It’s open enrollment season again. From now through Dec. 7, about 65 million Americans are facing the annual question of which Medicare options will give them the best health coverage. An onslaught of television and radio ads, emailed promotions, texts and mailers serve as reminders, though not necessarily clarifying ones.

“It’s a very consequential decision, and the most important thing is to be informed,” said Jeannie Fuglesten Biniek, a senior policy analyst at the Kaiser Family Foundation and a co-author of a recent literature review comparing Medicare Advantage and traditional Medicare.

If you are navigating this decision for yourself or for a loved one, here are some of the important factors to consider.

Why the marketing barrage?

Medicare — the federally funded health care program — has been in place since 1965. Since then, an expanding array of Medicare Advantage plans have become available. For 2023, the typical beneficiary can choose from 43 Advantage plans, the Kaiser Family Foundation has reported.

Medicare Advantage plans, like traditional Medicare, are funded by the federal government, but they are offered though private insurance companies, which receive a set payment for each enrollee. The idea is to help control costs by allowing these insurers, who must cover the same services as traditional Medicare, to keep some of the federal payment as profit if they can provide care less expensively.

The biggest providers of Advantage plans are Humana and United Healthcare, and they and others market aggressively to persuade seniors to sign up or switch plans. A new U.S. Senate report found that some of these Advantage plan practices are deceptive; for example, some marketing firms sent Medicare beneficiaries mailers made to look like government websites or letters. This has confused many seniors, and Medicare officials have promised to increased policing.

But the marketing has paid off for insurers. The proportion of eligible Medicare beneficiaries enrolled in Medicare Advantage plans has hit 48 percent. By next year, most beneficiaries will likely be Advantage enrollees.

Which is better: Medicare or Medicare Advantage?

The two plans operate quite differently, and the health and financial consequences can be dramatic. Each has, well, advantages — and disadvantages.

Jeannie Fuglesten Biniek, a senior policy analyst at the Kaiser Family Foundation, is a co-author of a recent literature review comparing Medicare Advantage and traditional Medicare. One important finding, Dr. Biniek said: “Both Medicare Advantage and traditional Medicare beneficiaries reported that they were satisfied with their care — a large majority in both groups.”

Advantage plans offer simplicity. “It’s one-stop shopping,” she added. “You get your drug plan included, and you don’t need a separate supplemental policy,” the kind that traditional Medicare beneficiaries often buy, frequently called Medigap policies.

Medicare Advantage may appear cheaper, because many plans charge low or no monthly premiums. Unlike traditional Medicare, Advantage plans also cap out-of-pocket expenses. Next year, you’ll pay no more than $8,300 in in-network expenses, excluding drugs — or $12,450 with the kind of plan that permits you to also use out-of-network providers at higher costs.

Only about one-third of Advantage plans (called P.P.O.s, or preferred provider organizations) allow that choice, however. “Most plans operate like an H.M.O. — you can only go to contracted providers,” said David Lipschutz, the associate director of the Center for Medicare Advocacy.

Advantage enrollees may also be drawn to the plan by benefits that traditional Medicare can’t offer. “Vision, dental and hearing are the most popular,” Mr. Lipschutz said, but plans may also include gym memberships or transportation.

“We caution people to look at what the scope of the benefits actually are,” he added. “They can be limited, or not available, to everyone in the plan. Dental care might cover one cleaning and that’s it, or it may be broader.” Most Advantage enrollees who use these benefits still wind up paying most dental, vision or hearing costs out of pocket.

What are the downsides to Medicare Advantage?

One big downside is that these insurers require “prior authorization,” or approval in advance, for many procedures, drugs or facilities.

“Your doctor or the facility says that you need more care” — in a hospital or nursing home, say — “but the plan says, ‘No, five days, or a week, two weeks, is fine,’” said David Lipschutz, the associate director of the Center for Medicare Advocacy. Then you must either forgo care or pay out of pocket.

Advantage participants who are denied care can appeal, and those who do so see the denials reversed 75 percent of the time, according to a 2018 report by the Department of Health and Human Services’s Office of Inspector General. But only about 1 percent of beneficiaries or providers file appeals, “which means there’s a lot of necessary care that enrollees are going without,” Mr. Lipschutz said.

