Privatizing Medicare through "Medicare Advantage" and REACH: The Wrong Way to Go!

The things to remember about “Medicare Advantage” plans is that 1) they are not Medicare, and 2) they may offer little or no advantage. They are a form of private insurance, cost Medicare a lot of money, and in some situations (especially when you are sick) can indeed hurt you.

Let’s get to the first. Medicare was created in 1965 to provide universal health care to senior and disabled people. It was a tremendous victory for those who had fought for decades to have a universal health insurance system in the US. It was also strongly opposed by those who thought their pocketbooks might be hurt, specifically the AMA, as well as other right-wing forces that just opposed everything that might actually help most people (and thus most Great Society, and even New Deal, programs). The supporters never envisioned that Medicare would be the end of the road, especially when, in the same year, Congress passed Medicaid, a federal-state collaborative program that was aimed at helping the poor access health care. They assumed that it would be expanded to finally include all Americans.

Of course, many of the opponents of Medicare didn’t give up either. The AMA, while never contrite, shut up about it after it became clear that rather than hurting physicians’ incomes, Medicare was a bonanza for them, ensuring payment for services had often previously been unable to collect for. Those who hate programs that benefit people, of course, are still around. But the most insidious and dangerous threat is from those who see any government program as a way to make lots of money, especially if it can be privatized without much risk to the private sector investors. This is really how Medicare (and many other public programs) have been most insidiously and effectively attacked -- by privatizing its programs to guarantee lots of money for the profit of the private companies, and largely insulate them from risk.

Enter Medicare Advantage (MA).  MA plans are largely run by insurance companies (and sometimes by venture capital groups) and are called “Part C” of the Medicare program, but they essentially take people out of Medicare and put them in a private managed care program. These companies then get the money that would have gone to the Medicare program (we’ll call it Traditional Medicare, or TM) for you. Plus they get extra money. Why do private companies caring for you under MA get more money than TM allocates for you? Because they do, right. Because the pro-for-profit “caucus” (PFPC) of the Congress, from both parties, wanted to increase the portion of people in Medicare entering MA. So these companies could make more money. And contribute more to the members of the PFPC.

Remember the old phrase “feeding at the government trough”? That is what these companies do, very well. Virtually no public function that is privatized becomes more effective at delivering service, since the amount of profit generated is increased by providing less service. To the extent that it sometimes seems to look better, it is almost always because of 2 things: that the public services were starved for funding in the first place, making them look bad and justifying the call to privatize them, and that private companies’ inefficiency, corruption, and overall bad acting is harder to ferret out than government agencies’.

How do MA plans make more money? In the traditional HMO manner, they limit access to a “panel” of doctors and hospitals. These are not necessarily the worst ones in your area, but they are the ones that the plans have negotiated the best deals with, for which they pay the least. They attract members with some perks like vision care, hearing care, etc., which can be useful if one is generally healthy. And of course, MA plans vary in quality and in performance; some of those covering state employees by contract have performed better possibly because of having a more educated, informed, and influential client base. But this is not always the case; see the example of city workers’ resistance to Mayor Eric Adams of NYC trying to push retirees into MA.  

And do not consider for a moment that the goal of any of these programs is to provide excellent health care: it is to make money. And that they make money is demonstrated by the aggressive marketing that Medicare-eligible people get from these companies, not to mention television advertising. The Commonwealth Fund recently published a piece called “The Role of Marketing in Medicare Beneficiaries’ Coverage Choices”, which describes this in detail. ‘Soaring private plan enrollment has led to a sharp increase in marketing and sales efforts, some misleading and inaccurate.’ It goes on to explain in how MA works and how they market. It also notes that about 1/3 of Medicare beneficiaries used an insurance broker; a boon to that private sector industry as well. MA plans can keep 15% of the money they get for profit and overhead, having to spend only 85% on actually delivering care (which they call the “medical loss ratio”!)

