On May 1, 2023, KFF (formerly Kaiser Family Foundation) issued a report stating that Medicare Advantage (MA) now provides Medicare coverage for just over half of eligible beneficiaries.
As outlined in recent CMA Alerts (including this one), the Centers for Medicare & Medicaid Services (CMS) has recently taken some long overdue, yet minor steps to start to address overpayments to MA plans. These measures fall far short of stemming the flow of billions of dollars in annual wasted payments. As discussed in this Center for Medicare Advocacy report, CMS has also recently taken some meaningful steps to strengthen consumer protections surrounding MA prior authorization, marketing misconduct and other issues. However the rules don’t go as far as they could, and, as noted in the report, their efficacy will depend on MA plan compliance and CMS oversight and enforcement. While there has been increased attention to Medicare Advantage concerns by some lawmakers (as noted in this CMA Alert), by and large, Congress has not held the MA industry accountable.
In short, despite private plans enrolling half of the Medicare population, oversight of such plans with respect to program integrity and transparency, fiscal responsibility, and most importantly from our vantage point – access to covered care and consumer protections for Medicare beneficiaries – has not kept up with MA’s rapid growth.
Excessive payment to MA plans is well documented. For example, a recent Los Angeles Times article titled “Medicare Advantage was meant to curb federal healthcare spending. It’s costing more instead” by Don Lee (May 9, 2023) notes that while MA plans can offer lower out-of-pocket costs and added benefits not covered under traditional Medicare, “[t]he one thing that Medicare Advantage has not done is curb the government’s healthcare spending, even though that was a big selling point in Washington when it was approved in the mid-1990s as Medicare Part C.” Instead, “Medicare spends considerably more for an Advantage member than it does for a comparable enrollee in original Medicare Parts A and B” and “[a]s a result, a program born out of a desire to deliver better care and more choices for seniors while reducing government costs is instead generating hefty income for private health insurers and keeping Medicare on a path to insolvency by decade’s end.”
At the same time that MA plans are being significantly overpaid, many providers that contract with MA plans complain that such plans pay them poorly. For example, Skilled Nursing News recently published an article titled “‘Big Trouble’: Medicare Advantage Rates Strain SNF Margins, Deepen Sector’s Pain” by Amy Stulick (May 1, 2023) which notes that “[a]s Medicare Advantage continues to penetrate the nursing home market, leaders say that MA plans are depressing margins amid higher costs to run operations.” Citing one study, the article notes that MA plans are “paying one-quarter to one-third less to SNFs than traditional Fee-for-Service (FFS) Medicare”. Another study cited collected data “on the FFS Medicare attrition rate – or MA payment shortfall relative to FFS – finding a staggering 40% shortfall, while per admission revenue trails FFS by up to 70%.” The author goes on to state:
Not only are operators dealing with consistently lower reimbursement, but MA beneficiaries need to be managed on a daily basis – meaning their stay is constantly questioned and nursing home staff must justify the need to keep residents longer. This detracts from bedside care, as outlined in previous stories on MA.
Access to Care
Considering the significant overpayments to MA plans, access to care for many enrollees is compromised, and health outcomes are decidedly mixed. In the above-referenced Los Angeles Times article, Lee quotes Tricia Neuman from KFF who describes the impact of this MA growth: “‘[t]oday Medicare looks more like a marketplace of private plans than a national public health program,’” and notes that “[s]he said it’s not clear whether Medicare Advantage is delivering better long-term health outcomes.”
Those who have greater health needs can in turn face greater barriers to care when enrolled in MA plans. A recent article in the New England Journal of Medicine titled “Addressing Serious Illness Care in Medicare Advantage” (May 6, 2023) notes that while the goal of MA is providing “high-quality care”, “plan administrators face financial incentives to contain costs, since they receive capitated payments” and for enrollees with serious illness, “the program’s cost-control mechanisms – such as coverage denials, narrow provider networks, and prior-authorization requirements – may undermine the ability to receive necessary or high-quality care.” The authors promote improving data transparency, critical review by Medicare contractors, and enhanced quality measurement of MA plans, but note that “[d]espite the program’s substantial growth, there aren’t sufficient data to evaluate the quality of care delivered to beneficiaries with serious illness, much less to assess disparities based on race, religion, or dual eligible status.”