Another report this spring by the inspector general’s office determined that 13 percent of services denied by Advantage plans met Medicare coverage rules and would have been approved under traditional Medicare.

Advantage plans can also be problematic if you are traveling or spending part of each year away from home. If you live in Philadelphia but get sick on vacation in Florida, all local providers may be out of network. Check to see how the plan you’re using or considering treats such situations.

So maybe I should just go with traditional Medicare?

“The big pro is that there are no networks,” Jeannie Fuglesten Biniek, a senior policy analyst at the Kaiser Family Foundation, said of traditional Medicare. “You can see any doctor that accepts Medicare,” as most do, and use any hospital or clinic. Traditional Medicare beneficiaries also largely avoid the delays and frustrations of prior authorization.

But traditional Medicare sets no cap on out-of-pocket expenses, and its 20 percent co-pay can add up quickly for hospitalizations or expensive tests and procedures. So most beneficiaries rely on supplemental insurance to cover those costs; either they buy a Medigap policy or they have supplementary coverage through an employer or Medicaid. Medigap policies are not inexpensive; a Kaiser Family Foundation survey found that they average $150 to $200 a month.

The Kaiser literature review found that traditional Medicare beneficiaries experienced fewer cost problems than Advantage beneficiaries if they had supplementary Medigap policies — but if they didn’t, they were more likely to report problems like delaying care for cost reasons or having trouble paying medical bills.

Traditional Medicare also provides somewhat better access to high-quality hospitals and nursing homes. David Meyers, a health services researcher at Brown University, and his colleagues have been tracking differences between original Medicare and Medicare Advantage for years, using data from millions of people.

The team has found that Advantage beneficiaries are 10 percent less likely to use the highest quality hospitals, four to eight percent less likely to be admitted to the highest quality nursing homes and half as likely to use the highest-rated cancer centers for complex cancer surgeries, compared to similar patients in the same counties or ZIP codes.

In general, patients with high needs — people who were frail, limited in activities of daily living or had chronic conditions — were more apt to switch to traditional Medicare than those who were not high-need.

“When you’re healthier, you may run into fewer of the limitations of networks and prior authorization,” Dr. Meyers said. “When you have more complex needs, you come up against those more frequently.”

Another downside to traditional Medicare, though, is that it does not include drug coverage. For that, you need to buy a separate Part D plan.

What should I know about drug plans?

Unlike most Medicare Advantage plans, traditional Medicare does not include drug coverage. For that, you must buy a separate Part D plan.

For 2023, beneficiaries can typically choose between 24 stand-alone Part D plans, at premiums that range from $6 to $111 a month and average $43 for policies available nationwide, said Juliette Cubanski, the deputy director of the program on Medicare policy at the Kaiser Family Foundation.

“If you’re the person who doesn’t take many medications or only uses generics, the best strategy might be to sign up for the plan with the lowest premium,” Dr. Cubanski said. “But if you take a lot of medications, the most important thing is whether the drugs you take, especially the most expensive ones, are covered by the plan.”

Different plans cover different drugs (which can change from year to year) and place them in different pricing tiers, so how much you pay for them varies. And, to make comparisons more dizzying, certain pharmacy chains are “preferred” by certain plans, so you could pay more at CVS than at Walmart for the same drug, or vice versa.

How does Part D work? First, most stand-alone plans have a deductible: $505 in 2023. You pay that amount out of pocket before coverage kicks in.

Then, a Part D plan, either stand-alone or as part of a Medicare Advantage plan, usually establishes five tiers for drugs. The cheapest two tiers, for generic drugs, could be free or run up to about $20 per prescription. Next comes a tier for preferred brand-name drugs, probably $30 to $45 per prescription in 2023.

Drugs on the next highest tier, for nonpreferred brand-name drugs, usually involve coinsurance — paying a percentage of the drug’s list price — rather than a flat co-pay. For national stand-alone plans, that ranges from 34 to 50 percent, Dr. Cubanski said.

Drugs that cost more than $830 a month are considered specialty drugs, the highest-priced tier. You only pay 25 percent of the price, but because these are so expensive, your costs rise.

Once your total drug costs reach $4,660 (for 2023), including out of pocket costs and what your plan paid, you have entered the so-called coverage gap phase and will pay 25 percent of the cost, regardless of tier.

