Monday, January 4, 2016

The problem with choosing Medicare Advantage plans: the abbreviated version

Mrs. Cassidy slowly walks into my office one busy afternoon.  Mrs. Cassidy has some serious style.  She is wearing a deep orange dress with a bright blue blazer.  There aren't too many folks that can pull that outfit off, but she can. She has a wide slow smile, and she speaks with a slow southern drawl that belies her southern roots. This was supposed to be a routine follow up visit for a 67 year old woman with a history of a mechanical mitral valve replacement and coronary disease.  Unfortunately, she tells me a story that is concerning for angina.  I think she needs a stress test. I quickly look at her insurance, and I let out a somewhat audible groan.  She has a Medicare Advantage (MA) plan.  I explain to Mrs. Cassidy that we will need to go through an extra step to pre-certify her stress test. She expresses surprise and asks me what she should do.  I will tell you what I told her, but first, let me tell you why.

Medicare Advantage Plans: A brief history

Medicare Advantage plans represent the federal government's experiment with delivering care to seniors through private insurance companies.  The experiment started as an alternative to the pay-for-whatever-the-doctor-orders model of traditional medicare.  Traditional medicare is fee-for-service, which means there are payments made for any and all services delivered.  If I think a patient needs a stress test, the patient just goes and gets the questions asked.  This can lead to some perverse incentives and results in a lot of services being delivered.  Like the parent that abdicates the responsibility of disciplining their child to a reform school, the federal government hoped private insurance companies would mete out the tough love needed to reign in costs.

Tough love meant I was going to have to get 'permission' from the insurance company to do a stress test on Mrs. Cassidy.  If my staff was unable to get the test authorized with the information I gave them, I would have to get on the phone with an insurance company physician to plead my case.  This seems like a win for the federal government from a cost standpoint.  Surprisingly, it's not.

The federal government pays private insurance companies a fixed amount for each enrollee in their plan.  In the beginning (prior to 1997), the federal government would pay 95% of what they would have paid had a patient enrolled in traditional Medicare.  This saved the government money, but resulted in MA plans making up only 13% of the total Medicare market.  In an effort to expand access and have more people enrolled in MA plans, the federal government increased reimbursement to MA plans in 2003 in a bill best known for introducing Medicare prescription drug coverage.

Enrollees in MA plans now cost the taxpayer $1000 more than if the patient had stayed in traditional Medicare, and enrollment in MA plans has risen rapidly to cover almost 30% of all Medicare eligible seniors.

The government has been active in trying to rectify the payment asymmetry by tying reimbursement to risk scores and value.  This has not proven to be without its problems.

Scoring risk: You are higher risk if they say you are

In 2004, the Medicare program began to tie payments to private plans to beneficiary risk score.  Risk scores are based on diagnoses coded during the year prior to the payment year.  Insurance companies responded by investing resources in ensuring 'appropriate' coding.  The patients didn't change.  But if the patient enrolled in a MA plan, they became higher risk.  The evidence clearly showed insurers were upcoding to raise payments.

Measuring value: Harder than it sounds.

Payments were also tied to value -based payments to reward MA plans that provided high quality care. Quality in the MA program is graded on a 5 star scale that is determined from a weighted scale comprised of variables that include adherence to best practice processes (adults should get flu shots) and outcomes.   An example of an outcome measure is blood pressure targets.  In 2010, the MEDPAC report on quality used blood pressures < 130/80 in diabetics as an outcome measure.  Unfortunately, 2010 was also the same year that the ACCORD trial examining aggressive blood pressure targets in diabetics was released: Targeting a systolic blood pressure target of < 120mmHg compared to < 140mmHg did not reduce the composite endpoint of fatal/non fatal cardiovascular events.  The world of hypertension was so spooked by this trial that the panel convened to create a national guideline using this trial as evidence that lower was not always better when it came to blood pressure.  So it is entirely possible, that in 2010, 5 star plans were those plans that did harm to diabetic patients by having lower blood pressure targets.

In brief, the federal government's experiment in risk-adjusted, value-based payments to private insurance companies has only served to shift health care dollars to insurance companies at increased cost to the taxpayer.

Between January 1st and February 14th each year, if you happen to be enrolled in a Medicare Advantage plan, you can leave your plan and return to original Medicare.  John F Kennedy famously said, "Ask not what your country can do for you, ask what you can do for your country".  Mrs. Cassidy, do what's right for your country.  Choose traditional Medicare.


  1. I'm glad you're not my cardiologist. Mine understands I can't afford a Medicare secondary and a part D premiums. None of my docs' or their staff seem to find pre-certifications all that ardeous.