Among other issues, the New England Journal article points out that concerns about the quality bonus program (QBP)’s “accuracy in measuring quality and its ability to drive quality improvement have been persistently documented in academic research and MedPAC reports” and “[d]espite CMS’s substantial investment in the QBP, there is no evidence that the program has improved the quality of care in Medicare Advantage” [citations omitted]. Noting that “[o]ur concerns regarding care delivery for Medicare Advantage enrollees have been previously raised and echo years of analysis by researchers and MedPAC”, the authors conclude that “[w]e believe the time has come for a forward-thinking approach aimed at reforming Medicare Advantage to better meet the needs of people with serious illness.”
While many stakeholders are hopeful that the above-referenced Part C & D rule will address some concerns about MA plans’ abuse of the prior authorization process, the need for additional oversight and enforcement is clear. For example, a recent Inside Health Policy article titled “MA Prior Auth Burdens Increase As Lobbyists Call For Legislation” by Bridget Early (May 5, 2023) profiles a report issued by the Medical Group Management Association (MGMA) which “indicates that prior authorization burdens are increasing as medical groups see more Medicare Advantage patients” and “an overwhelming number of medical groups struggle to manage MA prior authorization requests, resulting in ‘dangerous delays and denials in necessary medical care’”. Quoting MGMA’s senior vice president of government affairs, the article states that “‘[m]edical groups now identify prior authorization in the MA program as more burdensome than commercial insurance and Medicaid […] More needs to be done to protect beneficiaries.’” The MGMA report surveyed 600 medical practices (95% of which treat MA enrollees) and found that “[a]lmost all – about 97% – of those medical groups reported that their MA patients experienced delays or denials for medically necessary care, like prescriptions, diagnostic tests, or medical services, for example, due to prior authorization requirements”. The May 2023 MGMA report is available here.
A recent – but rare – oversight hearing on Capitol Hill focusing on Medicare Advantage explored problems with provider directories. On May 3, 2023, the Senate Finance Committee held a hearing titled “Barriers to Mental Health Care: Improving Provider Directory Accuracy to Reduce the Prevalence of Ghost Networks”. In his opening remarks to the hearing, Chairman Ron Wyden defined “ghost networks” as “provider directories maintained by insurance companies that are often inaccurate and unusable by American families who need mental health care.” The committee issued an accompanying report on a secret shopper study conducted by the committee majority staff, which reviewed directories from 12 different plans in 6 states. The report found that of the total 120 providers listings contacted by phone, 33% were inaccurate, non-working numbers, or unreturned calls, and staff could make appointments only 18% of the time. Noting that “insurance companies have gotten a free pass for too long letting ghost networks run rampant,” Chairman Wyden highlighted that CMS does not regularly audit MA provider directories and stated that “[i]t’s time for that to change.”
Lack of Transparency
Given that half of the Medicare population is now enrolled in MA, for which the federal government spends considerable amounts (including billions in annual overpayments), analysts, the public, and even the regulatory agency know far too little about how MA plans administer their benefits. In April 2023, KFF issued a report titled “Gaps in Medicare Advantage Data Limit Transparency in Plan Performance for Policymakers and Beneficiaries”. The report notes that despite growing enrollment in and spending on MA plans,
substantial data gaps limit the ability of policymakers and researchers to conduct oversight and assess the program’s performance, including evaluating the value provided and implications for equity. Additionally, the gaps in data prevent policymakers and other stakeholders from understanding how options to address the fiscal pressures facing the Medicare program, including extending the solvency of the Part A Hospital Insurance Trust, could impact beneficiaries.
