Heathcare Insurance Companies Abandoning Medicare Advantage redux
There are changes coming to the Medicare market place and Medicare Advantage. Healthcare Insurance companies are leaving the Medicare Advantage market.
“Market exits by Humana, Aetna, and UnitedHealthcare will collectively affect nearly 70% of those 1.8 million individuals.”
The remainder of the 1.8 million will be looking at new plans with the same insurance provider. The market consisting of people exiting their old Medicare Advantage plans “may” be faced with joining new companies or having to transition back to Traditional Medicare.
Traditional Medicare accepts all people and does not get to deny them. The company’s existing in Medicare Advantage are denying care to their patients as they leave the market. Just so you know, Supplemental Healthcare Insurance which backs up Traditional Medicare does not keep the same fees over the years. The fees do increase. I have not found the increases to be overwhelming. Some might find it costly. Something to think about in the years forth coming and what the solution may be. “1 million+ patients lose coverage as insurers, hospitals drop Medicare Advantage,” Stateline
The cancellation of Medicare Advantage plans started late last year with the dates set in 2025. Profit seems to be the issue mostly and the cancellation is selective to certain areas of the US. The other issue is working with MA plans, some are more rigid than others and look to cut back on services.
The graphs in this latter part of this commentary were added by Angry Bear. I find pics helpful in explaining the point of the commentary. It takes a while to add, but they are worthwhile. The first part is by CEPR. Cost again is an issue and MA plans drive the cost.
Medicare “Advantage” By the Numbers – Center for Economic and Policy Research, November 2024.
– by Emma Curchin, Brandon Novak, and Peter Hart
The quasi-privatized system called “Medicare Advantage,” otherwise known as Part C, was created in 2003 as a means of expanding the role of private sector corporations in the publicly funded Medicare system. Proponents claimed it would lower costs and improve health care for seniors. It has achieved neither of those goals, Instead, MA has become a wildly profitable scheme for private insurance giants. They have become adept at taking advantage of Medicare’s billing model to claim exorbitant profits. At this point, MA is more profitable for many companies than their conventional insurance businesses.
And the program continues to grow. MA now has more enrollees than traditional Medicare, thanks in no small part to aggressive public relations campaigns that sell seniors on the idea that the plans cut costs and increase choice. Congress has simultaneously failed to plug the holes in traditional Medicare, pushing seniors towards MA to avoid high out-of-pocket costs. Policymakers can fill these gaps and guarantee true comprehensive coverage simply by redirecting the overpayments to MA insurers into Medicare.
Numerous studies and media investigations have documented the problems with Medicare Advantage. What follows is a collection of some of the most notable figures documenting the high costs of this failed experiment in privatizing Medicare.
$88-$140 billion
The amount that the federal government overpaid private insurers under Medicare Advantage in 2022, according to the Physicians for a National Health Program (PNHP).
$612 billion
The amount that Medicare Advantage plans overcharged the federal government due to upcoding and favorable selection between 2007 and 2023. This amount, according to the Medicare Payment Advisory Commission (MedPAC), an independent congressional agency established to advise Congress on issues affecting the Medicare program.
$600 billion
According to one study, this is the projected excess spending between 2023 to 2031 due to the ways that Medicare Advantage plans use ‘upcoding,’ the process of classifying beneficiaries as being sicker than they really are in order to increase payments.
$35 billion
The amount that MedPAC estimates taxpayers will overpay MA insurers this year through ‘favorable selection,’ the practice of targeting healthy seniors for their plans.
$4.2 billion
The amount that MA insurers received for questionable home visit health risk assessments (and related chart reviews) in 2023, according to an October 2024 report from the Department of Health and Human Services.
80 percent
The percentage of mental health providers in a sample of MA plans that were determined to be “ghosts” (meaning they were unreachable, not accepting new patients, or not in-network), according to a recent Senate investigation.
1.8 million
Estimated number of Medicare Advantage customers whose health plans will be canceled in 2025. “Market exits by Humana, Aetna, and UnitedHealthcare collectively affect nearly 70% of those 1.8 million individuals.”
167 percent
The amount that drug deductibles will increase for roughly two-thirds of all Medicare Advantage enrollees next year.
55.7 percent
The increase in MA care denials from 2022 to 2023, according to research from the American Hospital Association.
