Secure Transfer System »     Client Portal Access »

Posts Tagged ‘slamming’

An Easy Budget Fix For Medicare

Posted by J. Paul Spencer, CPC, CPC-H in Health Care Reform

I was, perhaps unfortunately, born into a political family. Because my early childhood memories revolve around assorted family members watching the evening news and commenting loudly, sometimes using the off-color language of prejudice that was the hallmark of bygone generations, I continue to be sucked into political discussions as an adult.

There are only a few differences between the political junkie and the heroin junkie, not the least of which is that I lived beyond 30. While the actual junkie can usually be found in a dank room without furniture, huddled around a candle with a needle, a spoon and their latest bag of potential death to get them through the next six hours, the political junkie can be found in a different kind of shooting gallery (probably a Starbucks), huddled around a laptop, reading an opinion blog, with the latest cup of cream-softened caffeine to keep them going for the next four hours. The only physical similarity is the sunken eyes, one from walking death, the other from absorbing too much information, with both self-constructed prisons ensuring that they’ll never live carefree and happy again.

With this in mind, and with more than a little information about America’s health care situation in my mind, I wade into the morass that is our country’s current slouch towards debt default. Ironically, I’m due to be in Canada when the default is scheduled. Judging from the idiocy I see scattered among the people placed in charge of preventing the default, I might have to stay there. Why wouldn’t I? They have wonderful people, cold weather, intelligent public discourse, hockey, beer and doughnuts, all in abundance, which those who know me can tell you is a pretty sexy package in Spencerland. My wife is one-half Canadian, so I’m practically there already.

As the latest posturing about the federal budget drags on, I was struck by Senate Minority Leader Mitch McConnell recently stating that unless something is cut from Medicare, Republicans will not compromise on raising the country’s debt ceiling. Being the paragon of common sense that I am (at least during work hours), I’m here to accept Mr. McConnell’s challenge, and I can do it in three words.

End Medicare Advantage.

Federal contracting, in every Cabinet department, is a vast, apocalyptic land of waste, fraud, overpayment for everyday products and services, political back-scratching, and unfulfilled promises. Within the Department of Health and Human Services, there is no more salient example of a program that exists to no benefit for the country’s citizens than Medicare Advantage, or Medicare Part C.

The idea behind Medicare Part C is that private insurance companies offer Medicare beneficiaries an alternative to traditional Medicare coverage which, in theory, would also offer other benefits not available under the original plan. The beneficiary pays the competitive premiums to the insurance company, and voila!, everything is rainbows, good fairies, dancing elves, candy buttons and fountains of strawberry milk and gumdrop trees.

Since this is a joint initiative of the federal government and the insurance industry, one cannot be surprised that the program is one big con job and money pit all rolled into one.

Let’s start with the accuracy of claims payment. The claims error rate for traditional Medicare is 10.5%. That’s a lousy number, but the error rate for Medicare Part C is 14.1%, meaning that if your claim is sent to a Medicare Advantage plan, and it waits in a virtual line for claims adjudication on a given day, and its number in that line is divisible by seven, it will be paid incorrectly. It doesn’t end there. The American Medical Association issues an insurance report card, showing the accuracy of claims payment of the largest insurance companies in the country. The results of these measurements is the finding that one out of every five claims sent to the big insurers is deliberately underpaid based on contracted rates with physicians. In addition, the amount of the underpayment is usually far less than the administrative costs on the provider end to collect the remaining money owed. If we combine the Medicare error rate with this set of facts, the picture painted is less Rembrandt and more Picasso.

Next, we look at the incentive payments we pay to Medicare Advantage as taxpayers. Each Part C plan receives extra dollars if the data received from claims indicates that the population they are servicing is sicker and consuming more resources. These payments are in addition to the financial benefits to the insurance company of syphoning off patients from the traditional Medicare program. If you’re on Medicare, you’re either 65 or older, or have a chronic disease. If an insurance company makes a business decision to offer a Medicare replacement plan for a population that common sense dictates is worse off in terms of health than the rest of the general population, why is this incentivized? Opening a store offering glass figurines is fraught with inherent risks, but the government doesn’t pay to keep it open simply because of what’s being sold inside. Old people and those with chronic diseases get sick more often. The Medicare program offers them coverage because the insurance industry looked at their actuarial tables and said “no dice”. Medicare Advantage is being paid a tribute just to provide coverage to the sickest beneficiaries under the plan to make up for the actuarial loss. Voiding Medicare Part C would end this circular logic once and for all.

As the infomercial says, “But wait! THERE’S MORE!”. When Medicare Part D, which offers coverage for prescription drugs, came into being in the last decade, the vultures circled. Insurance brokers used the selling opportunities for Medicare Part D to sign up traditional Medicare patients to corresponding Medicare Advantage plans, many without their knowledge. The best comparison for this practice was the long-distance “slamming” that went on in the late-’80’s and early-’90’s, where virtuous corporate paragons like MCI/Worldcom would sign up someone for their long distance service without their knowledge, with the first indication that it actually happened being an eye-popping bill to the slammed. Medicare recipients have been lured into Medicare Advantage plans, hypnotized by drug formularies, to the great financial benefit of the insurance companies behind the Advantage plans. The OIG is aware of these behaviors and has issued a few slap-on-the-wrist fines, but the practice continues.

Finally, the so-called “advantage” of Part C plans was that they offered benefits above and beyond what traditional Medicare offered. The most common of these was coverage for yearly preventive exams with the beneficiary’s primary care physician. As of 2011, traditional Medicare offers an annual wellness exam to all beneficiaries as part of the plan, which significantly diminishes the value of Medicare Advantage plans right out of the starting gate.

Medicare Part C has become a worthless boondoggle. It has value only to the insurance companies collecting premiums. It is the worst kind of corporate welfare, redirecting benefit dollars from the sickest of our citizens into the pockets of corporate America. It is a drain on the budget at a time when we can’t afford it. If you want to be serious about deficit reduction ahead of raising the debt ceiling, tackle the waste. Other than the continuing misadventures in Iraq and Afghanistan, I can think of no better example than Medicare Part C.