What’s the Advantage in Medicare Advantage Plans?
Cheryl Clark recently wrote a MedPage Today article based on her interview of Michael Chernew, PhD, who chairs the influential Medicare Payment Advisory Commission (MedPAC). This group is an independent 17-member panel appointed by the U.S. Comptroller General to advise Congress on Medicare policy. Interestingly, Dr. Chernew was careful to clarify that he was responding to the interview questions as a health policy professor and researcher at Harvard Medical School, as opposed to a member of MedPAC.
In theory, the Medicare Advantage (MA) plans were designed to control waste, fraud, abuse, and to discourage low-value services. MA plans now cover almost 32 million seniors, or nearly 52 percent of the Medicare population. Apparently, MA enrollment is occurring at astonishingly high rates.
What accounts for these increasing enrollments? First, the advertising budget has to be enormous. It’s not unusual to see four or more adds for MA plans over a two-hour span of television. Ads with well-known seniors such as Tom Selleck plugging them.
Besides the copious TV ads, thousands of phone calls are made to promote the supposed advantages of these plans. I have received hundreds. So, the ad budget is huge! Does anybody actually know what these ads cost per year?
Secondly, how much are the commissions paid insurance agents for enrolling seniors in these plans?
Thirdly, does anyone really know the cost to administer these MA policies.
Fourthly, how much of the cost of administering these plans involves denying care? Denying care is the group-think of healthcare administers, their favorite way to save money. At times it seems as if this flawed notion is the only way healthcare administrators seem to believe they can save money. This thinking is wrong-headed on many levels. Many layers of employees must be salaried just to answer the phone calls, review the claims, and deny them. Does anyone know the cost of the salaries of these claims reviewers?
Those so satisfied with denying care to save costs ignore that there is a much larger expense of rendering very expensive care at a later date. Many of these people denied care go from treatable to untreatable illness while they wait to get ill enough to have their care approved by an MA plan or the insurance company.
My first-hand professional experience with one of these plans occurred 20 years ago. My patient had been in the hospital for five days. The patient’s MA plan paid late. More importantly, my hospital CEO called me in and showed me the check he had received for this 5-day hospital stay. The check sent in payment of the five-day hospitalization amounted to less than the cost of the postage stamp to mail it. The hospital, my CEO said, had no choice except to refuse all MA plans for elective admissions. Of course, hospitals have to serve the ER patients who had MA plans, but most seniors ddo not know this.
One of my patients died at home because he knew the hospital wouldn’t accept his MA plan, but he did not know the hospital was required to take his MA plan to cover any emergency room visits. Yes, death is a high price to pay for having wrong-headed insurance. I suspect out of 32 million people with MA plans, he was not the only one to die from being denied care without understanding that they could go to an emergency room for care.
Cheryl Clark reports that MA plans have cost Medicare $613 billion more than the beneficiaries in fee-for-service over the last 18 years. This cost is increasing rapidly and is projected to increase by $88 billion for the year 2024. Yet Dr. Chernew states:
I believe the Medicare Advantage program has successfully changed the patterns of care in ways that have reduced overall utilization.
Well, the overall utilization has no doubt been reduced, but at what cost to seniors? As I mentioned earlier in this post, I have never been able to understand why number crunchers have the notion that reducing utilization saves money. It actually increases costs because those patients denied needed care early on in the development of a disease will simply show up later as the untreated disease progresses, winding up in hospitals with very expensive repairs. Or wind up dead. These numbers of dead patients denied care never find their way into the data on denied care.
I find it difficult to believe how anyone could claim reducing overall utilization saves money when it simultaneously increases expense by $618 billion. This is success?
Let’s talk about utilization for a minute. Now in the world of obstetric care, the U.S. ranks on a par with third world countries in numbers of maternal mortalities. Yet the U.S. spends more on healthcare than any other country. The reason we fail so miserably to control the cost of healthcare and simultaneously have incredibly bad obstetrical healthcare service is the fantasy that our cost effectiveness is achieved through decreasing utilization.
The truth is, the MedPAC and various government groups don’t begin to understand the problems of our expensive healthcare. These problems begin in Washington DC with CMS, Medicare, MA plans, Medicaid, NIH, CDC, and the FDA. We don’t have a clue as to the cost of administration of all of these organizations. So, let’s please kill the fantasy that depriving people of healthcare is an effective way to balance the budget.
When healthcare groups withdraw from MA plans, they don’t do it for fun. They do it out of desperation. For big ticket items, these plans are simply remarkably impossible to deal with. My example of my patient who died at home rather than going to the ER is a prime example of what doesn’t get paid, what doesn’t work, and what people are not warned about when they sign-up for these MA plans. Many large hospitals that treat critical diseases don’t accept MA plans. This is a major omission in of many of these plans.
These decisions for health plans to withdraw from MA are not the fault of healthcare providers or consumers. They are clearly the fault of the MA plans, and the individual insurances which administrate them
As a retired physician who has had the 30 years of experience dealing with these plans, I have five words of advice for the public,
Don’t enroll in MA plans.
Don’t put your healthcare at risk with a business intent upon denying care.
I have seen the under-belly of this snake, and I know exactly the kind of damages these plans cause the people who hold them. Ms. Clark notes in her interview with Dr. Chernew that the retired doctors she spoke with had not enrolled in MA plans. Not one doctor. Big red flag!
If this is all the better we can expect from this “influential” MedPAC, we need a new 17-member panel. MA plans are basically unworkable the way they are. My recommendation would be to junk all the MA plans and to go to a straight fee-for-service Medicare, or better yet, a Direct Primary Care model to minimize insurance mandates and interference in physician care.