The way that MA plans make money is enrolling lots of people, many of whom are healthy (Wow! Free gym membership!) and don’t cost them much, and then submitting bills that make their patients look like they are as sick as possible thus inflating their bills (called “upcoding”). At best this an effort to maximize revenue from Medicare, which there is no incentive to do in TM. Plus, if they can get certain poor people enrolled, they can collect an additional $350 for each one regardless of whether they actually provide any care! This was implemented with the theoretical idea of increasing equity by incenting the enrollment of poor people, but really has the opposite effect since those folks now have their care restricted when they are sick by the private insurance company, while under TM it would not be. And, of course, they make money by fraudulently overbilling Medicare for billions of dollars, winning the Lown Institute’s 2022 “Shkreli Award” for bad behavior by corporations!

 

MA is not the only way Medicare is being privatized. As I have written before ("Private Equity": Profiteers in nursing homes, Medicare Advantage, DCEs, and all of healthcare, Sept 16, 2022; Direct Contracting Entities: Scamming Medicare and you and bad for your health!, Feb 7, 2022), the Center for Medicare and Medicaid Services Innovation Center (CMMI) implemented Direct-Contracting Entities (DCE), which was renamed REACH as of January 2023 (without any other significant change). REACH has allowed the creation of mostly investor-owned companies that contract with primary care practices (often already owned by corporations, not owned by the doctors) and voilà, all of those doctors' patients are in their REACH group, which then gets the money that Medicare would have paid for you. What is really tricky is that, unlike MA, you didn’t have to choose it; they choose for you by contracting with the group (often corporate) that owns your primary care practice! And your doctor may not even know that s/he is in one! You can only get out if you can find another doctor who is not in one – particularly difficult in rural or urban underserved areas where even finding a doctor is hard. Not to mention that REACH is even more lucrative than MA, as it allows the private company to keep 40% of its take as profit and overhead, spending only 60% on patient care!

The effort to privatize Medicare is absolutely the wrong way to go. The way to go is to keep the structure of Traditional Medicare, where anyone can use any doctor or hospital, where there is no profit taken out, and overhead is about 2%. And then increasing its benefits so that it covers 100% (not 80%) of approved charges so people don’t have to get a Supplement Plan, as well as cover dental, vision, hearing, etc. This is affordable, since it could be funded by money now used to generate huge profits for private investors, but could actually be used to improve our healthcare. While we still need to address access in terms of geography and specialty distribution, eliminating the profit motive will make major steps toward access and improved quality.

Then we can have Healthcare for All.

 

What is the problem with Primary Care? The US health system!

What is wrong with primary care in the US? Shall I count the ways? Medscape details a number of them in its recent article, citing much of the data provided in the Commonwealth Fund report “Mirror, Mirror on the Wall” which I discussed in my last blog post, Our health system: Not equitable, not effective, and not even efficient. Bad business!, (March 4, 2022). The spoiler answer is: what is wrong with primary care in the US is the US health care system – how it is designed, how it is implemented, the purposes for which it is intended, and the intrinsic corruption of it. If the primary care portion of the US health care system is in particular disarray, it is because it is the (relatively) poor stepchild of a system that is all about making lots of money for corporations, particularly large health systems, insurance companies, and the vendors of drugs, devices, and equipment. The way our health system is currently structured is to feature those parts of it that generate this money, rather than those that maximize the people’s health, and under our current reimbursement system primary care is not in the game. Thus, it is unsurprising – if incredibly depressing – that our primary care sector performs poorly on the metrics assessed by Commonwealth (and reported on by Medscape), because they are looking at different markers, that is, how it meets the health needs of our people, and a robust and effective primary care capacity is critical to that. If only they would look at corporate profit they would see how well the health system, by neglecting primary care, is doing!

What is primary care and what are primary care doctors? They care for all the issues that a person has, not limited to disease, organ system, procedure, etc. They care for people with as-yet undiagnosed problems, with undifferentiated conditions. They provide care over time, and consider the physical, mental, and social conditions affecting a person. They provide care in the context of a person’s family and community. Any issue that is affecting a person’s health, or that they think is, is fair game to bring to a primary care doctor, who will try to diagnose and treat it, referring if necessary. In a coherent and effective health system, they continue to be involved with the person, even after referral or hospitalization. The characteristics of primary care, and the reasons for its benefit to people and to society are discussed most clearly by Barbara Starfield, MD, in many papers including this one. I like to think that while the relationship between primary care doctors and their patient is defined by the relationship, not the disease, or procedure involved. Family medicine, unlike even other specialties in primary care does not even limit its practice to certain age groups. But even these doctors are being relegated to practice only part of what they could; few deliver babies, most don’t do hospital work, and a large number do not care for children.

