Medicare Part D: Learn from my mistakes

Following up on my piece on Medicare Advantage programs (Medicare Advantage: OK, it's bad for the country, but what about for me?, Dec 6, 2022), I wanted to add a piece on the Medicare Part D Prescription drug program. While others may be smart enough to not make the mistakes I have, I believe that the structure of the program and the behavior of many or most of the insurance companies involved in it encourage people to make decisions which are often not to  the person’s benefit (of course, they benefit the insurance companies!), so maybe others can learn from mine.

First, some clarifications about the last post, based upon comments I have received. Not all Medicare Advantage plans are equally bad or equally predatory. The for-profit ones run by insurance companies are the worst. Several not-for-profits are descendants of the original HMOs (from the time before they were called HMOs), which were real consumer cooperatives based upon the idea that if they could cut out the middleperson (the insurance companies) they could deliver more healthcare to members for the same money or at least the same healthcare for less money (these included HIP in NY, Group Health in Seattle, Ross-Loos in LA). Kaiser was not a consumer cooperative -- it was originally begun by Henry Kaiser for employees of his steel company -- but did function in a similar way as a nonprofit. Many of these were, however, bought out by insurance companies, venture capital (private equity) companies, and other profit-making organizations, and of course most of the Medicare Advantage plans that now exist were always for profit.

It should go without saying that when the “middleperson” (insurance companies) that you were going to cut out to benefit the consumer members takes over ownership, things change.  And, while many of the non-profits are less egregious in their exploitation than the for-profits, they share many of the same characteristics. So it is still “caveat emptor”, let the purchaser beware. Consider the idea that a non-profit Medicare Advantage plan may be better for you than a for profit, but it may still be a bad choice compared to traditional Medicare (TM). And certainly compared to what we should have – an improved and expanded Medicare for All.

Which brings me to Part D. Originally, Medicare was designed primarily to cover hospital care, then the most costly part of healthcare, and this, now called Part A, is the only portion covered by the Medicare Trust Fund from the money deducted from paychecks. Part B, the portion that covers outpatient care, is funded by general revenue plus monthly premiums paid by Medicare recipients to the government, which in 2023 will begin at about $164/month (for incomes below $97,000/year) and go up with higher incomes. Medicare Part C is what is now called Medicare Advantage, the substitute for TM (Parts A, B and D). Part D is the prescription drug plan. It became apparent in the decades since Medicare was created that prescription drugs were an increasing portion of the annual medical costs for Medicare recipients and that they were not covered was a problem for many people. So, eventually, under the presidency of George W. Bush, Part D was passed to cover them. But, of course, it was a “compromise”, which, as usual in government, means a compromise between meeting the needs of the American people and making a lot of money for the private corporations that ‘lobby’ (read: give money to) Congress. So, rather than covering drugs under the Medicare program, which would have done it pretty much at cost (traditional Medicare’s overhead is approximately 2%), it was farmed out to private insurers, some non-profit but mostly for-profit companies. Their overhead is a lot more, and they make a lot of money on this, as every Medicare recipient is required to have a part D plan (unless they are still working and covered by an employer plan or have a Part C, Medicare Advantage, plan that covers prescription drugs). Private for profit drug manufacturers also won another huge concession from Congress and the administration in the form of a prohibition on Medicare negotiating the prices of the drugs. As the largest purchaser of these drugs in the country, they would have great leverage and get great prices, and as a result the pharmaceutical companies would make less money. We wouldn’t want that, after having carved in profit for the insurance companies, so we don’t have it.

