Some notes on Medicare Advantage

Bienvenidos amigos,

It's been a minute! I want to spend this newsletter talking about Medicare Advantage, but I'd be remiss not to mention that ~I Finished My Book!~. It's a real book, with a cover, and lots of technical and mental typos I need to fix, and everything. Writing a book sucks! I'm very proud of it. It comes out August 6. Here is the cover:

It's apparently doing well on pre-orders, but that's within the very specific niche of "nonfiction about health policy from unknown author." If you are interested in the book, would you consider picking it up now? It would help me out quite a bit.

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That's not why I'm writing. I'm writing to get my head straight about Medicare Advantage. This is a bit of a "vegetables" email but I hope it's useful.

Medicare Advantage, also known as Medicare Part C, is privatized Medicare. It’s popular, and it sucks bigtime and I hate it. For this reason, some good people believe it represents the greatest threat to single-payer. I’m not sure I’m one of them, but I’m sympathetic to their pain. I see it along four basic points:

• Medicare Advantage is bad for patients: it sings sweetly to you until you need to use it, when it becomes as byzantine and repressive as the worst non-Medicare private insurance plan (in fact, becoming ill or getting injured is a strong predictor of switching from Advantage);
• Medicare Advantage is bad for providers: it creates waterfalls of paperwork, delays in authorizations, and lower reimbursements than normal Medicare;
• Medicare Advantage is bad for the public: it opens us up to massive cases of corporate (always corporate, never personal) fraud and abuse;
• And Medicare Advantage is just generally bad: it is an exercise of an ideology utterly opposed to public investment in public wellbeing, and seeks to siphon off public money into private coffers by any means necessary.

(Among these four arguments, I know the most about the third and the fourth, and hope to research further the personal and provider-side experiences with Medicare Advantage. If you happen to be someone who has experience in these areas, please shoot me a story or let’s set up time to talk.)

So: What is this thing? How, precisely, does it suck ass? Why, despite the ass it sucks, does it persist?  

You may already know that normal (“traditional”) Medicare was built like a monastery, with new additions built and rooms walled off kind of haphazardly over the course of decades. Medicare Part A covers hospital care, Part B covers physician and other kinds of care, and drugs are shunted into Part D. It’s pretty good, but it definitely has problems: all three have premiums (Part A's premium is covered if you have paid into Social Security for ten years), deductibles, and coinsurance; out-of-pocket expenses aren’t capped; etc. These are solvable—or at least addressable—through simple policy measures. Hell, every now and again one of Medicare’s wounds is healed in a heartwarming display of gold-standard American pragmatism; when an unnecessarily austere bad policy is alleviated by an infuriatingly tardy okay policy.

So what is Medicare Advantage? It’s Part C. You pay your Medicare Part A, B, and D premiums, and the government gives a private company the money (plus a bonus), and the private company gives you a private insurance plan.

You can probably smell Ronald Reagan from here. At its core, part of America believes with evangelical fervor that public programs are inherently inefficient and unworthy of love. They can only be redeemed by redistributing their resources to private companies, who will then, because of Free Market Incentives, perform the same work more efficiently. It’s a familiar and caustic myth, whispered in all our ears at birth, and one which perpetually fails to live up to its promise over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over again. Charter schools, private transit, private policing, you’ve seen this a thousand times—we cut government programs, they suffer, and we punish them for suffering by opening up the land for private contracting instead.

So too happens in Medicare with Medicare Advantage. Our healthcare administrators agree to siphon off of just a heinous amount of public money to pay private companies to insure Medicare patients. These private insurers agree to receive this money, use Medicare’s price negotiations and other advantages of size, spend as little as possible, and keep the rest as profit.  Everyone in charge smiles big the entire time; a calvary of crocodiles in Canali suits. Because the Center for Medicaid and Medicare Services very much wants people to use the private option. It’s even changing its Medicare enrollment materials to encourage it.

Except here’s the thing—there’s no money in insuring sick people. Definitionally, it’s only profitable to insure people who don’t need insurance—unless you’re getting bailed out by someone else’s money. So these plans need to do three things if they want to turn a profit: draw in inexpensive customers (hook ‘em), restrict the amount they spend on providing insurance (cook ‘em), and find a way to get bailed out by the feds afterward (crook ‘em). We’ll take each in turn.

1. Hook ‘em: Privileges and Treats

Medicare Advantage plans are regulated in such a way that customers who use Part C are  given special privileges over users of traditional Medicare. Most importantly, there’s an out-of-pocket cap—which limits how much a customer can be made to spend in copays and cost-sharing, and which should be the norm for all Medicare plans. (You might think traditional Medicare is kept flawed to make Advantage seem superior.)

Then there’s the perks. Private Medicare wants to find ways to draw in mostly-healthy patients to stay profitable. They’re allowed to offer all kinds of basic dignities—like bundled vision and dental care—and shiny perks, like free Fitbits and comped Lyft rides to the doctor’s office and other shit.

These are good things. People should have them. I just think traditional Medicare should be allowed to offer them as well, instead of reserving them for the private sector. It’s cosmically unfair, and by this own-goal unfairness the austerity movement tilts at the public Medicare program with big mole claws, eager to hollow it out and hoard the spoils.

2. Cook ‘em: Restriction

Fitbit or no, you just can’t dance away from the fundamental law of insurance: you can’t really profit from paying for the healthcare of people who need a lot of healthcare.  Medicare Advantage is great, until you really need to use it. Under the pretense of caring about “provider quality” or “care coordination”—real problems which can be addressed without throwing patients under the bus—Medicare Advantage makes it as difficult to seek healthcare as it was when you had employer-sponsored insurance.

