Medicare Advantage? or DISAdvantage?

signing 2The following article appeared originally on the healthinsurance.org Blog.

If you’re being courted by a private insurance company to enroll in one of its Medicare Advantage plans, don’t sign on the bottom line until you’ve read a recent report by a researcher at the Center for Medicare and Medicaid Services (CMS). The real bottom line you need to understand is that the insurer might want to keep you enrolled only as long as you’re relatively healthy. When that changes, you just might find that you’re no longer considered a valued member and that the traditional Medicare program is a much better deal for you.

The study, published recently in the Medicare and Medicaid Research Review, confirmed what some who are familiar with the Medicare Advantage program, including me, have suspected: when people enrolled in MA plans become critically ill, many realize that the only way they will get coverage for the care they need – and at a facility of their choice – is to return to the traditional Medicare program.

It may come as a surprise, but one of the reasons the Medicare program costs taxpayers more than it should is that the federal government has for years been overpaying insurance companies to participate in the Medicare Advantage program. (Medicare Advantage plans – typically HMOs and PPOs – are private alternatives to traditional Medicare.) Congress created the program after private insurers insisted that not only could they meet the medical needs of senior citizens and the disabled more cost effectively than the government, they could do so and still make a profit.

Many of the first insurance companies to participate in the program (previously known as Medicare+Choice) found out they couldn’t deliver on that promise. According to Health Affairs, 44 percent of the insurers that tried it between 1987 and 1990 threw in the towel and dropped out of the program. To entice them back, the federal government began paying insurers a bonus every year in the form of overpayments. Those overpayments have been sizable enough to keep most of them in the game and to keep investors of for-profit insurers happy.

You’re helping to keep those investors happy In 2009, the Medicare Payment Advisory Commission (MedPAC), which advises Congress, reported that those bonuses were costing Medicare (read: taxpayers) billions of dollars every year. It estimated that in 2009 alone, Medicare paid private insurers 14 percent more per beneficiary than it would cost the government to cover those beneficiaries in traditional Medicare. Between 2004 and 2008, according to MedPAC, the overpayments totaled nearly $33 billion.

During the debate on health care reform, the Congressional Budget Office estimated those overpayments would cost the government $157 billion over the coming decade. As a consequence of these overpayments, according to CMS, premiums for all Medicare beneficiaries, including those enrolled in traditional Medicare, are higher than they otherwise would be. That’s more than just an annoyance: the Medicare Hospital Insurance Trust Fund will become insolvent 18 months earlier than it would otherwise because of those overpayments, according to Congressional testimony by CMS’ chief actuary. That’s why, despite intense lobbying by the insurance industry, Congress inserted a provision in the Affordable Care Act to eventually phase out those overpayments.

It turns out, though, that those overpayments are not the only reason for MA insurers’ healthy profits. Many MA enrollees are finding that their plans – which offered discounts on gym memberships and hearing aids as an enticement to enroll – are not so willing to cover things like skilled nursing care when they get critically ill.

To see if that might be happening on a large scale, CMS researcher Gerald Riley looked at 240,000 people who dropped out of their MA plans in 2007 and compared them to Medicare beneficiaries who had always been enrolled in traditional Medicare. He found that those who had left their MA plans had used an average of $1,021 a month in medical services during the first six months after returning to traditional Medicare, compared to $710 a month for those who had never been in an MA plan.

Sicker MA enrollees may be less satisfied with program Citing his own findings and previous research that found more problems getting needed care among MA enrollees than beneficiaries in traditional Medicare, Riley wrote that, “Disenrollment of high-cost individuals may be related to persistent lower levels of satisfaction among sicker MA enrollees.”

My own mother will attest to that.

Back when my mother was much younger and healthier – and when I still worked in the insurance industry – I encouraged her to enroll in an MA plan. At the time it was especially appealing because it covered prescriptions medicines. The traditional Medicare program didn’t provide drug coverage until 2006.

Although Mom saw her MA premiums increase significantly over the years, she didn’t have any real motivation to disenroll until after she broke her hip and required skilled care in a nursing facility. After a few days, the nursing home administrator told her that if she stayed there, she would have to pay for everything out of her own pocket. Why? Because a utilization review nurse at her MA plan, who had never seen or examined her, decided that the care she was receiving was no longer “medically necessary.”

Because there are no commonly used criteria as to what constitutes medical necessity, insurers have wide discretion in determining what they will pay for and when they will stop paying for services like skilled nursing care by decreeing it “custodial.”

After doing considerable research, I learned that another highly regarded nursing facility nearby would take Mom and provide her with the skilled care she needed, but not if she stayed in the MA plan. That facility had years ago decided not to participate in MA plans like the one my mother was in because what happened to Mom was happening to other patients. Utilization review nurses at MA plans – not the patients’ treating physicians – where making the ultimate decisions as to whether nursing care was medically necessary. They still do.

I’m confident that Mom is alive today – and not completely broke – because she disenrolled from her MA plan and returned to traditional Medicare with a Medicare supplement plan to cover out-of-pocket expenses. And I’m confident after reading Riley’s study that there are hundreds of thousands of other people just like Mom who had similar experiences. And that the traditional Medicare program is paying more than it should because of the practices of many MA plans.

