By D. Kenton Henry Editor, Agent, Broker

05 April 2024

In addition to owning the first insurance agency in The Woodlands, Texas, and most of the United States, to create a website (Allplaninsurance.com) in 1995, I was among the first to offer Medicare Advantage and Medicare Part D Prescription Drug Plans (MAPD plans) to Medicare recipients following their creation by the Medicare Modernization Act of 2003. Congress created them to provide a lower premium insurance product as an alternative to Medicare Supplement policies, which has been the standard insurance product to serve as secondary insurance covering medical expenses not paid by Original Medicare. And—with premiums as low as $0—they have certainly done that. Contrary to what may be the common perception of the public, every good agent has a little bit of social worker in them and wants to think they have really helped a person and improved their situation. As an agent (before the advent of Medicare Advantage plans), I would sit across coffee tables from prospective clients living in single-wide trailers and subsisting on social security income alone. I would watch tears come in their eyes as they told me they simply did not have another dime to spend on insurance, leaving me to drive off and them no better off for my visit. So, from that standpoint, they have been a source of great relief for me as well as my clients. 

In addition to lower premiums, MAPD plans offer other advantages. Specifically, they are:

1. The convenience of combining medical coverage with prescription drug coverage under the cover of one policy. Effectively eliminating the necessity of paying a second premium for the latter.
2. The provision of “extra” benefits such as dental, vision, and hearing benefits
3. “Guaranteed Approval” during the Annual Election Period October 15th and December 7th and the option of changing your plan each January 1 as the plans and your needs change. 
4. Premiums are not age-based and do not increase due to age as one gets older.

Seniors are inundated with seemingly endless television and radio commercials promoting Medicare Advantage plans ad infinitum. But while they drive home the advantages mentioned above, they virtually never mention the disadvantages or compromises that come with electing them over a Medicare Supplement policy. There are many reasons for this, but this is the one most relevant to you:

Medicare, like Social Security, is hemorrhaging dollars. Please don’t take it from me. Google it. Financial prognosticators project it will enter a default position by 2031. Medicare trustees say the Part A (Hospital and Skilled Nursing coverage) program will begin running deficits again in 2025, drawing down the trust fund until it depletes in 2031. After that date, the program will not bring in enough money to fully pay out Part A benefits. *(See Feature Article 2 below.)

Now, we all know our government will just tax us more, and our treasury will print enough more money to keep things going. But the bottom line is that Medicare is seeking any way of saving money and limiting its losses. The easiest way to do this is to lower its share of claims. The easiest way to lower its share of claims is to increase enrollment in Medicare Advantage plans relative to Medicare Supplement. And why is that?

Opposed to Supplement, Advantage plans . . .

1) Force the insured member to share in more expenses as the medical claims come in.

2) They influence the member to utilize a limited network of providers or pay a higher cost for not.

3) They subject the member to preauthorization of medical tests and procedures, often resulting in significant delays in treatment. *(See Feature Article 1, 2 and 3 below.)

4) Advantage plans that combine prescription drug coverage with medical coverage (MAPD plans) lock the member into a drug plan that may not provide the lowest total cost for drugs or cover them in the first place. 

5) Once a member foregoes Medicare Supplement in favor of an Advantage plan beyond 12 months, they may find themselves locked into an Advantage plan—and out of a Medicare Supplement plan—due to preexisting medical conditions for the remainder of their lives. 

One reason for these differences in how things are covered is that when a person elects Medicare Advantage, their benefits and administration are assigned to the insurance plan and company issuing it and away from Medicare. Medicare no longer plays a role in your coverage. As Advantage plans are allocated a limited amount of dollars per plan member, the companies will seek to limit expenditures. Recent adjustments in budgets for the plans will result in more of this. *(See Feature Articles below.)

And now, we learn that in addition to the increasing number of denials for tests and procedures by Advantage plans, Medicare is allocating less money to cover benefits, resulting in an actual reduction in benefits in 2025. Depending on the Medicare Supplement plan option (A-N) one elects, these compromises seldom, if ever, apply to their coverage. 