Just like ESI, private Medicare plans have networks—narrow lists of providers you’re allowed to see, at risk of major financial penalty. So you have to hope that your plan includes the doctors you like, or the doctors who work near you—if you’re mobility-impaired, or in a nursing home, or just not able to travel very easy, you’re hosed. Should have read all the confusing enrollment literature more closely.

Once you’re able to actually get to a doctor, you’re not out of the woods yet. People with complicated medical needs find themselves trapped in prior authorization hell — where they need to wait days or weeks to obtain insurer permission to get care like advanced CT scans (for which they bill the patient up to $300 a scan, compared to ~$50–$75 under traditional Medicare). If you have complex medical needs, you can be stuck waiting and waiting and waiting, even when your oncologist needs to plan further treatment.

3. Crook ‘em: Risk Adjustment

In theory, Medicare Advantage companies profit by being so good at narrowing networks, finding the best providers, and coordinating care, that they just happen to spend less than they take in. In reality, there’s risk adjustment

Imagine a horrible scenario in which a patient with a lot of medical needs chooses Aetna’s Medicare Advantage plan and then gets chemotherapy, several surgeries, and some extensive inpatient hospitalizations—imagine how expensive that would be! There’s simply no way Aetna would break even on their allotment of public money for this patient. Hence, risk adjustment, a complex subsidy program designed to offset the risk that a patient needs to use the insurance they purchase. At the beginning of the insurance year, Medicare looks at the aggregate patient pool of Aetna, or any other a Medicare Advantage insurer—patient ages, genders, and health status profiles. Based on this composition, Medicare offers a benchmark amount it is willing to pay Aetna for providing insurance. If Aetna thinks it can insure the population for less, it keeps the difference and can use that projected surplus on perks, treats, and profit.

If it turns out that a patient is sicker than Medicare guessed they would be when setting the benchmark, the government pays the private insurer a bonus to compensate for it, usually in the range of a few thousand dollars.

These determinations of illness and their resulting insurer bonuses are made using diagnoses on a patient’s medical records. This means that now these medical records have two purposes: tracking patient status, and bringing in cash. Aetna and friends are thus interested in making sure every possible diagnosis that can be on those records gets on those records, regardless of whether it’s a necessary or even true diagnosis. This is known as upcharting, and Medicare Advantage insurers are more interested in the data-heavy business of upcharting than the business of insurance.

An example: a doctor might see a patient and note that their potassium levels are low. Not catastrophically low, just a little low. These levels can vary from time to time, and so the doctor decides not to make a formal diagnosis or begin medications—a normal, standard thing in the course of a relationship between a patient and their doctor. The doctor decides not to diagnose the patient with hypokalemia and moves on. That’s not good enough for Aetna. Aetna really wants that hypokalemia diagnosis, and that sweet risk adjustment money—so it sends the patient back to a doctor with whom it has a prior agreement to chart as much as possible. The diagnosis is made. (Perhaps the second doctor works at a hospital which sells an upcharting program to Medicare Advantage insurers, and which thus pressures its doctors to diagnose everything whenever possible—or else face an onslaught of curious calls from the billing department.)

Finally, efficient healthcare!

A 2017 allegation from the Justice Department, dismissed under the Trump Administration, claims that one single insurer, UnitedHealth, used its Medicare Advantage program to defraud the public of $3 billion dollars between 2010–2015. Former UnitedHealth finance director Benjamin Poehling agrees: he is the whistleblower at the center of the case.

It is alleged that UnitedHealth did this in two ways: one, it identified diagnoses it thought it might be able to get approved, and pressured doctors to review a selected patient for them (upcharting); two, at the end of the insurance year, it did not delete diagnoses that were inaccurate or out-of-date.

Think about the scale involved here. UnitedHealth has about 5 million people enrolled in its Medicare Advantage program—that getting an upgraded Medicare risk profile for just 4% of them would bring in an additional $600 million in public money a year.

This kind of billing fraud in Medicare Advantage is common. Dialysis giant DaVita agreed to a $270 million settlement just a few years ago. Hell, UnitedHealth got busted doing the same thing in 2009, through its health analytics subsidiary Ingenix, which is also named in the 2017 suit.

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So that’s the breaks. Medicare Advantage is a way to subsidize private companies to do a worse job than the public sector. When we hand over Medicare to private companies, they rip us off for billions and billions of dollars. The money we give is given at the expense of the American public, and it’s money that’s stolen from rural hospitals, public schools, or infrastructure. Medicare Advantage is a theft from the future of America.

But these are all structural pains. They are important, but they hurt differently than seeing your friends or parents or grandparents get kicked to the curb or denied care they need, or watching someone you love get swindled by a shitty insurance plan.

If you have experience with Medicare Advantage as either a patient or a provider and have a horror story—please, pass it on.

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Here's something very nice I read today. It's about the comprehensive healthcare programs offered in Brownsville, Brooklyn. City-sponsored free healthcare classes, services, and lessons all under one roof. This is the kind of extraclinical care which, alongside free and unlimited access to clinical care, might make a difference in long-term health equity. It’s not that tough! You just gotta give the people what they need.

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If you live in Spokane, WA; Boise, ID; Humboldt, CA; Chico, CA; or San Francisco, I'm speaking in your town in the next couple of weeks. Come hang out.