The insurance company mafia and Medicare Advantage: Taking your money and denying you care

If the government were considering ways of making small businesses function more effectively to meet the needs of their customers and make a reasonable living for their owners, they would consider the stakeholders. Those might reasonably be the owners, the customers, and perhaps the suppliers. And, of course the gangsters who supplied “protection" to the owners – that is, protecting them from damage that might occur if the owners didn’t pay up.

Oh. You don’t think so? Why would we include the gangsters who just prey upon these businesses, drive up costs and thus probably prices, and threaten bodily harm to innocent people? Well, why not? After all, they have a stake in those businesses as well. If this seems like a ridiculous idea, consider the fact that we do it whenever we consider changes to our healthcare system in the United States. Except, in that case, it is the health insurance, a huge parasitic industry that preys on the health of the American people by sucking out billions in profit from funds intended to pay for our actual health care. We not only allow it, we encourage it!

The patchwork nature of health insurance coverage in the US is incredible. Many folks are coverage by policies held by their employers, or the employers of family members, but the employer contribution has been decreasing with increases in what employees have to pay in premiums, co-pays, and co-insurance. Others are covered by government programs – indeed, when considering all of these including Medicare, Medicaid, military families and retirees, employees and families of federal, state, and local government – public funds are more than half our health expenditures, rising to about 60% if the taxes foregone by the government because (unlike wages) employer contributions but not employee contributions) to health insurance are tax free. And still others have insurance through the ACA (Obamacare) or actually pay their whole cost. And, of course, lots and lots of people are uninsured.

And the coverage for those who are insured varies tremendously, from plan to plan, insurer to insurer, employer to employer. Many policies are so bad that those who have them are almost as bad off as the uninsured – but they are paying for it. People get low-cost policies because this is what they can afford,  but pay the price when they find out they are sick. It is bad, bad, bad, inefficient, incredibly expensive, and, like all “protection” plans, beneficial only to the insurance company mafia. But it is even, in a way, more egregious when we consider how it has cannibalized Medicare, the federal program that is supposed to cover the aged, blind, and disabled. Not that it is ok to screw the younger, non-blind or disabled portion of our population, but Medicare, passed in 1965, was supposed to ensure health care for the elderly, who are, in fact, more likely to be sick.

But then we get “Medicare Advantage” (also known as Medicare Part C), pushed by successive Republican administrations and assented to by the Democrats who seem to believe the hype. Let’s be clear about what MA is and is not. It is NOT Medicare, the program funded by your Medicare taxes from your paycheck (Part A) or general revenue + you (Part B). It is private health insurance being paid for with Medicare dollars (and the MA insurers get more, per capita than Medicare itself). It is usually a PPO or HMO plan, which can (and does, its essential character) restrict the health care providers (doctors, hospitals, etc.) you can use, and can and does make it more difficult to get care by denying payment (illegal as such; it is supposed to cover, by law, everything Medicare does, but it can delay and delay by repeated denials) or requiring prior authorization for – everything. Sometimes until it is too late and you die. We’ll look at some examples.

In a piece subtly titled “Deny, deny, deny”, NBC News on Oct 31, 2023 describes how rural hospitals, usually the sole community provider, are losing so much money from MA plans denying their claims that they are either in danger of closing or at least will no longer accept MA. That, of course, creates major problems for their patients covered by MA plans – remember, they are not a problem until you get sick! ‘Rose Stone of Holly Springs, Miss., said she stopped going to her doctor after her Medicare Advantage plan wouldn't pay for the visits. “It was a mess,” Stone told NBC News. “I didn’t go to the doctor because I was going to have to pay out-of-pocket money I didn’t have.”’

The Washington Post, on Nov 29, 2023, in Hospitals and doctors are fed up with Medicare Advantage, discusses that they are not only fed up, but they are refusing to accept MA plans because it does not pay them for the services that they provide. Scripps Health in San Diego joined Mayo Clinic and many other facilities in not taking any MA plans. The problem with the article is it can be read to imply that doctors and hospitals are greedy, since ‘Medicare Advantage plans are pretty popular with both lawmakers and ordinary Americans — they now enroll about 31 million people, representing just over half of everyone in Medicare, by KFF’s (Kaiser Family  Foundation) count.’ Popular with lawmakers because, a lot, they are heavily lobbied by insurers and get campaign contributions from them. Popular with ordinary Americans in the same way that a lot of things are popular – they are heavily advertised and cheaper on the front end than having to buy a Medicare Supplement plan because Medicare only pays 80% of the money it approves for covered services. And they provide glasses, and dental, and often drugs without a separate Part D plan, and even gym memberships! Great! Until you really need care…like Ms. Stone.

Or like the woman who was denied coverage by Cigna for a lung transplant and died, as discussed by former insurance executive and current whistleblower Wendell Potter in his substack, “Health Care Un-Covered”, on Nov 27, 2023. Or the reports of massive denials, including those that break the law, identified by ProPublica in partnership with Scripps News and reported by Potter on Nov 30, 2023. These are not isolated stories; they occur all the time.