All this being said, we get back to affordability and the reality that Medicare Supplement premiums will increase due to the member’s age as the member ages. This could bring me back to that coffee table where clients simply can no longer afford their premiums. While their costs for treatment may increase, some will need a lower premium to afford some type of coverage. Those people should know I offer Medicare Advantage plans from virtually every major carrier in one’s county or region. These include (among others) Aetna, Anthem, AARP Unitedhealthcare, BlueCross BlueShield, Cigna, Kelseycare Advantage, and Wellcare.

Regardless of your situation, I offer whatever product is appropriate and best suited to meet your Medicare-related insurance needs. When you work with me, I will be an advocate on your behalf. I represent you over the insurance company. Yes, I still have a little bit of social work in me. 

Please get in touch with me. I am waiting to answer your questions and assist you with your coverage. 

D. Kenton Henry

Office: 281.367.6565 Text my cell 24/7 @ 713.907.7984                                              Https://TheWoodlandsTXHealthInsurance.com  Https://Allplanhealthinsurance.com

* For the latest in health and Medicare Related Insurance News, please follow me on my blog @ Https://HealthandMedicareInsurance.com

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Feature Article 1

Becker’s Hospital CFO Report                                                                                  

Financial Management

Hospitals’ Medicare Advantage problem hits an inflection point

Jakob Emerson – 5 April 2024

The tensions between hospitals and Medicare Advantage plans continue to grow. With the program hitting nearly 34 million enrollees in March, paired with recent policy moves by the federal government, the scene has been set for those relations to worsen.

“The relationship between hospitals and managed care is strained at best right now,” Chip Kahn, president and CEO of the Federation of American Hospitals, told Becker’s. “[Insurers] are finding every way to not pay for the care that Medicare beneficiaries should receive. I don’t know how the issue gets worse — we’re at a critical stage, and I think CMS is sending those signals.” 

On April 1, CMS finalized a slight decrease in MA benchmark payments for 2025. The agency has also issued more strict prior authorization rules this year and cracked down on when MA plans must cover inpatient care.

The health insurance industry has said the new rates will “put even more pressure on the benefits and premiums” of MA beneficiaries, a warning that individual insurers have also issued in recent months.

“Payers know that they’re going to have to cut supplemental benefits, and premiums may even have to go up, but I wouldn’t want to be the first one to do it,” Scott Ellsworth, founder and president at Ellsworth Consulting, told Becker’s. Mr. Ellsworth is a former insurance executive, overseeing entire divisions at Centene, Optum and a BCBS plan throughout his career.

“Seniors have seen their benefits get better every year, but now we’re at an inflection point and the free lunch is over,” he said. “There is going to be a sharing of the pain. Providers have disproportionately shared the pain and now you’re seeing many of them say ‘enough is enough, we’re out.'” 

In 2023, Becker’s reported on at least 15 hospitals and health systems nationwide that dropped some or all of their Medicare Advantage contracts. Among the most commonly cited reasons are excessive prior authorization denial rates and slow payments from insurers. Some systems have noted that most MA carriers have faced allegations of billing fraud from the federal government and are being probed by lawmakers over their high denial rates.

“It’s become a game of delay, deny and not pay,” Chris Van Gorder, president and CEO of San Diego-based Scripps Health, told Becker’s in September. “Providers are going to have to get out of full-risk capitation because it just doesn’t work — we’re the bottom of the food chain, and the food chain is not being fed.” 

Scripps terminated MA contracts in January for its integrated medical groups, citing an annual loss of $75 million on its contracts with insurers.

In March, Bristol (Conn.) Health announced it was eliminating 60 positions, 21 of which are occupied and will result in layoffs. Its CEO, Kurt Barwis, laid blame on Medicare Advantage saying, “All the nice-to-haves are being taken out by the lack of insurance payment and the lack of reimbursement.”  

In January, the Healthcare Financial Management Association released a survey of 135 health system CFOs, which found that 16% of systems are planning to stop accepting one or more MA plans in the next two years. Another 45% said they are considering the same but have not made a final decision. The report also found that 62% of CFOs believe collecting from MA is “significantly more difficult” than it was two years ago.

