike Medicare for All, which would restrict a person’s flexibility to choose the best health plan for them, MA for All could help ensure that individuals continue to have multiple options and the opportunity to select an MCO that covers their preferred clinicians or health care organizations. This model could accommodate regional differences in the health care landscape by continuing to enable flexibility in how payers and health care organizations work and partner together. For example, accountable care organizations could continue to grow, and local and state governments could retain a level of autonomy and apply for waivers to create MA plans for select populations (eg, individuals with low income).

Equity is also a key concern. Today’s environment, with commercial insurers paying significantly higher rates than public payers, incentivizes clinicians and health care entities to selectively pursue commercially insured patients. Greater payment parity, such as through comprehensive risk adjustment for all individuals, greater control over rates in noncompetitive markets, and greater rewards for offering plans that cover higher-risk populations, may help reduce these resultant disparities. Additionally, CMS could expand innovative programs that target high-need and underserved populations, such as clinically aligned payment models like the Program for All-Inclusive Care for the Elderly, which provides nursing home–level care at home, or special-needs plans designed to help patients with mental health and chronic conditions.

Comment:

By Jim Kahn, M.D.

Zahner and colleagues propose that Medicare Advantage offers a good model for how to implement single payer. They point to lower care costs, some higher quality metrics, and political viability. Here I address their main assertions. Pardon the longer-than-usual comment.

Assertion #1: Insurance companies could serve a central role in a single payer system.

Structuring single payer around private insurers would garner their political support. However, doing so would fundamentally undermine single payer design.

Insurance companies are central to current health system problems. They earn and extract high profits based largely on limiting access through care denials and financial barriers (for the home health example, see Monday’s HJM). They fail to provide the detailed data that would reveal what’s working well or poorly for access and health.

Insurance companies as we know them are incompatible with efficient and generous health coverage. In some countries, insurers have a major role, but they are non-profit and effectively claims administrators, selling a single insurance product with standard medical necessity and payment protocols, unlike what’s proposed in the US.

Assertion #2: Medicare for All would remove important economic activity that people want.

Not true. Medicare for All (single payer without private insurers) would remove the dead weight of insurance profits and administrative burden, and largely replace that with clinical services, including much-needed increases in long-term care.

As for polls indicating support for keeping private insurers, it’s all in the wording. If respondents are provided a fair description of how single payer would work – including choice of any doctor and elimination of cost-sharing – they don’t pine for private insurers.

Assertion #3: Medicare Advantage for All would increase efficiency and equity.

MA4A might trim a small portion of the horrendous administrative bloat in our current system, and reduce inequitable coverage. But not nearly as much as true single payer.

Administrative costs at insurers would remain high, because it’s a lot of work to oversee care approvals and complex payment arrangements. Not to mention profits (oops, did mention that). Administrative costs for providers would drop a little, if indeed they dealt with fewer MA plans than the current morass of private and public payers. But most doctors and hospitals in this “single payer” system would have to deal with multiple MA plans, each with different rules.

Equity – more similar insurance across individuals – would be enhanced versus today. (How could it be worse?) But differences in benefits scope, coverage rules, provider network design, and payment levels and structures would leave ample room for disparities.

Economic feasibility would benefit from a muted rise in utilization, as colleagues and I published recently (and they cite). But that’s a stronger argument for true single payer – you can fully remove restrictions on care access and still avoid overwhelming utilization growth.

Assertion #4: Medicare Advantage for All would allow choice – of health insurance plan.

People want choice among doctors and hospitals, not insurance plans. This is especially important when they have complex medical conditions. And choice imposes costs.

Selecting among health plans is nerve-wracking and nearly impossible for people to optimize. Consumers have almost no usable information about plan rules and performance or out-of-pocket costs, and huge uncertainty about their own future health needs

And provider choice is sacrificed. MA plans usually sharply restrict choice of doctors, by relying on narrow provider networks and excluding many top referral doctors – all to trim costs.

Furthermore, the profusion of plan options is extremely disruptive. It forces doctors to deal with multiple payers (and payment models) and patients to change doctors if they switch plans (or doctor networks shift), creating costs and hassles, all distractions from optimal clinical care.

Assertion #5: Medicare Advantage has higher quality metrics.

MA plans know how to play to the measure – raise targeted quality metrics. But much more importantly, mortality is highly variable across MA plans, unrelated to quality ratings, with no way for beneficiaries to know. And quality is useless if MA enrollees experience financial barriers to care.

Assertion #6: Medicare Advantage reduces health care spending compared with traditional Medicare.

