Medicare Advantage – whose advantage is it? Midlands Voices: Medicare Advantage – whose advantage is it?

MIDLANDS VOICES

You turn on your TV and hear a litany of monotonous, mind-numbing exaggerations. You go to your mailbox and find it stuffed full of slick marketing materials.

Of course, I'm talking about Medicare Advantage. Just call our toll-free number.

In 1997, after intense lobbying by the private insurance industry, Congress approved a plan allowing older Americans to enroll in private programs, rather than traditional Medicare. Instead of paying for an enrollee's medical expenses directly, Medicare would instead turn over a fixed sum of money to a private insurer to "manage" the patient's care.

Since then, Advantage plans have been marketed non-stop. They've become a gold mine for private insurers, but a multi-billion dollar drain on the Medicare Trust Fund.

Let's start with some basics. Traditional Medicare runs an overhead of 2%. Advantage plans combined overhead and profit checks in at an average 12.5%. That difference represents taxpayer dollars that don't pay for health care, but rather TV ads, marketing and corporate bottom lines. But how can Advantage plans offer all of those "extras" like gym memberships, etc., and still be so profitable? Through the twin processes of "upcoding" and "care management" (which actually means referral and treatment denials, according to some). Both are endemic in the Advantage world.

Upcoding works like this. The money the Medicare Trust Fund pays an insurer is based on the diagnoses listed for an individual patient. The more diagnoses, the greater the payment, whether the patient actually receives any care for those diagnoses or not. Through aggressive data mining, seniors are suddenly assigned diagnoses they've never been treated for, and likely never will. But it adds big bucks to the insurer. How widespread is this? According to the Office of the Inspector General, 4 of the 5 largest Advantage insurers are guilty of overbilling. Three have been charged with outright fraud.

Estimates of how much all of this costs Medicare run upwards to $25 billion per year - money that would otherwise pay for care in traditional Medicare.

But upcoding is only part of the story. Because Advantage plans are basically managed care products (unlike traditional Medicare), patients are only allowed to receive care through insurance-crafted networks - and pay dearly if they go out of network.

Testing, treatments, referrals and even some admissions must be approved by the insurer first, resulting in delays in care and often outright denials. A recent audit found that 14% of these denials were for treatments that Medicare was supposed to cover. And in each instance, the care was ordered by a physician. It was the Advantage insurer who denied it.

According to an investigation by the Kaiser Family Foundation, insurers are now reaping twice the profit from Advantage plans as from other products.

This was never the intention of the Medicare program. And if it continues, Medicare's future is in serious jeopardy. Through clever (and expensive) marketing, nearly half of all Medicare recipients have signed up for Advantage plans. That doesn't change the fact that these plans are bleeding the trust fund dry.

According to news sources, some in Congress are demanding cuts in Medicare and an increase in eligibility age, claiming both are necessary to sustain the program. Fine. But I hope they also realize that there are even greater savings in the $25 billion currently being lost through Advantage overpayments.

If Congress has the courage to act, these dollars could quickly be recouped by moving the program back to the far more efficient traditional Medicare, where overbilling would cease and care placed back in the hands of health care providers. If this were to happen, it would truly be an advantage for all Americans.

Donald R. Frey, M.D., is professor of family medicine at the Creighton University School of Medicine, and the author of "Pay Me Now or Pay Me Later: One Physician's Guided Tour Through an Insane Asylum Called American Health Care." This article reflects the views of the author and are not necessarily those of Creighton University.