News You Won’t Hear from Private Plans During Enrollment Season
The Medicare Annual Election Period (AEP) is a time during which people can change the way they receive their Medicare coverage – through traditional Medicare with a Part D prescription drug plan or through a private Medicare Advantage (MA) plan. The AEP is well underway, lasting until December 7th. During the AEP, Medicare beneficiaries can learn what coverage options are available for the coming year and make corresponding informed decisions. These include whether to change their MA or Part D plans, enroll in MA from traditional Medicare, or stay in or return to traditional Medicare. But where do people get their information before making such important healthcare decisions? Upon whom do they rely?
During the AEP in particular – but really, at all times throughout the year – the deck is stacked in favor of Medicare Advantage plans and the insurance providers who wish to sell them. Medicare beneficiaries face an onslaught of insurance industry marketing materials aimed at convincing them to enroll in a particular product(s) rather than encouraging informed decision-making about what options might be best for an individual. Rather than relying on enticements about the “extras,” or other sales efforts to enroll in a plan that is available from a particular broker, beneficiaries should make coverage decisions well-informed about the pros and cons of their coverage choices. In short, the public needs a balance, or counter-weight to insurance industry influence.
The Center for Medicare Advocacy is hopeful because we are seeing an increase in news coverage about Medicare, Medicare Advantage, and needed improvements that is more objective, and neutral. For example, as discussed below, a recent NY Times article highlights several issues. Are more journalists, and by extension, the public, becoming better educated about the Medicare program, and what needs to be fixed? Will policymakers follow?
Below, we explore a number of recent articles and reports that highlight various Medicare Advantage enrollment pitfalls, MA plan and agent/broker misconduct, access to care in MA plans, and other issues the insurance industry is not likely to promote this enrollment season, but about which beneficiaries should be aware. But first, we explore where people get their information, including from the Medicare program itself.
Sources of Information about Medicare Options
Official Medicare Materials – Improving, But Still Promoting Medicare Advantage
As the Center for Medicare Advocacy has previously written, starting in the Fall of 2017, the Center and other advocacy organizations began to note that, in a marked change from previous practice, the Trump Administration’s official Centers for Medicare & Medicaid Services’ (CMS) outreach and enrollment materials actively promoted enrollment in private Medicare Advantage (MA) plans, while downplaying the drawbacks of such plans, and omitting key information. At the same time, these materials – including revisions to several editions of Medicare & You, online comparison tools (including the Medicare Plan Finder and associated materials), and education and outreach materials – tended to downplay (or in the case of some email campaigns, entirely leave out), the option of traditional/Original Medicare. Instead of objectively presenting enrollment options, some of this material went as far as encouraging beneficiaries to choose a private MA plan over traditional Medicare. In an Addendum to a Center for Medicare Advocacy report issued in September 2021, we included a catalogue of such bias in Medicare materials during that time.
Thankfully, under the current Administration, Medicare’s own materials, including the Medicare & You Handbook, have begun to reverse much of the previous bias towards Medicare Advantage (see, e.g., CMA Alert (Sept. 28, 2022)). In particular, there have been improvements to the charts comparing Medicare Advantage and traditional Medicare at the beginning of the Handbook which are particularly important as that section of the book is what readers are most likely to pay attention to. Because of its brevity, that section (and other similar descriptions in other Medicare materials, such as medicare.gov) is most susceptible to improper shortcuts or abbreviations of critical information. We appreciate that CMS has been thoughtful and responsive to advocates’ concerns, however further improvement is needed, including more clearly outlining the trade-offs between MA and traditional Medicare.
On the medicare.gov website, many of the improvements made to Medicare & You have been incorporated in the comparison information and charts, but there is also key information missing. For example, on the medicare.gov website, if one selects “Get Started with Medicare” and clicks through “Medicare Basics” and the “Parts of Medicare” one ends up here. The chart titled “Your Medicare Options” uses almost identical language from the Handbook, but inexplicably omits key information from a similar chart from the Handbook (at p. 10) – specifically, a key statement about MA plan prior authorization is missing: “In many cases, you may need to get approval from your plan before it covers certain drugs or services.” Similarly, if one chooses to “Find Plans” on the homepage of the website, but under “Plan Type” selects “I want to learn more about Medicare options before I see plans” the medicare.gov website takes you here, where the information is much more abbreviated. Under “Your Medicare coverage options”, when selecting the link “Medicare Advantage Plan” there is no mention of prior authorization whatsoever.
