As Medicare Open Enrollment proceeds, more MA issues are coming to light, and Congress is starting to pay attention.
As the Medicare annual enrollment period continues through December 7, and beneficiaries are tasked with comparing their coverage options for the following year, ongoing overpayments to Medicare Advantage (MA) plans and barriers to care faced by MA enrollees continue to get attention. Key leaders of the committees of jurisdiction in the House and Senate have taken notice of many of these problems and are calling on the Centers for Medicare & Medicaid Services (CMS) to conduct more oversight and enforcement in order to adequately protect MA enrollees. This is a welcome step, but a much greater overhaul of the MA program is needed, which will require further Congressional action.
Medicare Advantage Overpayments
Reports about insurance companies’ manipulation of Medicare’s risk-adjusted payment system continue to highlight how MA plans are significantly overpaid in relation to traditional Medicare. For example, the Department of Health & Human Services, Office of Inspector General (OIG) recently issued a report titled “Medicare Advantage: Questionable Use of Health Risk Assessments Continues To Drive Up Payments to Plans by Billions” (Report number: OEI-03-23-00380; issued on Oct. 21, 2024). In the report, OIG noted that “taxpayers fund billions of dollars in overpayments to MA companies each year based on unsupported diagnoses for MA enrollees. Unsupported diagnoses inflate risk-adjusted payments and drive improper payments in the MA program.”
The report notes that prior OIG “work identified two sources of enrollee diagnoses—health risk assessments (HRAs) and chart reviews—as vulnerable to misuse by MA companies” and found that “[d]iagnoses reported only on enrollees’ HRAs and HRA-linked chart reviews, and not on any other 2022 service records, resulted in an estimated $7.5 billion in MA risk-adjusted payments for 2023” [emphasis added]. The report notes:
The lack of any other follow-up visits, procedures, tests, or supplies for these diagnoses in the MA encounter data for 1.7 million MA enrollees raises concerns that either: (1) the diagnoses are inaccurate and thus the payments are improper or (2) enrollees did not receive needed care for serious conditions reported only on HRAs or HRA-linked chart reviews
According to a Bloomberg Law article discussing the OIG report titled “Watchdog Flags $7.5 Billion Paid to Private Medicare Plans” by Tony Pugh (Oct. 24, 2024):
The report found that UnitedHealth Group Inc. received more than $3.7 billion in estimated risk-adjusted payments from health risk assessments and chart reviews in 2023. Humana Inc. received nearly $1.71 billion, followed by Cigna Group, which received nearly $237 million.
The most recent article in STAT News’ Health Care’s Colosssus series titled “Inside UnitedHealth’s strategy to pressure physicians: $10,000 bonuses and a doctor leaderboard” by Tara Bannow, Bob Herman, Casey Ross and Lizzy Lawrence (Oct. 16, 2024) also focuses on the risk-adjusted payment system and describes how “internal documents obtained by STAT expose the inner workings of UnitedHealth’s corporate strategy to enlist its doctors to pile moneymaking diagnoses onto patients covered by Medicare Advantage.” The reporters found that:
The coding strategy has paid off for the company. UnitedHealth’s physicians produced a blizzard of diagnoses that allowed the company to reap billions of dollars from Medicare, sometimes for illnesses that doctors told STAT were either clinically insignificant, marginally treatable, or not present in the patient at all.
Another significant revenue stream for MA plans comes through the star rating and quality bonus system, which, according the Medicare Payment Advisory Commission (MedPAC), does not provide enough reliable data about plan quality so the Commission “can no longer provide an accurate description of the quality of care in MA” (see, e.g., March 2021 report to Congress). As noted in an Urban Institute report (2023), the quality bonus program, “along with the MA risk adjustment program, overpays MA organizations and does not achieve its goal of quality improvement and helping beneficiaries select plans.” The title of a Health Affairs research article “The Medicare Advantage Quality Bonus Program Has Not Improved Plan Quality” (December 2021) makes a similar point.
In addition to some changes to Medicare’s risk-adjusted payment system meant to make payment to plans more accurate, CMS has recently made some changes to the quality bonus program in order to improve accuracy. These changes have resulted in reductions in quality ratings achieved by some MA plan sponsors, triggering industry lawsuits to challenge CMS’ ratings. As noted in a Bloomberg Law article titled “Insurers Sue to Bolster Revenue Amid Medicare Payment Squeeze” by Tony Pugh (Oct. 29, 2024):
Private Medicare Advantage insurers Humana, UnitedHealth Group, Centene, and a subsidiary of Blue Cross Blue Shield of Louisiana have sued the Department of Health and Human Services in recent weeks to contest their 2025 “star ratings,” which determine how much they’ll receive in 2026 from the MA Quality Bonus Payment program.