Finally, with gusto: Untrue in any meaningful way. Because:

First, reported savings are for medical care payments, not total costs. The care savings are more than offset by MA plan profits and administrative costs. Overall, MA increases insurance cost: medical spending down, profits and overhead up even more. This problem is accelerating in MA as private equity ramps up its role.

Second, savings in medical care costs are achieved by reducing service use in ways that are often harmful to patients. Plans deny care via prior authorization using obscure criteria. Small provider networks can mean the best care is out of network. And MA plans impose out-of-pocket costs, such as high deductibles and other cost-sharing, that is often unmanageable when people get sick and thus need more care.

Third, MA selects for lower cost individuals, leaving higher cost enrollees in traditional Medicare. The clearest recent evidence of this comes from a 2019 study of spending prior to MA enrollment.

Authors’ financial conflict of interest.

The authors disclose, as required by medical journals, significant financial connections to the private insurance industry. Does this influence their views? Impossible to say, but important to have this information.

Let’s stick with the plan: single payer, Medicare for All, with direct payment from the public funder to providers. No for-profit insurers in the mix. This is what works in all the other wealthy countries. It will work for us.

http://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 Places Us at a Disadvantage

Summary: This week we scrutinize Medicare Advantage (MA). Today: A survey from the Center for Medicare Advocacy found that MA plans deny, reduce, delay, and charge beneficiaries more for home health services. And a leading researcher estimated that Medicare overpaid MA plans by $106 billion over ten years for sicker patients. So … overpaying for worse care. Hmm.

Home Health Survey: Medicare Beneficiaries Likely Misinformed and Underserved, Center for Medicare Advocacy, December 2021

From April 28, 2021 – November 19, 2021, the Center for Medicare Advocacy conducted a survey of 217 Medicare-certified home health agencies in 20 states to learn what beneficiaries may experience when seeking home care.

The Medicare Act mandates that Medicare Advantage plans cover, at least, all the medically necessary services that traditional (also known as “original”) Medicare covers. However, when surveyed home health agencies were asked if there were differences in the services they could provide to clients enrolled in Medicare Advantage plans versus clients with traditional Medicare coverage, their comments describe a very different reality.

Major themes among agency comments were that Medicare Advantage plans deny more services, allow fewer visits per care modality, delay onset of care, lead to more changes to provider-approved plans of care, are significantly harder for agencies to work with, and require greater out-of-pocket costs. Many agencies also mentioned discrepancies in care caused by the pre-authorization process.

Examples:

  • “Abso-freakin-lutely! Medicare Advantage plans in our area are rotten.”
  • “Very much so, there’s a difference. Medicare Advantage plans don’t approve as much services.”
  • “Medicare Advantage patients are reimbursed for less, and do not have therapy covered. Typically they only provide nursing services.”
  • “The payment model is different so we can’t take as many Medicare Advantage beneficiaries. Traditional Medicare is better.”
  • “Medicare Advantage plans typically offer less coverage.”
  • “Medicare Advantage plans can be very limiting. Anthem and Humana are terrible, and very often do not cover services that patients need.”
  • “Medicare Advantage plans often fight tooth and nail on the number of visits they will allow. Anthem is the worst. They use MyNexus, a company for prior authorization work, and allow very few visits.”
  • “MA authorizations are limited. We [the agency] fight and appeal for more services. United Healthcare and Aetna provide particular coverage challenges.”
  • “Managed Medicare seems to be a lot stingier with what they authorize than traditional Medicare.”

Researcher: Medicare Advantage Plans Costing Billions More Than They Should, KHN, November 11, 2021, by Fred Schulte

Switching seniors to Medicare Advantage plans has cost taxpayers tens of billions of dollars more than keeping them in original Medicare, a cost that has exploded since 2018 and is likely to rise even higher, new research has found.

Richard Kronick, a former federal health policy researcher and a professor at the University of California-San Diego, said his analysis of newly released Medicare Advantage billing data estimates that Medicare overpaid the private health plans by more than $106 billion from 2010 through 2019 because of the way the private plans charge for sicker patients. “They are paying [Medicare Advantage plans] way more than they should,” said Kronick.

Kronick called the growth in Medicare Advantage costs a “systemic problem across the industry,” which CMS has failed to rein in. He said some plans saw “eye-popping” revenue gains, while others had more modest increases.

Making any cuts to Medicare Advantage payments faces stiff opposition, however.

On Oct. 15, 13 U.S. senators, including Sen. Kyrsten Sinema (D-Ariz.) sent a letter to CMS opposing any payment reductions. (Sen. Manchin also signed – DMc)

Comment:

By Don McCanne, M.D.