54 percent
The increase in the denial rate for long-term acute care hospitals in Humana’s Medicare Advantage plans from 2020 to 2022 (Senate Majority Staff Report, 10/17/24).
$660 million
The amount of taxpayer money that CVS/Aetna stashed away in 2018 by denying Medicare Advantage patients’ claims for treatment at inpatient facilities (Senate Majority Staff Report).
78 percent
The percentage of physicians in a 2023 American Medical Association survey who said that Medicare Advantage’s prior authorization processes caused a recommended treatment for a patient to be abandoned.
$6 billion
One estimate of the amount spent in 2022 on the marketing companies that work to attract new subscribers in Medicare Advantage plans.
643,852
The number of English-language TV commercials touting Medicare Advantage that aired during the seven-week open enrollment period in 2022.
$50 billion
The amount that the Wall Street Journal estimates private insurers received between 2018 and 2021 for “hundreds of thousands of questionable diagnoses that triggered extra taxpayer-funded payments.”
$2,329
The amount that MA insurers receive per beneficiary above the estimated costs of Medicare. “For 2024, rebates for conventional MA plans—excluding employer plans and SNPs—average $194 per enrollee per month ($2,329 annually per enrollee; $2,142 after subtracting plan projections for administrative costs and profit), a slight decrease from the record high $196 per enrollee per month in 2023 (Figure 12-2, p. 370). When including SNPs, rebates reached a record high of $209 per enrollee per month in 2024—a slight increase from $206 per enrollee per month in 2023 (data not shown). These rebates account for 17 percent of plan payments, unchanged from 2023 (data not shown). The average MA rebate among conventional plans has more than doubled since 2018.” Page 389 Chapter 12 MedPAC report.
$1,730
The gross profit margin posted by MA companies in 2021 – more than double their profit margin on the individual market.
$172 million
The amount that Cigna agreed to pay in 2023 to “resolve allegations that it knowingly submitted and failed to withdraw inaccurate and untruthful diagnosis codes for its Medicare Advantage Plan enrollees to increase its payments from Medicare.”
The Justice Department continues to investigate similar allegations involving other MA providers.
Some up-to-date 2024 Medicare MA information.
Medicare spends an estimated 22 percent more for MA enrollees than it would spend if they were enrolled in FFS Medicare. The difference translates into a projected $83 billion in 2024. The Commission acknowledges that a portion of these increased payments to MA plans are used to provide more generous supplemental benefits and better financial protection for MA enrollees. Table 12-3 (p. 371) includes a detailed breakdown of those benefits. Nevertheless, the Commission is concerned the relatively higher payments to MA plans are subsidized by the taxpayers and beneficiaries who fund the program. Higher MA spending increases Part B premiums for all beneficiaries (including those in FFS who do not have access to the supplemental benefits offered by MA plans). The Commission estimates those premiums will be about $13 billion higher in 2024 because of higher MA spending. Further, the Commission is concerned that policies leading to higher MA payments do not adequately address issues distorting the nature of plan competition in MA.
Up to Date Information for 2024 Impact of payment to MA Plans, The Medicare Advantage program: Report to the Congress: “Medicare Payment Policy” MedPac Report Chapter 12 March 2024
“MA rebates for conventional plans have more than doubled since 2018”
For 2024, rebates for conventional MA plans—excluding employer plans and SNPs—average $194 per enrollee per month ($2,329 annually per enrollee; $2,142 after subtracting plan projections for administrative costs and profit), a slight decrease from the record high $196 per enrollee per month in 2023 (Figure 12-2, p. 370). When including SNPs, rebates reached a record high of $209 per enrollee per month in 2024—a slight increase from $206 per enrollee per month in 2023 (data not shown). These rebates account for 17 percent of plan payments, unchanged from 2023 (data not shown). The average MA rebate among conventional plans has more than doubled since 2018.
“Conventional MA Plans project that rebates will be used to reduce cost sharing, reduce Part B and Part D premiums, and offer non-Medicare benefits in 2024.”
“Higher MA payments to what estimated spending would have been in FFS 2007-2024”
“Coding and Selection have Increased MA Payments above what Spending would have been in FFS”
“Est. Impact of Coding Intensity on MA Risk Scores was larger than Coding Adjustment, 2007-2024”
“Uncorrected MA Coding Intensity has increased Payments to Plans by an estimated $124 Billion through 2022 and is projected to generate nearly $94 billion more in 2023 and 2024”
