Last week’s CMA Alert (Aug. 29, 2024) discussed the insurance industry’s launch of a campaign to convince policymakers that Medicare Advantage (MA) plans need more money and less regulation. While the industry is trying to convince lawmakers and public that MA is “better” than traditional Medicare, as discussed further below, providers continue to flee from MA plans – raising concerns about inadequate provider networks – while plans are pulling out of certain areas and scaling back benefits, despite continuing to be significantly overpaid. Plan sponsor decisions to forgo paying commissions for stand-alone Part D plans will push even more people towards MA plans. And an overarching policy proposal called Project 2025, which would make MA the default enrollment option in Medicare and would scale back MA oversight even further, would greatly accelerate the privatization of the Medicare program.
Providers are Fleeing MA Plans as MA Plans Drop Enrollees
As noted in a recent CMA Alert (Aug. 8, 2024), the MA industry has begun to announce some of the changes they are implementing for 2025, including pulling plans out of service areas and reducing benefits. More recently, Axios Vitals (Sept. 5, 2024) reported that Humana announced that it plans to leave 13 Medicare Advantage markets in 2025 and “scale back plan offerings in other areas.” Quoting a Modern Healthcare article, the newsletter noted that the Humana CEO stated at a health care conference “that the insurer is dropping out of counties where performance has been unsatisfactory and expects to lose a few hundred thousand enrollees as it prioritizes profitable markets.” According to a Fierce Healthcare article titled “Humana exiting Medicare Advantage in 13 markets” by Noah Tong (Sept. 4, 2024), Humana’s CEO “explained around 560,000 members, or 10% of its individual MA membership base, would be impacted by the cutbacks, but Humana anticipates it will absorb about half of those members into other plans.” Noting that Humana is “exiting markets in which it did not expect to be profitable next year” the article then quotes the CEO again:
“The exit itself is positive in the sense that those plans were not contributing,” said Diamond. “And so just exiting, even if we don’t retain the members, is positive. If we do ultimately retain more of those members, that’s incrementally positive because the plan choices left behind are priced in a way that will be positively contributing.”
[Explanation: plans that are not profitable are not “contributing” so exiting unprofitable markets, which will likely include loss of many members who don’t sign up for another Humana plan, is “positive.” Got it.]
While MA plan sponsors are exiting certain “unprofitable” markets, providers continue to pull away from MA plans (see, e.g., CMA Alert, July 25, 2024). For example, a recent Minnesota Star Tribune article titled “Sanford Health dropping out of Humana Medicare Advantage network, affecting up to 10K Minnesotans” by Christopher Snowbeck (Aug. 28, 2024) notes that nearly 10,000 affected patients in Minnesota were informed by Sanford Health that “it is dropping out of the network for Medicare Advantage plans from Humana, alleging the Kentucky-based health insurer continually delays patient care and denies coverage for services.” The article quotes a letter from the provider stating: “‘We have attempted to work with Humana for several years, but unfortunately, we have continued to experience delays in patient care, barriers to scheduling and denials of coverage causing financial burden and undue stress to our patients.”’ As Snowbeck points out, affected MA enrollees (in this and other analogous scenarios) will have to decide whether to find a new MA plan that contracts with the provider, stay with their current plan but without access to this provider, or return to traditional Medicare “although they might not be able to purchase a Medicare Supplement policy to cover out-of-pocket costs that can be significant.”
One of the ways that Medicare Advantage plans “manage” care is their ability to restrict enrollees to a network of providers (either exclusively, in the case of most HMOs, or for lower cost-sharing in the case of PPOs). When groups of providers pull out of contracts with MA plans (or when a plan terminates contracts with providers) it raises the question whether the remaining provider network is “adequate” and in compliance with existing network adequacy requirements. Narrowing networks – particularly when an individual’s personal provider(s) leaves or is terminated – raises concerns about access to care for MA enrollees.