While the “stakes are enormous” for plans “with hundreds of millions of dollars in play”, the article notes that the bonus program has “irked the [Medicare Payment Advisory Commission] and other Medicare watchers who say it’s a poor barometer of plan quality and a prime contributor to Medicare’s spiraling costs.” The article quotes the Center for Medicare Advocacy as noting that unlike quality incentive programs in traditional Medicare, the MA quality bonuses are not budget-neutral, and noting that “plans are scrounging to protect their profits and this is one of the ways that they maximize their profits. But it’s had limited utility for the program and, according to independent analyses, it hasn’t improved quality.”
Access to Care in Medicare Advantage Plans
In addition to wasteful overpayments to MA plans, barriers to accessing care in MA plans continue to get attention. There are trade-offs for Medicare beneficiaries’ choices between staying in traditional Medicare and enrolling in a Medicare Advantage plan. Among such trade-offs, not promoted in plan marketing materials, is the extensive use of prior authorization and restricted networks of contracting providers.
Prior Authorization
As we outlined in last week’s CMA Alert titled “Senate Subcommittee Report Details Medicare Advantage Coverage Denials” (Oct. 24, 2024), the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations released a report this month regarding its ongoing investigation of Medicare Advantage plans’ prior authorization and on-going denials. The report highlights how three major insurers: UnitedHealthcare, Humana, and CVS “intentionally use prior authorization to boost profits by denying post-acute care.”
Similarly, ProPublica and Capitol Forum recently issued a report analyzing private insurance companies’ use of prior authorization beyond just Medicare Advantage. The report, titled “‘Not Medically Necessary’: Inside the Company Helping America’s Biggest Health Insurers Deny Coverage for Care” by T. Christian Miller, ProPublica; Patrick Rucker, The Capitol Forum; and David Armstrong, ProPublica (Oct. 23, 2024), highlights how insurance companies “often outsource medical reviews to a largely hidden industry that makes money by turning down doctors’ requests for payments, known as prior authorizations. Call it the denials for dollars business.” The report found that a company called EviCore:
uses an algorithm backed by artificial intelligence, which some insiders call “the dial,” that it can adjust to lead to higher denials. Some contracts ensure the company makes more money the more it cuts health spending. And it issues medical guidelines that doctors have said delay and deny care for patients.
In a Health Care Uncovered post describing this report titled “How EviCore’s “Denials-for-Dollars” Model is Putting Americans’ Health at Risk” (Oct 25, 2024), advocate Wendell Potter concludes:
While prior authorizations were originally intended to prevent unnecessary treatments and overbilling, those third-party companies have twisted the process into a profit-generating machine, one that forces patients and doctors to jump through hoops to secure even the most basic medical services. The result is a system where care all too often is denied to patients who need it most while insurers and their partners reap the financial rewards.
Abuse of the prior authorization process negatively impacts both beneficiaries and providers. A recent Skilled Nursing News article titled “‘Broken System’ of Medicare Advantage Prior Authorizations Leads to Nursing Home, Hospital Woes” by Amy Stulick (Oct. 29, 2024) quotes the president of the American Medical Association (AMA) as stating:
About 90%-plus of physicians, including those serving nursing home patients, have said that one or more of their patients have suffered significant harm because of delays tied to prior authorization […] “For 24% of these physicians, that delay has resulted in hospitalization, permanent disability or death – this is harming patients.”
Network Adequacy
As discussed in a recent CMA Alert (Sept. 5, 2024), media reports continue to highlight how many providers are pulling away from MA plans, which can impact access to care for MA enrollees. For example, Becker’s Hospital Review keeps a running tally of health systems that have announced they are no longer contracting with MA plans. In a recent update titled “30 health systems dropping Medicare Advantage plans | 2024” by Jakob Emerson (updated Oct 25, 2024), they note that among the most commonly cited reasons for providers ending their contracts with MA plans are administrative challenges such as “excessive prior authorization denial rates and slow payments from insurers.”
Even providers that are advertised as participating in a given plan’s network might not actually be available to plan enrollees. For example, a recent Health Care Uncovered post titled “Haunted Health: Beware the Ghost Networks This Halloween (And All Year Long)” by Joey Rettino (Oct. 30, 2024) highlighted health insurance plan provider directories that “are filled with outdated or inaccurate information, giving you the illusion that help is just a phone call away. But when you finally reach out, it very well could be a doctor or therapist who has retired, moved away or simply isn’t taking new patients anymore.” The article highlights a May 2023 Senate Finance Committee study of Medicare Advantage provider directories from 12 different plans in 6 states; of the 120 provider listings that the committee staff contacted by phone:
33% were inaccurate, non-working numbers, or unreturned calls. Staff could only make appointments 18% of the time. Appointment rates varied by plan and state, ranging from 0% in Oregon to 50% in Colorado. More than 80% of the listed, in-network, mental health providers staff attempted to contact were therefore “ghosts,” as they were either unreachable, not accepting new patients, or not in-network.