Potter also testified in favor of retirees from Cortland County,  NY, when the county was trying to push them all into an MA plan run by UnitedHealth. For this year, at least, they were successful, arguing basically about how Prior Authorizations (PAs) required by UnitedHealth would limit their care. At the last minute, under discovery, they obtained a (possibly incomplete) list of services requiring PA…essentially everything (see the list at the end of this post)! And if anyone is worried that these doctors and hospitals wanting to be paid for the work that they actually do for people’s health (remember – insurance companies do ZERO of this!) will bankrupt the MA plans, we can look at their profits. In a piece Potter wrote looking at how Cigna is trying to acquire Humana to get a piece of the MA market he provides the profit made by the largest players in the industry: Cigna $7.28B on revenues of $181B, Humana $4.2B on revenues of $93B, and industry leader UnitedHealth $28.4B on revenues of $324B – nearly 9%! ALL of this is on money that was intended to be spent on providing health care to Medicare recipients! No wonder they can pay for your gym membership! They sure ain’t hurting!

Other countries have much less complex and arcane coverage systems. You’re born, you’re covered. Everyone is in, no one is out. Pretty much everyone is in the same plan. That is what we could have if we had an expanded (to everyone) and improved (covering 100%, not 80%, of ALL necessary services, including mental health, dental, vision, hearing, drugs, long-term care) Medicare for All.

But the insurance company mafia stands in the way. Contact your senators and congresspeople! 

    From Wendell Potter, list of services (possibly incomplete) requiring PA from UnitedHealth:

The list includes:

• Cardiac rehabilitation services
• Intensive cardiac rehabilitation services
• Chiropractic services
• Outpatient diagnostic colonoscopy
• Supplies to monitor blood glucose
• Continuous glucose monitors
• Therapeutic shoes for people with diabetes
• Durable medical equipment
• Diagnostic hearing and balance evaluations
• Home infusion therapy
• Inpatient services in a psychiatric hospital
• Medicare Part B drugs and non-chemotherapy drugs to treat cancer
• Medicare-covered chemotherapy drugs to treat cancer and the administration of that drug
• Opioid treatment services
• Outpatient diagnostic tests and therapeutic services and supplies, including x-rays and other radiation therapies
• Lab tests and other diagnostic tests
• Outpatient mental health care
• Outpatient rehabilitation services
• Outpatient substance abuse services
• Outpatient surgery and other medical services at hospital outpatient and ambulatory surgical centers
• Partial hospitalization services and intensive outpatient services
• Basic hearing and balance exams
• Some telehealth services
• Second opinions prior to surgery
• Non-routine dental care
• Monitoring services in a physician’s office or outpatient setting
• Medically necessary medical and surgical services that are provided at home or nursing home
• Prosthetic devices
• Pulmonary rehabilitation services
• Skilled nursing care
• Supervised exercise therapy
• Outpatient services provided by an ophthalmologist or optometrist
• Eye exams for people with diabetes

Medicare Advantage, Direct Contracting Entities, and other scams to transfer your money to insurance companies

In my post DTC Advertising on TV illustrates the corruption and inequity of the US medical care system (March 6, 2021) I talked a little about advertisements for Medicare Advantage (MA), an alternative to traditional Medicare (TM, not ™) that involves an insurance company taking over your Medicare and you maybe paying additional money to, essentially, be enrolled in their HMO or PPO, with its concomitant advantages and disadvantages to you personally. Advantages include a variety of additional services that are not currently included in TM (they should be, but this is a different issue), such as vision care (or at least glasses), hearing aids, and sometimes dental care. This can save you money. The disadvantages are, essentially, the same as those for any HMO or PPO – a limited “network” of physicians and hospitals (and big charges for which you are liable if you go out of network) and, related to that, a limited geographic area in which your network applies. This is not generally a big issue for the occasional traveler (emergencies are usually covered) but can be a big problem for those who split their time between two or more areas. Plus, it doesn’t protect you from “surprise medical bills”, as they are called in Congress (which discusses them but has yet to enact anything to protect you from them). These occur when, while both your doctor and hospital are “in network”, someone else --  the ambulance company, some doctors caring for you (say, the group that staffs the Emergency Department, or the surgeon assisting your surgeon) are not. They can – and do – then send you big bills. This should be a caution.

