CMA Alert | March 3, 2022

House GOP Accuses Dems of Trying to Rein in Medicare Advantage Overpayments in Order to Expand Benefits to All Medicare Beneficiaries: If Only This Were True…

When it comes to Medicare policy discussions on Capitol Hill, two things are commonly raised:

1. Active support for Medicare Advantage (MA), and
2. The looming insolvency of the Part A Trust Fund.

Despite the painfully obvious connection between these two, however, they are rarely discussed together. In fact, policymakers in both parties continue to ignore their obligation to address inflated Medicare Advantage payments.

Medicare Advantage and the Medicare Part A Trust Fund

The annual release of the Medicare Trustees Report – which projects the fiscal health of the Medicare program and focuses on the Part A Trust Fund – often serves as an impetus for calling for Medicare changes and cuts. The latest Report, released in August 2021, projects that the Part A Trust Fund will be depleted by 2026; this is unchanged from the previous projection, despite the impact of the COVID-19 pandemic.

As the Center for Medicare Advocacy periodically notes, even if the Trust Fund were to be depleted as projected, the program would still be able to pay out approximately 90% of Medicare Part A benefits. While not ideal, this is far from “bankruptcy.”  Further, the date of projected insolvency is an estimate, and could easily change again – as it has many times before.

There are various ways to address Medicare’s solvency, by raising revenues, reducing spending, or both.  One large and obvious option, which escapes the attention of most policymakers, is to look at the Medicare Advantage (MA) program. There is consistent, and growing evidence that the Medicare Advantage program is paid more than traditional Medicare would spend on the same beneficiary, and such spending is growing per person, with significant implications for the Medicare programmatic spending.

The Medicare Payment Advisory Commission (MedPAC) confirmed these spending concerns in its March 2021 report to Congress, noting that Medicare payments to MA plans average 104% of spending in traditional Medicare and stating:

[t]his level of payment reflects Medicare payments that were higher for MA enrollees than the program would have spent for similar beneficiaries in traditional FFS Medicare, continuing a long-standing trend.

According to a recent Commonwealth Fund blog, due to risk adjustment and quality bonus payments, MA “plans have been paid more than what traditional Medicare would spend for similar beneficiaries every year since 2003” (emphasis added).  In other words, this payment imbalance has persisted for almost 20 years.

Similarly, the Kaiser Family Foundation noted in an August 2021 report that the MA program “has never generated savings relative to traditional Medicare” and while higher payments have led to coverage of some limited extra benefits for plan enrollees,

the higher payments have also led to higher Medicare spending than would have occurred under traditional Medicare and higher Medicare Part B premiums paid by all beneficiaries, including those in traditional Medicare (emphasis added).

Various non-insurance industry influenced analysis and reports continue to point out how the current MA payment system based on maximizing profits through risk adjustment leads to excessive payment.  Recent examples include: research by Richard Kronick, highlighted by Kaiser Health News in November 2021, which analyzed MA billing data and estimated 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” (nearly $34 billion of this new spending came during 2018 and 2019); in September 2021, the Department of Health & Human Services Office of Inspector General issued a report titled “Some Medicare Advantage Companies Leveraged Chart Reviews and Health Risk Assessments To Disproportionately Drive Payments”; and in December 2019 OIG issued a report titled “Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns.”

In a February 2021 issue brief titled “Reducing Medicare Advantage Overpayments” the Committee for a Responsible Federal Budget offered a method for addressing MA overpayments by adjusting coding intensity:

Addressing this problem would improve the solvency of the Medicare trust fund and reduce the federal budget deficit. Given the high and rising costs of health care, a number of bold policy changes will be needed to assure long-term affordability and sustainability. In this context, fully adjusting for MA coding practices that result in overpayment could be considered an obvious option, particularly because this problem is well known and adjustments are already made; they are just inadequate (emphasis added).

Despite all of the evidence showing that MA plans are overpaid billions of dollars a year, with a few exceptions, such as Senator Elizabeth Warren during a recent Senate Finance Subcommittee hearing, policymakers fail to even mention the withering impact of MA costs on the Medicare Trust Fund, and Medicare spending more broadly.

