Title: The Disadvantages of Medicare Advantage
Guest: Anne Montgomery, Senior Health Policy Expert, NCPSSM
Release Date: 12/21/23



Announcer:  It’s You Earned This, the Social Security and Medicare podcast, brought to you by the National Committee to Preserve Social Security and Medicare, and now your host, Walter Gottlieb.

HOST:  If you’ve been watching TV lately, especially the news, you cannot escape the relentless commercials for Medicare Advantage plans. They sound great: lower premiums, free gym memberships, dental and vision coverage. But these ads are not telling you about the many disadvantages of Medicare Advantage. And many seniors don’t realize that they’re signing up for a glorified HMO that may deny them the care they need, and which very well may be overbilling U. S. taxpayers by billions of dollars. And who better to talk to us about Medicare Advantage and all the disadvantages thereof than our senior health policy expert here at the National Committee, Anne Montgomery. How are you? 

GUEST:  Good morning. Great, glad to be here, Walter. 

HOST:  So what do you think of the setup? Like, you were a big champion of the podcast, of doing a podcast. 

GUEST:  Absolutely. I think this is awesome. Like I say, I feel like I’m on NPR.

HOST:  We can only aspire, right? In the meantime, we’ll do our level best. So I was talking a little earlier about all these Medicare Advantage commercials that are so ubiquitous now. I saw one with William Devane from Knots Landing yesterday. 

GUEST:  Wow. I mean, I’ve seen all the Joe Namath commercials. He’s good. You know, he’s always been good. 

HOST:  Jimmy Walker. 

GUEST:  Jimmy Walker. 

HOST:  Captain Kirk. 

GUEST:  That’s right. But the information they’re pushing isn’t necessarily correct. 

HOST:  Yeah. What is it about these commercials? What is it that they’re kind of not telling us about Medicare Advantage? 

GUEST:  Well, part of the issue, I think, although there’s been some effort to crack down on this in terms of marketing, but they sound as though the Medicare program itself is talking to you. 

HOST:  Yeah. 

GUEST:  When it’s really a Medicare Advantage plan, which is private insurer, and they’re interested in making lots of money, and they do. So they have these call-in numbers, you know, 800 numbers, and they urge you to call and basically enroll. And you may think, unless you’re listening very carefully and you’re really well-informed, that you’re calling some independent organization or the government itself, when you’re not. 

HOST:  Yeah. You’re kind of being sold, right? 

GUEST:  Correct. Yes. 

HOST:  By big insurance companies, Humana, UnitedHealthcare, the others that run these programs, right? 

GUEST:  Right. And very attractive people like Joe Namath and so on. I mean, you trust them, right? You trust Captain Kirk, of course. So it’s a little, you know, misleading. 

HOST:  What about William Devane? I kind of trust him, because of that voice, that authoritative voice. So let’s talk about some of the disadvantages that people may not know about. Now first of all, Medicare Advantage was created ostensibly to save the government money. Like the idea was you pay, the federal government would pay less per patient than with traditional Medicare, right? Have I got that right? 

GUEST:  That’s correct. Yeah. So I don’t want to go through some legislative history, but Medicare Advantage used to be known as Medicare Choice, and it was actually created in 1997 as part of the Balanced Budget Act. And before that, actually, there was a 1985 law that said Medicare has the authority to contract with risk-based plans. That means an insurance plan that gets a monthly payment for all services. You know, that’s a good thing, perhaps, for Medicare to- 

HOST:  In theory. 

GUEST:  In theory, to have done that. 

HOST:  But it didn’t work out that way. 

GUEST:  Well, the payments have been adjusted in terms of the methodology over the years, and initially in that 1997 law that I mentioned, the payments were supposed to be limited to 95% of what original Medicare beneficiaries cost. But over time, that’s been shifted a lot. And so now it’s easier for Medicare Advantage plans that are interested in doing so to kind of game the payment system. And we can talk about that if you’d like. 

HOST:  Game the payment system. Federal audits reveal that these plans, these private insurance plans, over-billed Medicare. You ready for this? Between $12 billion and $25 billion in 2020 alone. And the Biden administration is working to claw back some of those billions of overpayments, of course, over the objections of the insurance industry. 

GUEST:  Correct. Yes. It is hard to claw back those payments, I would say. I mean, you can adjust the payments going forward probably more easily. And there are different factors and different levers that you can adjust. One of them is that Medicare Advantage plans are known for what they call coding intensity. 

HOST: Coding intensity.

GUEST:  Yeah. Don’t you love that? 

HOST:  Yeah. What does that mean? 

GUEST:  It means that they find every single chronic condition and every single thing that they can bill for in a given enrollee more so than a traditional doctor would do in original Medicare. So then they can bill the government for more dollars for that individual. And it adds up to a lot of money. It’s anywhere from 6% to 10% of an overpayment relative, per beneficiary, relative to original Medicare. 

HOST:  So this whole private scheme that was supposed to save the taxpayers money is actually costing taxpayers and the Medicare program more money. And let’s also talk about the effect on patients. So you go into these Medicare Advantage plans sold by the commercials, maybe you get a nice low premium, some goodies like gym memberships. But there’s some things that they don’t tell you. I don’t think a lot of people realize that traditional Medicare is sort of fee for service. You need something, you go to the doctor, the doctor refers you to a specialist, you go to the specialist. Medicare Advantage isn’t like that. It’s more like an HMO, right? 