Why I am bringing this up again now is that the pace and frequency of solicitations for people to abandon TM and enroll in MA have greatly accelerated because we have entered the “open enrollment” period, when people with Medicare can change their insurer or plan type, and the MA plans, mostly owned by insurance companies, really want you*. This is why in addition to adding more former NFL quarterbacks to their ads (Joe Theismann, who is only my age, joins the 78-year-old Joe Namath), you have (if you are of Medicare age) been getting dozens of information packets in your mail for the plans available in your area – almost all of which pick names and design their envelopes and otherwise do their best to make it look as if they are official and from Medicare (I was going to share the link to one with a name that prominently features “Medicare”, but I figured why advertise them?)  They’re not. And they’re being successful. As documented by the Kaiser Family Foundation, MA plans had an 8% increase from 2018 to 2019 and a 15% increase from 2019 to 2020. Advertising really pays off! And, boy, does it pay! Thanks to your generosity (well, Congress’ generosity, on your behalf, or at least using your money) MA plans (and, by the way, “Medicare Advantage” is the official term specified in the legislation, in case you had any doubts about the influence of insurance companies over Congress) get paid a lot more than the government pays on your behalf to TM. For starters, their administrative overhead – comparable to that of most private insurers – is about 13.2%. Is that a lot? Well, the overhead for TM is about 1.8%! Some sources have cited the overhead for “Medicare” as about 3% -- still a lot better – but that is because it is combining the two. And, of course, as MA increases as a share of Medicare that figure will continue to rise.

MEDPAC, the Medicare Payment Advisory Commission, an independent agency created by the federal government to monitor and recommend on issues related to Medicare, notes that MA plans receive more money from Medicare but spend less on providing patient care to their members, costing Medicare an additional $8B. So it is definitely worth pursuing your business! Unless, of course, and this was the reason for the asterisk (*) above following really want you, you are sick. Then you would cost them money, and they would rather that you switch to regular TM. Which would be better for you, of course, but it would have been better for you to have never been in MA. This is a core part of their business strategy: attracting healthy seniors who will not cost them much money with the lure of cheap glasses and hearing aids and such (“cherry picking”) and then getting rid of those beneficiaries who really get sick and would cost them a lot of money (“lemon dropping”). All this is an effort to improve their “Medical Loss Ratio”, which is to say decrease the % of the money that they collect which they have to spend on actually taking care of you. If it sounds weird or offensive (and it is both) that their spending money on what they are supposed to be in the business of doing is called “loss”, it is a term that comes from the overall insurance industry. The % of homeowner’s premiums that have to be paid out to clients because their homes burn down, or auto insurance premiums that have to be paid if you are in a car wreck, is called the loss ratio. Of course, you don’t expect (and certainly don’t hope) to be in a car wreck or have your house burn down, but you do (or should) expect to receive medical care. Indeed, a more apt comparison to your house burning down might be made to “major medical” – coverage for costly hospitalizations – but in fact most people will need those if they live long enough. Much more about the cost of MA and the reasons for it can be found in the Health Affairs Blog posts of September 29 (Medicare Advantage, Direct Contracting, And The Medicare ‘Money Machine,’ Part 1: The Risk-Score Game), and 30 (Medicare Advantage, Direct Contracting, And The Medicare ‘Money Machine,’ Part 2: Building On The ACO Model) by Rick Gilfilan and former CMS administrator Donald Berwick. Another article on MA can be found in Consumer Reports.

Since not everyone who would be a good health risk is forgoing TM for MA, a new scam (excuse me, option!) has been developed by CMMI, the Centers for Medicare and Medicaid Innovation, a branch of CMS, the Center for Medicare and Medicaid Services, which has been granted authority to implement such changes as they (or the insurance company lobbyists) can come up with without needing further Congressional approval. This one is Direct Contracting Entities (DCEs). A company, particularly a health system or medical group, may send people a complicated letter telling them that (for their benefit!) the group has enrolled them in a DCE. The client has the choice to opt out, but this is disguised in complex legal language, and the benefits(!) are so strongly sold, that many people do not.  Remember, this is not being sent to folks who are in MA, but those who have purposely and specifically chosen TM and NOT MA. Thus, they are not expecting that their providers will try to enroll them, backdoor, in a plan that, while it has benefits(!) – like those of MA – also lets insurance companies (wait, how di I get to an insurance company? I thought I was in TM!) collect a lot more money from CMS – like under MA! What a cool idea! If you resist MA because you are more concerned about your healthcare than insurance company profits, CMMI will find a way to allow you to help the insurance companies anyway! A lot more can be learned from a short (15 minute) youtube presentation by PNHP (Physician’s for a National Health  Plan) member Ana Malinow.

Medicare, along with its parent, Social Security, is the most popular government program in the nation, and for good reason. It actually provides important benefits to the taxpaying American people. Instead of paying out lots of extra money to Wall St. and insurance companies, Congress should expand the benefits available under TM to include all necessary health care, including dental care, vision care, and hearing care. Instead of forbidding Medicare to negotiate drug prices with BigPharma and the Pharmacy Benefits Mangers (PBMs) that control access to drugs, Congress should ENCOURAGE and REQUIRE it. Finally, it should extend all these Medicare benefits to EVERYONE in the country, not just the elderly and disabled.

This would be what the American people need.  But if you want to have this, you are going to need to shout it from the rooftops – and write letters to Congress -- to be heard over the sound of cash flowing from insurance companies into your Congresspeople’s pockets.

Then go to pnhp.org and sign the petition asking Sec. Becerra to close the DCE program!