Also of lingering concern, Medicare’s email campaign during the AEP is very “plan” focused – for example, a generic email sent on October 27, 2022 titled “What to consider when choosing your 2023 Medicare plan” encourages recipients to compare plans and then recommends factors to consider, most of which apply only to Medicare Advantage plans, and implies that one is already (or should be) in an MA plan, not traditional Medicare:
Here are some things to consider when shopping for Medicare coverage:
- Check if your doctors are still in-network.
- Make sure your prescriptions are on the plan’s list of covered drugs, or “formulary.”
- Consider how the plan’s deductible and other out-of-pocket costs factor into total costs.
- Some plans offer extra benefits, like vision, hearing, or dental coverage, that could help meet your needs in 2023.
Medicare is also sending targeted emails to individuals, using their name and zip code. For example, in late October, Medicare sent an email to a beneficiary, “Jane “, with the title, “Jane, see how many Medicare Advantage Plans are available in your area”. The body of the email reads:
[Jane], There are 25 Medicare Advantage Plans available in your area (zip code), including 2 new plans. Find a plan that’s right for you before Open Enrollment ends on December 7!
The Center has spoken with individuals, including people with extensive professional education, who, after being subject to such information from Medicare, are left with the conclusion that they have no choice but to enroll in an MA plan. These materials do not adequately inform people that if they are in traditional Medicare, they can stay there, and if they have a stand-alone Part D plan, they can compare such plans for the following year – they do not need to enroll in an MA plan.
In addition, the Medicare program’s own MA plan quality ratings – which, ostensibly allow beneficiaries to compare MA plan performance – are fundamentally flawed (see, e.g., CMA Special Report (October 14, 2021)). As noted in a recent article in JAMA Forum, “The Lake Wobegon Effect—Where Every Medicare Advantage Plan Is ‘Above Average’” by Joan M. Teno and Claire Ankuda (Oct. 20, 2022), “The current system for rating the quality of MA plans does not allow consumers to make meaningful comparisons. The millions of US seniors faced with choosing an MA plan deserve to know if a given plan is truly above average—or if a favorable rating might be a fictional entity, not unlike Lake Wobegon’s ubiquitously above-average children” [Emphasis added.]
At the beginning of last year’s AEP, the Center for Medicare Advocacy issued our “Special Report | Medicare Annual Enrollment Period Starts Tomorrow – Look Before You Leap” (October 14, 2021). Among other things, we highlighted a Kaiser Family Foundation (KFF) report issued in 2021 titled “Seven in Ten Medicare Beneficiaries Did Not Compare Plans During Past Open Enrollment Period” (Oct. 13, 2021) which found that in 2019, “71% of all Medicare beneficiaries reported that they did not compare their plan to other Medicare plans that were available during the 2018 open enrollment period, while 29% of all Medicare beneficiaries reported that they compared Medicare plans.” Among those in MA plans, “68% reported that they did not compare Medicare plans during the 2018 open enrollment period, compared to 73% of those in traditional Medicare.”
With respect to Medicare’s own materials, even if they continue to improve with respect to bias towards MA, according to KFF they are “not widely used by beneficiaries.” The 2021 KFF report noted that:
- “Nearly half (47%) of all beneficiaries with Medicare said they had never visited the official Medicare website for information, while 42% said they said they (or someone for them) had ever visited the website, and the remainder (11%) reported they did not have access to the internet or had no one to access it for them […].
- 53% of all Medicare beneficiaries reported they had never called the 1-800-MEDICARE helpline for information, while 31% reported they had ever called the helpline, and another 16% said they were not aware this helpline existed.
- Half (51%) of Medicare beneficiaries reported they had read thoroughly or some parts of the Medicare & You handbook, while almost one-third (31%) reported they had not read it at all. Nearly one in five (18%) Medicare beneficiaries reported they did not receive it or did not know if they had received it.”
So where do people get their information about Medicare?
The Commonwealth Fund recently released an Issue Brief titled “Traditional Medicare or Medicare Advantage? How Older Americans Choose and Why” (Oct. 17, 2022). The Brief describes the results of a survey the Fund conducted of individuals aged 65 and over, finding that the main reason people choose traditional Medicare is “more doctor, hospital and health care provider choice” (40% of respondents), while those that choose Medicare Advantage cite “more benefits” (24%) and an “out-of-pocket cost limit” (20%).
As far as using an information source to guide plan choice, the Commonwealth Fund survey found that about 1 in 3 Medicare beneficiaries – regardless of coverage– used insurance brokers or agents to choose a plan, compared with approximately 5% who used a State Health Insurance Assistance Program (SHIP). About 40% of people did not receive any help. The survey also found that “Advertising was a more common source of information for Black, low-income, and older Medicare beneficiaries.”
