Let’s talk Medicare Advantage – NC Health News

By Thomas Goldsmith

Privately run Medicare Advantage insurers attract more enrollees each year with prominent advertising and enticing perks. But the program, with about 1 million North Carolina enrollees, faces challenges on specifics from federal regulators, the courts and Congress about the profits it makes, its consumer advertising and some of its internal practices. 

As federal regulators are taking aim at aspects of Medicare Advantage, such as allegedly fraudulent billing practices, a report from the U.S. Senate Finance Committee is one of the sources that lists complaints calling its marketing misleading. Those problems have been seen in North Carolina, as well as across the country.

“The North Carolina Department of Insurance shared that its Seniors’ Health Insurance Information Program (SHIIP) had received a number of complaints involving dually eligible beneficiaries who had their enrollment changed to a different [Medicare Advantage] plan even though neither the beneficiary, family member, or power of attorney had been engaged in an enrollment discussion with the plan or an agent,” the August 2022 report reads.

(Dually eligible beneficiaries are eligible for Medicaid, the health insurance that covers low-income people, and for Medicare, which is mostly for people older than 65.) 

Now, federal regulators are proposing new rules to curb such deceptive practices. Regulators say the rules are necessary to make sure potential Medicare Advantage customers can receive accurate information about the plans and their differences from traditional Medicare.

In addition to restricting the advertising that draws millions of enrollees to Medicare Advantage, the federal Centers of Medicare and Medicaid Services is working with the federal Department of Justice to crack down on billing practices that they contend can unnecessarily increase company profits by billions annually.

Recently announced moves by CMS to improve the accuracy of billing by Medicare Advantage companies won praise late last week in a joint letter from a group of more than three dozen leading figures from public health, public policy, health care and clinical care.

“CMS has taken a strong and appropriate approach to improving the accuracy of payment in the MA Program,” said Dr. Don Berwick, a former administrator of the Centers for Medicare and Medicaid Services who signed the letter. 

Additional signers included faculty from Yale, Harvard, Stanford, Southern California, Pennsylvania and New York universities, as well as former officials of CMS, the Center for Medicare and Medicaid Innovation and the Medicare Payment Advisory Commission, known as MedPac, which advises Congress on Medicare’s performance.

Changes in the way the government pays Medicare Advantage companies are needed, federal regulators said, to make sure the massive Medicare benefit maintains financial stability in years to come. 

But Medicare Advantage plans have been a cash cow for many insurers, and they’re pushing back.

Feds: Overbilling pays for popular perks

The federal government has sued insurance giant Cigna over its Medicare Advantage plans, including the North Carolina subsidiary as a named defendant. The government’s case alleges that the perks that draw consumers into the program — gym memberships, dental coverage and the like — are paid for by sometimes fraudulent assessments of beneficiaries’ diagnoses during home visits by medical providers.

The federal Department of Justice announced this month that prosecutors won more than $1.7 billion during the last fiscal year with similar cases based on the same statute that’s invoked in the Cigna lawsuit. 

DOJ cited its recent intervention in the CIGNA case as well as continuing suits against UnitedHealth Group, Independent Health Corporation, Elevance Health (formerly Anthem) and the Kaiser Permanente consortium.

Part of the government’s argument rests on the case that these Medicare Advantage companies turned in information that they knew to be false about the health status of enrollees, or didn’t correct reports that were false — all of this to fatten reimbursements, the justice department said in a news release. 

In addition to the Justice Department’s case, regulators at the Centers for Medicare and Medicaid Services are also flagging widely reported misleading and aggressive marketing of Medicare Advantage. 

“States reported a variety of other issues around [Medicare Advantage] plan marketing, including marketing to beneficiaries with cognitive impairments,” the Senate Finance Committee report said. “For instance, five states shared examples where brokers targeted beneficiaries with a cognitive impairment.”

The agency is also targeting prior authorization, the process by which enrollees require a sign-off before receiving certain treatments or medications. Regulators want to make sure that the process moves more quickly, is easier to understand and can (in some cases) be completed online.

New: CMS claws back overpayments

The Centers for Medicare and Medicaid Services published proposed regulations on Feb. 1 that would allow the U.S. Treasury to receive payback from Medicare Advantage insurers based on percentages of overcharges that showed up in a sampling of federal audits. 

In a crucial change, the government can now “claw back” payments from companies, not just when overcharges are found in audits, but also when leaders should reasonably have known that payments were improper.

Such audits have come infrequently, but when they do, they can find significant discrepancies. 

The most recent federal audits of Medicare Advantage companies took place in 2011–13, according to records obtained by Kaiser Health News through a Freedom of Information Act lawsuit.  

These audits had a broad mix of excess payments. For example: 

• Cigna made excessive claims of $1,737,505 in reviews of 1,809 patient records, for an average of $960 based on 201 enrollees. The audit did not specify the locations of the patients.
• A 2013 audit of Blue Cross and Blue Shield of North Carolina showed overpayments of $337,112 for covering 201 patients, with a resulting per-enrollee excess of $1,677. 

Though some of the audit findings are as much as a decade old, the audits’ findings of excess payments mark new efforts by federal officials to make Medicare Advantage books balance on behalf of taxpayers. The Centers for Medicare and Medicaid Services said in its announcement of the new regulations that it would examine records going back to 2018 for overpayments.

A different government agency, the independent advisory body Medicare Payment Advisory Commission, noted that payments for Medicare Advantage add-ons, such as some dental and vision care, rose by more than half between 2019 and 2022, amounting to “an indirect subsidy to offer expanded benefits for MA enrollees.”

With billions at stake, insurers push back

Insurance companies, lobbyists and congressional supporters had been spreading the word that the new regulations could dig into corporate profits. “Proposed Rule Is Fatally Flawed and Should Be Withdrawn” read a heading on a letter to the Centers for Medicare and Medicaid Services from the industry group America’s Health Insurance Plans. 

“My colleagues and I remain committed to working with CMS to ensure the Medicare Advantage program is protected from severe payment cuts, which lead to higher costs and premiums and reductions in vital benefits for its beneficiaries,” said Arizona Sen. Kyrsten Sinema in an October video addressed to the Better Medicare Alliance.

On the provider side, Margaret A. Murray, CEO of the Association for Community Affiliated Plans, a national trade organization for not-for-profit health insurance plans, responded to the new regulations last week, including her concerns:

• That insurers of low-income clients might be disproportionately affected and 
• That new audits would look at pandemic years 2020 and 2021, when health care practitioners focused more on serving enrollees than on documentation.

“Looking forward, we are hopeful that CMS will continue to adjust its … methodology to assure that these audits not only result in accurate payments but also are distributed equitably — and in a way that avoids penalizing health plans for choosing to serve patients with limited resources or high levels of health need,” Murray said.

The Medicare Board of Trustees has estimated that the Hospital Insurance Trust Fund is due to run out by 2028. The fund backstops Medicare’s ability to cover payments to hospitals to cover beneficiaries’ care in years when the program spends more than it takes in.  

Even with this looming deadline, industry has been able to slow down changes. The clout of insurance company lawyers, lobbyists and public relations campaigns have slowed — or stopped — proposed reforms of the system for a decade or more.