But few of us have seen such a physician lately, still less with a “full scope” practice. There are not enough family physicians or other primary care doctors in the US. There are not enough to meet the primary care needs of our people, nor to adequately perform the role that primary care should play in regard to specialists – that is, assessing a patient, determining if they can be treated by the primary care doctor, and if not referring. Otherwise subspecialists spend a lot of time caring for things that could have been done by a primary care physician. Or missing problems that are outside their specialty focus when people directly self-refer. And it is not only in the US; in parts of Canada, there are such shortages of primary care doctors (there they are virtually all family physicians) that consideration is being given to a new profession, possibly called associate physicians. In the US, much primary care is delivered by nurse practitioners and physician’s assistants. Some of them do excellent work, but they are also hampered by the same constraints as those primary care physicians face – excessive workload, assembly line production, (relative) underpayment, and a perverted reimbursement system.

To the extent that the move to non-physicians is driven by the fact that they cost less because they earn less money, any such effort is doomed. Nurse practitioners are increasingly being recruited by hospitals and subspecialty physician groups where they can earn, as do the doctors in those specialties, more money. This has overwhelmingly already happened in the case of physician assistants. The answer to the need for more primary care is simple: PAY MORE MONEY. Pay them as much as, or almost as much as (70% would probably do it) other specialists. There are a lot of students, residents, doctors, nurse practitioner and physician’s assistant trainees who would like to do primary care, and would be good at it, but are dissuaded because they can earn WAY more in another specialty. It is not that complicated; virtually all reimbursement for health care in the US is based on Medicare rates; private insurers pay some multiple of what Medicare pays. So all that has to happen is for Medicare to completely revise its reimbursement schedule so that primary care is paid a lot more, and interventive procedural specialty care less. Don’t increase the size of the pie; reallocate!

Sadly, the reallocation (under both Republican and Democratic administrations) has been instead to increase the privatization of Medicare, effectively enhancing corporate profits rather than quality health care. The Medicare Advantage program, while it can be good for some seniors, is being touted as the greatest thing since sliced bread by many in Congress, although it is heavily subsidized and saps funds from Traditional Medicare (TM). MedPac (not a “political action committee”, but the official group convened by Congress to make recommendations on Medicare) has raised serious concerns about the program, which essentially cherry picks healthy seniors, gives them low cost benefits, and eschews sick people while getting more money from Medicare. As I have written before (Direct Contracting Entities: Scamming Medicare and you and bad for your health!, Feb 7, 2022), a program called Direct Contracting Entities (DCEs) was developed to push even those who have chosen TM into corporate controlled profit centers. And now, after DCEs have received criticism in Congress, they haven’t been abandoned, but re-branded as REACH, essentially the same model.

The problems with primary care are not with the clinicians. The problem is with the corporate model that seeks to limit the practices of the clinicians and speed up their work so they cannot provide the benefits of primary care. The key part here is being the core person who knows about you and your family and manages directly or in conjunction with others all your care. It cannot effectively happen if you are seeing different doctors in every setting, and no one is responsible for YOU. This is much different from being the person who orders the tests or prior authorizations. Family physicians and other primary care doctors and clinicians need to have the time to spend with the patients, getting to know them, getting to know them well enough that they are trusted by their patients, who may then reveal the Pandora’s box of complicated, difficult-or-impossible to solve problems that physicians dread to hear about and corporate employers hate to pay for. You can’t get to these, not to mention begin to solve them, in 15 minute visits. Often you can’t really begin to solve them at all, since they are based in the overall circumstances of life that people find themselves in, what are often referred to as the "social determinants of health" -- their income, jobs, education, housing, food, safety, and discrimination for starters. But they need to be revealed.

This is scary to corporate types, who want to continue to do what they do – generate big bucks by hiring procedural specialists to care for well-insured or rich people for big reimbursement.