For many years, the Center for Medicare Advocacy has advocated 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. In addition, lax oversight of MA plans has led to decidedly mixed outcomes for MA enrollees, and, as noted by a recent Office of Inspector General report (discussed in our companion Alert, Office of Inspector General (OIG) Issues Another Report Highlighting Inappropriate Medicare Advantage Denials), “widespread and persistent problems related to inappropriate denials of services and payment.”
Unfortunately, policy makers are taking little action, let alone acknowledging, that these problems exist.
Medicare Finances – MA Overpayments
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 Medicare programmatic spending. For example, the Medicare Payment Advisory Commission (MedPAC) continues to sound an alarm regarding the need for policymakers to act on Medicare Advantage overpayments and oversight, noting in their March 2022 “Report to Congress” that Medicare spends 4 percent more on MA than it would spend on traditional Medicare, an estimated $12 billion in excess payments this year alone.
As we outlined in a recent CMA Alert (March 31, 2022), MA overpayments lead to enticing extra benefits, which lead to more enrollment, which lead to more Medicare spending. But most of Congress avoids eye contact on this issue.
As the Center noted in another recent CMA Alert (March 3, 2022), when it comes to Medicare policy discussions on Capitol Hill, two things are commonly raised:
- Active support for Medicare Advantage (MA), and
- 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.
Much of this overpayment is due to the manner in which risk-adjusted payment to plans are structured, which incentivize plans to code as many diagnoses as possible in order maximize payment. For example, a recent Bloomberg article titled “Major Insurers Are Scamming Billions from Medicare, Whistle-Blowers Say” by John Tozzi (April 12, 2022) states, about Medicare Advantage:
The program’s growing popularity has made it politically powerful. Republicans extoll its private-sector innovation while Democrats know that enrollees are disproportionately low-income and people of color. An industry coalition recently touted a letter signed by 346 U.S. representatives — more than 80% of the House — urging the Biden administration to “provide a stable rate and policy environment” for the program. Soon after, Medicare proposed payment rates for 2023 that an analyst for Veda Partners called “surprisingly good news for industry.”
Noting that “[t]he industry has billions at stake in how the payments are calculated”, the article describes how, in an effort to chase dollars, “[h]ealth-care companies developed increasingly sophisticated methods to maximize payments. A cottage industry of vendors emerged to help them. They mine data from patient charts, send staff to do health-risk assessments in patients’ homes and prod doctors to review potentially missed diagnoses.”
As we describe here, not only Congress, but CMS has failed to use the tools they possess to address MA overpayments.
Need for More Oversight
There is an urgent need not only to address MA overpayments, but also to ensure that MA enrollees have adequate access to care and are not being harmed by the financial incentives motivating plan behavior. As discussed in our companion Alert, Office of Inspector General (OIG) Issues Another Report Highlighting Inappropriate Medicare Advantage Denials, the recent OIG report on Medicare Advantage denials clearly demonstrates the need for tighter regulation of plan activity. While CMS agrees with the recommendations offered by OIG to address some of these problems, as noted by OIG, CMS has yet to implement recommendations offered to them in OIG’s 2018 report on Medicare Advantage denials.
With respect to other issues surrounding consumer protections, such as plan marketing and network adequacy rules, as noted here, while the Center appreciates that a recent Part C & D rule starts to reverse a recent trend of regulatory rollback, the rule falls short of reimposing the necessary breadth of critical plan oversight.
Medicare Advantage for All?!
Despite the apparent lack of appetite on either side of the aisle to address MA overpayments and step-up oversight, there are, broadly, different ideological visions of the future of the Medicare program. On one side, the so-far stalled Build Back Better debate began with a fundamental expansion of the traditional Medicare program, including adding dental, hearing and vision benefits, expanding low-income protections, improving Medigap rights, and lowering drug costs. These changes, if enacted, would have benefited all Medicare beneficiaries, including those in private plans.
The alternative view of the future of Medicare appears to be much more reliant on Medicare Advantage. For example, Politico recently published an article titled “Republicans Have Stopped Trying to Kill Obamacare. Here’s What They’re Planning Instead.” by John E. McDonough (4/26/22). In assessing potential future health policy action on Capitol Hill, McDonough notes that
[t]he two behemoths of federal health policy, Medicare […] and Medicaid […] are far less the reform target of Republicans and conservatives than they used to be. An essential reason for this is that both programs, with little controversy, have become increasingly privatized. Former House Speaker Paul Ryan’s vision of privatizing both programs is happening and fast. Today, about half of all Medicaid spending goes to private Medicaid managed care organizations, most of them for-profit. Trends now project that by 2023 a majority of Medicare’s senior and disabled enrollees will get their coverage via Medicare Advantage (Part C), the private insurance option dominated by massive for-profit insurers such as UnitedHealthcare.
McDonough notes that Medicare “is a big success story for the American right as more than half of new enrollees are signing up daily for the privatized Medicare Advantage option” and some conservatives “would like to expedite the transition, allowing year-round open enrollment in Part C (as opposed to the current 6-week annual open enrollment period) and even making it the default selection for new enrollees.” Further, “a small and growing chorus of voices now suggest that Medicare Advantage could be the foundation for a unitary and reformed national health system, not Sanders’ ‘Medicare for All’ which would eliminate Part C, but ‘Medicare Advantage for All’ that would eliminate Medicare A and B, and make Part C universal.”
