Tag: Kaiser Permanente

Will Kaiser Permanente’s purchase of Geisinger benefit their members?
In an op-ed for Forbes, Robert Pearl, MD, former longtime CEO of California-based Permanente Medical Group–the part of Kaiser Permanente responsible for health care delivery–shares his views on Kaiser Permanente’s recent purchase of Geisinger, a Pennsylvania-based health care system. What are the implications for patients, their doctors and the health insurers? Both Kaiser and Geisinger are non-profit corporations, which once meant that they likely provided better care than the for-profits. Does it still?

Pearl notes that Kaiser Foundation Health Plan and Hospitals, the insurance side of Kaiser Permanente, acquired Geisinger. Kaiser Permanente is calling its new acquisition, Risant Health. And, Kaiser claims it bought Geisinger because it is focused on growing larger through acquisitions of other nonprofit health systems that have been prized for their good health care. Interestingly, Kaiser paid more than $1 billion for Geisinger, even though Geisinger lost more than $200 million in 2022.

While there is no good data confirming which health plans offer the highest quality care, it has long been assumed that Kaiser is one of them. The National Committee for Quality Assurance (NCQA), Leapfrog Group JD Power and Medicare all claim that Kaiser gets high patient satisfaction ratings.

Now, Kaiser wants to be known nationally. Kaiser operates in eight states and has 13 million enrollees. But, Kaiser has never been able to spread its wings beyond California and the mid-Atlantic to all parts of the US in a major way, as has UnitedHealth and Humana, for example.

By growing larger, says Pearl, Kaiser will have greater influence with lawmakers. Moreover, it has a far better chance of survival if it’s larger. The biggest insurers continue to grow larger.

With the purchase of Geisinger, Kaiser will have 600,000 more patients, as well as ten more hospitals and 100 additional health clinics. In Pearl’s words, when it comes to healthcare “size matters.”

What will become of Geisinger? Kaiser says it plans to put $5 billion into the Geisinger health systems, which will help Geisinger’s financial health. But, can Kaiser improve Geisinger’s value-proposition? Kaiser talks the talk of improving care. And, Kaiser focuses on the delivery of “value-based” care, an Orwellian term that has no clear relationship to cost or quality, the two components of value.

Here’s where the explanation gets technical and questionable. The Permanente Medical Group, which is responsible for care delivery had no involvement in the acquisition. Unless that group is brought in, Pearl does not see how health outcomes improve. But, even if they are brought in, why are they better than the clinical team at Geisinger?

It’s the insurance arm of Kaiser that bought Geisinger, and insurers are not known for their strength in care coordination or quality improvement. The Kaiser acquisition does not involve the Kaiser doctors. Pearl argues that physician leadership is needed to create better health outcomes, for example, getting doctors to adopt better ways of practicing medicine.

So, what’s the odds that Kaiser will do better for its patients with this acquisition of Geisinger? Pearl argues, along with many others, that the fee-for-service model for paying physicians and other health care providers leads to overtreatment, in many instances, with no better clinical outcomes. But, Pearl fails to acknowledge the inherent flaw in the capitated payment model. Paying health care providers and insurers a fixed rate too often leads to undertreatment, with worse health outcomes. The less care they deliver the more money they earn.

In theory, if provider groups manage care well, they bring down costs. But, in practice, it often doesn’t work that way. Rather, the provider groups steer away from people with costly and complex conditions in order to spend less on care and profit more. And, since patients can change health plans from year to year, they have little incentive to manage care for the long-term.

Pearl acknowledges that insurers that are paid a fixed fee upfront to cover care for their enrollees have an incentive to reduce volume of care rather than improve value. He believes that providers do not have that same incentive, that providers do not face financial pressures to delay and deny needed care.

The most important issue to resolve is whether these shifts will ultimately help or harm patients.Pearl is optimistic that, in the long-run, the system will help patients. He foolishly believes that the big behemoth insurers will want to provide great care and the losers will die out. Their IT will make the difference.

Yes, the big insurers will want to keep their members who are relatively healthy and cost little to treat happy. They represent the majority of enrollees at any given time. But, that’s the easy piece. What Pearl fails to acknowledge is the 10 percent of people who are responsible for about 70 percent of costs and for whom the system is designed to fail. And, when people fall into that 10 percent cohort, which we all will do at some point, we are likely to lose big time.

Here’s more from Just Care:
May 28, 2023
Medicare Advantage plans are an “Insatiable Cash Monster”
In a no holds barred expose, Reed Abelson and Margot Sanger-Katz report for the New York Times on the fraudulent activities of the largest health insurers offering Medicare Advantage plans. “The Cash Monster Was Insatiable’: How Insurers Exploited Medicare for Billions” takes a deep dive into how Medicare Advantage plans add diagnosis codes to patients’ medical records in order to receive higher payments from the government and drive up profits. The overpayments the Medicare Advantage plans collect increase Medicare spending to the tune of tens of billions of dollars each year and do nothing to ensure that people in Medicare Advantage plans get the care they need.

