Open enrollment is over and the flood of advertisements for Medicare Advantage plans has ended for another year. I’m happy to report that, once again, I’ve managed to avoid signing up for one of those plans.
For those who aren’t familiar with Medicare Advantage (MA), otherwise known as Medicare Part C, it is health care coverage available to Medicare beneficiaries offered through private insurance companies. The Centers for Medicare and Medicaid Services (CMS) contracts with these companies, for a set per enrollee cost, to provide coverage that must include all of the traditional Medicare (Parts A and B) benefits. Many of these carriers offer plans that also include prescription drug coverage (comparable to Medicare Part D). Most cover some services not provided by traditional Medicare, such as hearing and dental care and fitness club memberships; and all are required to have annual maximum out-of-pocket limits for their beneficiaries, a protection not provided by traditional Medicare alone. MA plans now cover about one third of Medicare beneficiaries, and that number has been steadily increasing in recent years. This isn’t surprising given their apparent generous benefits and low to absent premiums. So why would I pass up the opportunity to enjoy health care coverage that includes dental and hearing services, Silver Sneakers Fitness Club membership and, potentially, no premiums?
The MA market is now one of the most profitable for the health insurance industry, and more companies are investing in that market each year. But how can insurance companies make such generous profits while providing more enrollee benefits at similar costs? The answers to that question help to explain my own aversion to MA plans.
To begin with, I want to maintain the freedom to choose my health care providers without paying additional costs. Most MA plans have defined networks of providers (physicians and other health care practitioners, hospitals, laboratories, etc.); some have very narrow networks. Using out-of-network providers almost always results in much higher copays for the patient. In some cases, insurance companies may not cover any of the cost of out-of-network services. Use of an out-of-network provider may also result in balance billing, leaving the patient responsible for the full amount charged by that provider, not the fee contracted for by insurance carriers. On the other hand, traditional Medicare is accepted by almost all physicians caring for adults in the U. S., thus giving patients much more freedom to choose their health care providers.
I also want to have accurate information about my providers. MA insurance companies have a very poor track record when it comes to accuracy of information about their network providers. Although required to provide accurate information, a recent audit disclosed that nearly half of MA provider location directories contained at least one mistake, including such items as practice location, telephone number and whether or not the provider was taking new patients.
I want my providers to make decisions about my care based on their clinical judgement and cost considerations, not dependent on the profits of a health insurance corporation. MA plans are able to reduce their costs by requiring prior approval for most referrals and procedures, many lab and radiology tests, as well as some prescription drugs. A recent study by the Office of Inspector General (OIG) at the U.S. Department of Health and Human Services found “widespread and persistent problems related to denials of care and payment in Medicare Advantage” plans. While only about one percent of such denials are appealed by patients and their providers, 75% of those appeals are subsequently overturned. According to the OIG report, this may be due in part to insurance companies’ incentives to increase profits. Similar denials also occur with traditional Medicare, but they are much less frequent and less likely to be overturned on appeal. I don’t want my providers having to jump through unnecessary hoops just to give me the care they feel is indicated.
This underscores the basic, underlying reason for my avoidance of MA insurance. I don’t want corporate profits trumping my own health care. Private, for-profit corporations have an obligation to their shareholders (or other owners) to maximize profits; that’s why they’re in business. This often conflicts with patients’ needs for quality health care.
The greatest downside to traditional Medicare is the increased liability for out of pocket expenses due to the lack of annual or lifetime maximums for copays and coinsurance. In recent years, MA plans have been required to have these limits. With traditional Medicare, the only way to protect against potential huge medical expenses is to have supplemental (“Medigap”) coverage. I’m fortunate to have excellent, low cost Medigap coverage available through my former employer. This covers most of my copayments and protects me with annual and lifetime out-of-pocket limits. Without that low cost additional protection, I would be sorely tempted to go with a MA plan. Even so, I don’t want to support a system that needs to change. Even if your former employer does not give you Medigap coverage, there are many organizations like AARP and insurance companies that provide reasonable Medigap coverage for most people.
I want to maintain my freedom to choose the providers that I feel can best serve my health care needs. I don’t want to be charged extra for out-of-network providers that I’m unaware of in the hospital. I don’t want my physicians to spend more of their precious time (and that of their office staffs) appealing to for-profit insurers to pay for tests or procedures that they feel are necessary.
Insurance companies continue to promote MA plans heavily because of their great profitability. MA costs per beneficiary (to CMS) are only slightly more than traditional Medicare. However, this is true only because they balance their administrative overhead costs (including profits and marketing) by making life more difficult for their beneficiaries and the providers who care for them. Traditional Medicare has worked well for millions of Americans for over half a century; it’s time to reverse the trend toward privatization of Medicare.
Dr Raymond H. Feierabend is Professor Emeritus in the Department of Family Medicine at Quillen College of Medicine, East Tennessee State University.