We have been witnessing the privatization of the Medicare program through the introduction of the private Medicare Advantage plans, and, more recently, the Direct Contracting Entities as a means of converting much of the remaining traditional Medicare program into private plans.

We have recently been inundated with heavy marketing of these plans during the open enrollment period, promising eligible Medicare beneficiaries much better benefits at considerably lower costs.

Better benefits? Look at the report on services provided by home health agencies, the type of services the marketing suggests are superior when provided by the Medicare Advantage plans. This study showed that services were emphatically inferior to services provided under the traditional Medicare program.

And lower costs? The other report cited above indicates that Medicare Advantage plans were overpaid by tens of billions of dollars.

When there is a popular movement to eliminate private plans and establish a single payer Medicare for All program, it is ironic that our government is establishing policies to suppress our existing Medicare program and replace it with private plans when the evidence is that they are a major source of much of the detrimental dysfunction in health care financing.

What we need is an equitable, publicly administered and publicly financed health care program for everyone: a single payer, improved Medicare for All. But we do need to consider getting rid of the politicians who want to use our public funds to support the private health plans while suppressing our public programs.

http://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.

Failure of Nursing Home Safety Monitoring

Summary: NY Times research found a huge gap between safety problems found in nursing homes and the public reporting of those problems. Quality star ratings are misleading. Consumers are not being protected.

How Nursing Homes’ Worst Offenses Are Hidden From the Public, New York Times, Dec. 9, 2021, by Robert Gebeloff, Katie Thomas, and Jessica Silver-Greenberg

A New York Times investigation found that at least 2,700 similarly dangerous incidents were also not factored into the rating system [Care Compare] run by the federal Centers for Medicare and Medicaid Services, or C.M.S., which is designed to give people reliable information to evaluate the safety and quality of thousands of nursing homes.

Oklahoma’s inspections agency referred to nursing homes as its ‘clients,’ according to a letter from the agency reviewed by The Times. Inspectors in Pennsylvania complained about being told to be ‘kinder and gentler’ with nursing homes, according to the 2013 survey. Last year, in the depths of the pandemic, the California department of health told inspectors to act as safety “consultants” to nursing homes and to not take on an enforcement role. (The policy was scrapped after inspectors objected.)

Jonathan Blum, the chief operating officer for C.M.S., said that citations are omitted during state-level appeals to be fair to nursing homes that are disputing inspectors’ findings. He acknowledged that even after appeals are exhausted, some citations still don’t appear on Care Compare. He said C.M.S. is ‘working to correct this issue.’

The Times asked public health agencies in all 50 states how often citations were upheld, reduced in severity or deleted entirely since 2016. Eighteen states provided figures. About 37 percent of the time, the nursing homes succeeded in getting citations removed or reduced in severity.

Studies have found that federal inspectors tend to find more serious problems than their state counterparts during these examinations. But the Medicare agency does not publish the reports of its own inspectors — even when they turn up dangerous or deadly conditions — or factor them into homes’ star ratings.

http://healthjusticemonitor.org…

Comment:

By Allison K. Hoffman, J.D.

The COVID-19 pandemic revealed the depths of problems in U.S. nursing homes, but it is also clear that nursing homes have had serious deficiencies leading up to the pandemic. Worse, even when these problems are uncovered, they are sometimes later buried. There are many reasons why nursing homes became an epicenter for the pandemic, but one has been well illuminated by recent New York Times reporting: the failure of regulatory monitoring and reporting systems, including Care Compare and star ratings, which were intended to reflect nursing home quality.

These types of ratings systems are part of a consumerist turn in health care, based on the idea that with all the right information, patients will be able to navigate the system to choose among care providers and balance things like quality and price. There are many flaws in these assumptions. The N.Y. Times reporting over the past year shows that one necessary piece of the consumerist model is completely lacking: the quality of information to inform decisionmaking. This article, in particular, illuminates the fact that even after major problems were uncovered in surveys and inspections, nursing homes had too many tools to keep those problems from coming to light and eventually making it into Care Compare. The problems don’t harm their star ratings – a scale from 1 to 5 that is supposed to—but often fails to— indicate nursing home quality.

The failure of these ratings to capture what is actually happening in settings where residents often cannot advocate for themselves is tragic. When the faults in such a system intersect with a pandemic, people who think they have chosen quality nursing homes for loved ones learning that they are tragically wrong.

Even the best nursing homes went through extremely trying times over the past two years. But some nursing homes began this period in a state of poor oversight, management, staffing, and operations that never should have been tolerated.

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.