The Issue Brief noted that policy implications of the survey findings include the following:
Medicare beneficiaries, regardless of their source of coverage, seem to most frequently rely on the one-on-one help provided by brokers and agents in choosing a Medicare plan. But brokers and agents are paid commissions by insurers, which can influence the kind of information they provide. While government-funded SHIPs are designed to provide unbiased, one-on-one help, these programs remain underutilized. That’s perhaps because they rely heavily on volunteers, and because their staff lack the capacity that brokers and agents have to reach beneficiaries, many of whom may not be aware of SHIPs. The relatively low percentage of respondents who used Medicare.gov or the Medicare hotline also raises questions about whether these resources are known to beneficiaries and are meeting their needs. [emphasis added]
To the extent that Medicare beneficiaries rely on others, it is more often agents and brokers with a pecuniary interest in the outcome of a beneficiary’s decision-making, amid a barrage of plan advertising, rather than the unbiased State Health Insurance Assistance Program (SHIPs) or even Medicare’s own materials. This tilts the Medicare marketplace in favor of enrollment in Medicare Advantage, even if a Medicare Advantage plan is not in the beneficiary’s personal best interest.
Every year during the Medicare Annual Election Period (AEP), health insurance companies blanket the airwaves, internet and print in an effort to compete for attention and sell their products. These efforts inevitably paint Medicare Advantage in a light most favorable, highlight all of the plans’ new bells and whistles, and ignore most of the crucial considerations that prospective enrollees must weigh, including restricted networks, prior authorization for services, and other trade-offs of enrolling in an MA plan. This advertising onslaught, combined with the efforts of many agents and brokers primed to sell MA products above all others, is clearly biased and bent towards pushing people to MA plans. As discussed above, Medicare’s own materials have begun to return to a more objective stance, but there is still over-promotion of MA plans.
Thankfully, however, many news outlets seem to be issuing more complete information about the trade-offs between coverage options. More articles are focusing on exploring the trade-offs between MA and traditional Medicare, serving as a counter-weight to – or at least a more neutral check on – insurance industry advertising. Every year, multiple news outlets publish articles about the annual Medicare enrollment period, aimed at providing advice to readers about making choices about their Medicare coverage. Perhaps fostered in part by increasing instances of marketing misconduct, we are noticing that many such articles increasingly try to warn readers about choosing coverage options carefully, caution against being misled by Medicare Advantage plans, and highlight incentives that might push agents and brokers to promote MA plans over other options.
An example of such an article is “Medicare Open Enrollment: Don’t Let Deceptive Advertising Lead To Costly Mistakes” by Mark Miller (Oct. 11, 2022) published by Morningstar. In the article, Miller notes that:
The heavy marketing of Medicare plans can add to the confusion of an already-challenging process. Choosing between traditional fee-for-service Medicare and Medicare Advantage involves complex trade-offs between up-front premium costs, out-of-pocket limits, and potential restrictions on network providers.
And these choices are not only financial. Wrong-fit coverage can have an impact on your health if it means delayed access to care, or if it prevents you from seeing the best possible healthcare provider for your situation.
Miller highlights that “[a]ggressive marketing pitches often focus on claims that Medicare Advantage is less expensive than traditional Medicare, and that Advantage plans deliver extra benefits, such as dental coverage, gym memberships, and even meals delivered to the home.” He notes, however, that “traditional Medicare actually provides the best protection against out-of-pocket costs when coupled with a Medigap supplemental plan. If you are in Medicare Advantage, you carry the risk of additional costs up to your plan’s annual out-of-pocket limit.”
One of the most important considerations in choosing between MA and traditional Medicare is knowing that the choices are, in fact, not equal in most parts of the country. As Miller notes, “[t]heoretically, you can switch between traditional Medicare and Medicare Advantage during the annual fall enrollment period. But from a practical standpoint, a choice to enroll in Advantage when you first sign up for Medicare may be irreversible because of the rules governing Medigap supplemental insurance and pre-existing conditions.”
In addition to providing practical advice about coverage options, Miller highlights the disparity in the public’s access to information about coverage options:
The huge marketing budgets supporting sales of Medicare Advantage plans create an uneven playing field for consumers choosing between Advantage plans and traditional Medicare during Medicare’s annual enrollment period, which runs from Oct. 15 through Dec. 7.
There simply are no big advertising budgets supporting traditional Medicare, which allows you to visit nearly any healthcare provider in the United States. That feature has become extremely rare in most health insurance plans, and it could be a matter of life and death if you receive a diagnosis of a serious illness and want to seek out care from a top-rated specialist or facility that might not be in a Medicare Advantage network. [emphasis added]
Miller further describes how agent and broker commissions often influence what products are promoted:
But it’s important to understand that brokers earn a living through commissions, so they have a built-in bias to sell their own product lines. Enrollees who use a broker therefore may not be presented with plans based on thorough analysis of all the possible coverage choices available to them.