Finally, when your costs reach $7,400 — including what you’ve paid, plus the value of manufacturer discounts — you have hit the threshold for catastrophic coverage. After that, you pay just 5 percent.

After I pick a plan, can I switch if I don’t like it?

You can, but be careful.

Switching between Medicare Advantage plans is fairly easy. But switching from traditional Medicare to an Advantage plan can cause a major problem: You relinquish your Medigap policy, if you had one. Then, if you later grow dissatisfied and want to switch back from Advantage to traditional Medicare, you may not be able to replace that policy. Medigap insurers can deny your application or charge high prices based on factors like pre-existing conditions.

(There are some exceptions. For instance, people who drop a Medigap policy to enroll in an Advantage plan for the first time can repurchase it, or buy another Medigap policy, if they switch back to traditional Medicare within a year.)

“Many people think they can try out Medicare Advantage for a while, but it’s not a two-way street,” said David Lipschutz, the associate director of the Center for Medicare Advocacy. Except in four states that guarantee Medigap coverage at set prices — New York, Massachusetts, Connecticut and Maine — “it’s one type of insurance that can discriminate against you based on your health,” he said.

The fact is, few consumers do any real comparison shopping, or shift their coverage in either direction. Dozens of lawsuits charging Medicare Advantage insurers with fraudulently inflating their profits apparently haven’t made much difference to consumers, either.

In 2020, only 3 in 10 Medicare beneficiaries compared their current plans with others, a recent Kaiser Family Foundation survey reported. Even fewer beneficiaries changed plans, which might reflect consumer satisfaction — or the daunting task of trying to evaluate the pluses and minuses.

Where can I find help with these decisions?

You will find plenty of information on the Medicare.gov website, including the Part D plan finder, where you can input the drugs you take and see which plan gives you the best and most economical coverage. The toll-free 1-800-MEDICARE number can also assist you.

Perhaps the best resources, however, are the federally funded State Health Insurance Assistance Programs, where trained volunteers can help consumers assess both Medicare and drug plans.

These programs “are unbiased and don’t have a pecuniary interest in your decision making,” said David Lipschutz, the associate director of the Center for Medicare Advocacy. But their appointments tend to fill up quickly at this time of year, and the annual open enrollment period ends on Dec. 7. Don’t delay.

By Fred Schulte, KHN.

Congress should crack down on Medicare Advantage health plans for seniors that sometimes deny patients vital medical care while overcharging the government billions of dollars every year, government watchdogs told a House panel Tuesday.

Witnesses sharply criticized the fast-growing health plans at a hearing held by the Energy and Commerce subcommittee on oversight and investigations. They cited a slew of critical audits and other reports that described plans denying access to health care, particularly those with high rates of patients who were disenrolled in their last year of life while likely in poor health and in need of more services.

Rep. Diana DeGette (D-Colo.), chair of the subcommittee, said seniors should not be “required to jump through numerous hoops” to gain access to health care.

The watchdogs also recommended imposing limits on home-based “health assessments,” arguing these visits can artificially inflate payments to plans without offering patients appropriate care. They also called for the Centers for Medicare & Medicaid Services, or CMS, to revive a foundering audit program that is more than a decade behind in recouping billions in suspected overpayments to the health plans, which are run mostly by private insurance companies.

Related to denying treatment, Erin Bliss, a Department of Health and Human Services assistant inspector general, said one Medicare Advantage plan had refused a request for a computed tomography, or CT, scan that “was medically necessary to exclude a life-threatening diagnosis (aneurysm).”

The health plan required patients to have an X-ray first to prove a CT scan was needed.

Bliss said seniors “may not be aware that they may face greater barriers to accessing certain types of health care services in Medicare Advantage than in original Medicare.”

Leslie Gordon, of the Government Accountability Office, the watchdog arm of Congress, said seniors in their last year of life had dropped out of Medicare Advantage plans at twice the rate of other patients leaving the plans.

Rep. Frank Pallone Jr. (D-N.J.), who chairs the influential Energy and Commerce Committee, said he was “deeply concerned” to hear that some patients are facing “unwarranted barriers” to getting care.

Under original Medicare, patients can see any doctor they want, though they may need to buy a supplemental policy to cover gaps in coverage.