So let’s talk about me. When I retired and had to get a Part D plan I also needed a Medicare Supplement plan, to cover the 20% that TM doesn’t pay and other costs. I got the latter through my insurance company, USAA, and got a good policy for a reasonable fee. One thing Medicare does regulate are Medicare Supplement plans, which are identified by letters: A, K, F, G, N, etc. All plans offered by any insurer have to meet the standards – that is, the benefits for all type F or type K plans have to be the same-- so the competition is on price and service, which is absolutely the way it should be (but rarely is). However, USAA does not offer a Part D plan; they contract with Humana to offer their plans to their customers, so I chose a Humana plan. Unfortunately, the standardization that characterizes Medicare Supplements is NOT true for Part D; the different plans have all kinds of complicating and confusing characteristics. Both Medicare and the insurers offer “calculators” where you can put in the drugs you take and it calculates what they would cost you on each of their plans, adds the premium, and voilà, tells you the best deal for you. Maybe. If you trust them. But there turn out to be some hidden factors.

I chose the Humana plan with the cheapest premium, Humana Wal-Mart, not because I expected to buy my drugs at Wal-Mart but because it was the cheapest. My drugs, you see (I take 3 prescription drugs) are all available generically. They are (relatively) cheap. And so Humana does not cover them. So I pay out of pocket. Until and unless I meet my deductible; then they pay, maybe. But what I discovered in the first year is that any drug I get that is a lower price that the supposed retail price doesn’t count toward my deductible. Humana’s justification is that they have negotiated lower prices, and I am benefiting. It sounds possibly plausible, except all  insurers have pretty much the same lower prices. And usually more than you’d pay with GoodRx®. But it means that I can never meet my deductible and thus they never pay anything. But I pay them a monthly premium. That is a good deal – for them. Sounds an awful lot like a protection racket!

Because I just kept the same plan in my second year, I thought I’d do the same in my third, and didn’t go online to choose a plan during open enrollment. I then got my bills and my premiums went up from about $17/mo to $57/mo! When I inquired (irate) they said I didn’t elect a plan, and the exact plan I had had (the cheapest) was no longer available, so they decided for me that I’d be best off in their most expensive plan! Two things to note: 1) while my premiums went up (and I had to keep this plan for a year), they still paid nothing, so I just contributed more to Humana, and 2) they did have a cheap plan, which cost even less than I had been paying ($14/mo) but of course they didn’t think I’d want that.

The next year, I took it, and have had it for a few years. The premium has crept up, from $14, to $17, to $22. Last year I paid $272 for drugs and they paid $21. That, I think, was for a vaccine. This year the premium is going up to $30, nearly a 50% increase. But I didn’t notice that until they sent the payment book. It took me two days to look, call Humana and discover from them that the increase was just, well, an increase, no reason other than they want more money and can do it, and that when I went to Medicare.gov there were companies offering plans for as little as $7.40/mo. I would probably get no benefit from them either, but a lot lower premium. Sadly, for me, I found this out December 8, and December 7 was the end of the open enrollment period.

I won’t forget next year. I have no loyalty to Humana, and think they are unscrupulous predatory profiteers. Of course, most all of them are, but Humana seems to be worse than many. Luckily, the premium difference won’t break me, but since I will get no benefit, there are about a thousand different charities I’d rather donate the money to than the Make Humana More Profit Fund.

US government programs should exist to help the American people. Some good reforms would include allowing Medicare to negotiate drug prices and standardizing Part D plans the way Medicare Supplements are. Real reform would be to have a single universal program covering all health care (inpatient, outpatient, drugs, mental health, vision, dental, etc.) and eliminate profit from healthcare.

Sorry it is too late for this year. Be careful during open enrollment next year. I will be.

 

 

"It's the prices, stupid!". And they won't tell us what they are...

You wouldn’t buy most things if the price were not labelled, and certainly not if price were not available on asking. Sometimes shopping on the Internet is frustrating because that the prices are not always apparent. When I had to get my sewer routed out, the plumber told me what it would cos (a lot), and my only choice was to have a blocked sewer or try to find another plumber who might be cheaper. But I had that choice, and he told me the price. Even in the American bastion of car buying, where “negotiating” is a tradition, and while YOUR first question is “what is the price”, theirs is “what are you trading in [so we can quote a higher price]”, this is changing, with set prices at many dealers and alternative vendors like CarMax and Carvana.