“Medicare Advantage net reimbursement right now is terrible for hospitals — our clients average about 85 cents on the dollar, and it’s only getting worse,” Mr. Ellsworth said. “MA is a race to the bottom, and I would argue that we’ve hit that bottom. Payers are going to struggle with this too, but no one wants to be the first to blink.”

Medicare Advantage denials increased almost 56% for the average hospital from January 2022 to July 2023, according to data from a joint American Hospital Association and Syntellis report. The denials and inconsistent reimbursement led to a 28% drop in hospital cash reserves.

Both Mr. Ellsworth and Mr. Kahn noted that it isn’t feasible for most health systems to completely walk away from Medicare Advantage, given that it now makes up more than half of the Medicare population. Instead, many hospitals are paring down contracts and looking for payer partners that align best with their financial objectives. Some systems are even exploring launching their own MA plan built in tandem with one insurer. Others have partnered with grocers or other health systems.

“We will ultimately pick a couple of partners going forward, and I think a lot of health systems are going to do this,” Will Bryant, CFO of Chapel Hill, N.C.-based UNC Health, told Becker’s in November. “They’re going to be the partners who act like partners and not who deny care in order to bolster their billions of dollars of quarterly earnings.”

Sachin Jain, MD, CEO of SCAN Group — one of the nation’s largest nonprofit Medicare Advantage companies — cautioned hospitals that dropping MA plans is a short-term trend that is “going to backfire in a big way for these large health systems.”

“You’re a nonprofit system saying you’re no longer going to accept the insurance that low-income people actually have,” he said. “We’ll see how that works out for you.” 

Dr. Jain said any public policy program is going to create unintended consequences, adding, “What I would say to anybody who’s critical about the program is that you’re right, but let’s fix that.”  

Former CMS Administrator Don Berwick, MD, told Becker’s in February that the battle between hospitals and Medicare Advantage is a “manifestation of an underlying broken system in which everyone that gives care wants to give more, and everyone that pays for care wants to pay less.”

“To me, the untold story yet is about the physicians and nurses who don’t feel directly tied to ongoing Medicare Advantage trends, but they are certainly immersed in a changing financial landscape,” Dr. Berwick said. “As venture capital, private equity and ownership of healthcare by private interests increases, it changes their worlds, what it’s like to practice, their feelings about themselves, and the degrees of freedom they have to care for their patients. That chicken is going to come home to roost.”

Despite the tensions with hospitals, the MA program has bipartisan support in Congress and a 95% quality satisfaction rating among enrolled members in 2023. There are about 4,000 MA plans being offered this year nationwide, and MA members spend an average of $2,434 less on out-of-pocket costs and premiums per year compared to traditional Medicare enrollees.

“Medicare Advantage is very important, especially for low-income seniors,” Mr. Ellsworth said. “Hospitals need to acknowledge the reimbursement problem and proactively address their relationships [with payers] head-on.”

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Feature Article 2

Medicare Won’t Have Enough Money to Pay Full Benefits After 2031: Report

Money Magazine

By: Adam Hardy 

Editor: Brad Tuttle

Published: Apr 05, 2023

The fund covering Medicare‘s hospital-insurance benefits is now projected to run out of money in 2031, according to a new report by Medicare trustees.

This new insolvency date gives policymakers three more years than previously estimated to address impending financial setbacks that are facing the social safety net program, which provides health care benefits to tens of millions of Americans.

The ultimate insolvency date will likely change, the trustees say, due to difficulties in accurately projecting program expenditures. That leaves the exact timeline unclear for lawmakers to hash out a plan to mend Medicare’s finances, which could require an increase in taxes, a cut in benefits or a combination of both to keep benefits paying out in full.

What the report says

In a report released Friday, Medicare’s Board of Trustees provided the latest snapshot of the program’s finances. On the whole, Medicare is on sounder financial footing than indicated in last year’s trustee report, though financial shortfalls still loom.