Medicare Advantage plans accept a set fee from the government for covering a person’s health care. The plans may provide extra benefits, such as dental care, and cost patients less out-of-pocket, though they limit the choice of medical providers as a trade-off.

Those trade-offs aside, Medicare Advantage is clearly proving attractive to consumers. Enrollment more than doubled over the past decade, reaching nearly 27 million people in 2021. That’s nearly half of all people on Medicare, a trend many experts predict will accelerate as legions of baby boomers retire.

James Mathews, who directs the Medicare Payment Advisory Commission, which advises Congress on Medicare policy, said Medicare Advantage could lower costs and improve medical care but “is not meeting this potential” despite its wide acceptance among seniors.

Notably absent from the hearing witness list was anyone from CMS, which runs the $350 billion-a-year program. The agency took a pass even though committee Republicans invited CMS Administrator Chiquita Brooks-LaSure to testify. Rep. Cathy Rodgers (R-Wash.) said she was “disappointed” CMS had punted, calling it a “missed opportunity.”

CMS did not respond to a request for comment in time for publication.

AHIP, which represents the health insurance industry, released a statement that said Medicare Advantage plans “deliver better service, access to care, and value for nearly 30 million seniors and people with disabilities and for American taxpayers.”

At Tuesday’s hearing, both Republicans and Democrats stressed a need for improvements to the program while staunchly supporting it. Still, the detail and degree of criticism were unusual.

More typically, hundreds of members of Congress argue against making cuts to Medicare Advantage and cite its growing popularity.

At the hearing, the watchdogs sharply criticized home visits, which have been controversial for years. Because Medicare Advantage pays higher rates for sicker patients, health plans can profit from making patients look sicker on paper than they are. Bliss said Medicare paid $2.6 billion in 2017 for diagnoses backed up only by the health assessments; she said 3.5 million members didn’t have any records of getting care for medical conditions diagnosed during those health assessment visits.

Although CMS chose not to appear at the hearing, officials clearly knew years ago that some health plans were abusing the payment system to boost profits yet for years ran the program as what one CMS official called an “honor system.”

CMS aimed to change things starting in 2007, when it rolled out an audit plan called “Risk Adjustment Data Validation,” or RADV. Health plans were directed to send CMS medical records that documented the health status of each patient and return payments when they couldn’t.

The results were disastrous, showing that 35 of 37 plans picked for audit had been overpaid, sometimes by thousands of dollars per patient. Common conditions that were overstated or unable to be verified ranged from diabetes with chronic complications to major depression.

Yet CMS still has not completed audits dating as far back as 2011, through which officials had expected to recoup more than $600 million in overpayments caused by unverified diagnoses.

In September 2019, KHN sued CMS under the Freedom of Information Act to compel the agency to release audits from 2011, 2012, and 2013 — audits the agency contends still aren’t finished. CMS is scheduled to release the audits later this year.

Article link: https://khn.org/news/article/medicare-advantage-congress-hearing-care-overcharging/

By Fred Schulte, KHN.

Switching seniors to Medicare Advantage plans has cost taxpayers tens of billions of dollars more than keeping them in original Medicare, a cost that has exploded since 2018 and is likely to rise even higher, new research has found.

Richard Kronick, a former federal health policy researcher and a professor at the University of California-San Diego, said his analysis of newly released Medicare Advantage billing data estimates that Medicare overpaid the private health plans by more than $106 billion from 2010 through 2019 because of the way the private plans charge for sicker patients.

Nearly $34 billion of that new spending came during 2018 and 2019, the latest payment period available, according to Kronick. The Centers for Medicare & Medicaid Services made the 2019 billing data public for the first time in late September.

“They are paying [Medicare Advantage plans] way more than they should,” said Kronick, who served as deputy assistant secretary for health policy in the Department of Health and Human Services during the Obama administration.

Medicare Advantage, a fast-growing alternative to original Medicare, is run primarily by major insurance companies. The health plans have enrolled nearly 27 million members, or about 45% of people eligible for Medicare, according to AHIP, an industry trade group formerly known as America’s Health Insurance Plans.

The industry argues that the plans generally offer extra benefits, such as eyeglasses and dental care, not available under original Medicare and that most seniors who join the health plans are happy they did so.