KFF identifies specific data gaps that have implications for both program oversight and beneficiary decision-making. The report notes that some information is not available because it is not collected by CMS, whereas other information is collected by CMS but not released to the public. According to the report, the type of data not reported or published include:
- Use of supplemental benefits and associated spending;
- Prior authorization data by type of service, beneficiary characteristics, and plan;
- Reason for prior authorization denials;
- Timeliness of prior authorization decisions;
- Share of Medicare Advantage claims that are denied after service has been provided; and
- Disenrollment reasons by beneficiary characteristics.
KFF highlights that deficiencies in information collected by the regulator can significantly impact oversight; for example, the report notes that “[t]he lack of data about the services for which prior authorization is requested and the decisions made by plans also make it difficult to assess whether Medicare Advantage insurers are complying with CMS requirements to cover all Medicare Part A and Part B services.”
With respect to data that is collected by CMS but not made publicly available, critical questions about beneficiary out-of-pocket liability and MA spending, among other issues, cannot be answered. In short, KFF concludes that “increasing transparency in information about Medicare Advantage plans could improve program oversight and beneficiary decision making.”
What Happens as Medicare Becomes More Privatized?
As the Center for Medicare Advocacy noted in comments to CMS’ 2022 Request for Information concerning MA plans, much more than wasted overpayments is at stake as MA gains dominance in the Medicare program. A May 2022 JAMA Viewpoint article titled “Medicare Advantage Enrollment Growth – Implications for the US Health Care System” by Gretchen Jacobson and David Blumenthal notes that a “Medicare Advantage–dominated system […] raises questions about how Medicare would work through private plans to achieve the many other public purposes that Medicare has served.” Challenges stemming from relative decline in traditional Medicare and the rise in MA
involve the potential loss of the vital role that traditional Medicare has had in shaping the health care system generally. Traditional Medicare has led the way in developing quality standards and measures that have been widely applied and in transparently sharing results with the public. The resulting quality data provide unique insight into the performance of the US health care system and can help purchasers and consumers of health care in both the public and private sectors choose among alternative sources of care.
In addition, the article notes, traditional Medicare has also helped support rural health care centers and fund graduate medical education and has guided innovations in payment models.
The impact of an increasingly privatized and consolidated health care system in the U.S. is explored in a recent article in the New York Times titled “Corporate Giants Buy Up Primary Care Practices at Rapid Pace” by Reed Abelson (May 8, 2023) which asks the question “why are multibillion-dollar corporations, particularly giant health insurers, gobbling up primary care practices?” Abelson then answers:
The appeal is simple: Despite their lowly status, primary care doctors oversee vast numbers of patients, who bring business and profits to a hospital system, a health insurer or a pharmacy outfit eyeing expansion.
And there’s an added lure: The growing privatization of Medicare, the federal health insurance program for older Americans, means that more than half its 60 million beneficiaries have signed up for policies with private insurers under the Medicare Advantage program. The federal government is now paying those insurers $400 billion a year.
Abelson chronicles the trend in consolidation:
The absorption of doctor practices is part of a vast, accelerating consolidation of medical care, leaving patients in the hands of a shrinking number of giant companies or hospital groups. Many already were the patients’ insurers and controlled the distribution of medicines through ownership of drugstore chains or pharmacy benefit managers. But now, nearly seven in 10 of all doctors are either employed by a hospital or a corporation, according to a recent analysis from the Physicians Advocacy Institute.
While insurers assert that this trend “is a step toward what is called value-based care”, Abelson notes that “some experts warn the consolidation will lead to higher prices and systems driven by the quest for profits, not patients’ welfare.”
The traditional Medicare program is a national treasure that is quickly being looted by those who wish to see the program continue its current path towards privatization. It is long-past time for Congress and CMS to take dramatic steps to protect traditional Medicare, secure the program’s finances, and exercise appropriate oversight and accountability of the MA industry. Medicare beneficiaries – including those enrolled in Medicare Advantage plans – deserve no less.
May 11, 2023 – D. Lipschutz