To Whose advantage is Medicare Advantage? Part 2

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"They have to authorize this"

To whose advantage is Medicare Advantage? Part 1 of this inquiry overviewed the tradeoffs for enrollees and the primary payer -- the federal government. In this post, we'll hear from professionals who deal with MA enrollees and plans.

First, a recap of the issues overviewed in Part 1, based mainly on analysis from MedPAC, the Kaiser Family Foundation, and comments on MA recently solicited by CMS.

MA constrains unneeded care and, in some cases at least, encourages effective preventive care. At the same time, cases are not rare in which MA constrains needed care, either denying it entirely or throwing up hurdles that delay care, sometimes dangerously, and add  administrative effort and expense. Similarly, while MA plan networks may exclude inefficient and unduly expensive providers (keeping in mind the outsized pricing power exercised by concentrated hospital systems), they also tend to deny patients access to the best providers, most notably in post-acute care. 

On the financial front, the American propensity to privilege market competition (and defer to powerful industry groups) has tilted the field toward MA -- over-rewarding plans, according to MedPAC, via both an overly permissive risk adjustment system and an ineffective quality rating system. These payment factors  effectively increase MA funding relative to FFS while leaving untouched major holes in FFS coverage, the chief of which is lack of a cap on enrollees' annual out-of-pocket costs. To plug that dangerous hole, Medicare enrollees who lack access to an employer-sponsored supplement must either effectively pay double in premiums (Medigap + Part D premium on top of the Part B premium) or choose MA, and likely expose themselves to more out-of-pocket costs over the long term than they'd pay with Medigap coverage. 

In assessing how well the two programs work for enrollees, it's important to keep in mind both broad averages and significant minority experiences. As noted in Part 1, MA scores slightly better than FFS nationally in customer satisfaction (CAHPS) surveys. At the same time, inspector general reports, comments filed with CMS, and various enrollee testimonials indicate that substantial numbers of MA enrollees - - and providers -- suffer from irrational and unjustifiable coverage denials, particularly for post-acute care; onerous administrative procedures to clear prior authorization or get denials reversed; frequent changes in provider rosters; high out-of-pocket costs; and opacity as to those costs. 

A view from the hospital(ist)

To get a sense of how interaction with MA plans plays out in a hospital setting I spoke to Dr. Bradley Flansbaum, a hospitalist currently at NYU Langone and previously at Geisinger in Danville, PA.

I first asked Flansbaum for his sense of how MA plans manage to cover enrollees at lower cost than FFS Medicare. He focused, not surprisingly, on post-acute care.

"MA plans derive a lot of savings from reducing the length of stay at acute facilities," Flansbaum said. "The average length of short-term stay at a skilled nursing facility for MA patients is 7-10 days shorter." 

I asked whether MA patients are less likely to be transferred to a rehab facility (inpatient rehabilitation facility, or IRF), which provides more intensive therapy than a skilled nursing facility (SNF). The answer was an emphatic yes. "MA plans will try to push a patient to SNF. They always look for the less expensive site of care," Flansbaum said.  He added, "Sometimes the plan does know best -- in some cases it's needless to go to a place that costs $30,000 versus $12,000." In many cases, too, an MA insurer will push a post-acute patient into home health care rather than a facility.

While hospital personnel sometimes push back against a restrictive post-acute placement, Flansbaum said, providers are at a disadvantage in that "there is no validated tool that reliably predicts where someone will do better" -- for example, at home versus an SNF. "The provider team is often at the mercy of nurses at the other end (working for the MA plan), or the medical directors they report to, or to third parties"  that handle the claim. "What we do have to go on," Flansbaum added, "are physical therapy reports and the medical diagnoses we present, in trying to determine what's remediable and whether putting the patient into a facility is cost-effective."

Flansbaum also acknowledged that because a post-acute care is often the fastest way to move a patient out of the hospital,   "Providers often reflexively want to put people in facilities. In my experience, I can usually sniff out when someone really does need to go."

A difficulty with MA assessments, Flansbaum added, is that the case for post-acute care is not always purely medical.  "A patient may need OT or PT and a period of time before they can function in the home. If there's an infirm spouse, or an adult child who can't be there...does a managed care organization recognize that, given conditions in the home, it's best for the patient to have ten or eleven days in a post-acute facility?

More broadly, there is considerable variety in the way MA plans handle claims and prior authorization requests. "Some plans are more understanding -- tolerant of the need to put people in facilities.  Some plans have higher denial rates," Flansbaum said. "Often, when the case manager submits additional material, the plan continues to deny the request, and then you go to peer-to-peer review -- there you're often able to make the case, but it's time-consuming, and there are a lot of indirect costs." 