“Seniors and taxpayers alike have come to expect high-quality, high-value health coverage from MA [Medicare Advantage] plans,” said AHIP spokesperson David Allen.

Yet critics have argued for years that Medicare Advantage costs taxpayers too much. The industry also has been the target of multiple government investigations and Department of Justice lawsuits that allege widespread billing abuse by some plans.

The payment issue has been getting a closer look as some Democrats in Congress search for ways to finance the Biden administration’s social spending agenda. Medicare Advantage plans also are scrambling to attract new members by advertising widely during the fall open-enrollment period, which ends next month.

“It’s hard to miss the big red flag that Medicare is grossly overpaying these plans when you see that beneficiaries have more than 30 plans available in their area and are being bombarded daily by TV, magazine and billboard ads,” said Cristina Boccuti, director of health policy at West Health, a group that seeks to cut health care costs and has supported Kronick’s research.

Kronick called the growth in Medicare Advantage costs a “systemic problem across the industry,” which CMS has failed to rein in. He said some plans saw “eye-popping” revenue gains, while others had more modest increases. Giant insurer UnitedHealthcare, which in 2019 had about 6 million Medicare Advantage members, received excess payments of some $6 billion, according to Kronick. The company had no comment.

“This is not small change,” said Joshua Gordon, director of health policy for the Committee for a Responsible Federal Budget, a nonpartisan group. “The problem is just getting worse and worse.”

Responding to written questions, a CMS spokesperson said the agency “is committed to ensuring that payments to Medicare Advantage plans are appropriate. It is CMS’s responsibility to make sure that Medicare Advantage plans are living up to their role, and the agency will certainly hold the plans to the standards that they should meet.”

Making any cuts to Medicare Advantage payments faces stiff opposition, however.

On Oct. 15, 13 U.S. senators, including Sen. Kyrsten Sinema (D-Ariz.) sent a letter to CMS opposing any payment reductions, which they said “could lead to higher costs and premiums, reduce vital benefits, and undermine advances made to improve health outcomes and health equity” for people enrolled in the plans.

Much of the debate centers on the complex method used to pay the health plans.

In original Medicare, medical providers bill for each service they provide. By contrast, Medicare Advantage plans are paid using a coding formula called a “risk score” that pays higher rates for sicker patients and less for those in good health.

That means the more serious medical conditions the plans diagnose the more money they get — sometimes thousands of dollars more per patient over the course of a year with little monitoring by CMS to make sure the higher fees are justified.

Congress recognized the problem in 2005 and directed CMS to set an annual “coding intensity adjustment” to reduce Medicare Advantage risk scores and keep them more in line with original Medicare.

But since 2018, CMS has set the coding adjustment at 5.9%, the minimum amount required by law. Boccuti said that adjustment is “too low,” adding that health plans “are inventing new ways to increase their enrollees’ risk scores, which gain them higher monthly payments from Medicare.”

Some of these coding strategies have been the target of whistleblower lawsuits and government investigations that allege health plans illegally manipulated risk scores by making patients appear sicker than they were, or by billing for medical conditions patients did not have. In one recent case, the Justice Department accused Kaiser Permanente health plans of obtaining about $1 billion by inflating risk scores. In a statement, the insurer disputed the allegations. (KHN is not affiliated with Kaiser Permanente.)

Legal or not, the rise in Medicare Advantage coding means taxpayers pay much more for similar patients who join the health plans than for those in original Medicare, according to Kronick. He said there is “little evidence” that higher payments to Medicare Advantage are justified because their enrollees are sicker than the average senior.

Kronick, who has studied the coding issue for years, both inside government and out, said that risk scores in 2019 were 19% higher across Medicare Advantage plans than in original Medicare. The Medicare Advantage scores rose by 4 percentage points between 2017 and 2019, faster than the average in past years, he said.

Kronick said that if CMS keeps the current coding adjustment in place, spending on Medicare Advantage will increase by $600 billion from 2023 through 2031. While some of that money would provide patients with extra health benefits, Kronick estimates that as much as two-thirds of it could be going toward profits for insurance companies.

AHIP, the industry trade group, did not respond to questions about the coding controversy. But a report prepared for AHIP warned in September that payments tied to risk scores are a “key component” in how health plans calculate benefits they provide and that even a slight increase in the coding adjustment would prompt plans to cut benefits or charge patients more.