Where it is almost never true is in purchasing health care, and it is worst when you are most vulnerable and in urgent need of a service -- sometimes even more urgent than routing your sewer line! We think we would almost never buy something first in order to find out what it cost – that would be crazy --  but in fact that is the title of a video by Martin Schoeller recently featured in the New York Times: ‘How Much Does Your M.R.I. Cost? Buy It First to Find Out.’ And that is what it shows. The prices aren’t available in advance, there is no published price list, there is no bar code for the clerk to scan, and no one, pretty much, can tell you how much it will cost. It is not just MRIs, of course; that is just the headline; it is all tests, procedures, surgeries, and consultations from specialists.

One of the people interviewed by Mr. Schoeller, who had severe injuries as a result of being two feet from where to bomb blew up at the Boston Marathon in 2013, says “I had these procedures done, and now I’m getting the prices. It should have been the other way; I should have had the prices first.” Of course. But this is the story all of the people he interviews – regular people, just like us, he notes -- whose lives have been upended twice, first by their health problem and then by the cost that they were never told about, “whether it is through surprise bills or straight-up price gouging.”

In an old expression, you might say “there oughta be a law”. The amazing thing is that there is a law, or at least a federal rule. The Hospital Price Transparency Rule went into effect on January 1, 2021. Per the website of the Centers for Medicare and Medicaid Services (CMS)

Hospital price transparency helps Americans know the cost of a hospital item or service before receiving it. Starting January 1, 2021, each hospital operating in the United States will be required to provide clear, accessible pricing information online about the items and services they provide in two ways:

1.      As a comprehensive machine-readable file with all items and services.

2.      In a display of shoppable services in a consumer-friendly format.

This information will make it easier for consumers to shop and compare prices across hospitals and estimate the cost of care before going to the hospital.

CMS plans to audit a sample of hospitals for compliance starting in January, in addition to investigating complaints that are submitted to CMS and reviewing analyses of non-compliance, and hospitals may face civil monetary penalties for noncompliance. Access a list of hospitals that have been issued CMPs.

That sounds good, right? There is only one problem. They’re not doing it. The article notes that “A recent study by PatientRightsadvocate.org, a nonprofit group that works for price transparency, revealed that only about 14 percent of the 1,000 hospitals it surveyed were complying with the new rule.” That’s right. Eighty-six percent of the hospitals in the US are NOT posting their prices, in violation of the law. While the language on the CMS website, “This information will make it easier for consumers to shop and compare prices across hospitals and estimate the cost of care before going to the hospital”, could have (actually, as far as I know, may have) come directly out of the mouths of a conservative think tank that advocates “consumer choice” as the solution to the costs of health care, they’re not even doing that. These folks want you to shop for health care like you would shop for anything else, choosing the one that provides you the most value for the best price. This was always a completely bad (I was going to say stupid, but it could be simply malicious) idea, but when you can’t even get the prices to compare, it is completely ridiculous.

Back on March 15, 2009 (“Bargaining down the medical bills”) I wrote about an Oprah Winfrey show on which her guests were the late health economist Uwe Reinhardt and Karen Ignani, the then-head of the trade group America’s Health Insurance Plans (ACIP). At one point

Oprah asked Ms. Ignani (and I paraphrase, I don’t have the transcript): “So if I need a $200,000 procedure, why don’t you just pay it?” Flustered, Ignani said, “Well, you presume that the $200,000 is in fact what the procedure is worth; other hospitals may chart less …” – Oprah interrupted her: “I’m sick!”, she said, “I don’t have time to go shopping around to six different places to see where I can get the best deal!”

I added “Unsurprisingly, the audience, made up of regular people, not pundits, applauded wildly.” But, in fact, in 2022, 13 years later, you still could not find the price for that procedure in 86% of American hospitals! Inadvertently, perhaps, Ms. Ignani points to another concern: your insurance company may refuse to pay for your procedure because you could have had it done across town (presuming you live in an area where there is more than one hospital) for less money. But, as Ms. Winfrey so succinctly put it, you weren’t in a position to comparison shop – you were sick!

