We noted in a prior posting that there are concerns about the Medicare Advantage program at the national level - and concerning UC at a more micro level.* Medicare Advantage plans are basically a privatized version of Medicare. Although proponents of "Medicare for All" seem to think that Medicare is a single-payer government-run insurance entity, the reality is more complicated. Medicare-eligible recipients can choose Medicare Advantage plans run by private insurance companies which then are paid by the federal government to deliver health insurance.
Those recipients who choose Medicare Advantage plans are supposed to receive Medicare-equivalent benefits, often with some "perks" thrown in, e.g., gym membership, to attract clients. Over 40% of the Medicare-eligible population in fact receive private Medicare Advantage and the proportion is growing. UC began offering a Medicare Advantage plan to its retirees a few years ago. The plan is the cheapest option. Apart from directly saving UC money, it also effectively raises the out-of-pocket cost of other traditional Medicare wrap-around (supplemental) plans for those retirees who chose the traditional option.
The question of why the Medicare Advantage plans are so cheap, and why private insurers compete to recruit Medicare-eligible participants through advertising, etc., has been raised. One might think that insuring an elderly population would be costly and unattractive. But apparently, one would be wrong to think so. The federal government provides insurers who compete in the Medicare Advantage market with risk-adjusted premiums. If premiums are high enough, even high-risk participants can be attractive. There if been suspicions that in fact the federal government has been over-paying (and/or that insurers have been exaggerating risk to obtain attractive premiums).
From Healthcare Dive:
OIG flags potential $5B overpaid to Medicare Advantage plans
Sept. 22, 2021, Samantha Liss
Dive Brief:
A federal watchdog is again raising concerns about risk-adjusted payments in the Medicare Advantage program and whether insurers are gaming the system to make more money.
The sicker a Medicare Advantage beneficiary, the more money an insurer will receive to take care of that member. The report highlights how some beneficiaries may appear sicker as a result of insurers conducting certain assessments, outside of a physician's office, to add a diagnosis to accrue the higher risk-adjusted payment.
In an analysis, the HHS Office of Inspector General found that 20 of the 162 MA organizations were responsible for 54% of the risk-adjusted payments from these assessments, chart reviews and health risk assessments, resulting in $5 billion in possible inappropriate payments.
Dive Insight:
The federal government frequently alleges cases of overpayment to MA plans, which now cover about 42% of people in Medicare. It April, it said Humana had overcharged the program by nearly $200 million for submitting documentation claiming patients were sicker than they were. A month later, it alleged Anthem received $3.4 million extra because it wrongly classified patients as high-risk. Then in August, Aetna disclosed in a filing with the Securities and Exchange Commission that HHS OIG was targeting their MA plans amid recent whistleblower lawsuits. The findings also come amid outside research showing that MA members cost the government $321 more per person than those enrolled in the traditional Medicare program.
HHS OIG is calling for greater oversight amid the findings from its latest analysis of risk-adjusted payments in MA. The report urges CMS to conduct greater oversight of the 20 insurers, which were not named in the report, to determine the appropriateness of those payments. It also calls for periodic monitoring of insurers and whether they received a disproportionate amount of risk-adjusted payments. As part of its report, HHS OIG analyzed whether certain insurers were using chart reviews and health risk assessments to generate higher payments at a greater rate than their peers. The watchdog found that most insurers had a proportional amount of risk-adjusted payments based on their size. However, that was not true for all them. About 12%, or 20 insurers, had payments that were disproportionally higher than their size.
Those 20 insurers generated more than half of the $9.2 billion in risk-adjusted payments in 2017 but were responsible for less than a third of MA members. The payments were generated by chart reviews and health risk assessments "that were the sole source of diagnoses in the encounter data," according to the report. But one unnamed company stood out even more, OIG said. The company had 40% of risk-adjusted payments from the assessments but enrolled only 22% of MA members.
The Kaiser Family Foundation estimates UnitedHealthcare controlled 25% of MA enrollment in 2017, followed by Humana (17%) and BCBS plans (16%).
Source: https://www.healthcaredive.com/news/medicare-advantage-organizations-drove-more-than-half-of-risk-/607001/.
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The concern for UC is that if the federal government begins cracking down - lowering its payments to insurers - Medicare Advantage insurers will have to jack up their premiums to customers including UC. In the meantime, however, the cheapness of the Medicare Advantage option may drive recipients out of the traditional plans and into the Medicare Advantage plans, ending choice for participants and, in the end, leading to higher costs for participants.
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*http://uclafacultyassociation.blogspot.com/2021/08/is-medicare-and-ultimately-uc.html.