Medicare Spending and Build Back Better

Discussions in Congress last year surrounding the Build Back Better (BBB) Act created a rare opportunity to make meaningful improvements to Medicare and other critical programs. Yet the associated costs and concerns about the Medicare Trust Fund were often raised as barriers to doing so (despite the fact that new dental, hearing and vision benefits would have been covered under Medicare Part B, not through Part A and the Trust Fund).  For example, House Ways & Means minority staff issued a statement in September 2021 calling BBB a “RECKLESS MEDICARE EXPANSION[…]With the major hospital trust fund insolvent in five years, Democrats also recklessly expand Medicare with junk dental, vision, and hearing plans with no reforms to save this important program for 62 million seniors.”  Similarly, in prepared remarks at a Committee session debating BBB the same month, CNBC reported that the Committee’s Ranking Member stated “Democrats are ramming through a reckless new expansion of Medicare – just as it’s a few years from bankruptcy.”

For a brief moment in time, during the debate surrounding Build Back Better, reining in MA overpayments was floated as a potential “pay for” to expand Medicare benefits, such as dental, hearing and vision care, to all Medicare beneficiaries.  As chronicled by reporter Jessie Hellman in a Modern Healthcare article titled “How the Insurance Lobby Got Congress to Love Medicare Advantage” (Dec. 28, 2021), such discussions were short-lived.  “Almost as soon as it came up, it was off the table” Hellman wrote. “Industry groups aired millions of dollars in television advertisements warning seniors that Washington was ‘messing with’ their healthcare and urging them to contact members and tell them ‘please don’t cut Medicare Advantage.’”  The article cites the looming insolvency of the Trust Fund and notes that “Medicare spending continues to grow as more people age into benefits, prompting renewed anxiety about the program’s fiscal footing […] Still, Medicare Advantage plans have fought to keep things the way they are, mostly with success.”  Discussing how the industry has kept lawmakers in check, Hellman states:

Instead of oversight, scores of lawmakers annually sign on to letters drafted by the industry praising Medicare Advantage. […] More than 400 lawmakers—or three-quarters of Congress—signed on to a letter to CMS in 2020 to “express strong bipartisan support” for Medicare Advantage but raised no questions about program integrity issues watchdogs have flagged.

Even now, in early 2022 as Build Back Better is stalled, at best, policymakers continue to refuse to connect the proverbial dots concerning Medicare financing.  For example, on February 25, 2022, House Ways & Means Committee Republicans issued a statement titled “Democrats Want to Cut Overwhelmingly Popular Medicare Advantage Program” stating that “enrollment in the popular Medicare Advantage (MA) program has grown across the board, showing that more seniors are choosing privately-run, innovative options every year.”  Taking a page from cold war era rhetoric, the statement continues: “Unfortunately, Democrats want to hamstring [the Medicare Advantage] program and move us backwards towards a socialist single-payer model that will limit patient choice and increase costs.”

In conflict with all of the evidence surrounding MA overpayment cited above, the statement notes that “Nearly all MA plans also offer supplementary benefits that are not available in fee-for-service Medicare, including telehealth, vision, dental, hearing, and transportation services – all at no additional cost to the taxpayer” (emphasis added).  The statement concludes with questionable math and a curious description of the BBB Act: “Sadly, as part of their push for the $5 billion socialist Build Back Better agenda, Democrats proposed spending $285 billion to pull beneficiaries away from Medicare Advantage—despite its popularity among seniors—into an outdated single-payer system that rewards volume over value” (hyperlink omitted).

Unfortunately, these allegations are simply not true – most Democrats in Congress as well as the Administration seem equally unwilling to take on the insurance industry in order to right the Medicare ship. We are unaware of any concerted effort to rein in these MA overpayments.

Conclusion

For many years, the Center for Medicare Advocacy has pushed for legislative and administrative efforts to address the growing inequities between Medicare Advantage (MA) and traditional Medicare that favor MA, and thus encourage the growing privatization of the Medicare program. These inequities include overpayments to MA plans that unnecessarily drive-up programmatic spending, and further tip the scales away from traditional Medicare.

Reining in wasteful MA spending would not only shore up the Part A Trust Fund and relieve overall Medicare spending, such savings could be used to expand Medicare benefits for all beneficiaries.  We urge policymakers – Democrats, Republicans and Independents alike – to do what’s right for both taxpayers and Medicare beneficiaries and end MA overpayments.

Biden Administration Issues Bold and Comprehensive Nursing Home Reform Agenda

President Joseph R. Biden announced a comprehensive nursing home agenda in his State of the Union address on March 1, 2022.  A Fact Sheet issued by the White House on February 28 set out the agenda in greater detail.  The Center for Medicare Advocacy fully supports the reform platform, which addresses issues that advocates for nursing home residents have been supporting for many years, if not decades.  Improving nurse staffing levels and holding facilities and their corporate owners accountable for the billions of dollars they receive under the Medicare and Medicaid programs are key provisions that, properly implemented, can help achieve the promise of the 1987 Nursing Home Reform Law.