For example, a Commonwealth review of online broker plan selection tools found that, on average, each tool included just 43% of available Medicare Advantage plans and 65% of Medicare Part D plans.
Commission structures also matter, and The Commonwealth Fund has found potential conflicts between financial interests of brokers and beneficiary interests. CMS sets maximum broker commissions for Medicare Advantage, Medicare Part D, and Medigap. But insurer payments can vary, and the highest commissions are paid on first-time enrollment in Advantage plans. And plan brokers can earn additional bonus payments for meeting enrollment targets. [emphasis added]
Another recent article that combines practical advice with context as to why the market is skewed towards MA plans is “What Is a Medicare Advantage Plan, and Should You Sign Up for One?” by Alex Janin and Leslie Scism, Wall Street Journal (Oct. 14, 2022). Janin and Scism caution readers about Medicare Advantage advertising:
Celebrity-studded advertisements paint a rosy picture: low premiums, easy enrollment and alluring benefits such as vision, dental and fitness class coverage.
Medicare experts say: Look before you leap.
The Wall Street Journal article then outlines five steps to determine whether to enroll in traditional Medicare or MA, and offers sage advice, including “Plans may boast coverage for extra benefits, such as hearing aids or gym memberships, but they may only cover a fraction of the total cost.” The article also notes, “Under rates set by CMS, insurers pay agents and brokers higher commissions on average for enrolling clients in Medicare Advantage plans than for Part D plans” [emphasis added].
More attention is appropriately being paid to agent and broker incentives. “Brokers Earn More to Steer New Beneficiaries to Medicare Advantage” by Cheryl Clark, MedPage Today (Oct. 14, 2022) outlines how agent/broker commissions factor in to the rapid growth in MA enrollment. Clark states:
In a nutshell, because CMS sets agents’ MA commission rates, they tend to be much more favorable to those selling MA plans to first-time enrollees than to the agents who would put those beneficiaries in traditional Medicare with a supplemental plan, known as a Medigap plan.
Clark quotes Christopher Westfall, a broker licensed to sell plans in 47 states who says “that he’s paid roughly twice as much in commissions — depending on the state and the plan — for enrolling a new beneficiary into an MA plan for 2023 compared with a Medigap plan” [emphasis added]. Clark notes that “[w]hen a health insurance agent enrolls a beneficiary, it’s not just a one-time commission for that year […] Brokers reap payments for subsequent years if their client stays in the same plan, but the disparity between MA and supplemental plan commissions is evident here as well.” Similar to the article cited above by Mark Miller published by Morningstar, Clark also points out the difficultly of dropping an MA plan and picking up a Medigap policy:
Westfall pointed out that if an unhappy enrollee wants to switch to traditional Medicare with a supplemental plan after the first 12 months of being in an MA plan, plans in all but four states are allowed to reject high-risk, unhealthy would-be transfers. This means that beneficiaries who have had common conditions or illnesses including knee replacement, diabetes, cancer, or even high cholesterol and high blood pressure with other conditions will likely be rejected after answering a health questionnaire, a process called underwriting.
An article by Daniel Funke, Agence France-Presse (AFP) published on MSN.com titled “Amid high US inflation, online insurance offers mislead elderly” (Oct. 5, 2022) highlights advertisements promoting extra benefits in Medicare Advantage plans on Facebook, Instagram and elsewhere promoting “zero-cost dental care” and “free groceries in exchange for an email and a phone number.” Such ads are often posted by marketing and lead generating firms and connect inquiries to agents and brokers. Funke notes that the promoted “benefits are only available to a comparatively small audience. And as older, typically unwaged citizens are hit by rising prices, watchdogs say they could be misled into changing their plans during traditional Medicare enrollment in October.” The article notes: “[i]n comments on dozens of posts reviewed by AFP, Facebook users said they never received the promised grocery cards or dental care — and chasing those offers can have unintended consequences.”
Another recent article, “Medicare Guide 2023: Complaints soar over misleading Medicare Advantage marketing; how to protect yourself” by Mike Rogoway, published by The Oregonian (Oct. 23, 2022), chronicles some of the problems with MA advertising:
Consumer watchdogs say the commercials are grossly misleading, making promises the company behind them often can’t deliver. The ads – and similar marketing pitches – have coincided with a spike in complaints about Medicare Advantage marketing, which surged 165% last year.