  2. Thx for the comment. I'm glad you have a cardiologist you're happy with. Certainly Medicare advantage plans may be what is best for you.. There is no free lunch though. Someone is paying for the good deal you are getting. Medicare advantage plans are subsidized by the traditional Medicare folks. i jump through plenty of hoops for my patients.. Some for good reason, others I'm not so sure about. The question you should be asking is.. If the govt is paying insurance companies more for you, and the insurance company in turn saves money by limiting what is spent per patient (not necessarily a bad thing), where are those cost savings going?

    1. You have to begin with the fact that you are dealing with extremely old and incorrect information about the financing and administration of Medicare in general and the financing of public Part C of Medicare in particular. No one is paying for the "good deal" those of us on public Part C Medicare health plans are getting; the money comes out of the Trust funds for us in the same way it comes out for fee for service beneficiaries. The administration is done in large part by all the same private insurance companies. For example, Guidewell (basically Florida Blue Cross) runs Parts A and B in your area and in parts of the south and southwest and also sells private Medigap plans and administers public Part C plans in these and other geographic areas. All of Medicare is run by private insurance companies and your constant repetition of the word private is totally misleading.

      The deal we on Parts A/B/C get is better insurance at a lower price but within the limits of a health network. This is the same tradeoff over half the people in the U.S. under 65 make.

      In addition over the 18 year history of the Part C program, those of us on Part A/B/C have cost the same per person on average as those of us only on Part A or Part B or Part A/B (the fact that MedPAC -- the source of most of the bad information you are citing and then misinterpreting -- does not highlight this split is only one example of the problems with your information about Medicare financing). In 2014 (latest data available), we actually cost 2% less per person. The money that is "saved" (in advance through bidding) comes back to us the beneficiaries to some extent and never comes out of the Trust funds in the first place to some extent.

    2. There is so much to respond to here, not sure where to start.

      Again, please read the MEDPAC 2014 report. There is a reason MEDPAC has strongly suggested reducing the overpayment to medicare advantage plans. While it is true that the amount paid out per enrollee is less in Medicare advantage plans (rationing care, requiring precerts - perhaps all reasonable), the cost to the federal govt is still higher. That is why there is an overpayment. There is a reason why medicare advantage enrollment didn't start to take off until overpayments began in earnest.

      All Medicare is private?? This is completely untrue.

      Look don't take my word for it, or even MEDPAC's word...

  3. Your article does not make sense on so many levels it is hard to know where to start commenting. Probably best start with the patient. If you do not accept patients with public Part C Medicare, why are you seeing Mrs. Cassidy? And if you do accept public Part C Medicare health plans, why do you – a cardiologist -- not belong to a public Part C network that includes a provider of cardiac stress tests who does not require checking back with the HMO (or PPO)? And – depending on where she lives – if poor Mrs. Cassidy does take your ill-advised advice and drop her public Part C health plan in the next few weeks, she will almost certainly have to pay two to three times a month as much for supplemental coverage on top of her Original Medicare Parts A and B premium and she may not even be able to buy a supplement because of her pre-existing condition. But we all know Mrs. Cassidy isn’t real.

    As for the rest of your article, I hope you advice to patients is not as full of errors and misleading statements as this screed that is unbelievably insulting to 17,000,000 people on Original Medicare Parts A and B. I count about a dozen serious errors or misleading statements.

    1. Dennis or is it byron? I'm not sure if you read the article. To clarify:

      1. Mrs. Cassidy is absolutely real (not her real name)
      2. Where does it say that I don't take Medicare Advantage plans? I very much do.
      3. Your point about belonging to a network that does not require checking back makes absolutely no sense. Prior authorization for stress tests is something I deal with for many commercial insurances as well as for medicare advantage plans.
      4. It is certainly possible that traditional medicare + medigap may be more than medicare part c depending on where you live. Please tell me where it is 2-3 times as much. That is definitely not the standard. Your comment also misses the point I was trying to make. Medicare advantage plan enrollees are more expensive to the taxpayer than the traditional medicare enrollee because of the 'overpayment' I detailed. (this information is sourced from the medicare advisory payment committee)
      5. My article is sourced from my personal experiences with medicare advantage plans, as well as the MEDPAC committee report. You can see where the graphs are sourced from, I did not make them up.

      Your comment would strongly suggest you should get some advice when choosing a medicare plan. A medicare advantage plan may certainly be the best thing for you. If you actually made it to my last paragraph, I did say that the best thing for the country (fiscally) would be choosing traditional medicare.