The woman who was severely injured in the Boston Marathon bombing tells Mr. Schoeller that she had no idea that these surprise bills were coming, because everyone in the hospital was so nice. The fact is that none of those nice people, nurses, doctors, technicians, clerks, was being devious – they didn’t know the costs either. Mr. Schoeller says that it is not just patients, but employers, unions, even the government that cannot get the prices. And neither can staff. While most people would not buy groceries if the prices were not listed, some more well-off folks might. But only a very few would buy a car, or a house, or something else that might cost $200,000 without knowing the cost – unless it was medical care. Obviously, this hits the poor and uninsured worst, as does everything of the sort, but being insured – and even being well-insured – is not a guarantee that you will not be hit with surprise charges. And that you won’t end up like those who speak to Mr. Schoeller. One says “I just ignore the bills now,” and he asks if this might keep her from getting a loan or a credit card. “Of course,” she says. Life ruined?

So medical system IS systematically not only engaged in price gouging, but in fact hiding those prices in clear and direct violation of a federal rule that was put in place to address this problem. It is a system clearly and unequivocally built not to provide health care but to make money for the investors (in “for-profits”) and large organizations (“non-profits”) that provide the care, as well as insurance companies and drug companies and lots of large corporations, at the expense – in dollars and health – of all of us.

The same Uwe Reinhardt mentioned above, when asked why US health care was so expensive, was fond of saying (and co-wrote an article entitled) “It’s the prices, stupid!”. ‘“We depend on hospitals in our communities to take care of us,” Mr. Schoeller says, “But our hospitals are putting profits before patients.”’ He calls for there to be diligent enforcement and stronger penalties for violation of the price transparency rule.

It’s a good idea, but I call for more than forcing hospitals to post their prices. I call for those prices to be reasonable, and to require insurance companies to pay them, and for everyone to have health insurance that does. A universal national health insurance system, such as improved and expanded Medicare for All.

And the elimination of profit from the health care industry.

Hospitals post their charges: almost indecipherable, but important!

The recent Trump administration order to have hospitals post their prices has been widely covered in the media, along with both headlines and articles that make it clear that these prices list are far from…clear! For example, Robert Pear’s article in the NY Times on January 13, 2019, titled “Hospitals Must Now Post Prices. But It May Take a Brain Surgeon to Decipher Them” , starts:

‘Vanderbilt University Medical Center, responding to a new Trump administration order to begin posting all hospital prices, listed a charge of $42,569 for a cardiology procedure described as “HC PTC CLOS PAT DUCT ART.”

Baptist Health in Miami helpfully told consumers that an “Embolza Protect 5.5” would cost them $9,818 while a “Visceral selective angio rad” runs a mere $5,538.’

The Arizona Star piece on Tucson hospitals had a more moderate title, “Hospitals post prices, but public can find it confusing”, but made the same points. As a physician (if not a brain surgeon!) I think I can figure out what most of these mean, but the point that they are making is that they are hard for almost everyone to understand. The reason, of course, is that they have simply posted online their “chargemasters”, the price list that they supply to insurers (including Medicare and Medicaid), which are based on the nationally used “procedure codes”; these are numbers which identify different treatments that are abbreviated as above. So, the charge at Baptist for a radiologist injecting dye into an artery supplying your intestines is only a little over $5,000, while Vanderbilt charges over $42,000 to do a surgical procedure to close a shunt artery in your heart that is vital to fetal circulation but normally closes spontaneously after birth. The question is, what does all this mean? And what are you and I supposed to do with this information?