Your chance to leave MA is limited

At the beginning of the MA program, people could disenroll at any time. That’s no longer possible. If you’re in an MA plan and don’t like it, you have a relatively brief window of opportunity each year to go back to traditional Medicare. Keep that in mind as you’re trying to decide whether an MA plan is right for you, either now or later. It very well could be right for you. Some studies have indicated that people in MA plans are less likely to end up in the hospital or emergency room. But you might not know that enrolling in a private plan was not a great idea until you’re critically ill.

Following a 20-year career as a corporate insurance executive, Wendell Potter left his position as head of communications for Cigna in 2008 to advocate for comprehensive health care reform. He is now an analyst at the The Center for Public Integrity and president of Wendell Potter Consulting. He has also served as a consumer representative to the National Association of Insurance Commissioners. His book, Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR Is Killing Health Care and Deceiving Americans, was awarded the Ridenhour Book Prize for “outstanding work of social significance” in 2011. In March, he testified before Congress about the affordability of Obamacare. Potter also provided his perspective on the nation’s broken health care system when he was interviewed for a documentary that aired nationally.

 

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Medicare Advantage? or DISAdvantage?

Humana Sued in Federal Court Over Incentives for Doctors

Humana Inc., one of the nation’s largest managed-care companies, was accused in a Federal lawsuit yesterday of misleading health plan members by failing to disclose financial incentives to doctors and case reviewers intended to keep down costs by limiting or denying care.

The suit, filed on behalf of workers in Florida and Texas, asked a United States District Court in Miami to certify a class action on behalf of more than six million customers of Humana health plans nationwide. The suit seeks triple damages under the Federal anti-racketeering law. No amounts were specified.

The plaintiffs say they did not get the health coverage that they thought they were selecting because the company did not disclose incentives to doctors to deny care.

Joseph Sellers, a Washington lawyer who represents the plaintiffs in Miami, said the suit did not question whether managed care was a good idea or whether cost should be a factor. Instead, the suit contends that there was a ”breach of trust” because plan members thought that medical guidelines would solely determine their treatment.

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Humana Sued in Federal Court Over Incentives for Doctors

Taking Advantage of Medicare Advantage

Federal government has been overpaying private insurers.

cash cowFacing government cuts to one of their cash cows—private Medicare plans—health insurance companies have launched a multi-pronged campaign, financed by the customer premiums, to persuade Congress to keep the cuts from going into effect next month.

The industry’s big PR and lobbying group, America’s Health Insurance Plans, is deploying the tactics I described in Deadly Spin to scare seniors into believing that if the federal government stops overpaying insurers that offer Medicare Advantage plans (the private alternative to the traditional government-run Medicare program) seniors will “pay more, get less and lose choices.”

“U.S. Health Insurers Launch TV War Over Medicare Advantage Cuts,” read the headline of a Reuters story last week when AHIP’s ads started running.

At issue is a 2.3 percent cut in payments to Medicare Advantage plans by the Centers for Medicare and Medicaid Services (CMS) that are scheduled to go into effect on April 1.

The industry’s campaign, of course, conveniently leaves out the fact that the government has been overpaying private insurers for years and that the cuts being proposed starting next month are part of a broader effort to put a stop to those overpayments.

Members of Congress inserted a provision in the Affordable Care Act to reduce the overpayments by $200 billion over the next several years.  The 2.3 percent cut would be in addition to that.

It makes little sense for the government to overpay private insurers in the first place, but that is exactly what’s been going on for several years. During the administration of George W. Bush, which supported the privatization of the Medicare program, Congress passed legislation to provide incentives to insurers to offer private plans to compete with traditional Medicare. This enabled the plans to offer richer benefits than traditional Medicare at little or no additional cost to beneficiaries while also making a tidy profit.

It’s little wonder that the number of people enrolled in Medicare Advantage plans has increased rapidly. About one of every five Medicare beneficiaries are now enrolled in private plans. When the government enables you to offer plans with vision and dental benefits, lower copayments and discounts on gym memberships, all at no additional cost, you’re going to be able to lure a lot of seniors from traditional Medicare.

An agent for Humana Inc., one of the biggest Medicare Advantage companies, told me a few years ago that, thanks to the sweet deal insurers have been getting from the government, his job of enrolling healthy seniors in Humana plans was “like shooting fish in a barrel.”

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Taking Advantage of Medicare Advantage

Wrongly Denied Coverage

A Breach of Trust WWII Veteran WifeWWII Veteran known for his integrity and love of family, he worked hard his
entire life to give them the best upbringing and memories he possibly
could.  He taught his young ones to always be honest and to keep their
word without hesitation.  To him, that was ultimately important and his
example served well.

Little did he know, as he raised his children in honor and honesty, that
one day he would be the victim of a breach of trust by one, who should
have been his champion, during a devastating medical crisisHe trusted
and he was betrayed.  Never again shall his life be as once promised.
Deceit won the battle that day, but the truth was not conquered.  Truth
fights on and strives to win the war against those who deny care for
profit and because they can.

Truth and knowledge will bring the deceit and trickery into the light
and hopefully prevent others from being denied proper care at critical
moments.  People deserve better than that.  People should be able to
trust the caregivers and providers.  People deserve the chance to
recover and live on in dignity and with purpose to whatever degree is
theirs to behold.  People should and it is time eyes are opened and the
truth be seen by a population unaware.  It’s time people rather than
profits trump and honesty prevail.

A Breach of Trust is never acceptable and it shan’t be silently tolerated!

Be intolerant — add your voice in objection to deceit and trickery that
wrongfully denies coverage!