Health MA Plan Insurers’ big win
If you are not aware, each group bids on the area they will serve. CMS pays them a certain amount. What occurs is over-prescribing the condition of the patient and withholding care. In each case the group providing the car is paid. Both have been going for a long time. The last report detailed over costs of ~$80 billion by MA plans.
Trump’s CMS doubles down on pay hikes for MA plans while providers chafe from reimbursements below traditional Medicare. GoozNews. Merrill Goozner
Health insurer stocks are soaring today after the Trump administration doubled their Medicare Advantage plans’ payment boost for next year. The Center for Medicare and Medicaid Services’ final rule gave the plans a 5% bump compared to the 2.2% increase proposed by the Biden administration in late November.
It’s too soon to say whether the decision reveals the hidden hand of CMS administrator Mehmet Oz, who owned insurance stocks and touted MA plans for years on his television show. The final rule left in place a Biden plan to curb MA plan upcoding, which won’t go into effect until 2026.
The timing is suspicious. The Trump team at CMS, which would like to see MA become the default plan for seniors, still has time to use next year’s payment update to repeal more stringent rules on upcoding, which have been subject to intense industry lobbying.
Under upcoding, many insurers, now covering over half of all Medicare beneficiaries cull their medical records. The intent is to find conditions that aren’t being treated. When found, CMS increases the monthly payment insurers receive for those MA enrollees, a process known as risk-adjustment. The Medicare Payment Advisory Commission estimates MA plans received more than $80 billion in risk-adjustment add-ons last year, 22% more than if they had remained in traditional fee-for-service Medicare.
To put that in perspective, MA plans received a total of about $600 billion from the government to cover about 33 million or 54% of all seniors last year. A 5% bump in average payments will cost the government about $30 billion.
As the Wall Street Journal noted in its report this morning, the rate increase “provides a turnaround for big insurers after a difficult year.” The Biden administration had proposed covering the overpriced anti-obesity drugs, and service use surged after pushback by providers and patients limited their use of prior authorization and denials to limit care.
Should CMS under Oz attempt to roll back the new risk-adjustment formula next year, it could get bipartisan pushback on Capitol Hill. Stat reports that several members of the Republican Doctors Caucus (there are 18 in the GOP Doctors Caucus and 6 in the Democratic Doctors Caucus) intend to push hard for even greater restrictions on MA plan risk-adjustment payments.
It’s worth quoting from the story at length:
“When we create these Medicare Advantage programs, we incentivize insurance companies to tell doctors how to practice. It just doesn’t help the health care process,” Rep. Mike Kennedy (R-Utah) told STAT in an interview. A family medicine physician for 25 years, Kennedy recounted insurers’ attempts to induce him and colleagues in his medical group to diagnose patients with clinically insignificant or irrelevant chronic illnesses.
He said UnitedHealth was heavily involved in those efforts. The company’s Optum subsidiary took Kennedy and other physicians out to dinners to train them to code patients with various illnesses, such as peripheral artery disease and hyperaldosteronism, a hormonal condition that affects a small percentage of patients with high blood pressure. Kennedy said the training, usually delivered by an Optum physician assistant, was focused on generating revenue.
“Here’s a type of blood test where you find this, then you can put on the diagnosis hyperaldosteronism, which enhances the patients’ severity score, driving up the payments,’” he recalled being instructed, adding: “I just thought it was baloney.”
Rural hospitals fight back
Meanwhile, Kaiser Health News reports this morning that rural hospitals, which are major employers in small towns across America, are getting stiffed by MA plans. They are paying rural providers 10% less than what they would get if the same service was being reimbursed by traditional Medicare, according to a new report from the American Hospital Association.
He said traditional Medicare pays about 91% of what it cost his hospital to deliver care. MA plans reimburse at 76% of the cost of care.
Cancelling contracts is hardly the optimal solution, however. It forces beneficiaries in MA plans to pay out-of-pocket for costs not picked up by the MA plan or sends them scrambling to find alternative providers, of which there are few or none in most rural
It is forcing some rural hospitals to cancel their contracts with MA plans. Jason Merkley, CEO of Brookings Health System in South Dakota, told KFF his system dropped all four contracts it had with MA plans, a move that many others are considering. “I’ve had lots of discussions with CEOs and executive teams across the country in regard to that,” said Merkley, whose health system operates a hospital and clinics in the small city of Brookings and surrounding rural areas.