That threat sounds alarms for many lawmakers, according to Kronick. “Under pressure from Congress, CMS is not doing the job it should do,” he said. “If they do what the law tells them to do, they will get yelled at loudly, and not too many people will applaud.”

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By Susan Jaffe, KHN.

A cost-saving change in Medicare launched in the final days of the Trump administration will cut payments to hospitals for some surgical procedures while potentially raising costs and confusion for patients.

For years, the Centers for Medicare & Medicaid Services classified 1,740 surgeries and other services so risky for older adults that Medicare would pay for them only when they were admitted to the hospital as inpatients. Under the new rule, the agency is beginning to phase out that requirement and, on Jan. 1, 266 shoulder, spine and other musculoskeletal surgeries were crossed off what’s called the “inpatient-only list.” By the end of 2023, the list — which includes a variety of complicated procedures including brain and heart operations — is scheduled to be gone.

CMS officials said the change was designed to give patients and doctors more options and help lower costs by promoting more competition among hospitals and independent ambulatory surgical centers. But they forgot one thing.

While removing the surgeries from the inpatient-only list, the government did not approve them to be performed anywhere else. So patients will still have to get the care at hospitals. But because the procedures have been reclassified, patients who have them in the hospital don’t have to be considered admitted patients. Instead, they can receive services on an outpatient basis.

CMS pays hospitals less for care provided to beneficiaries who are outpatients, so the new policy means the agency can pay less than it did last year for the same surgery at the same hospital and Medicare outpatients will usually pick up a bigger part of the tab.

“The impetus for this is for Medicare to save money,” said Dr. James Huddleston, a professor of orthopedic surgery at the Stanford University Medical Center and the chair of the American Association of Hip and Knee Surgeons’ Health Policy Council. “The oldest trick in the book is to say the patients don’t need to be cared for in an expensive hospital setting.”

But since seniors will still have to go to the hospital, “it’s sort of a distinction without a difference,” he added.

“This is not about a different care setting, or giving more choice to providers,” said Judith Stein, executive director of the Center for Medicare Advocacy. “It’s about Medicare billing practices that will further confuse hospital patients.”

When unveiling the final rule in December, then-CMS Administrator Seema Verma said the change would give seniors and their physicians more options for care “without micromanagement from Washington.” She promised the new policy would also let seniors avoid hospitals, especially during the covid-19 pandemic, and free up needed beds.

CMS did add services that it will cover when provided by ambulatory surgery centers this year, a spokesperson said last month, but those don’t include procedures that were on the inpatient-only list.

Dr. Catherine MacLean, chief value medical officer at New York City’s Hospital for Special Surgery, said CMS should have tested the change as a pilot project to be sure it’s safe for patients. “These are big procedures,” she said, with a lot of “cutting, sewing and bleeding” that require post-surgery monitoring due to a significant risk of complications, especially for patients with multiple health problems.

The change applies to adults who have government-run Medicare insurance, but some Medicare Advantage plans sold by private companies have similar policies.

CMS officials said the change was a response to numerous requests seeking assurance that payment requirements do not override physicians’ judgment and assessment of their patients’ conditions. But health care groups representing millions of providers opposed it.

Even though seniors getting this care will be considered outpatients, they may still stay in the hospital overnight or longer, often on the same floor as those who are admitted, getting the same nursing care, lab tests and drugs with one big difference: their bill.

Patients admitted to the hospital typically receive an all-inclusive package of services and pay only this year’s Medicare hospital deductible of $1,484 for a stay of up to 60 days. They also pay 20% of doctors’ charges. Medicare picks up the rest of the bill.

Outpatient services are charged differently, with the patient typically paying 20% of the Medicare-approved amount for each service. That’s one payment for the outpatient surgery plus, for example, a second payment for blood transfusions, and more payments depending on what may be included in the surgery charge and how many other separately billed items the patient needs. (And, like admitted patients, outpatients also pay 20% of doctors’ charges.)

As with other outpatient services, in most cases each charge cannot exceed $1,484. “However, your total copayment for all outpatient services may be more than the inpatient hospital deductible,” according to the federal government’s annual guide sent to all Medicare beneficiaries.