• Medicare hospital insurance benefits, aka Medicare Part A, are expected to fully pay out until 2031, a three-year improvement from the last trustee report.
• Medicare Part B and Part D do not face insolvency, the report said, because they are funded separately — partially by premiums and general revenue from the U.S. Department of the Treasury. These benefits help cover typical health-insurance and prescription-drug expenses, respectively.
• By contrast, Medicare Part A, which generally covers inpatient hospital care, skilled-nursing facility care, home-health care and hospice care, uses a separate reserve that’s funded by a 2.9% Medicare payroll tax. This is the trust fund at risk of insolvency.
• In 2022, Medicare’s balance sheet looked better than previous years, the report shows. The hospital-insurance trust fund had a surplus of $54 billion, and Medicare overall brought in about $84 billion more than it paid out.
• Nearly every year since 2008, the Part A trust fund has run a deficit, the report notes, with the exception of 2021 and 2022. The fund ran a steep shortfall in 2020 of more than $60 billion, largely because Medicare began making loans to health care providers to increase their cash flow as they grappled with the COVID-19 crisis. Then in 2021, providers began to repay Medicare, leading to the current surpluses.

The surpluses aren’t expected to last, however. Medicare trustees say the Part A program will begin running deficits again in 2025, drawing down the trust fund until it depletes in 2031. After that date, the program would not be bringing in enough money to fully pay out Part A benefits.

Key context

Medicare covered 65 million Americans last year. The vast majority of those people, about 88%, were 65 or older, though the program also provides health coverage to millions of disabled Americans.

• Medicare — particularly Part A — has long faced financial issues. The nation’s changing demographic makeup is a big reason why. Because Medicare Part A relies on payroll taxes, it is more susceptible to insolvency when a growing share of the population is older, ultimately changing the worker-to-beneficiary ratio. In other words: less money coming in and more money going out. These demographic changes are also leading to insolvency issues for Social Security.
• Compared to Social Security, projections for Medicare’s insolvency are less certain because it’s difficult for the trustees to accurately predict future health care expenditures. This can lead to some larger swings in the predicted insolvency date. By contrast to the trustee’s estimate, the Congressional Budget Office estimates the fund will remain solvent until 2033.
• According to the nonprofit Center on Budget and Policy Priorities (CBPP), if Medicare Part A went insolvent, it would still be able to pay out almost all benefits. This leads some experts to call for tempered reactions to the newly projected insolvency date.
• “Medicare does not face a financing ‘crisis’ and is not ‘bankrupt,’ as some critics charge,” tweeted Paul Van de Water, a senior fellow at the CBPP who specializes in Medicare. “Even if policymakers took no further action … tax revenues would still cover 89 percent of scheduled benefits” after the insolvency date.

Avoiding Medicare insolvency

Policymakers have several options to avoid impending insolvency headed for Medicare Part A. The trustees note two options that could immediately solve the issue:

• The standard 2.9% payroll tax could be immediately raised to 3.52%, which would be enough to plug any financial shortfalls over the next 75 years.
• In lieu of a tax increase, expenditures (read: benefits) would need to be reduced immediately by 13%, the trustees say.

Realistically, a combination of the two could work and the benefits cuts and/or tax increases could be implemented over a longer period of time.

Additionally, President Joe Biden released a plan last month to push the insolvency date back by 25 years.

• The central change under the president’s plan would be a Medicare payroll tax increase on Americans earning more than $400,000.
• Currently, earnings over $200,000 for individuals are taxed at 3.8% (while income under that amount is taxed at the standard 2.9% rate). These rates are split 50-50 between employees and employers.
• The president’s plan introduces a new tier for income over $400,000, a tax rate of 5%.

The president’s Medicare proposal — part of a larger 2024 budget plan — is not expected to make it through the Republican-controlled House of Representatives.

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FEATURE ARTICLE 3

Dozens of health systems ask CMS to crack down on Medicare Advantage Denials

Becker’s Hospital CFO Report                                                                                  

Rylee Wilson – Friday, March 22nd, 2024

Over 100 hospitals, health systems and providers signed on to a call for CMS to do more on Medicare Advantage denials. 