McDonough concludes his analysis:
In sum, conservative and Republican health policy voices, in spite of a full retreat on ACA repeal, are active and ambitious to reengage if and when Republicans retake the Senate and/or the House. This is especially true regarding private commercial health insurance, inside or outside of the ACA’s health marketplace/exchanges. They are ready to confront any and all threats to the growing hegemony of Medicare Advantage and to find new opportunities to expand it. They stand on the sidelines regarding fast-growing interest in health care equity and social determinants of health. They are down for the current moment and will be back with ideas and plans when the political climate changes. If prior history matters, so will their emerging ideas.
While some policy makers might favor Medicare Advantage for All, there are many who oppose this approach, including physicians. For example, in response to an article titled “A Potential Path to Universal Coverage With Medicare Advantage for All”, the Journal of the American Medical Association (JAMA) recently published letters to the editor from physicians who object to this approach (Vol. 327, No. 16, April 26, 2022). One letter highlights MA’s “excess expense (and waste)” and notes that “the exodus from MA of patients needing high-cost services such as dialysis, skilled nursing, or homecare offers ‘revealed preference’ evidence that MA poorly serves unprofitably ill patients.” The letter concludes “[f]ar from looking to MA as a model for reform, we should question whether it should play any role at all.” Another letter describes that plan
“incentives to maximize profits by manipulating the risk-adjusted payment system are such that in our medical practices, we receive various entreaties from MA plans and their affiliates encouraging us to code with greater specificity, which serves only to create the appearance of greater case-mix complexity. None of this improves patient care on any level; in fact, it detracts by requiring us to spend valuable time looking up codes instead of caring for our patients.”
Another letter that even “agree[s] with the premise of retaining the private health insurance industry while still covering the population under Medicare for All,” nonetheless echoes that “Medicare Advantage enrollees in poorer health disenroll at high rates” and suggests “numerous regulatory and oversight fixes”.
A New Hope – Some Policymakers are Pushing Back
The Center for Medicare Advocacy does not support a Medicare Advantage for All approach. Instead, we urge policy makers to address the growing inequities between traditional Medicare and the Medicare Advantage, including payment, scope of covered benefits, and equal access to coverage options (e.g., expanded federal guarantee issue rights to purchase Medigap plans).
At the very least, MA overpayments must be reined in, and oversight of plans must be increased. Despite the overwhelming neglect of policymakers to so act, there are some lawmakers that are trying to draw attention to these issues. Here are some examples.
On February 2, 2022, the Senate Finance Committee’s Subcommittee on Fiscal Responsibility and Economic Growth held a hearing entitled “The Hospital Insurance Trust Fund and the Future of Medicare Financing”. Unlike any of her colleagues, Senator Elizabeth Warren made a clear connection between Trust Fund challenges and MA overpayments.
As noted in a March 10, 2022 CMA Alert, on March 4, 2022 Representative Pramila Jayapal led members of Congress in a letter to the Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) calling on CMS to address MA overpayments. She was joined by Senators Bernie Sanders (I-VT) and Elizabeth Warren (D-MA) and Representatives Jamaal Bowman (NY-16) and Katie Porter (CA-45).
As the Center noted in another recent CMA Alert (April 21, 2022), 19 members of the House and Senate sent a letter to Centers for Medicare & Medicaid (CMS) Administrator Chiquita Brooks-LaSure “highlighting concerns about overpayments to Medicare Advantage plans that line the pockets of big insurance companies” according to a press release posted by Rep. Rosa DeLauro titled “Porter, DeLauro, Schakowsky, Warren Lead Letter Calling on CMS to Address Overpayments and Increase Transparency in the Medicare Advantage Program” (4/20/22). The letter “urges CMS to mitigate the announced payment increases so they are on par with payments to Traditional Medicare” and “also calls on CMS to increase transparency in the Medicare Advantage program.”
More recently, on April 27, 2022, 11 members of Congress sent a letter to the Chair and Ranking Member of the House Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies requesting greater oversight of MA payment and inappropriate care denials. The letter requests “1) bill language to increase the accuracy of payments to Medicare Advantage plans and extend Medicare Hospital Insurance Trust Fund solvency and 2) report language directing the Centers for Medicare and Medicaid Services to use at least 50 percent of the funds appropriated for the Healthcare Fraud and Abuse Control Account to investigate inappropriate care denials by private insurance companies.” (Note that the letter was finalized before the recent OIG report on MA denials was released.) Rep. Pramila Jayapal, who led the letter, was joined by Reps. Sheila Cherfilus-McCormick, Raul M. Grijavla, Katie Porter, Cori Bush, Mondaire Jones, Rashida Tlaib, Ro Khanna, Andy Levin, Mark Takano, and Ayanna Pressley.
We need more policymakers to follow these examples. The Medicare program – and Medicare beneficiaries – deserve no less.
May 5, 2022 – D. Lipschutz