President Biden’s nursing home agenda – “Protecting Seniors and People with Disabilities by Improving Safety and Quality of Care in the Nation’s Nursing Homes” – is intended to ensure that,

• “every nursing home provides a sufficient number of staff who are adequately trained to provide high-quality care;
• “poorly performing nursing homes are held accountable for improper and unsafe care and immediately improve their services or are cut from taxpayer dollars; and
• “the public has better information about nursing home conditions so that they can find the best available options.”

Reported here are the five themes and the 21 action steps included under them.  Additional detail is provided in the seven-page document.

Ensuring Taxpayer Dollars Support Nursing Homes That Provide Safe, Adequate, and Dignified Care

• Establish a Minimum Nursing Home Staffing Requirement
• Reduce Resident Room Crowding
• Strengthen the Skilled Nursing Facility (“SNF) Value-Based Purchasing (“VBP”) Program
• Reinforce Safeguards against Unnecessary Medications and Treatments

Enhancing Accountability and Oversight

• Adequately Fund Inspection Activities
• Beef up Scrutiny of More of the Poorest Performers
• Expand Financial Penalties and Other Enforcement Sanctions
• Increase Accountability for Chain Owners of Substandard Facilities
• Provide Technical Assistance to Nursing Homes to Help them Improve

Increasing Transparency

• Create a Database of Nursing Home Owners and Operators
• Improve Transparency of Facility Ownership and Finances
• Enhance Nursing Home Care Compare
• Examine the Role of Private Equity

Creating Pathways to Good-paying Jobs with the Free and Fair Choice to Form a Union

• Ensure Nurse Aide Training is Affordable
• Support State Efforts to Improve Staffing and Workforce Sustainability
• Launch National Nursing Career Pathways Campaign

Ensuring Pandemic and Emergency Preparedness in Nursing Homes

• Continued COVID-19 testing in long-term care facilities
• Continued COVID-19 vaccinations and boosters in long-term care facilities
• Strengthen Requirements for On-site Infection Preventionists
• Enhance Requirements for Pandemic and Emergency Preparedness
• Integrate Pandemic Lessons into Nursing Home Requirements

Resident advocates have our work cut out for us – to make this agenda a reality.

“Protecting Seniors and People with Disabilities by Improving Safety and Quality of Care in the Nation’s Nursing Homes” is at https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/28/fact-sheet-protecting-seniors-and-people-with-disabilities-by-improving-safety-and-quality-of-care-in-the-nations-nursing-homes/

New Study: COVID-19-Related Discrimination Impacted All Racial/Ethnic Minorities

As the coronavirus swept through the nation, reports surfaced that Asian and Black Americans were experiencing increased discrimination. According to a Pew Research Center article published in 2020, 40 percent of Black and Asian adults noted that if they wore a mask in public, people they encountered appeared to be uncomfortable or suspicious.[1] In 2021, one-third of Asian Americans reported that they feared for their safety, while 80 percent of Asian adults said violence against them was increasing.[2] Anti-Asian racial and xenophobic attacks escalated worldwide to the point where the Human Rights Watch urged governments to take preventative measures against the violence and discrimination.[3]

A new study published in the American Journal of Public Health examined COVID-19 related discrimination and concluded that the coronavirus pandemic exacerbated preexisting racism against racial and ethnic minorities and marginalized communities.[4] Researchers conducted a nationally representative survey of American Indian/Alaska Native, Asian, Black/African American, Hawaiian/Pacific Islander, Latino, White, and multiracial adults. It determined that all racial/ethnic minorities were more likely to experience COVID-related discrimination than White adults, while those who identified as Asian and American Indian/Alaska Native were significantly more likely to experience discrimination. Furthermore, people who speak little to no English, those with lower levels of education, and those with lower levels of income were also more likely to experience discrimination.

The study highlights the need to carefully craft messaging around public health crises in order to help prevent and address discrimination.[5] Researchers noted that how diseases are named and discussed can have significant impact on subsequent discrimination. Both the World Health Organization and the Centers for Disease Control and Prevention have guidelines that recommend against attaching locations or ethnicities to diseases to prevent backlash against members of the identified community.