Congressional Attention re: Need for More Oversight
Building on prior investigations of MA marketing and provider network issues, Senate Finance Committee Chair Ron Wyden sent a letter to CMS (Oct. 29, 2024) calling for greater oversight of MA plans. He was joined by House Ways & Means Committee Ranking Member Richard Neal and House Energy & Commerce Committee Ranking Member Frank Pallone. See Senate Finance Committee press release “Democratic Health Leaders Warn Medicare Advantage is Falling Short for Seniors, Americans with Disabilities” (Oct. 30, 2024); a corresponding Energy & Commerce press release, available here, notes:
The letter raises concerns about several ways MA plans are failing to deliver for seniors and Americans with disabilities, including the growing use of prior authorization to deny or delay care and in particular the use of algorithms and artificial intelligence tools to make coverage determinations. The letter also highlights shortfalls among MA plans when it comes to core Medicare medical benefits or access to providers, as MA plans focus marketing efforts on supplemental benefits like gym memberships and flex cards.
The Center for Medicare Advocacy contributed a quote to the press release, supporting the leaders’ call for greater oversight of MA plans. We hope that such scrutiny continues. In the last few years, CMS has made significant improvements in consumer protections and oversight of MA plans, but far more is needed as plans continue to find ways to circumvent the rules.
Additional Congressional Action Needed
The Center for Medicare Advocacy recently drafted a joint op-ed with the Center for American Progress published in MarketWatch titled “Opinion: Medicare or Medicare Advantage? One of them doesn’t give you what you pay for.” by Andrea Ducas (CAP) and David Lipschutz (CMA) (Oct. 25, 2024).
Highlighting some of the issues raised above, including significant overpayments to MA plans and arduous prior authorization requirements, our organizations call on Congress to “level the playing field” between traditional Medicare and MA in order to give Medicare beneficiaries “a real choice between” the two. Using CAP’s estimate that MA will be overpaid by as much as $127 billion in 2024 alone, the authors conclude:
That’s more than enough money to expand traditional Medicare coverage to include dental, vision, and hearing benefits and introduce an annual cap on out-of-pocket expenses — reforms that would help all Medicare beneficiaries. The money could also be used to fund home-based caregivers, a critical Medicare coverage gap.
As Medicare beneficiaries navigate potential changes to their coverage during this open-enrollment period, the reality is that far too many enrollees won’t have a meaningful choice set before them — but lawmakers do.
A recent policy paper outlines one way that overpayments to MA plans can be redirected into traditional Medicare to the benefit of all Medicare beneficiaries. In a New England Journal of Medicine (NEJM) Perspective paper titled “The Opportunity Costs of Medicare Advantage Plan Rebates” by Cori Uccello, M.P.P., Gretchen Jacobson, Ph.D., and Melinda J.B. Buntin, Ph.D. (Oct 24, 2024), the authors analyze MA plan sponsor bids and payment benchmarks, and note that “the way in which Medicare pays [MA] plans leads to the federal government spending more on Medicare Advantage than traditional Medicare and to higher premiums and cost sharing for beneficiaries in traditional Medicare.” The authors note:
Instead of saving the federal government money, Medicare Advantage plans increase Medicare spending and worsen Medicare’s financial condition. They also raise Part B premiums and deductibles for people enrolled in traditional Medicare, since these costs reflect total Part B spending, including the portion of payments to Medicare Advantage plans drawn from the Part B trust fund.
The authors compared data on MA rebates resulting from this payment system “with the projected cost of providing enhanced benefits to all Medicare beneficiaries.” They found:
that a package of expanded benefits could be made available to all Medicare beneficiaries for less than the projected spending on rebates to Medicare Advantage plans in 2029 […]. This package could include reduced Part D premiums; a limit on out-of-pocket costs; coverage of dental, vision, and hearing care; some coverage of over-the-counter medications; and expanded behavioral health care coverage.
The report then calls on Congress to:
actively review the way the federal government pays Medicare Advantage plans and methods of providing extra benefits. This process should include consideration of whether there are more intentional methods of providing supplemental benefits that could improve outcomes for beneficiaries while also improving the Medicare program’s financial sustainability.
Conclusion
Despite more people continuing to enroll in Medicare Advantage plans, problems with accessing care in such plans persist. Wasteful overpayments continue to crowd out other federal spending, including improvements to traditional Medicare. We are greatly encouraged by greater Congressional attention to overseeing Medicare Advantage plans. But in addition to oversight, we also need a more substantial overhaul of the MA program and improvements to traditional Medicare.
October 31, 2024 – D. Lipschutz