Other concerns can emerge when a health insurer owns providers. In theory, if an insurer owns a provider or facility, coordination of care and payment should be more fluid. But problems for MA enrollees can arise even when someone has prior approval from their plan for care at a facility or provider that is in-network. A recent Minnesota Star Tribune article titled “Medicare patient wrongly sent to collections in dispute between two UnitedHealth Group entities” by Christopher Snowbeck (Aug. 30, 2024) chronicles the experiences of Mr. Stu Erck, a UnitedHealthcare MA plan enrollee who scheduled a knee replacement surgery with a surgical center (owned by Optum, a UnitedHealth subsidiary), confirmed as being in the plan’s network by both the plan and the center. Mr. Erck received approval for the surgery from his plan and was told he would have a copay of $275. Not long after the successful procedure was performed, the surgical center said that they were actually out-of-network and Mr. Erck owed an additional $3,300. Mr. Erck disputed the bill, and despite being told by UnitedHealth that the facility was indeed in-network, the bill was sent to collections. Mr. Erck had to file an appeal with his plan many months later before the insurer “identified a clerical error” and reprocessed the claim as being in-network yet the facility still did not reimburse Mr. Eck for amounts he paid through collections. It was not until the Star Tribune reporter contacted the plan months later that UnitedHealth Group – which owns both the insurer UnitedHealthcare and OptumCare, which owns the surgical center – declared that Mr. Erck would be reimbursed and his credit rating corrected. Perhaps it goes without saying that it should not require both an appeal to the plan and a call from a reporter to resolve a billing issue that is the fault of an insurer and provider that are owned by the same entity.
While some might argue that an insurance plan’s ownership of provider groups can yield greater efficiencies and coordination of care, such consolidation can also lead to deterioration of care while enriching the owner. STAT News’ Health Care’s Colossus series has highlighted how UnitedHealthcare “has brought roughly 90,000 physicians under its control over the past 20 years— 1 in 10 U.S. doctors — and has leveraged those physicians, as well as its position as the largest Medicare Advantage insurer, to maximize profits.” The latest article in the STAT News series, titled “Doctors detail profit-driven changes after UnitedHealth takeover” by Lizzy Lawrence, Casey Ross, Bob Herman and Tara Bannow (Aug. 28, 2024), describes the impact of UnitedHealth’s purchase of ProHealth Physicians in Middletown, Connecticut, 10 years down the road:
[T]he primary care network is a shell of its former self. Doctors are retiring earlier than they planned, or leaving for competing practices. Patients with serious medical conditions struggle to make appointments, while others complain of mysterious diagnoses popping up in their charts. Disillusioned, many patients are leaving.
As providers and plans battle over contract disputes, and even when plans own providers, beneficiaries are ultimately in the middle, and often end up paying the price – financially and/or in health-related ways.
Plan Sponsor Commissions Further Incentivizes MA Enrollment Over Traditional Medicare
Given that Medicare Advantage plans and stand-alone Part D prescription drug plans (PDPs) are only offered by private companies, there has long been concern that varying commission rates paid to agents and brokers for these products (and related products, such as Medigap plans) can incentivize those receiving commissions to push certain products over others – namely MA plans – regardless of whether such products are in the best interest of individuals. See, e.g., the work of the Commonwealth Fund, including “Agent Commissions in Medicare and the Impact on Beneficiary Choice” by Riaz Ali and Lesley Hellow (October 2021). A report by the Commonwealth Fund titled “The Challenges of Choosing Medicare Coverage: Views from Insurance Brokers and Agents” by Faith Leonard, Gretchen Jacobson, Michael Perry, Sean Dryden, Naomi Mulligan Kolb (Feb. 2023) explored these incentives through focus groups with agents and brokers. Among other findings, the report found:
Commissions for stand-alone Part D plans were viewed as too low and not worth the time — creating some problems for beneficiaries. While the federal Centers for Medicare and Medicaid Services (CMS) sets a maximum for Part D commissions, it doesn’t set a minimum, leading some brokers to believe they’re not being fairly compensated. “A lot of these carriers don’t compensate you at all to do a prescription drug plan now,” one broker said. Low commissions don’t incentivize brokers and agents to help people in traditional Medicare reevaluate their Part D plan each year, even though a plan’s coverage can change from year to year.
Some brokers described clients coming to them without a Part D plan or other drug coverage, despite being on Medicare for years, because their previous broker had never enrolled them in a Part D plan. These enrollees consequently have to pay a Part D late-enrollment penalty each month for the remainder of their years on Medicare and cannot enroll in a Part D plan until the next open enrollment period.
This phenomenon will continue into 2025, with two major plan sponsors that offer both MA and Part D plans announcing that they will not pay commissions for new Part D plan enrollments (and one sponsor will no longer pay renewals, either). A recent STAT News article titled “Centene eliminates brokers’ commissions for Medicare drug plans” by Bob Herman (Aug. 27, 2024) has the sub-heading: “The decision by the largest Medicare Part D carrier may end up steering policyholders toward Medicare Advantage plans.” Herman notes that Centene – “the largest seller of Medicare Part D drug plans with more than 6.6 million enrollees” – “will not pay any commissions to brokers and agents who help people sign up for next year’s Medicare prescription drug plans” nor will the company pay renewal commissions for “people who have already chosen one of the company’s drug plans.” Noting that this “decision will save hundreds of millions of dollars for Centene”, Herman states that many insurance brokers “think Centene’s strategy is an attempt to move those enrollees into Medicare Advantage plans, which include coverage for prescription drugs and draw more money from the federal government.” The article also notes that CVS Health’s Aetna is paying renewal commissions for its current Part D plan enrollees but not for new enrollees.
