Physicians and policy makers are, in different ways, responsible for the health and well-being of patients. While doctors care for patients to the best of their ability, policymakers ensure that the structures that make up the health care system are efficient and fair. Whenever and wherever there is a threat to these goals, both groups have a role to play in recognizing and combating it. That’s why we’re talking about the need to make fundamental changes to the Medicare Advantage (MA) program.
MA as it exists today is a threat to patient care, health equity, and indeed the integrity of our public health infrastructure. A new report by Physicians for the National Health Program, a physician organization working to reform the health care system, shows that for-profit corporate MA insurers are overpaid by $88 billion to $140 billion annually. That’s money that comes out of the pockets of patients and taxpayers.
MA is a private version of the traditional government-run Medicare program. Instead of directly paying for care, the government instead pays insurers to “manage” patients’ needs. Enrollment in this program has grown significantly over the past two decades, with over 50 percent of eligible beneficiaries opting for an MA plan in 2023. Unfortunately, the program’s growth has not led to better beneficiary care or a better deal for taxpayers—quite the opposite, in things. Tens of billions of taxpayer dollars are siphoned off as profits from insurance companies that don’t even provide the care they need. That money is not only costing our government, it is also costing the elderly. For example, premiums paid for Medicare Part B, which covers most medical services outside of hospitalization, totaled $131 billion in 2022. With the amount of extra money corporate insurers receive from the government, we could eliminate Part B premiums entirely and still have money left over.
Where does all this money come from? It’s complicated, the result of a tangled web of loopholes, policies and practices that are difficult for the individual user or physician to discern. Despite this, scientists and regulators have identified several main factors that lead to overpayment. For example, insurance companies in MA tend to enroll patients who are healthier and thus cost less than average, but still get paid as if their patients were much sicker. This is called an advantageous choice, and according to some estimates, it can cost up to $75 billion a year in additional payments.
Because Medicare gives extra money to MA insurers for patients with more severe or multiple diagnoses, another source of overpayments is any nonessential or old conditions that insurers record in patient records. This practice is known as upcoding; these conditions are not actively treated, so they cost the insurance company nothing, but lead to as much as $20 billion in additional payments. These methods only scratch the surface of all the ways MA insurers take advantage of the system, but the bottom line is clear: these companies hold billions of dollars that belong to Medicare beneficiaries.
Of course, it’s not just about the money; it’s also about patient care. Medicare Advantage plans tout their low premiums and added benefits, but often it’s only worth it while you’re healthy. If you get sick and need complex or significant care, the plans start to show their true colors. Difficult authorization processes and narrow networks can make treatment under an MA plan a nightmare. In fact, high-needs patients with chronic conditions and patients in their last year of life are significantly more likely to switch from MA and return to traditional Medicare, tired of having to justify every necessary procedure or drug to their insurance company.
In our role as a member of Congress and as a physician, we see different but equally troubling manifestations of these problems. Constituents are calling in with stories of being lured into an MA plan and then being denied care or prevented from seeing their doctor. Cancer patients, for whom early diagnosis and a treatment plan are imperative to survival, face weeks of delays due to onerous pre-authorization requirements. In fact, some of these patients ended up needing emergency surgery or aggressive radiation that could have been avoided if their insurers hadn’t gotten in the way. MA isn’t just taking billions of taxpayer dollars; it makes it harder for doctors to do their jobs and harder for patients to get well.
With the money we spend on corporate gifts, we could fully fund Medicare’s prescription drug benefits, establish out-of-pocket maximums in traditional Medicare, or even provide dental, hearing, and vision benefits to everyone on to Medicare and all on Medicaid. This does not have to be a partisan issue. We should all agree that programs paid for by the people should benefit the people. It’s time to crack down on overpayment in MA and use those resources to improve Medicare for all patients.
Pramila Jayapal represents Washington’s 7th District. Dr. Diljeet K. Singh has been a women’s health advocate and integrative gynecologic oncologist in clinical practice since 1999. She currently serves as the vice president for physicians for the National Health Program.
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