Letter to Feds: How to Fix Broken Medicare Advantage

September 9, 2022

Summary: Recently three leading progressive organizations (Just Care USA, Social Security Works, and Center for Health and Democracy) wrote to two federal health agency leads, offering an incisive litany of major flaws with Medicare Advantage. They proposed a 10-point reform plan, which would remove insurer profiteering, assure access, and improve quality of care. The plan would make Medicare a lot like its inevitable successor, single payer.

Letter to HHS & CMS on Reforming Medicare Advantage
August 31, 2022
By Diane Archer, Alex Lawson, and Wendell Potter

Dear Secretary Becerra and Administrator Brooks-LaSure:

… We agree with the HHS Office of the Inspector General, Government Accountability Office and MedPac that Medicare Advantage is in need of major reform to ensure the health and well-being of enrollees, promote health equity, and minimize legal violations, Including overpayments. As GAO reported: “The Medicare program, which includes MA, is on GAO’s High Risk List, because of its size, complexity, and susceptibility to mismanagement and improper payments. …

People from racial and ethnic minority groups, people with disabilities and serious health conditions, people of disadvantaged socioeconomic status, people with limited English proficiency, and people from rural communities disproportionately choose Medicare Advantage because of its low upfront cost. They are, however, at greater risk in Medicare Advantage than in traditional Medicare for two key reasons: 

• Copays and deductibles impose a financial barrier to care, forcing the most vulnerable MA enrollees to go without needed care;
• Referral and prior authorization requirements, narrow networks, and widespread and persistent inappropriate delays and denials of care and coverage endanger care access for everyone, particularly vulnerable MA enrollees. 

Fundamental problems with the current Medicare Advantage model drive health inequities and poor health outcomes for people with complex conditions. The biggest problem is the risk-adjusted capitated payment model. Medicare Advantage plans that: 1. Attract a disproportionate number of enrollees in relatively good health and/or 2. Delay and deny care inappropriately and/or 3. Do not include high quality specialists and specialty hospitals in their networks, can be sure to profit handsomely. … 

We propose a suite of ten changes to improve health equity, reduce Medicare Advantage threats, enable appropriate CMS oversight, and minimize health insurer violations in Medicare Advantage. 

1. Change the way the government pays Medicare Advantage plans.

The government should pay MA plans so that they do not have a financial disincentive to cover care for people with costly and complex conditions. Prospective payments, unrelated to actual medical claims, create a powerful financial incentive for MA plans to impede access to high-value care for enrollees with complex conditions in order to maximize profits.

2. Base payments to MA plans on the cost of services MA plans cover plus a reasonable fee for administration and a global cap.

3. Require Medicare Advantage plans that pay providers on a fee-for-service basis to use traditional Medicare’s fee schedule.

4. Require MA plans to include all centers of excellence in their networks and disclose out-of-pocket costs for people with complex conditions.

5. Standardize MA coverage rules and cost-sharing design.

6. Ensure appropriate oversight of MA.

The GAO has found that CMS has not validated MA patient encounter data as needed and recommended. In a recent House Ways and Means Subcommittee on Oversight and Investigations hearing, MedPAC reported that “After a decade, MA plans are “not producing complete and accurate enough records needed for MedPAC to conduct oversight activities

7. Do not assume value in MA, since it cannot be measured.

MedPAC has said repeatedly that MA quality cannot be measured.

8. Rethink Medicare Advantage networks.

CMS should stop allowing Medicare Advantage plans, except those that are fully integrated health systems, to design their own provider networks and require them to cover care from all Medicare providers.

9. Rethink key consumer information regarding Medicare Advantage and overhaul MA marketing to minimize deception.

10. Level the playing field with traditional Medicare and ensure health equity in MA.

We urge the government to put an out-of-pocket cap in traditional Medicare so that traditional Medicare is a meaningful choice for everyone with Medicare, including people with low incomes, people in rural communities, people from racial and ethnic minority groups, and people with complex conditions. Without that out-of-pocket cap, the hundreds of thousands of people who face inappropriate delays and denials of care in Medicare Advantage too often are deprived a meaningful choice of traditional Medicare.

Comment by: Jim Kahn

This impressive letter assembles key evidence on the failings of Medicare Advantage – how it costs too much, imposes barriers to care access, and fails to assure quality. The problems are structural and thus require aggressive reforms, such as changing how plans are paid.

The proposed changes would move Medicare Advantage (and Medicare) much close to single payer, by removing excessive profit-taking by insurers, standardizing coverage and provider payments, and collecting clinical data to measure and improve quality. The major difference is that even an improved Medicare for seniors and the long-term disabled would not create the fairness, efficiency, and simplicity of an improved Medicare *for all*. That’s single payer.

For those interested in the numbers on Medicare finances, see HJM pieces on how Medicare Advantage plans plunder government funds here and here, and on the financial barriers faced by sick beneficiaries here.