Members of Premier, a healthcare services company, penned a letter to CMS administrator Chiquita Brooks-LaSure on March 21, requesting CMS collect more data on claims denied by Medicare Advantage plans and take enforcement action against plans not following the coverage rules set out by Medicare. 

A survey of Premier’s member hospitals and health systems found 15% of claims to private payers are denied. A slightly higher portion of Medicare Advantage claims, 15.7%, are denied, according to the survey. 

On average, hospitals spend $47.77 in administrative costs to appeal a denied Medicare Advantage claim, according to the Premier survey. 

In the letter, the health systems asked CMS to monitor how much MA plans spent on direct patient care to address “potentially dire impacts on Medicare beneficiaries and providers.” 

“It is imperative that CMS leverage its full authority to ensure that MA plans’ medical loss ratio (MLR) requirements for revenue used for patient care are satisfied in alignment with the benefits to which Medicare beneficiaries are entitled,” the providers wrote. 

Dozens of health systems signed the letter, including CommonSpirit Health, Ascension, Advocate Health, AdventHealth and Providence. 

The providers also asked CMS to bar MA plans from delaying or denying claims approved through electronic prior authorization and weight patient experience more heavily in its ratings of MA plans. 

A growing number of hospital executives have criticized Medicare Advantage, often citing excessive prior authorization hurdles and delayed payments. A handful of systems have moved to drop the program entirely. 

FEATURE ARTICLE 3

Nearly 15% of claims submitted to private payers are initially denied

Marty Stempniak | March 22, 2024 | Radiology Business | Economics

Nearly 15% of medical claims submitted to private payers for reimbursement are initially denied, according to new survey data released Thursday.

Denied claims are more prevalent for high-cost treatments, with the average rejected charges at $14,000 and up, Premier Inc. reported. Medicare Advantage and other private payers eventually overturned more than half (54%) of denials, with the claims paid, but only after “multiple, costly rounds of provider appeals.”

The findings are from a national survey of hospitals, health systems and post-acute providers, conducted by the Charlotte-based healthcare improvement company.

“To address these potentially dire impacts on Medicare beneficiaries and providers, we urge CMS to stringently monitor MA plans’ reporting of expenditures on direct patient care,” Premier and 118 member organizations wrote in a March 21 letter to the head of the Centers for Medicare & Medicaid Services. “It is imperative that CMS leverage its full authority to ensure that MA plans’ medical loss ratio requirements for revenue used for patient care are satisfied in alignment with the benefits to which Medicare beneficiaries are entitled.”

  Premier partnered with member hospitals to conduct the survey from October to December 2023. A total of 516 hospitals across 36 states, representing 52,123 acute care beds responded. Answers were based on claims submitted to private payers in 2022.

On average, hospitals and other providers incurred a cost of $43.84 per claim to fight denials. With insurers processing about 3 billion claims per year, this equates to $19.7 billion per year in expenses for these reviews. An average of about 3% of all claims denied included those that were already preapproved via prior authorization, Premier noted.

The continued burden from these delays and denials has impacted hospital finances. During the past year, average days of cash on hand at hospitals declined by 44 days or 17%. Meanwhile, days of cash on hand increased among insurers such as UnitedHealth Group (up 25.5% on average since 2019) and Cigna (24.4% on average).

The letter writers—who included numerous large health systems and other provider organizations—want CMS to take enforcement action against MA plans that “fail to abide by the coverage rules of Medicare.”

“Additionally, we note that CMS has moved away from holding MA plans accountable for [Consumer Assessment of Healthcare Providers and Systems] and other patient experience measures in recent rulemaking by reducing the weighting of patient experience and access measures in the Star Ratings program. We recommend that CMS return to its past policy of weighting patient experience and access measures more heavily in the MA Star Ratings methodology, empowering beneficiaries to hold their health plans financially accountable,” the letter stated.

The analysis does not specifically mention radiology services, but it mirrors ongoing problems imaging providers have had with prior authorization and the No Surprises Act (links to previous coverage below).