The article quotes the chair of the Senate Finance Committee, which has jurisdiction over the Medicare program:
The article notes that Sen. Wyden recently sought information from various state regulators across the country about misleading marketing practices surrounding the sale of MA products. “‘Bad actors keep finding ways to milk the program, make a quick buck off the vulnerable,’ Wyden said. ‘So I believe the data’s going to confirm this question of deceptive marketing and these numbers that show the number of complaints going up are accurate.’”
Oversight of Marketing Misconduct
On October 19, 2022, the Centers for Medicare & Medicaid Services (CMS) issued a memorandum to all Medicare Advantage and Part D plans titled “CMS Monitoring Activities and Best Practices during the Annual Election Period” (Oct. 19, 2022) The memo informs plans of CMS monitoring activities, shares plan best practices for the current AEP, and outlines changes to its “file and use” policy with respect to TV advertisements starting January 2023. The memo notes that CMS has conducted “secret shopping” related to ads, mailings and internet searches, and as a result:
CMS is concerned about the marketing practices of all entities, including Third-Party Marketing Organizations. We have reviewed thousands of complaints and hundreds of audio calls and have identified numerous issues with information provided to beneficiaries that is confusing, misleading and/or inaccurate. […] Our secret shopping activities have discovered that some agents were not complying with current regulation and unduly pressuring beneficiaries, as well as failing to provide accurate or enough information to assist a beneficiary in making an informed enrollment decision [emphasis added].
CMS also published an accompanying FAQ titled “Contract Year 2023 Medicare Advantage Marketing Policies – Frequently Asked Questions” that addresses new rules surrounding recording of agent and broker calls with clients and disclaimers that third party marketing organizations (TPMOs) must provide. As noted in an article titled “CMS Puts the Kibosh on Misleading Medicare Advantage Sales Pitches” by Cheryl Clark, MedPage Today (Oct. 21, 2022), the FAQ states that a CMS review of recordings of calls, prompted by a “significant increase in marketing-related complaints”, found that:
The agents failed to provide the beneficiary with the necessary information or provided inaccurate information to make an informed choice for more than 80 percent of the calls reviewed. Examples included beneficiaries being told that if their medication was not on the formulary, the doctor could tell the plan and the plan would simply add it; or incorrectly stating that “nothing would change” when beneficiaries asked if their current health coverage would stay the same [emphasis added].
Clark quotes one broker who states “‘we hope that finally the regulators will hold these plans and call centers accountable. We have clients call us all the time telling us they have no idea what they were signed up for, and were shocked that they were not on original Medicare any longer. Now they were in an Advantage plan, with all kinds of restrictions.’”
Clark puts the CMS memo to plans in broader context:
The CMS letter is part of a wide-ranging effort by many federal agencies to crack down on myriad Medicare Advantage plan practices, including delays and denials of care through prior authorization requirements, and concerns that dozens of plans fraudulently inflated the severity of their enrollees’ illnesses to receive billions of dollars more from the Medicare Trust Fund that were not needed for their patients’ care.
Access to Care in Medicare Advantage Plans
Medicare Advantage plan advertising, by its very nature, aims to convince people to enroll in a given plan, highlighting “extras” or “perks” unavailable in traditional Medicare (or a competitor’s MA plan). Rarely, however, does such advertising focus on some of the downsides of enrollment in MA plans, including restricted provided networks, extensive use of prior authorization, and out-of-pocket costs (even with the out-of-pocket cap MA plans are required to provide – see, e.g., Kaiser Family Foundation report finding that “about half of all Medicare Advantage enrollees would incur higher costs than beneficiaries in traditional Medicare for a 7-day hospital stay” in Medicare Advantage in 2022: Premiums, Out-of-Pocket Limits, Cost Sharing, Supplemental Benefits, Prior Authorization, and Star Ratings (Aug. 25, 2022)).
In addition to warning consumers of misleading marketing, and explaining incentives generated by broker commissions, journalists are highlighting the trade-offs of enrollment in MA vs. traditional Medicare – information that certainly the insurance industry, and even the Medicare program itself, is hesitant to acknowledge.
Another article by Cheryl Clark titled “The Medicare Advantage Trade-Off: Saving Money, Losing Access” published by MedPage Today (Oct. 14, 2022) outlines how Medicare beneficiaries “are wooed by ads promising low- or no-cost premiums, money added to their Social Security checks, free dentistry, home meals, prescriptions, and rides to the doctor. But those ads and marketing schemes don’t tell the whole story.” She continues:
There is a greater, and less well-publicized, problem with MA plans — denial of physicians’ referrals for care. Even after appeals and approval, there are delays in scheduling. It’s a game that gobbles up huge amounts of staff time, clinicians complain. One physician said he expects all MA referral requests to be denied at least once.