GUEST:  Yes. So when you sign up for a Medicare Advantage plan, you are in a network of providers. You’re limited to those providers unless you pay more to see providers outside of that network. And you are subject to certain kinds of conditions that may be imposed and often are imposed by a Medicare Advantage plan. For example, you may not be able to get a referral out to the provider of your choice. 

HOST: Right. There’s more red tape. It’s like every step of the way they are interposing themselves between you and your doctor. 

GUEST:  Yes. So there are definitely limitations that they impose. 

HOST:  But they don’t go on TV… like Jimmy Walker doesn’t say, “And by the way, you’re joining an HMO, Folks.” They make it sound like Medicare and Medicare Advantage are equivalent in that way. 

GUEST:  Yeah, they aren’t equivalent. You are definitely limited in the providers that you can see. So your choice of specialists and providers is most definitely limited. And that is not revealed, if you will, on TV or really anywhere else. 

HOST:  For instance, Medicare Advantage plans have a history now of denying legitimate care either by saying, no, you’re not getting that pre-authorization that your doctor wanted, or saying you can’t fill that prescription or have that procedure. These are procedures and prescriptions that would have been honored in traditional Medicare. So isn’t the patient getting the short end of the stick then? 

GUEST:  Yes. In a Medicare Advantage plan, there is something called prior authorization. This is a common utilization management technique to safeguard monies going out by the insurer. And that’s fine in concept. But if it is used as kind of a cudgel to deny services that have been authorized by a physician and that are perfectly legitimate in terms of Medicare coverage and are medically necessary for that given patient, that’s a problem. 

HOST: That’s the key. Medically necessary. 

GUEST:  That’s right. 

HOST:  A report from federal investigators from April, 2022 found that tens of thousands of Medicare Advantage customers were denied coverage for services they should have been entitled to. That’s a lot. One thing that we say here at the National Committee is that younger and healthier seniors may be okay in Medicare Advantage because they don’t need that much care and maybe their costs are lower. But once you get a little older and sicker, you might find yourself on the short end of the stick with care.

GUEST:  You might. Some of the expensive services, hospitalization included, but imaging services, days in rehab facilities, injections, those are some of the services that have been subjected to a lot of prior authorization in Medicare Advantage plans, and in some cases, denial of services. And many beneficiaries don’t, and doctors, and their doctors don’t really want to go through the many, many hoops to get those refusals, those denials overturned. When they do, many of them are overturned and they are able to get the services, but that’s something that many people don’t know, don’t pursue, and it’s quite arguable that they shouldn’t have to go through it in the first place. If it’s medically necessary, it should be provided in a timely way. 

HOST:  So it sounds like, to put a fine point on it, that a lot of these Medicare Advantage insurance companies are putting profits over patients. They putting making money over delivering the highest quality care. 

GUEST:  I think that’s one interpretation, yes. I do think that Medicare Advantage plans, as you said a minute ago, can offer really good services and really good care, some do. But if they are tempted to put profit over patients, they can employ some of these techniques, like prior authorization, to keep their costs down and to, on that coding intensity front, bill the government for as much money as possible, and they can do quite well. Over the next 10 years, there are analysts that project we’re going to be paying, we taxpayers, Medicare Advantage plans $7 trillion. T, that’s a lot. So the record is mixed, and I think it’s important that government watchdogs and many others, including the National Committee, keep a very close eye on Medicare Advantage plans and try to make sure that they are doing what we want them to do, which is to provide the services that people are entitled to under federal law and don’t skimp and don’t short people and that we really look at that overpayment problem and take it seriously. 

HOST:  It’s a formidable task because we have more and more people getting on to Medicare Advantage, right? It’s incredibly popular now. I think we just crossed the threshold where 51% of the seniors in the Medicare market are in Medicare Advantage as of 2023. Is it sort of like a juggernaut that’s taken off that you can’t really stop? You can’t really mitigate? 

GUEST:  I think we could do more to strengthen original Medicare. Part of the reason that people, one of the major reasons that they sign up for a Medicare Advantage plans is that you do get some extra benefits in many cases. You get dental and vision and hearing. Those are not covered benefits under original Medicare because Congress hasn’t decided to really go forward with adding some of those benefits to Medicare. There was an attempt to do that in the…

HOST:  Build Back Better.  But Joe Manchin and some others killed that. We were going to get at least hearing coverage added to traditional Medicare and Joe Manchin put the kibosh on that. So then we got the Inflation Reduction Act, which did some good things for lowering prescription drug prices, but did not expand traditional Medicare, which is what you’re saying would make it more competitive with Medicare Advantage. Well, I think we got to leave it there. How do you feel about doing your first podcast with us? 

GUEST:  I think it’s wonderful. I am glad you’re doing it. And I think the National Committee is perfectly positioned to shed light on any number of subjects. Thank you so much. 

HOST:  You’re welcome. And I hear you’re going to use your connections to get us Joe Namath. 

GUEST:  I don’t see why not. 

HOST:  As another guest. And that I want that signed eight by ten glossy of William Devane. 

GUEST:  We’ll work on that. 

HOST:  And it better be from the Knots Landing period. Okay, thank you, Anne. You’ve been wonderful. 

GUEST:  Thank you. 

HOST:  And you can join us in our fight to protect Social Security and Medicare. Become a member by visiting ncpssm.org. That’s ncpssm.org today. And remember, you earned this!