Patients will also be hit with a “facility fee” up to several thousand dollars to cover the hospital’s overhead costs, said Richard Gundling, senior vice president at the Healthcare Financial Management Association. After Medicare pays its portion, outpatients owe 20% of the facility fee. And because Medicare prescription drug plans don’t cover medication ordered for hospital patients, they’re treated as if they have no drug insurance and can be charged exorbitant amounts for drugs they routinely take at home.

Another item that can be tacked onto the bill for outpatients — but not admitted patients — is called “excess charges.” Providers who do not accept the Medicare-approved amount as full payment can charge up to an extra 15% of that amount. Medicare pays none of these extra charges.

These surprise expenses can add up even for people who buy supplementary or Medigap health insurance to cushion the sticker shock. These private policies cover some portion of the patient’s payments for Medicare-approved charges. Only the most expensive policies cover “excess charges.” Otherwise, when Medicare doesn’t cover something, Medigap doesn’t chip in, so the patient is on the hook for the total charge.

In addition, Stein warned that the new rule will “sometimes limit their Medicare coverage when they need care after leaving the hospital.” Medicare patients don’t qualify for nursing home coverage even if they stay in the hospital for the required three days. That time doesn’t count because they were not admitted to the hospital — something Medicare patients who are in the hospital for observation care have complained about for years, forcing some to sue the government for a change.

Outpatients may also find it more difficult to get home health care. Medicare pays home care agencies more for people after a hospital inpatient stay, but those who are not admitted may have trouble finding agencies willing to serve them at Medicare’s lower reimbursement, said Stein.

A procedure that was on the inpatient-only list can still be provided to an admitted hospital patient, if health care providers can justify the need based on their clinical judgment. But there’s no guarantee that CMS will agree the admission was necessary and cover it.

Since the Biden administration inherited the new policy, critics are hoping CMS will rescind it.

“The decision ought to be made by the surgeons in consultation with their patients,” said Dr. Joseph Bosco, a vice chair of NYU Langone Health’s department of orthopedic surgery and president of the American Academy of Orthopaedic Surgeons. “We don’t need the federal government or health insurance companies interfering in the doctor-patient relationship.”

Article link: https://khn.org/news/article/trump-medicare-inpatient-only-rule-risky-surgery-procedures-patient-cost-burden-catch-22/

By Fred Schulte, NPR.

A Humana Inc. health plan for seniors in Florida improperly collected nearly $200 million in 2015 by overstating how sick some patients were, according to a new federal audit, which seeks to claw back the money.

The Health and Human Services Office of Inspector General’s recommendation to repay, if finalized, would be “by far the largest” audit penalty ever imposed on a Medicare Advantage company, said Christopher Bresette, an HHS assistant regional inspector general.

“This [money] needs to come back to the federal government,” he said in an interview.

Humana sharply disputed the findings of the audit, which was set for public release Tuesday. A spokesman for the company said Humana will work with Medicare officials “to resolve this review” and noted that the recommendations “do not represent final determinations, and Humana will have the right to appeal.”

Medicare Advantage, a fast-growing private alternative to original Medicare, has enrolled more than 26 million people, according to America’s Health Insurance Plans, an industry trade group. Humana, based in Louisville, Ky., has about 4 million members and is one of the largest of these insurers.

While popular with seniors, Medicare Advantage has been the target of multiple government investigations, Department of Justice and whistleblower lawsuits and Medicare audits that concluded that some plans boosted their government payments by exaggerating the severity of illnesses they treated. One 2020 report estimated that improper payments to the plans topped $16 billion the previous year.

But efforts to recover even a tiny fraction of the overpayments in past years have stalled amid intense industry opposition to the government’s audit methods.

Now the OIG is rolling out a series of audits that could for the first time put health plans on the hook for refunding tens of millions of dollars or more to Medicare. The OIG is planning to release five to seven similar audits within the next year or two, officials said.

The Humana audit, conducted from February 2017 to August 2020, tied overpayments to medical conditions that pay health plans extra because they are costly to treat, such as some cases of cancer or diabetes that have serious medical complications.

Auditors examined a random sample of 200 patients’ medical charts to make sure the patients had the diseases the health plans were paid to treat, or that the conditions were as severe as the health plan claimed.