The story explains how Medicare Advantage insurers reward physicians with champagne, money and other goodies for adding diagnosis codes to patient records. Each diagnosis code means more money for the Medicare Advantage plans, which receive a fixed amount for each enrollee, adjusted up for enrollees with multiple diagnoses.

Abelson and Sanger-Katz explain how “major health insurers exploited the [Medicare Advantage] program to inflate their profits by billions of dollars. Of the five large Medicare Advantage participants, UnitedHealth, Humana, Elevance (formerly Anthem) and Kaiser Permanente have been charged with fraud for adding inappropriate diagnosis codes to patient files. The Justice Department is currently investigating CVS Health for related conduct.

Instead of saving money, Medicare Advantage costs taxpayers a lot more than traditional Medicare. One former government official projects that overpayments in 2020 alone totaled $25 billion and that overpayments will total $600 billion over the next nine years. Not surprisingly, the Kaiser Family Foundation reported that the companies offering Medicare Advantage plans generate twice as much gross profit from Medicare as from their commercial health insurance businesses.

For reasons unknown, the Centers for Medicare and Medicaid Services (CMS) has done a poor job of keeping the Medicare Advantage plans from overbilling the government and an equally poor job of collecting overpayments that are identified. Instead of reducing Medicare Advantage rates to adjust for the overbilling, CMS has increased them substantially, up eight percent in 2023. And, when CMS audits plans and finds overpayments, it only goes after the plans for the small number of overpayments it finds through its audits.

Where’s the value in Medicare Advantage? “Even when they’re playing the game legally, we are lining the pockets of very wealthy corporations that are not improving patient care,” according to Dr. Donald Berwick, the head of CMS during the Obama administration. Contrary to what some might believe, traditional Medicare offers better value than Medicare Advantage, as good or better care, particularly for people with complex and costly conditions, at lower cost.

Here’s more from Just Care:
October 12, 2022
Congress must overhaul the way it pays Medicare Advantage plans
For years, government and independent analysts have shown that the Centers for Medicare and Medicaid Services (CMS) is overpaying Medicare Advantage (MA) plans–the corporate health plans that cover Medicare benefits–billions of dollars each year. The government’s payment model increases the amount it pays MA plans when they add diagnoses codes to a patient’s profile, regardless of whether they provide more services to the patient. Christopher Rowland reports on incidents of fraudulent billing in Medicare Advantage for the Washington Post.

The problem with “risk-adjusted” capitated payments–fixed monthly payments based on the diagnoses codes in a patient’s chart–is that they incentivize insurers to add irrelevant or even inappropriate diagnoses codes to a patient’s profile in order to get paid more, driving up Medicare spending. In an ideal world, there would be the ability to monitor the problems and correct the overpayments. But, CMS does not begin to have the resources to do so.

Kathy Ormsby worked for the Palo Alto Medical Foundation, a subsidiary of Sutter Health in California, which was looking at patients’ health histories as a way to get doctors to add diagnoses codes to their records. Sutter dismissed Ormsby’s concerns about upcoding. Ormsby found a lot of mistakes, and Sutter had no interest in refunding the government. Medicare Advantage plans appear focused on a ‘dash for cash,” first and foremost.

Ormsby filed a whistleblower lawsuit against Sutter Health because its practice of adding diagnosis codes. The upcoding was not designed to improve patient care, but rather to increase payments for that patient.

Sutter health ended up paying $90 million to the government to settle the lawsuit filed by Ormsby last August. It was a clear case since Ormsby found that nine in ten cancer and stroke diagnoses were false. More than six in ten fracture diagnoses were also false.

Sutter is hardly the only bad actor. Abusive billing practices appear to have become the norm in Medicare Advantage. Many Medicare Advantage plans see no reason not to give patients as many diagnoses as possible in order to increase their revenues. The government does not pay Medicare Advantage plans, or even adjust payments, based on the cost of services they deliver. Medicare Advantage plan incentives are perverse thanks to this payment model, and the proof is in the pudding,

The Justice Department has filed lawsuits against several Medicare Advantage companies for fraudulent billing. Rowland writes: “Justice Department whistleblower allegations and similar lawsuits also are playing out in federal courts against UnitedHealth Group, Cigna and Anthem. The government’s Office of Inspector General has audited Humana and found it overbilled the government. United Healthcare, which is under the umbrella of UnitedHealth Group, and Kaiser Permanente denied any improper conduct. Cigna, Anthem and Humana did not respond to requests for comment.”

