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Oh So Many Problems with Medicare Advantage

A news article reports on Congressional hearings on problems with Medicare Advantage. An academic article describes big challenges and valuable public benefits lost if traditional Medicare is replaced by Medicare Advantage. Our apologies for a longer-than-usual post … too many Medicare Advantage failings to review!

July 9, 2022

Topics: Risk Adjustment

(HJM bolding for key points)

Government Watchdogs Attack Medicare Advantage for Denying Care and Overcharging
June 29, 2022
By Fred Schulte

Congress should crack down on Medicare Advantage health plans for seniors that sometimes deny patients vital medical care while overcharging the government billions of dollars every year, government watchdogs told a House panel Tuesday.

Witnesses sharply criticized the fast-growing health plans at a hearing held by the Energy and Commerce subcommittee on oversight and investigations. They cited a slew of critical audits and other reports that described plans denying access to health care

Rep. Diana DeGette (D-Colo.), chair of the subcommittee, said seniors should not be “required to jump through numerous hoops” to gain access to health care.

The watchdogs also recommended imposing limits on home-based “health assessments,” arguing these visits can artificially inflate payments to plans without offering patients appropriate care. …

Bliss said seniors “may not be aware that they may face greater barriers to accessing certain types of health care services in Medicare Advantage than in original Medicare.”

Leslie Gordon, of the Government Accountability Office, the watchdog arm of Congress, said seniors in their last year of life had dropped out of Medicare Advantage plans at twice the rate of other patients leaving the plans.

Rep. Frank Pallone Jr. (D-N.J.), who chairs the influential Energy and Commerce Committee, said he was “deeply concerned” to hear that some patients are facing “unwarranted barriers” to getting care.

James Mathews, who directs the Medicare Payment Advisory Commission, which advises Congress on Medicare policy, said Medicare Advantage could lower costs and improve medical care but “is not meeting this potential” despite its wide acceptance among seniors.

Notably absent from the hearing witness list was anyone from CMS, which runs the $350 billion-a-year program.

[CMS] officials clearly knew years ago that some health plans were abusing the payment system to boost profits yet for years ran the program as what one CMS official called an “honor system.”

CMS aimed to change things starting in 2007, when it rolled out an audit plan called “Risk Adjustment Data Validation,” or RADV. Health plans were directed to send CMS medical records that documented the health status of each patient and return payments when they couldn’t.

The results were disastrous, showing that 35 of 37 plans picked for audit had been overpaid, sometimes by thousands of dollars per patient. Common conditions that were overstated or unable to be verified ranged from diabetes with chronic complications to major depression.

Yet CMS still has not completed audits dating as far back as 2011, through which officials had expected to recoup more than $600 million in overpayments caused by unverified diagnoses.

Medicare Advantage Enrollment Growth Implications for the US Health Care System
June 28, 2022
By Gretchen Jacobson & David Blumenthal

Medicare Advantage will be the dominant source of Medicare coverage by 2025. This development creates significant challenges ….

[T]he need to find new ways to set Medicare Advantage payment rates. Currently, Medicare Advantage plans in local markets are paid to cover Medicare benefits based on the average costs of providing those same benefits to patients in traditional Medicare within the same market. Yet, basing payments on the costs of covering remaining enrollees in traditional Medicare will be less appropriate as these individuals become less and less representative of the Medicare population…

[P]otential 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.

[T]raditional Medicare claims data provide the only nationwide source of consistent, comparable information on patterns of care throughout the country. … have enabled important observations about variability in care within and across geographic areas, and have informed policies to reduce variation, reduce unnecessary spending, and improve the quality of care.

[T]raditional Medicare has helped support rural health care centers and fund graduate medical education. …

[Q]uality and utilization data that traditional Medicare has accumulated on individual clinicians and health care centers are not currently accessible for those same entities serving patients enrolled in Medicare Advantage plans. … Medicare Advantage organizations and their clinicians and health centers are not reimbursed based on encounter data, and thus do not have the same incentives to submit complete and accurate information.

A Medicare Advantage–dominated system also raises questions about how Medicare would work through private plans to achieve the many other public purposes that Medicare has served. Traditional Medicare’s increased payments for clinicians and health care centers in rural areas have helped to maintain access to care for rural populations.

looming challenges created by the impending transformation of Medicare into a system primarily consisting of competing for-profit health organizations. … [and] consider how to compensate for the vital information about the US health care system that could be lost with the decline of traditional Medicare. …

[C]onsider how to sustain Medicare’s record of innovation in payment and delivery system reform in a program in which the nature and results of innovation are increasingly the proprietary property of private entities. CMMI will have to develop methods to take full advantage of a much more modest traditional Medicare testing ground. Medicare also will have to consider whether and how to incentivize or encourage private organizations to share their most promising innovations— undertaken with public funds—so that Medicare can fulfill its obligations to all beneficiaries and, as a public program, to the health care system generally.

Comment by: Jim Kahn

Two unrelated reports on problems with Medicare Advantage, the private insurer side of Medicare:

KHN (Kaiser Health News) lists Medicare Advantage problems discussed in a Congressional hearing: care barriers and denials; excess home health assessments designed to inflate capitation payments; audits revealing widespread overpayment yet languishing >10 years; patients switching to traditional Medicare at the end of life when medical needs rise; Medicare Advantage failing to realize purported advantages; CMS missing in action (and from the hearing).

It’s a familiar story. Promise improved quality and lowered costs for CMS. Fail to achieve those goals (despite claims of success). Game the system to boost capitation payments and avoid meaningful oversight. These revelations aren’t news, indeed are noted regularly in HJM. Yet on and on it goes. CMS – the regulator asleep at the wheel – declined to testify (they can do that?).

The article by Jacobson & Blumenthal is more arcane – about how the traditional fully public fee-for-service part of Medicare has provided consistent national data on medical claims to help improve care and simple methods to adjust payments to support rural areas and medical education. They want CMS to somehow achieve the same abilities with Medicare Advantage, despite the variation and opacity implicit with a multitude of private insurance plans. There’s no indication it can ever happen.

Unfortunately, now traditional Medicare is pursuing a Medicare Advantage look-alike strategy. Engineered by CMS via the REACH program, for-profit ACO “entities” receive a capitated amount per patient. It will yield the same dynamics and vulnerabilities as Medicare Advantage. HJM has written often on this. CMS is catering to corporate interests.

In sum: myriad severe limitations associated with growing privatization of Medicare. There seems to be an implication around here somewhere … oh, I see it. Why don’t we transform Medicare into a fully public system, with no role for profit-seeking intermediaries, like it used to be? While we’re at it, let’s adopt the system universally, replacing private insurance, Medicaid, etc. Just like dozens of other countries. We could call it a “single payer”.

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