For instance, Medicare paid $244 a month — or $2,928 for the year — for one patient said to be suffering from serious complications of diabetes. But medical records Humana supplied failed to confirm that diagnosis, meaning the health plan should have received $163 less per month for the patient’s care, or $1,956 for the year, according to the audit.

Similarly, Medicare paid $4,380 too much in 2015 for treatment of a patient whose throat cancer had been resolved, according to the audit. In other cases, however, auditors said Medicare underpaid Humana by thousands of dollars because the plan submitted incorrect billing codes.

In the end, auditors said Medicare overpaid Humana by $249,279 for the 200 patients whose medical charts were closely examined in the sample. Based on those 200 cases, auditors used a technique called extrapolation to estimate the prevalence of such billing errors across the health plan.

“As a result, we estimated that Humana received at least $197.7 million in net overpayments for 2015,” the audit states, adding that Humana’s policies to prevent these errors “were not always effective” and need improvement.

The OIG notified Humana of its findings in September 2020, according to the audit. A final decision on collecting the money rests with the Centers for Medicare & Medicaid Services, or CMS, which runs Medicare Advantage. Under federal law, the OIG is responsible for identifying waste and mismanagement in federal health care programs but can only recommend repayment. CMS had no comment.

Though controversial, extrapolation is commonly used in medical fraud investigations — except for investigations into Medicare Advantage. Since 2007, the industry has criticized the extrapolation method and, as a result, largely avoided accountability for pervasive billing errors.

Industry protests aside, OIG officials say they are confident their enhanced audit tools will withstand scrutiny. “I believe what we have here is solid,” OIG official Bresette said.

Michael Geruso, an associate professor of economics at the University of Texas-Austin who has researched Medicare Advantage, said extrapolation “makes perfect sense,” so long as it is based on a random sample.

“It seems like this is a healthy step forward by the OIG to protect the U.S. taxpayer,” he said.

The OIG used the extrapolation technique for the first time in a February audit of Blue Cross and Blue Shield of Michigan that uncovered $14.5 million in overpayments for 2015 and 2016. In response, Blue Cross said it would take steps to ferret out payment mistakes from other years and refund $14.5 million. Blue Cross spokesperson Helen Stojic said that process “is still pending.”

But Humana, with a lot more money on the line, is fighting back. Humana “takes great pride in what the company believes to be its industry-leading approach” to ensuring proper billing, Sean O’Reilly, a company vice president, wrote in a December 2019 letter to the OIG that blasted the audit.

O’Reilly wrote that Humana “has never received feedback from CMS that its program is deficient in any respect.”

The nine-page letter argues that the audit “reflects misunderstandings related to certain statistical and actuarial principles, and legal and regulatory requirements.” Requiring Humana to repay the money “would represent a serious departure from the statutory requirements underlying the [Medicare Advantage] payment model,” the company said.

Humana did persuade the OIG to shave off about $65 million from its initial estimate of the overpayment. In 2015, Medicare paid the plan about $5.6 billion to treat about 485,000 members, mostly in South Florida.

Humana is not alone in disapproving of the audits.

AHIP, the industry trade group, has long opposed extrapolation of payment errors, and in 2019 called a CMS proposal to start doing it “fatally flawed.” The group did not respond to requests for comment.

Health care industry consultant Richard Lieberman said insurers remain “vehemently opposed” and will likely head to court to try to sidestep any multimillion-dollar penalties.

Lieberman noted that CMS has “waffled” in deciding how to protect tax dollars as Medicare Advantage plans have grown rapidly and cost taxpayers more than $200 billion a year. CMS says it has yet to complete its own audits dating to 2011, which are years overdue.

The dispute has been largely invisible to patients, who are not directly affected by overpayments to the plans. Many seniors sign up because Medicare Advantage offers benefits not included in original Medicare and may cost them less out-of-pocket, though it restricts their choice of doctors.

But some critics argue that inaccurate medical files pose a risk of improper treatment. Dr. Mario Baez, a Florida physician and whistleblower, said seniors can be “placed in harm’s way due to false information in their medical records.”

Article link: https://www.npr.org/sections/health-shots/2021/04/20/988817003/humana-inc-overcharged-medicare-nearly-200-million-federal-audit-finds