Stepping back, Flansbaum asserted that the prior authorization process needs reform, noting that there are bills aiming to curb MA plans' power. (The Improving Seniors' Timely Access to Care Act passed the House on a voice vote on September 14. The bill would establish a mandatory electronic prior auth process to expedite requests.) 

"When you have a whole regime of people working to get patients into skilled nursing facilities -- that's a big pain in the ass. Even if only a tenth of patients are hitting roadblocks, the effects -- delays in discharge, weekends spent trying to get reviews -- it's all a total waste. While hospitals pushing to get beds freed up are not all free of guilt, on balance, MA is disproportionately to blame."

At the same time, Flansbaum is far from an MA abolitionist. "If you accept that we have to be stewards of limited resources," he asks, "how do you balance the ability of organizations to innovate and also say no? I often read news stories of MA gone bad, but they don't talk about the other 50 times a patient did perfectly well. Where do the plans fail, and where do they do better? -- that's the piece reporters should be writing. Who else is going to do this -- does Uncle Sam have the ability, say via ACOs, to coordinate or oversee care as MA does? What's the efficiency cost of having MA do this? I don't know."

Medigap if you can afford it: The brokers' tale

I spoke to two Medicare brokers about the choices facing their clients, one in New Jersey and one in Texas. Because MA broker contracts require that they not "disparage" Medicare Advantage, both must remain unnamed.

The New Jersey broker recommends Medigap to clients unless their budget doesn't allow it. But "some people because of budget really have no choice" but MA. In those cases, she says, "we always look very carefully at their doctors and hospitals of choice -- i.e., what E.R. would you go to. I can match pretty well for most people. It works."

At the same time, she notes, "Doctors go in and out of network all year long." In one case, she suggested that a client switch to a plan that listed his doctors, part of a major regional health system, as of the start of Open Enrollment in October.   He showed up for an appointment shortly afterward, and the doctor was no longer in network -- that health system had withdrawn.

This broker notes that seniors in northern New Jersey generally want to be able to go to New York City for second opinions or treatment when something goes seriously wrong, e.g., for cancer care, and that one Medicare Advantage PPO "stands head and shoulders above the rest" in providing access.  She cautions, however, that PPOs in MA are different from those in employer plans. If an out-of-network doesn't want to wait for the insurer to pay, the patient may have to advance payment. "It's not an easy process."

She also notes that it's not uncommon for her to get a call from the adult child of a senor whose parent has been told she can't get into inpatient rehab, after, for example, a stroke. MA plans "are always trying to save" on that front in particular. 

The Texas-based broker tells me that her main problem with MA is that Medicare enrollees are not informed of their rights and often don't understand that once they've been enrolled in MA for twelve months (after Medicare eligibility starts), if they switch to Medigap they are subject to medical underwriting in most states.

This broker reiterates that MA enrollees often have trouble obtaining the right post-acute care or obtaining it for an adequate time period. She cites a recent case in which a woman in her 80s, who lives alone, broke her ankle. She was making progress in a skilled nursing facility but not yet in a condition to function at home when her MA plan cut off coverage. An experienced person within the SNF filed an anonymous complaint, knowing that the plan could not cut off coverage while it was pending.

This broker says, "If I meet someone who is Social Security only [with no other income] but not eligible for Medicaid, I don't like putting them in MA plans." If that person needs a hip replaced, she explains, the hospital copay under MA will likely be a major burden. But this person can budget $100-120 per month for Medigap. Bottom line: "What you want when you're healthy and 65 is different from what you want when you're 75 and have a stroke." 

While these two brokers focus mainly on Medigap plans, the Texas broker tells me that that is unusual. She recounts that a recent caller told her that she was the fifth agent he spoke to -- and the first to talk about a supplemental plan. The financial incentives work the other way. "If I put someone on Medigap, I make around $20 a month for seven years. In Medicare Advantage, it's $580 for the first year ($48/month) and then $300 per year for the life of the policy."  The broker's incentive, from her standpoint, is at cross-purposes with the client's. 

That particular problem, in my view, highlights the central dysfunction in U.S. healthcare: financial incentives are paramount. That's true for insurers, and it's true for all too many hospital systems -- which increasingly own physician practices -- and its especially true for private equity-owned practices and other PE-own services.

The New York Times recently published an exposé of a major hospital system that's been aggressively pursuing low income patients who should have been eligible for charity care under a program designed by consulting giant McKinsey and Company. The program's title, Rev-Up, is an apt sobriquet for the country's healthcare system writ large.

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Postscript: I had interesting conversations with a couple of enrollees in New Jersey's state employees' MA benefit, which seems somewhat different in kind from most MA plans on the individual market. If I can gather more info, I'll add a Part 3 about employer-sponsored MA.

Read Part 1 here.

Photo by RODNAE Productions  

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