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Hospitals across the country are dumping Medicare Advantage plans and canceling their contracts with insurers
Something strange happened on the way to health insurance nirvana. Hospitals are dumping some Medicare Advantage plans. Such a move would have been unthinkable a year ago when Advantage plans were the high flyers of the insurance business raking in money by signing up new recruits, a substantial number of them with little or no understanding of the trade-offs involved in what they were buying.
Enticed by incessant TV ads blaring every night with those fictional characters Martha and Karen and that old shill Joe Namath pushing plans, especially those with zero premiums, more converts have signed up for potentially less health care coverage and more out-of-pocket expense when illness strikes. In return, they are told they may have no monthly premium and receive a grab bag of goodies like grocery cards and a handful of toiletries. Those goodies may be less attractive, however, when that health plan makes you wait weeks for a diagnostic test to see if you have cancer or will only pay a small portion of the bill if you do.
Most sellers don’t mention that possibility in their pitches during annual enrollment, which ends today. Nor do they mention that new recruits in nearly all states are barred from buying a Medicare supplement policy, also called a Medigap plan, to cover what the traditional program does not unless they are healthy enough to meet the insurers’ medical requirements. In other words, seniors with Advantage plans may be stuck with huge medical bills if they get sick and live in a state that makes it impossible to switch to traditional Medicare and a supplement that would take care of nearly all their costs. Most sales agents don’t discuss that possibility.
There’s a new twist to the Medicare Advantage story this year that is slowly seeping out. Hospitals across the country are dumping Medicare Advantage plans and canceling their contracts with insurers, which means their patients must select new plans. The CEO of the Brookings Hospital System in Brookings, South Dakota, Jason Merkley, was one hospital executive willing to speak about the problems with Advantage plans. “The difference between original Medicare and Medicare Advantage is vast," he said, noting that MA plans “pay less, don’t follow medical policy, coverage, billing, and payment rules and procedures, and they are always trying to figure out how to deny payment for services.”
He said his 49-bed hospital is getting 17% less in reimbursement from Advantage plans than the payments from regular Medicare, noting plans used other tactics such as being slow to approve, partially approve or deny medically necessary services. Sometimes they don’t get back to the hospital until after discharge to say they were denying those services, he said. Merkley said the hospital spent “a lot of time and resources to appeal,” adding “we estimated it required three times more labor and expense to collect from Medicare Advantage plans than from traditional Medicare.” For next year Merkley’s hospital is accepting a single Advantage plan, one sold by Medica that Merkley says aligns more with traditional Medicare’s accepted billing practices and reimbursement policy.
Other hospitals I contacted refused to talk or sent terse statements. The Nebraska Hospital Association, which represents 92 facilities, issued a clear warning in a report this fall that MA plans were “failing patients and jeopardizing Nebraska hospitals,” but did not respond to an interview request. A report on its website revealed the damning conclusion, reporting that “patient access to health care is eroding” when plans restrict access, deny medically necessary care, require unreasonable levels of documentation to show whether care is needed, and change the health plan rules in the middle of the contract year. To back up those conclusions, the Association noted two-thirds of the state’s hospitals refuse to contract with certain plans and 90% say MA plans negatively impact the care they can give. More than 92% of the hospitals say that prior authorization requirements delay necessary care, three-quarters say the cost of complying with plan rules has increased, and 90% reported the experience of working with the plans had gotten worse.
Such headaches for hospitals can’t help but translate into headaches for patients waiting for care, some of which could be life-saving. With outcomes like those, who would want to give up their traditional Medicare benefits? The hospital association didn’t respond.
Mayo Clinic In Arizona and Florida “have always been out of network” for Medicare Advantage plans,” said a spokesperson for the Clinic adding that the clinic chose to note that information “in light of the increase in marketing of Advantage plans.” In California, a Scripps Health spokesman said no individual Advantage plans will be accepted where Scripps Clinic and Scripps Coastal medical group doctors are in-network. The statement noted that “Scripps and other hospital systems across the country are facing unprecedented financial pressures. The revenue from Medicare Advantage plans is not sufficient to cover the cost of the patient care we provide.”
Dr. Steve Gordon, the CEO of the St. Charles Health System in Bend, Oregon, did not mince words about MA plans in a newsletter to his community. “Every day I hear stories of Medicare Advantage patients who have trouble getting the care they need,” he wrote, recounting the story of a patient with prostate cancer who was denied three times for a PET scan to see if the cancer had spread “even though the test is nationally accepted best practice care for this type of case.” The hospital will no longer accept Advantage plans sold by Humana, HealthNet, and WellCare.
The time has come to rethink the last 25 years of Medicare policy. Do we really want every senior pushed into Medicare Advantage plans that make a ton of money from denying and delaying care? Do we really want our oldest citizens to face crushing medical debt at the close of their lives? Medicare Advantage has gotten a lot more press attention this enrollment season, something I have been urging for a long time, but David Lipschutz, associate director of the Center for Medicare Advocacy, asks, “Is all this attention too little, too late to salvage Medicare?” Those questions need answers because the country is very close to fulfilling the goal set out nearly 30 years ago by then-speaker of the House of Representatives Newt Gingrich: to let Medicare wither on the vine.
Trudy Lieberman, a past president of the Association of Health Care Journalists, has had a long career in journalism, specializing in health care in recent years. She has written for many publications including Consumer Reports, Columbia Journalism Review, The Nation, Harper's Magazine, and the Center for Health Journalism. She has won many awards for her work including two National Magazine Awards, several National Press Club Awards, and a James Beard Award.
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Pulling back the curtains on how Big Health is hurting Americans and how we got to this point.
Unfortunately, there are no clean hands here. Providers & insurers are fighting over the same $ stream. The only question is who will get more - not how to improve patient health. The only real solution is having a national system where Americans are collectively self-insuring. We cut out that layer of non-productive & cost-generating middlemen (insurance) & negotiate directly with providers.
We’re already spending the $. It’s just going to corporate profits instead of care.
Even knowing about the big insurers' practices, when I turned 65 this year, I signed up for an Advantage Plan. It seemed wonderful because it cost me nothing out of pocket, paid for routine care, and gave me a free gym membership. However, as I learned more about how MA plans kick hospitals out of network, deny care, and otherwise do all they can to bilk taxpayers and deliver value only to shareholders and executives, I simply could not continue to live with my decision. Instead, I used Open Enrollment to switch to Traditional Medicare. Yes, it now costs me about $185 per month for supplemental insurance (I went with a member-owned mutual company), vision, dental, and prescription coverage. But no longer supporting MA immediately improved my HEALTH because I SLEEP better at night knowing I am no longer colluding this scam to ripoff American taxpayers. It's worth it!