Richard Kronick, a health economist, projects that if not stopped, overpayments to Medicare Advantage will amount to more than $600 billion in the next nine years. Putting aside the propriety of Medicare Advantage plan behavior to generate more revenue, what’s clear is that the risk-adjusted capitated payment system is fraught, leaving insurers holding the bag if they attract too many cancer and stroke patients and profiting wildly if they have disproportionate numbers of people who are relatively healthy.

The problem in a nutshell: The government pays Medicare Advantage plans way too much for people who use relatively little care and too little for people who need a lot of care. That payment model needs overhauling. Like large employers, the government should pay health plans a management fee for coordinating care, on top of the cost of covering medically necessary services for their enrollees. Medicare Advantage plans should not profit more the less care they provide.

Rowland spoke with a number of doctors who all confirmed that Medicare Advantage plans are mining data to add codes to patient records. They are expected to add these codes and pressured in various ways to do so.

Kaiser Permanente was giving so many of its patients diagnoses for aortic atherosclerosis that it was overloading its cardiovascular disease management program. Instead of eliminating the diagnosis code and losing revenue, it stopped referring all of these patients to the cardiovascular disease program. Pressure was on to include that diagnosis in patient medical records because it generated an extra $40 million a year for one physician group.

The HHS Office of the Inspector General has issued reports on the cost of upcoding. Donald Berwick and Richard Gilfillan, the former heads of CMS and the Centers for Medicare and Medicaid Innovation, respectively, just published an article in Health Affairs in which they take the available evidence to show that Medicare Advantage not only costs a lot more than traditional Medicare, but it delivers care of questionable quality and promotes health inequities. (Here’s the Just Care post I wrote on topic.)

Berwick and Gilfillan dismiss patient satisfaction with Medicare Advantage as a table rabbit. People choose it to save money, as the upfront costs of Medicare Advantage are less than traditional Medicare; But, out-of-pocket costs in Medicare Advantage are generally much higher than traditional Medicare with supplemental insurance for people with costly health care needs.

Here’s more from Just Care:
June 14, 2022
Health care prices will continue rising until they are regulated
The public is fed a lot of misleading information about health care prices. Contrary to popular myth, health care “competition” does not bring down prices. In fact, health care prices will continue rising until Congress regulates them.

But, Congress is practically silent on the issue of regulating health care prices. It is allowing Wall Street to call the shots. And, Wall Street is taking full advantage, buying up big pieces of the health care industry–physician and dental practices, hospitals and more–and raising prices as quickly as it can.

Elisabeth Rosenthal reports for the New York Times on her experience visiting two hospital medical centers, operating under very different rules. She went to Johns Hopkins Medicine in Maryland, the one state with regulated hospital prices–and a hospital she would not name in New York,, which has no price regulation to speak of for health care. The cost for her treatment with a neurologist in Maryland was a fraction of the cost in New York,, $350 v. $1,775.

Rosenthal makes the point that hospitals do not need to charge $1,775 for a neurology visit to deliver excellent care. Johns Hopkins delivered as good care. The big difference between the two hospitals is that Johns Hopkins has lower profit margins and not all the over-the-top bells and whistles that many of the high-priced hospitals have today.

Meanwhile, the Daily Poster reports on concerning behavior among Wall Street entities owning physician practices. One private equity firm, KKR, which owns emergency room physicians, did not want to share its billing codes with its physicians. It apparently wanted to protect its doctors from being charged with engaging in fraud. KKR seemed to fear that transparency in its billing practices would put physicians it owns on notice of the services KKR was billing insurers for, which they might not believe they had performed.

This all said, price regulation is not enough in some instances to keep costs from escalating. You also need oversight and enforcement. A story in Kaiser Health News reports on Justice Department action against Kaiser Permanente. A whistleblower reported that more than half of its doctors say they were pressured to add diagnoses to Medicare patient records that they had no basis for adding. These additional diagnoses increase Kaiser’s Medicare Advantage revenues. (The government pays Medicare Advantage plans more for patients with multiple diagnoses.) The Justice Department found a 75 percent error rate in diagnoses codes.

This practice of “upcoding” (the term for adding additional diagnoses codes) appears to be quite common among Medicare Advantage plans. One analysis found that the government would be spending $355 billion more over the next eight years than it should be spending for people in Medicare Advantage as a result of upcoding. It needs to be addressed, but so far the government is letting it happen.

If we improved and expanded Medicare for all, we would not be dealing with any of these issues.

Here’s more from Just Care:
October 27, 2021
Kaiser Permanente sued for misleading people about their network doctors
The city of San Diego, California is suing Centene, Kaiser Permanente and Molina, three large corporate health plans, for false advertising about the health care providers in their networks reports Health Care Dive. Like many corporate health plans, they are deceiving potential members and cannot be trusted regarding the coverage they provide.