As discussed in a previous CMA Alert (June 6, 2024), in April 2024, CMS issued a final rule to crack down on excessive compensation and other bonus arrangements offered to agents and brokers by Medicare Advantage and Part D plans. The rule disallows tactics that incentivize agents and brokers to steer beneficiaries into particular plans based on financial perks for the agents and brokers instead of on the enrollees’ health care needs. The Center supported this rule, but urged CMS to go further by equalizing commission between MA and Part D plans instead of just within these coverage options. Having one, uniform commission for all MA and Part D plan sales would mitigate many of the incentives to promote one product type over the other. As discussed in this Alert, though, CMS’ rule has been challenged by elements of the agent/broker community, and are now on hold for the upcoming annual enrollment period.
Project 2025 Would “Supercharge” the Privatization of Medicare
While there are varying approaches to reforming the Medicare program, one set of policy proposals in a wide-ranging document titled “Project 2025” by the Heritage Foundation, offered as “the conservative movement’s unified effort to be ready for the next conservative Administration”, would have profound impacts on the Medicare program, likely exacerbating many of the problems outlined above.
Among other proposals, it would: “[m]ake Medicare Advantage the default enrollment option;” “[r]emove burdensome policies that micromanage MA plans;” and repeal the Inflation Reduction Act (pp. 464-5).
The Center for Medicare Advocacy has been quoted in several articles that discuss the potential impact of Project 2025 on the Medicare program, including: Salon, “‘Shocking’: Experts warn ‘irresponsible’ Project 2025 Medicare proposal would harm seniors” by Cara Michelle Smith (Sept. 3, 2024); Yahoo Finance, “How ‘Project 2025’ could change Medicare” by Janna Herron (July 20, 2024); and Rolling Stone “Republicans Are Planning to Totally Privatize Medicare — And Fast” by Andrew Perez (Feb. 5, 2024).
A previous CMA Alert (Feb. 22, 2024) referencing the Rolling Stone article notes that the policy of making MA the default enrollment option “would hasten the end of the traditional Medicare program, as well as its foundational premise: that seniors can go to any doctor or provider they choose.” As noted by the Center, it would both “‘greatly accelerate’ Medicare privatization” and “‘accelerate program insolvency because Medicare Advantage [costs] so much more than traditional Medicare.’”
As noted in an article by the Center for American Progress titled “Project 2025’s Medicare Changes Would Restrict Older Americans’ Access to Care and Imperil the Program’s Financial Health” by Brian Keyser and Andrea Ducas (Aug 15, 2024):
Project 2025 would put more control in the hands of profit-driven corporations by making MA the default enrollment option for Medicare beneficiaries. Corporations, not doctors or patients, would be able to control what care an even greater number of enrollees can and cannot receive, while enriching their bottom lines and threatening Medicare’s future.
Conclusion
Reporter Fred Schulte, who has long chronicled Medicare Advantage upcoding and other tactics to maximize plan profit at taxpayer expense, recently wrote an article for KFF Health News titled “Feds Killed Plan To Curb Medicare Advantage Overbilling After Industry Opposition” (Aug. 27, 2024). The article describes how:
A decade ago, federal officials drafted a plan to discourage Medicare Advantage health insurers from overcharging the government by billions of dollars — only to abruptly back off amid an “uproar” from the industry, newly released court filings show.
The Centers for Medicare & Medicaid Services published the draft regulation in January 2014. The rule would have required health plans, when examining patient’s medical records, to identify overpayments by CMS and refund them to the government.
Schulte notes that this proposed rule was dropped in May 2014 without public explanation, but “[n]ewly released court depositions show that agency officials repeatedly cited concern about pressure from the industry.”
In 2014, 31% of Medicare beneficiaries were enrolled in MA plans; today, it is 54% and growing. If anything, the insurance industry is more influential now and is actively trying to leverage its influence to maintain its margins and reduce oversight. If MA plans actually produced better outcomes for enrollees and had lower costs for both the government and enrollees (none of which is true), there would be less urgency to push back against the insurance industry. We urge policymakers to rein in MA overpayments, address payment incentives (including commissions) that continue to push people towards MA enrollment, and strengthen consumer protections for those who are in MA plans, including network adequacy rules and prior authorization requirements. In short, Medicare Advantage needs more oversight and less overpayments.
September 8, 2024 – D. Lipshutz