The article highlights the experiences of both MA enrollees and physicians who treat them, including problems with prior authorization, delays in care that impact patient health, and difficulty finding specialists who are in a given plan’s network. She quotes an endocrinologist in San Diego who tells patients considering MA that “‘they’re trading money for access,’ that is low or no premiums for a limited network, and they may not be able to see the best specialist for their problem” [emphasis added]. Clark notes:
Numerous beneficiaries told MedPage Today that they signed up for their MA plans when they were younger and healthier. Their premiums were zero or low. But after they needed care for newly diagnosed chronic conditions, they found themselves paying far more in co-pays and deductibles than a supplemental plan would have cost them. Now with pre-existing conditions they’re ineligible to sign up for a supplement. They’re stuck [emphasis added].
Clark’s article also highlights both a recent CMS Request for Information (RFI) concerning a range of MA issues, and the Center for Medicare Advocacy’s extensive comments to the RFI (discussed in a previous CMA Alert, Sept. 1, 2022).
Providers are increasingly speaking up about their own concerns about MA plans. After the HHS Office of Inspector General (OIG) released another report in April 2022 addressing MA plan denials, many provider groups and associations publicly highlighted problems with MA prior authorization (see, e.g., CMA Alert (May 5, 2022)). Provider trade press articles have focused on prior authorization, lower reimbursement rates, and other problems (see, e.g., “‘Death spiral’ for SNFs as Medicare Advantage pay decreases” by Kimberly Marselas, McKnights Long-Term Care News (Sept 6, 2022): “The plans frequently offer lower upfront costs, but seniors are often denied or delayed access to care they need as they become sicker and near the end of life, a provider complaint backed up by an OIG investigation. Skilled nursing facilities have found themselves fighting routine denials with no real way to fight back as MA dominance grows”; “LHC Group’s Keith Myers: To Fix the Medicare Advantage Problem, Cut Out the Middle Man” by Andrew Donlan, Home Health Care News (July 26, 2022): “MA plans tend to pay far less for home health services when compared to fee-for-service Medicare […] For instance, MA plans sometimes pay up to 40% to 60% less than fee-for-service Medicare”; “As Medicare Advantage grows, experts say, so do hard-to-fight denials” by Kimberly Marselas, McKnights Long-Term Care News (May 19, 2022): “The reimbursement challenges are affecting the bottom line, and in some places, they’re starting to limit patients’ access to care, operators and billing, experts warned. Not only are many seeing managed care plans increase payment denials, some observers say they’re often doing it without justifiable cause”).
Even retired providers are speaking up. For example, a recent op-ed in the Charlotte Observer titled “Medicare Advantage? Medicare Disadvantage would be a better name” by retired family physician Jessica Schorr Saxe (October 25, 2022) notes that “while traditional Medicare gives access to any participating provider, Medicare Advantage plans limit care to doctors and hospitals in their networks. They are also more likely to deny needed care by requiring prior authorizations for tests or procedures.”
Citing to the April 2022 OIG report issued earlier this year (see CMA Alert (May 5, 2022)), Saxe states:
Medicare Advantage plans are also increasingly ending nursing home and rehabilitation care before providers consider patients ready to go home. While medical professionals make those decisions under traditional Medicare, in Medicare Advantage the insurer decides.
So instead of innovating care, Medicare Advantage seems to mainly withhold it. It has also proven to be costly. Because such plans get higher government payouts for sicker patients, insurers have an incentive to exaggerate the sickness of enrollees.
Saxe issues a warning to MA enrollees:
Despite all this, the low premiums and perks may still be attractive to seniors who are not (yet) sick. The situation often changes when they develop an illness. They may find that a specialist or hospital they wish to see is out of network. They may experience delays or denials of care due to administrative barriers. Their out-of-pocket costs will often be higher.
Restricted provider networks are a barrier to care that many MA enrollees might not be aware of. According to “Medicare Advantage at the tipping point: A preview of 2023 open enrollment” by Robert King, Fierce Healthcare (Oct. 10, 2022):
Network adequacy is a key difference from traditional Medicare, as MA plans at times may offer narrow networks that could not include a beneficiary’s provider. A survey released in March found that 4 in 10 MA customers mistakenly believe they don’t have to stay in-network for getting medical care. [emphasis added].