If you have traditional Medicare, you have a wide choice of doctors. With commercial insurance, be it through a Medicare Advantage plan, a state health care exchange, or your employer, your choice of doctors and hospitals can be quite limited. If you develop a costly condition, you might not be able to see the doctors you want to see.

You can’t trust your health plan’s provider directory to reflect accurately the doctors you can use or the locations at which you can get care. Doctors come and go. If the doctors are in your health plan, they may not be taking new patients from your health plan. Or, you may only have coverage from in-network doctors at a location that is inconvenient for you, which is different from the location listed in the provider directory.

People in corporate health plans, who do not have easy access to the doctors they need to see, too often forgo needed care. They endanger their health and well-being. What ‘s worse is that government has little ability to ensure that corporate health plans provide adequate access to care.

In its lawsuit against Kaiser Permanente, Molina, and Centene, the city of San Diego argues that “ghost networks,” health plan networks that are misleading and improperly include out-of-network providers, threaten the public health. But, what leverage does it have to correct this issue even if it wins the lawsuit?

To address problems with health plan provider directories and help people make better decisions about their health plans, CMS imposed rules on health plans that became effective in 2016. Both Medicare Advantage plans and plans in the state health exchanges must publish up-to-date provider directories, including which doctors are seeing new patients, their locations, contact information, specialties and hospital affiliations. And, in addition to making them easily accessible, they must keep them updated each month.

CMS can impose penalties on Medicare Advantage plans up to $25,000 per person enrolled if they violate the rules and up to $100 per enrollee on health plans in the state exchanges. These penalties should deter plans from listing doctors in their directories who have left their plans as much as ten years back, as some have been doing, but CMS has not. The Trump Administration chose not to fine Medicare Advantage plans that violate these rules.

To help ensure a health plan’s in-network doctors meet your needs, talk to your doctors’ staff to see which health plan networks your doctors are in. Always call your health plan to double check. And, make sure that whatever plan you join has a stable of good specialists. Even if you’re healthy, you want to know that there are doctors in the plan who will meet your needs if you develop a costly or complex condition.

Here’s more from Just Care:
June 29, 2021
Coronavirus: Medicare Advantage plans doing little to ensure their members get needed care
In the face of the novel coronavirus pandemic, the Centers for Medicare and Medicaid Services (CMS) has mandated that Medicare Advantage plans–corporate health plans that offer Medicare benefits–remove certain restrictions on covered care. Unfortunately, it does not appear that these private plans are letting their members know. Based on the information available on their web sites, they are doing precious little to ensure their members get needed care, endangering the lives of hundreds of thousands of older adults and people with disabilities.

CMS is requiring Medicare Advantage plans to cover coronavirus-related treatment from out-of-network providers in Medicare-participating facilities at the same cost as at in-network facilities. And, people do not need a referral to be covered. Virtually all hospitals in the US are Medicare-participating facilities.

Shockingly, UnitedHealthcare, Humana and Aetna coronavirus web pages do not mention these expanded protections for people in Medicare Advantage plans needing coronavirus treatment. In fact, they are largely silent on coverage for treatment. UnitedHealthcare, Humana and Aetna combined cover half of all Medicare Advantage enrollees.

It appears that Medicare Advantage plans are also keeping all cost-sharing and prior authorization requirements in place for people needing coronavirus treatment. CMS issued guidance allowing them to waive these requirements, but not mandating that they do so.

Because out-of-pocket costs can be very high for people needing hospital care, one in four people with corporate health insurance skip treatment. Of course, deductibles, coinsurance and other barriers to care in Medicare Advantage plans will keep thousands, if not tens of thousands, of older adults and people with disabilities from getting needed treatment. But, they presumably will help Medicare Advantage plans’ bottom lines.

A new Kaiser Family Foundation paper shows that people in Medicare Advantage plans who are hospitalized for seven or more days will spend more out of pocket for their care than they would had they been in traditional Medicare. Nine in ten people in traditional Medicare will spend nothing or close to nothing because they have supplemental coverage through Medigap, Medicaid or a former employer, which pays for all or virtually all out-of-pocket costs.

The six million people in traditional Medicare who do not have supplemental coverage that picks up the cost of the Part A deductible must pay $1,408 out of pocket if they are hospitalized. After that, they pay nothing for the next 60 days of hospitalization. For most people in Medicare Advantage plans, the average out-of-pocket cost is $1,762 for a seven-day hospital stay and $2,039 for a ten-day stay. Hospitalizations related to treatment for Covid-19, the disease caused by the coronavirus, can be far longer than ten days.

Here’s more from Just Care:
March 25, 2020