Ken Alltucker reports for USA Today on how insurers offering Medicare Advantage plans are underpaying hospitals and specialists. Consequently, these health care providers are dropping their Medicare Advantage contracts. It’s hard to see how this persisting issue can be solved given the corporate health insurers’ ability to use their own proprietary claims processing software, which makes oversight near impossible.
Since Medicare Advantage plans legally must cover the same benefits as Traditional Medicare, they should be required to to use the same claims processing software as Traditional Medicare to ensure they do. They should also be required to pay hospitals and specialists the same rates as Traditional Medicare.
Traditional Medicare rates are significantly lower than commercial insurance rates because, unlike Medicare, which uses its enormous leverage to set fair rates with providers, commercial health insurers are generally unwilling or unable to negotiate low rates for people under 65. But, Congress allow Medicare Advantage insurers to pay providers even lower rates than Traditional Medicare. So, the insurers sometimes will only pay lower rates; consequently, they can keep top quality providers out of their networks and increase their profits. Narrow networks keep people with costly conditions from enrolling or remaining in a Medicare Advantage plan.
The USA Today story feeds off of other stories in Becker’s Hospital, MedPage Today and Kaiser Health News, documenting the financial problems and patient safety concerns that hospitals are dealing with because Medicare Advantage plans are undermining their ability to provide good patient care and underpaying them. When these hospitals cancel their Medicare Advantage contracts, tens of thousands of patients face major care disruptions.
The patient care disruptions mean that patients need to find new doctors and hospitals or pay out of network to continue to get care from the same providers. The Centers for Medicare and Medicaid Services, which oversees Medicare, can step in to help patients when there are “significant network changes,” but it is not clear how often or whether it ever does.
It’s likely that the disputes that USA Today documents are the tip of the iceberg. Even when Medicare Advantage plans agree to pay decent rates to hospitals, they can and do often refuse to pay the hospitals and other care providers what they owe them, cutting payments by as much as 30 percent. Hospitals then report losing tens of millions of dollars in revenue, while the insurers run away with the store. Moreover, hospitals also report inability to provide timely and necessary care to their patients in Medicare Advantage plans.
The Medicare Advantage payment system is defective. The government pays the insurers upfront regardless of how much they spend on care. The government is not even able to monitor how much the Medicare Advantage plans spend on care effectively, in order to ensure enrollees are getting the benefits to which they are entitled. Not surprisingly, the Office of the Inspector General has found widespread and persistent failure on the part of the health insurers to pay for medically necessary care they should be paying for and that Traditional Medicare covers. That’s one way that the insurers profit.
St. Charles Health system in Oregon tried and failed to resolve its disputes with insurers offering Medicare Advantage. As a result, it is cancelling contracts with Humana, HealthNet and WellCare. Its chief clinical officer said that unless it cancelled these contracts, their physicians would face restrictions on “patient care, longer hospital stays and administrative burdens.”
Here’s more from Just Care:
- 2023: Five things to think about when choosing between traditional Medicare and a Medicare Advantage plan
- If you’re in a Medicare Advantage plan, watch out! Your doctor or hospital might no longer be in-network
- Rural hospitals accept Medicare Advantage at their peril
- 2024: Medicare Part D coverage and costs
- What are your Medicare premiums in 2024?