Another recent article by Cheryl Clark highlights how some sought-after providers or networks might be out-of-reach for MA enrollees. In an article titled “Mayo Warns It Won’t Take Most Medicare Advantage Plans”, MedPage Today (Oct. 20, 2022), Clark states:
The Mayo Clinic sent letters this fall to all eligible Medicare beneficiaries who received care at its Arizona and Florida facilities in the last 3 years, warning them that it is out-of-network “with most Medicare Advantage plans.”
The letter sent to Florida beneficiaries said that “marketing for Medicare Advantage Plans may indicate that you can be seen at any facility that accepts Medicare, however Mayo Clinic in Florida is out of network on these plans.”
Medicare Advantage Overpayments
There is consistent and growing evidence that Medicare Advantage plans are paid more on average than traditional Medicare spends on a given beneficiary, and such spending is growing per person, with significant implications for Medicare programmatic spending (see, e.g., CMA Alert (May 5, 2022)).
The Center is encouraged that such overpayments are generating more attention in the press. For example, “Growth of Private Medicare Plans Clouded by Payment Questions” by Tony Pugh, Bloomberg Law (Oct. 18, 2022) states that “[a] fast-approaching enrollment tipping point for Medicare managed care plans is increasing the urgency for Congress and the HHS to resolve payment issues that threaten the viability and cost-effectiveness of the popular coverage option.” Citing the Medicare Payment Advisory Commission (MedPAC), Pugh notes that “[i]n their 37-year history, private Medicare managed care plans have never produced aggregate savings for the program” and notes that the Commission “is pushing to rein in excess payments to MA plans, before they become the program’s dominant coverage vehicle” [emphasis added].
Pugh quotes Richard Kronick, a former HHS official and current professor of public health:
‘As MA is a bigger and bigger part of the budget, the effects of overpaying MA increase. And the difficulty of doing anything about it increases because the political influence of MA plans grow, and because more and more beneficiaries are benefiting from the overpayments.’
Citing further to Kronick, Pugh notes that “[i]n addition to depleting more quickly the trust fund that finances hospital care in traditional Medicare, MA overpayments also swell the federal deficit and drive up costs for beneficiaries, who pay for 25% of the cost for Medicare’s ‘Part B’ coverage” [emphasis added].
Some journalists have been covering MA overpayments, and the government’s efforts (or lack thereof) to recoup these costs, for many years. In September 2019, Kaiser Health News filed a lawsuit against CMS under the Freedom of Information Act seeking the results of audits of MA plans conducted for 2011, 2012 and 2013. As noted in “Lawsuit by KHN Prompts Government to Release Medicare Advantage Audits” by Fred Schulte, Kaiser Health News (Oct. 14, 2022), “Federal health officials have agreed to make public 90 audits of private Medicare Advantage health plans for seniors that are expected to reveal hundreds of millions of dollars in overcharges to the government.” Schulte states that “CMS officials have said they expect to collect more than $600 million in overpayments from the audits.”
In a recent CMA Alert (Oct. 13, 2022), we highlighted a New York Times article ‘The Cash Monster Was Insatiable’: How Insurers Exploited Medicare for Billions” (Oct. 8, 2022) by Reed Abelson and Margot Sanger-Katz which focused on “how major health insurers exploited the [Medicare] program to inflate their profits by billions of dollars.” Noting that most large insurers offering MA plans have been accused of fraud in various lawsuits, the article outlines how MA insurers, “among the largest and most prosperous American companies, have developed elaborate systems to make their patients appear as sick as possible, often without providing additional treatment, according to the lawsuits” and “[a]s a result, a program devised to help lower health care spending has instead become substantially more costly than the traditional government program it was meant to improve.”
On October 23, 2022, The New York Times published a letter to the editor by Center for Medicare Advocacy Executive Director Judith Stein in response to the article about MA overpayments, which we re-publish in full here:
It’s beyond comprehension that the subject of this article is not a major scandal. Not only are wasteful payments to private Medicare Advantage plans straining Medicare’s finances, but they are also crowding out expansion of benefits for the half of Medicare beneficiaries who choose to remain in traditional Medicare.
For example, even using the article’s conservative overpayment estimates ($12 billion in 2020), the overpayments are “enough to cover hearing and vision care for every American over 65.”
At the Center for Medicare Advocacy, we regularly hear from Medicare Advantage enrollees who are denied or prematurely cut off from medically necessary care, particularly in the skilled nursing and home health settings.
Despite overpayments to Medicare Advantage plans, the health outcomes of their enrollees are mixed, according to some independent research. Medicare sustainability is unnecessarily strained, and sick beneficiaries are in jeopardy.
The Committee for a Responsible Federal Budget (CRFB) referenced the New York Times article in an October 19, 2022 blog post titled “New York Times Highlights Need to Improve Medicare Advantage.” The post restated many of the organization’s recommendations to rein in MA overpayments. The post notes:
While fraud is a significant issue CMS must work to address, overpayments have created a system where MA is highly profitable for private insurance companies, rather than one that saves taxpayer money by promoting more efficient forms of care.
The findings published by The New York Times serve as further evidence that, as the Medicare trust fund approaches insolvency in 2028, policymakers should consider comprehensive policies to improve MA and lower health care costs.
Citing CRFB, Inside Health Policy recently noted that “[t]hink tanks on opposite sides of the political spectrum have both raised issues with MA coding intensity. The Center for American Progress and the Committee for a Responsible Federal Budget have both called on CMS to halt the rise of coding intensity in MA by enacting appropriate coding intensity adjustments, which they say will help reduce excessive payments” (emphasis added; links omitted – “CMS Delays Finalizing MA Risk Adjustment Rule Amid Coding Controversy” by Bridget Early (Oct. 28, 2022)).
Shortly after publication of the New York Times article, the U.S. attorney for the Southern District of New York announced that it joined a whistleblower lawsuit against health insurer Cigna, alleging that the company “improperly obtained tens of millions of dollars in Medicare funding by making certain Medicare Part C recipients seem sicker than they actually were”, according to an article titled “Cigna received millions of Medicare dollars based on invalid diagnoses, lawsuit claims”by Aaron Katersky, ABC News (Oct. 17, 2022). The article notes:
According to the government’s lawsuit, Cigna structured home visits for the primary purpose of capturing and recording lucrative diagnosis codes that would significantly increase the monthly capitated payments it received from CMS.
When identifying plan members to receive home visits, the lawsuit said Cigna targeted individuals who were likely to yield the greatest risk score increases and thus the greatest increased payment.
Whether or not policymakers will act in a meaningful way to address MA overpayment and barriers to care faced by MA enrollees remains an open question. An article cited above, “Medicare Advantage at the tipping point: A preview of 2023 open enrollment” by Robert King Fierce Healthcare (Oct. 10, 2022) discusses, among other things, scrutiny of MA risk adjusted payment, and the likelihood of Congressional or regulatory action in response:
The MA program has wide popularity among lawmakers, as evidenced by a letter signed by 346 House lawmakers—80% of the entire chamber—expressing their support for the program.
“The question is this becoming such a political issue that there is a determination to take back overspending,” asked Bob Berenson, an institute fellow with the think tank Urban Institute. “There is clearly overspending in MA, but the question is, does anyone have the political will?” [emphasis added]
This is the question, indeed.
Every Fall, Medicare beneficiaries are subject to a barrage of ads featuring former athletes and TV stars pitching extra benefits that you are entitled to, which, of course, lead beneficiaries to insurance agents who are heavily incentivized to sell Medicare Advantage products.
Currently, the critical issue of access to quality Medicare health coverage is relegated largely to the marketplace, where the loudest voice with the most advertising dollars gets the most attention. The focus of such advertising is rarely on issues of great import to people when they’re sick (such as provider networks, prior authorization and out-of-pocket costs), but rather on the attractive distractions of helpful, but often limited, extra benefits.
From a marketing standpoint, people are being pushed firmly towards Medicare Advantage. There is a lot of money to be made by a lot of people which motivates this. Regrettably, however, it often does not translate into what is best for the individual. Further, from a policy standpoint, the insurance industry has been adept at warding off additional oversight.
The public needs and deserves a counter-weight to these constant marketing and influence campaigns aimed at beneficiaries and policymakers.
As long-time health care journalist Trudy Lieberman wrote in an article in November 2019 for the Center for Health Journalism, entitled “Health Care Reporters Used To Be Medicare Hounds. What Happened?”: “Medicare reporting, once a staple of health care journalism, has disappeared from the health and political beats, leaving the public to get its Medicare news via advocacy group press releases and sponsored content or ‘submitted news,’ once known as advertising.” More recently, Lieberman wrote an article in June 2022 for the publication entitled “Reporters Are Waking Up To The Medicare Story, But More Digging Is Needed. Citing coverage of the above-referenced OIG report, along with the growing privatization of the Medicare program, Lieberman wrote: “It’s well past time for the broader media to take a cue from these examples and report more to the public on what is happening. Reporters can still be the Medicare hounds they once were.”
The Center for Medicare Advocacy is encouraged that critical issues facing the Medicare program – and the costs of private Medicare Advantage in particular – are getting greater attention in the media. Let’s hope more sunlight will help sustain and enhance the country’s foundational public Medicare program.
Center for Medicare Advocacy
October 31, 2022