What happens when a Medicare Advantage plan endangers people’s health?

Medicare Advantage plans delay and deny care inappropriately, putting their members’ health at risk. Enrollees with serious medical conditions can find themselves unable to get critical care. As a general rule, the government does nothing to stop the wrongful delays and denials of care or to protect people in Medicare Advantage plans that are failing to cover their enrollees’ medically necessary care. Before signing up for a Medicare Advantage plan or deciding to remain in one, consider the consequences if you take a big fall or are diagnosed with a serious health condition.

Twice now, the HHS Office of the Inspector General has found widespread and persistent delays and denials of care and coverage in Medicare Advantage plans. But, the government never names names. Similarly, the American Hospital Association has reported that some Medicare Advantage patients are not able to get essential hospital care. “Inappropriate denials for prior authorization and coverage of medically necessary services are a pervasive problem among certain plans in the MA program. This results in delays in care, wasteful and potentially dangerous utilization of fail-first requirements for imaging and therapies, and other direct patient harms.”

The Centers for Medicare and Medicaid Services (CMS), the government agency that oversees Medicare, tells people that MA plans “must” cover the same services as Traditional Medicare, but there’s a profound difference between theory and practice. Despite reports of bad acts by insurers offering MA, CMS does not have the resources to monitor the Medicare Advantage plans adequately. Even when the OIG identifies bad actors, CMS appears to lack the political will to name the bad actors, let alone punish the bad actors appropriately.

Moreover, some MA plans are failing to pay hospitals and other providers adequately, denying 18 percent of their claims inappropriately, according to the OIG. People enrolled in these Medicare Advantage plans are at risk of losing access to their local hospitals, which cannot afford continuing contracts with Medicare Advantage plans that don’t pay their bills.

On rare occasions, CMS will temporarily freeze enrollment in some Medicare Advantage plans as a penalty for their bad acts. But, when it does, CMS does not alert members to the inappropriate denials. Moreover, it has no way to prevent these Medicare Advantage plans from continuing to delay and deny care inappropriately.

Worse still, even when cautioned about bad actor Medicare Advantage plans—for example, by a local hospital—enrollees have little recourse. They generally cannot enroll in Traditional Medicare because, as a rule, they have no ability to buy supplemental coverage to fill coverage gaps. When they can get supplemental coverage, they often can’t afford it.

Here’s what must happen to protect people with Medicare enrolled in, or thinking of enrolling in, a Medicare Advantage plan:

1. The government, insurance sales agents, and all Medicare Advantage marketing materials must warn people with Medicare that they may be enrolling in a Medicare Advantage plan with high rates of coverage denials and high delay rates, jeopardizing their access to care. They must disclose denial rates and delay rates for each Medicare Advantage plan.
2. The government, insurance sales agents, and all Medicare Advantage marketing materials must warn people with Medicare that they may be enrolling in a Medicare Advantage plan with high rates of payment denials, jeopardizing their access to care. It must disclose payment denial rates for each Medicare Advantage plan.
3. The government, insurance sales agents, and all Medicare Advantage marketing materials should make clear that the government has no way to ensure that people enrolling in a Medicare Advantage plan will get the same benefits they get in Traditional Medicare and remove any language or suggestion to the contrary. The issue is not whether Medicare Advantage plans “must” cover the same benefits as Traditional Medicare, but whether they are doing so.
4. The government must conduct annual audits of all Medicare Advantage plans and publicly identify all of them that have coverage and care denial rates of 10 percent or higher.
5. The government must publish on its web site and send notices to people enrolled in any Medicare Advantage plan that has a 10 percent or greater denial rate.
6. The government must give people a meaningful option to enroll in Traditional Medicare, with a limit on financial liability no higher than the lowest limit available in a Medicare Advantage plan; the cap should cost the government $10 less per person than the government spends on enrollees in Medicare Advantage. Right now, CMS must provide a Traditional Medicare option through its Innovation Center that caps out-of-pocket costs in Traditional Medicare no higher than the lowest level set by a Medicare Advantage plan.
7. The government must establish a set of automatic escalating penalties to impose on Medicare Advantage plans that violate their contractual obligations, either through a ten percent denial rate or higher.
8. To ensure the financial stability of hospitals, CMS should pay hospitals for MA enrollees directly whenever an MA plan has a payment denial rate above 10 percent and deduct hospital expenses from the MA plans’ capitated rate.

In addition, the government should make clear in all its materials the annual maximum out-of-pocket costs in Medicare Advantage plans and advise people to check the maximum in any Medicare Advantage plan they are enrolling in. It should require Medicare Advantage plans to include this information prominently in all marketing materials. Sales agents should be required to disclose this information as well.

As the American Hospital Association has said, “strong, decisive and immediate enforcement action is needed to protect sick and elderly patients, the providers who care for them and American taxpayers who pay MA plans more to administer Medicare benefits to MA enrollees than they do to the Traditional Medicare program . . . . In the recent contract year 2024 Medicare Advantage Rule, CMS noted that a number of the established regulations were already requirements under the health plan terms of participation in the MA program. Given MAOs historic lack of adherence to these rules, Congress should establish stronger programs to hold plans accountable for non-adherence. Additional requirements are insufficient without enforcement action and penalties to support compliance.”

For too long, our federal government has allowed insurance corporations to mislead the public about Medicare Advantage, without revealing that all Medicare Advantage plans are different and that some are engaged in widespread and persistent delays and denials of care and coverage. Our federal government has failed to protect people from these bad actor insurers. These corporate insurers have endangered the lives of tens of thousands of people, to date. Their bad practices must end before the corporate insurers endanger the health and well-being of tens of thousands more older and disabled Americans.

Here’s more from Just Care:

• OIG finds widespread inappropriate care denials in Medicare Advantage
• AHA underscores dangers of Medicare Advantage, need for greater accountability
• New Medicare Advantage rules won’t stop the misleading marketing
• Be a Hero tells Congress to end Medicare Advantage wrongful delays and denials of care
• The choice between traditional Medicare and Medicare Advantage: It’s a sham