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[1] Ruiz, N. G., Menasce Horowitz, J., & Tamir, C. Many Black, Asian Americans Say They have Experienced Discrimination Amid Coronavirus. Pew Research Center’s Social & Demographic Trends Project. (July 1, 2020). Available at: https://www.pewresearch.org/social-trends/2020/07/01/many-black-and-asian-americans-say-they-have-experienced-discrimination-amid-the-covid-19-outbreak/ 
[2] Ruiz, N. G., Edwards, K., & Hugo Lopez, M. One-third of Asian Americans Fear Threats, Physical Attacks and Most Say Violence Against Them is Rising. Pew Research Center. (April 21, 2021). Available at: https://www.pewresearch.org/fact-tank/2021/04/21/one-third-of-asian-americans-fear-threats-physical-attacks-and-most-say-violence-against-them-is-rising/ 
[3] Human Rights Watch. Covid-19 Fueling Anti-Asian Racism and Xenophobia Worldwide. (May 12, 2020). Available at: https://www.hrw.org/news/2020/05/12/covid-19-fueling-anti-asian-racism-and-xenophobia-worldwide 
[4] Strassle, P. D., Stewart, A. L., Quintero, S. M., Bonilla, J., Alhomsi, A., Santana-Ufret, V., Maldonado, A. I., Forde, A. T., & Nápoles, A. M. (2022). Covid-19–related discrimination among racial/ethnic minorities and other marginalized communities in the United States. American Journal of Public Health, 112(3), 453–466. https://doi.org/10.2105/ajph.2021.306594 
[5] National Institutes of Health. People from racial, ethnic, and other groups report frequent covid-19–related discrimination. Media Advisory. (February 24, 2022). Available at: https://www.nih.gov/news-events/news-releases/people-racial-ethnic-other-groups-report-frequent-covid-19-related-discrimination?utm_medium=email&utm_source=govdelivery

Case Against Nursing Facility Alleging Negligence and Wrongful Death From COVID-19 Affirmed to Belong in State Court

Ricardo Saldana died at Glenhaven Healthcare in California on April 13, 2020, allegedly from COVID-19. Four surviving family members sued the nursing facility in California Superior Court,  alleging that the facility failed to protect Saldana from the virus. Plaintiffs stated four causes of action: elder abuse, willful misconduct, custodial negligence, and wrongful death. The facility removed the case to federal district court in June 2020. The court granted plaintiffs’ motion to remand the case to Superior Court. The Ninth Circuit Court of Appeals affirms the district court’s decision, on three grounds. Saldana v. Glenhaven Healthcare, LLC, No. 20-56194 (9^th Cir. Feb. 22, 2022).[1]

First, addressing the federal officer removal statute, 28 U.S.C. §1442(a)(1), the Ninth Circuit panel describes the federal agency’s communications as “nothing more than regulations and recommendations for nursing homes.” The panel concludes, “Without more than government regulations and recommendations, Glenhaven has failed to establish that it was ‘acting under’ a federal official, and it has not identified a duty of the federal government that it performed.”    Similarly, “Glenhaven’s status as a critical infrastructure entity does not establish that it acted under a federal officer or agency, or that it carried out a government duty.”   

Second, the Court rejects the facility’s argument that plaintiffs’ claims are completely preempted by the Public Readiness and Emergency Preparedness (PREP) Act, 42 U.S.C. §§247d-6, 247d-63, a 2005 federal law that provides immunity from liability to “covered persons” for using “covered countermeasures.” The sole exception to immunity is for cases of “willful misconduct,” which may be brought only in federal district court in the District of Columbia. The panel finds that the law creates federal court jurisdiction “only for willful misconduct claims and not claims for negligence and recklessness.  §247d-6d(c)(1)(B).” 

Finally, the panel finds that the district court did not have jurisdiction under the embedded federal question doctrine. Plaintiffs’ claims are raised under state law “and do not raise questions on federal law on the face of the complaint.” 

In October 2021, the Third Circuit similarly rejected nursing homes’ arguments that the PREP Act gives federal courts jurisdiction over claims that would ordinarily be brought in state court. Estate of Joseph Maglioli v. Alliance Holdings, LLC, No. 20-2833 (3^rd Cir. Oct. 21, 2021).[2]

A similar case involving a Texas nursing facility is pending in the Fifth Circuit. 

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[1] https://cdn.ca9.uscourts.gov/datastore/opinions/2022/02/22/20-56194.pdf 
[2] The Third Circuit decision is available at http://www2.ca3.uscourts.gov/opinarch/202833p.pdf and discussed in “Affirmed: Negligence and Wrongful Death Cases Against Nursing Homes During COVID-19 Pandemic Belong in State Court” (CMA Alert, Nov. 4, 2021), https://medicareadvocacy.org/state-courts-will-decide-snf-covid-suits/

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