We have all heard the old adage about people voting with their feet. It means that the situation in which they find themselves is so intolerable that they are leaving as a way of escaping it. According to the Wall Street Journal, that is what many of the sickest Medicare Advantage patients are doing. They are leaving Medicare Advantage and returning to Traditional Medicare because they cannot get the treatment they need from the Advantage plans. They are leaving at twice the rate of enrollees who are not extremely sick. When they land back on Traditional Medicare, it shifts billions of dollars in health care costs from the Advantage plans onto the backs of taxpayers.
Medicare Advantage plans have been incredibly popular since they were introduced in 1997. Now over half of Medicare enrollees are enrolled in a Medicare Advantage plan. The plans get paid by the government to offer coverage for the “actuarial equivalent” of the medical treatment covered by Medicare Parts A and B. The plans have spending limits for their enrollees, which limit the amount of covered health care spending for which the enrollee will be responsible. The enrollee gets to choose the amount of the spending limit. As with all other insurance, the lower the limit chosen by the enrollee, the higher the premium charged by the plan.
Medicare Advantage plans actively manage the care of their enrollees. That means that they limit what doctors their enrollees can see and what hospitals they can go to. There are no such limitations in Traditional Medicare. The most significant of the active management strategies employed by the Medicare Advantage plans is the requirement for prior approval for many treatment needs. Traditional Medicare has a prior approval requirement for only a few procedures that it is likely not to cover.
According to reviews of Medicare data by the Wall Street Journal and others, in 2022 Medicare Advantage insurers denied 3.4 million requests for services by their enrollees. When the Inspector General overseeing Medicare reviewed a sample of these denials, it found that 13% were within Medicare guidelines and would have been approved, if the patient was enrolled in Traditional Medicare. That is a lot of medical care that should have been provided to seniors that was denied. While Medicare Advantage enrollees have the right to appeal a denial, that is a fraught process and is often not successful. Even a successful appeal will mean that the treatment that should have been approved in the first place has been delayed, many times to the detriment of the patient.
As an enrollee’s medical needs increase, the likelihood of a denial of a request for prior authorization also increases. Nursing home care is often needed by elderly patients recovering from a fractured hip or a stroke or some similar medical disaster. It is always going to be the subject of a request for prior authorization and that authorization is going to have to be renewed over and over, if the patient remains sick and in the nursing home. Nursing home care is very expensive and the Medicare Advantage companies are aggressive in looking for ways to avoid having to pay for the care.
For the very sick, this is where the denial of a prior authorization request puts the patient and the patient’s family in a bind. The patient cannot go home yet the Medicare Advantage plan will not pay for her to stay in the nursing home. This is the point at which some patients throw in the towel and switch their coverage to Traditional Medicare, which will pay for the nursing home care. However, that coverage will not become effective until the beginning of the month following the transfer to Traditional Medicare. Until then, the patient is responsible for the cost of the nursing home care.
Maybe it is just a coincidence that the sickest patients are denied nursing home care to the point that they vote with their feet and flee Medicare Advantage. On the other hand, maybe it is part of a deliberate plan on the part of these insurance companies to rid themselves of their most expensive patients. Whether it is a coincidence or not, when these sick patients leave Medicare Advantage, it saves the companies billions and places that burden squarely on the backs of the taxpayers. You do the math and draw your own conclusions. In drawing your conclusions, you should probably consider the fact that most of the large Medicare Advantage plans have been accused of fraud by the Office of the Inspector General.
The post They Are Voting With Their Feet appeared first on Sandweg & Ager PC.