Elisabeth Rosenthal, the emergency room physician turned NY Times reporter turned editor of Kaiser Health News, is more optimistic in her Times Op-Ed on January 22, 2019, “Donald Trump did something right”. She acknowledges the opacity of the posted charges to most people, but says it is a great step forward, because they are accessible, at least to those who are academic experts, and can be compared, both one hospital to another (“Maybe, just maybe, a hospital will think twice before charging a $6,000 “operating room fee” for a routine colonoscopy if its competitor down the street is listing its price at $1,000”), and to alternative treatments (“With access to list prices on your phone, you could reject the $300 sling in the emergency room and instead order one for one-tenth of the price on Amazon.”) Obviously, these would not be easily available on your phone now, but her hope and expectation is that third parties will develop apps that will take this nearly impenetrable information and make it easily accessible to people, as apps such as GoodRx® have done for drug prices. She emphasizes the magnitude of this change, since before now these prices have been closely-guarded secrets.

Rosenthal makes a number of other important points that illustrate the fact that this system is not only opaque, but deeply morally corrupt. Hospitals are run as businesses, to make money, even when they are ostensibly “non-profit”. Their CEOs and other executives are mostly businessmen, CPAs and MBAs – even when they are physicians, which sometimes happens, they are usually also MBAs – and are hired for their ability to run a money-making operation that happens to sell health care. And sell it, to your insurance company, at what often seems like deeply discounted prices because they are based on absurdly inflated chargemasters. “You don’t really want to change your charges if you have a Saudi sheikh come in with a suitcase full of cash who’s going to pay full charges,” says one CEO. More important, it allows them to reach agreements with insurers to pay a lot less than the official “price”, which in turn allows those insurance companies to brag to you about how much money they saved you. Rosenthal notes this is farcical, raising prices to make you think that you got a discount (‘If a supposedly $1,000 TV is “on sale” for $80, it’s not really a discount. It’s an absurd list price’), and that it emulates practices in other arenas, such as airlines overestimating their flight times to make it seem like they have a better on-time percent.

At a higher level, Rosenthal points out what is wrong is that these inflated charges do make a difference. Your co-pays and deductibles, if you are insured, are based upon the amount that your insurer pays, so that if they have agreed to pay only 20% of the listed charge, $200 for the TV set instead of $1000, you still may pay more than if you bought it for $80 cash. And certainly more than if the insurer were paying 20% of the old list price, say $500. You pay. You always pay. (See, for example, how insulin manufacturers and insurance companies and pharmacy benefit managers, each following their own profit incentives, have made insulin – a life saving treatment for millions of people with diabetes – often unaffordable: Danielle Ofri, “The Insulin Wars”.)

And, of course, there is the nasty little glitch that it is the most vulnerable and most needy, those who are uninsured as well as sick, and often poor, that get charged the full list price, the $1000 for the TV, or the ostensible “uninsured discount”:

When Wanda Wickizer had a brain hemorrhage in 2013, a Virginia hospital billed her $286,000 after a 20 percent “uninsured” discount on a hospital bill of $357,000 — the list price, according to chargemaster charges. Medicare would have paid less than $100,000 for her treatment.

Wait. Medicare? Medicare would have paid a quarter of their list price and a third of what this uninsured person got billed with the “discount”? Yes. And that is a place to start. Hospitals – or the third-party app developers that will let you see these prices on your phone – should be required to list the Medicare-approved payment right next to what they will charge you, or your insurer. That would measurably increase the “light of day”.

Of course, some doctors and hospitals do not want to accept Medicare for this reason – they can charge more money to insurance companies, who pass it on to you in premiums (in addition to your co-pays and deductibles) while claiming to be saving you money. There is a solution to this also, although Rosenthal does not mention it. It is to have everyone in the same insurance program, a single payer, an improved and expanded Medicare for All. This would set the rates and pay them, without co-pays or deductibles for necessary services. Everyone in the same plan would mean that the better educated, wealthier, and generally more empowered would ensure that it worked for them – and thus would work for everyone else, middle-class, poor, and even homeless.

Yes, hospitals and other service providers (physicians, nursing homes, etc.) and drug companies and insurance companies would make less profit. I’m sure that your heart goes out to them (maybe the next requirement could be the posting of the salaries of the C-suite executives at hospitals…). But, after all, what the health care system should be run for, and is run for in every other developed country, is the health of the people, not the profit of corporations.

Amazing, huh? And it could be that way here!