JustCare

Tag: Value

  • Even with billions in overpayments, Medicare Advantage insurers are losing value

    Even with billions in overpayments, Medicare Advantage insurers are losing value

    The latest news suggests that Humana and other big insurers are losing shareholder value because they are spending more money on care in Medicare Advantage than anticipated. It’s hard to believe they aren’t profiting wildly when they have been running away with the store, raking in tens of billions of dolloars in overpayments from the government each year. But, if they are losing value, it’s another reason why Congress should cut its losses on Medicare Advantage and either overhaul the program or end it entirely.

    If insurers deliver shareholder value by spending less on care, then shareholder value is at odds with the needs of Medicare Advantage enrollees. And, if insurers can’t deliver shareholder value when they are massively overpaid, Medicare Advantage enrollee costs are likely to rise significantly when the government ends the overpayments. Right now, the Medicare Advantage plans are being overpaid $88 billion, according to the Medicare Payment Advisory Commission or MedPAC.

    No one, including many Democrats in Congress, wants to hear that Medicare Advantage is financially unsustainable and not delivering shareholder value. After all, as one Just Care reader just wrote me, it’s the only option many people with Medicare believe they can afford.  (Traditional Medicare has no out-of-pocket limit. So, unless they have Medicaid, people need supplemental coverage to protect themselves financially, and supplemental coverage can be expensive. That said, out-of-pocket costs in Medicare Advantage can be over $8,000 a year for in-network care alone, which presents a significant barrier to care for many enrollees with complex and costly conditions. People in Medicare Advantage cannot buy supplemental coverage.)

    It’s an open question whether Traditional Medicare without supplemental coverage is a better option for people with limited incomes than Medicare Advantage. At least, the government is not second-guessing their treating physicians or limiting their access to physicians and hospitals. Medicare Advantage is not working for millions of people with costly conditions; they often can’t get the care they need. When they need care, it’s a crapshoot whether their insurers will approve it and whether they will be able to afford the out-of-pocket costs.

    What’s crystal clear is that Congress and the administration need to cut Medicare Advantage overpayments really soon if Medicare is going to be around in the future. These overpayments are unsustainable, and they are undermining Traditional Medicare. Without Traditional Medicare, the Medicare Advantage insurers will have no competitive pressure and their behavior, which already too often endangers people’s health and well-being, is likely to worsen.

    Politically, many Democrats are likely to feel that their hands are tied, and they cannot support reforms to address the overpayments without a backlash from insurers. Republicans seem happy to allow the waste in Medicare Advantage to continue, because it’s helping the corporations that support them. But, only when Congress ends the Medicare Advantage overpayments will Republicans and Democrats serve the needs of all their constituents and ensure Medicare’s future.

    Here’s more from Just Care:

  • Will Kaiser Permanente’s purchase of Geisinger benefit their members?

    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:

  • Medicare Advantage plans are an “Insatiable Cash Monster”

    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:

  • Budget reconciliation: What’s happening with drug prices?

    Budget reconciliation: What’s happening with drug prices?

    As the Democrats in Congress work on the budget reconciliation bill, a lot is happening with drug prices. And, it is still unclear where Congress will end up. Here’s what we know as of now:

    Uninsured Americans will continue to be burdened by high drug prices: Unless something changes soon–and it’s hard to imagine what it would be–uninsured Americans will continue to face unconscionably high drug prices even if Congress lowers drug prices for everyone else. How could this be, you might wonder? It appears that lawmakers do not have a way to lower drug prices for the uninsured through a budget reconciliation bill. What the uninsured pay for drugs does not affect the budget in any evident way. Also, it appears that lawmakers do not see a way to regulate drug prices for the uninsured, short of Medicare or health care for all, which is not on the table.

    The US Department of Health and Human Services has a plan to negotiate drug prices for people with Medicare: With White House backing, Secretary Xavier Becerra is looking to negotiate Medicare drug prices and to limit price increases to the rate of inflation. Becerra’s plan mirrors the plan working its way through Congress. One unanswered question is the number of drugs that will have their prices negotiated. Another is whether private insurers will be willing and able to take advantage of Medicare’s negotiated prices.

    It is unlikely that a drug’s negotiated price will relate to the value that drug offers: Some countries, such as Germany and Australia, do value-based pricing–price prescription drugs based on their value to patients, in terms of the drug’s efficacy and the quality of life it offers. Currently, writes Thomas Waldrop for the Center for American Progress, drug prices in other wealthy nations are easily half the prices we pay and sometimes as little as 25 percent of the cost. Right now, we all bear the burden of exorbitant drug prices, as taxpayers and as patients. Medicare and Medicaid alone in 2019 spent $290 billion on prescription drugs.

    We have little understanding of the value of FDA-approved drugs so insurers must cover drugs of little or no value with unreasonably high price tags: We do not have the information to assess a drug’s value. We do not have detailed or centralized information on drug usage rates, let alone health care usage rates.  And, the FDA does not do comparative effectiveness reviews of drugs. It simply determines whether a new drug is more effective than a placebo.

    Regulating drug prices will not affect critical innovation: The federal government has funded research for every new drug on the market. Pharmaceutical companies are not innovating in the ways we need–to find treatments for conditions that are rare and therefore less profitable to them. Rather, they are focused on maximizing profits by targeting research on drugs that are most used or for which they can generate the most money.

    Here’s more from Just Care: