When my beloved grandfather got angry, and it was a rare thing indeed, he would say, “I’ve got my Irish up!” That was the warning to stop whatever I was doing and pay close attention. Well, I’ve got my Irish up, and I hope you will stop whatever you are doing and pay attention to this blog.
Medicare is one of the most efficient and effective healthcare insurance plans for Americans 65 and older or those with disabilities and has been since 1965. Sadly, many folks who are eligible for Medicare don’t understand how it works and have mistaken ideas about benefits and costs. Worse, too many are seduced by Medicare Advantage plan ads that make all kinds of promises, but turn out to be just another bait and switch.
That’s bad enough, but what has got my Irish up is what is on the horizon. There is a proposal in the wings right now that would move ALL Medicare beneficiaries off of traditional Medicare and put them into Medicare Advantage plans WITHOUT YOUR KNOWLEDGE, CONSENT, OR INPUT! It is known as Medicare Direct Contracting (DCE). As proposed, this would allow virtually any type of company to apply to be a DCE, including commercial insurers, venture capital investors, and even dialysis centers.
It’s All About Profits!
Let me be blunt. No matter which private insurance company offers it, healthcare coverage is not about making sure you get well. It is all about profits!
When it first started, Medicare was a straightforward insurance program that covered hospital stays, surgical procedures, and the first 100 days of a stay in a nursing home. Original Medicare included Part A (hospital stuff) and Part B (outpatient stuff like seeing your doctor for regular check-ups). Medicare paid 80% of the bill and you, the beneficiary, paid a 20% co-pay. Fees for these services were determined by the Centers for Medicare and Medicaid with input from professional groups, and ultimately approved by Congress.
Private insurance companies like Blue Cross saw a chance to make some money and started selling “supplemental plans” to cover that 20% co-pay. Depending on your plan, they also included extras that Medicare didn’t cover under Part B. You paid extra for this “supplemental” plan.
All of this continued to evolve between 1965 and 2007.
Medicare Part D
Turns out there is a lot of money to be made in prescription drugs. The era of big Pharma took off in the 1980’s and all of us have benefited from new discoveries. But, because this area of health care WASN’T regulated, pharmaceutical companies followed solid free-market principles and began to charge lots of money for their product.
Medicare only covered limited kinds of drugs. Many of the newer ones weren’t covered at all, leaving people to have to pay out of pocket. Folks on fixed incomes with chronic illnesses felt the pinch. Many ended up having to decide between buying food or buying medicine. The government recognized the unfairness of this (with the assistance of advocacy groups like AARP!) and established Medicare Part D to assist in shouldering the cost of medication.
What About Medicare Part C?
Glad you asked – Medicare Part C was added in 1997. Don’t know if you remember back then, but there was a lot of talk about how costs for medical care were rising and if we weren’t careful, paying for all those old people who were using too many services was going to bankrupt the system!
The Clinton Administration made healthcare reform a priority in 1994 to address inequities in the system, focusing on lowering costs and expanding eligibility. Opposition was fierce and came from many different sources including the insurance industry, conservative members of Congress, and organized healthcare providers like the AMA.
The ultimate result was a cobbled-together agreement giving private insurance plans free reign to sell their product to Medicare-eligible beneficiaries. This product was not a fee-for-service plan, rather it was a managed health care plan designed to be more efficient and save money.
But Wait There’s More!
What beneficiaries were offered sounded FABULOUS! Low monthly premiums, dental and vision benefits, prescription drug coverage, doctor’s visits and other tidbits. And it turned out to be a real moneymaker for insurance companies! According to the Kaiser Family Foundation, more than four in ten (42%) Medicare beneficiaries – 26.4 million people out of 62.7 million Medicare beneficiaries overall – are enrolled in Medicare Advantage plans.
What’s the Catch?
Healthcare in the United States is not guaranteed by the Constitution. It is not a right, even though many Americans believe it to be (or believe it should be). Insurance coverage that so many of us take for granted, wasn’t even a thing back in the 1930s. It wasn’t until after World War II that unions and corporations negotiated healthcare benefits for workers. That we have so many different types of healthcare insurance is a result of living longer, healthier lives, reducing deaths by accident, having providers demand and obtain assurances they will be paid for their services, and having an economy that gives people (and companies) sufficient incomes to pay.
Insurance is a business that focuses on risk management. Insurance companies make money selling insurance policies to people who have a low risk of using their benefits or needing to have benefits paid out.
Medicare Part C is making a lot of money for Health Care Insurance Giants BECAUSE the people buying the plans are healthy and do not need to use those benefits. When they do need coverage, they will find services are limited (capped), restricted (only paid for if on the formulary) and provided by a panel of providers who contract with the insurance company, not the patient.
Original Medicare (Parts A and B) is expensive because it provides coverage for those who are NEEDING TO USE THEIR BENEFITS and because the fees negotiated by providers, hospitals, and suppliers are not capped. They are based on “medical necessity”.
So What? . . . Doesn’t Affect Me!
This brings me back to the beginning. I will be clear here. I recommend that you NOT purchase a Medicare Advantage plan. Yes, I understand that there are lower monthly costs, but you get what you pay for. But those of us who have original Medicare need to pay attention, too! We are all at risk for having our healthcare coverage choices taken away. Under the current Direct Contracting initiative , we will lose our power to choose our healthcare coverage altogether!
Last week, Dr. Susan Rogers testified before the Senate Finance Committee, Subcommittee on Fiscal Responsibility and Economic Growth asking that Congress not go forward with Direct Contracting and give away hard-earned health coverage for elders in America.
Dr. Rogers is the current President, Physicians for a National Health Program. In her testimony, she said,
This privatization of Medicare began when President Nixon enacted the HMO Act in 1973, but exploded in 2003 with the creation of Medicare Advantage, the version of Medicare run by commercial insurers. The common thread among these privatization experiments is the theory that inserting a middleman between Medicare and health providers — and between providers and our patients — will somehow save money or improve care. It has failed at both. In fact, researchers estimate that Medicare overpaid Medicare Advantage insurers by more than $106 billion from 2010 through 2019. That’s money that could have been spent on seniors’ care.
Despite decades of failure, the Center for Medicare and Medicaid Services launched a new model of Medicare privatization, called Direct Contracting. Instead of paying providers directly, Medicare pays third-party middlemen called Direct Contracting Entities, or DCEs, a set amount to “manage” seniors’ health. DCEs are then allowed to pocket what they don’t pay for in health services, a dangerous financial incentive to restrict and ration seniors’ care.
If you haven’t yet heard of Direct Contracting, that’s by design. It was created in 2019 by the CMS Innovation Center, which is authorized to conduct payment experiments and scale them up to all of Medicare without input from Congress. Virtually any type of company can apply to be a DCE, including commercial insurers, venture capital investors, and even dialysis centers.
Seniors in Traditional Medicare are automatically assigned to a DCE, without their full knowledge or understanding, if their primary care provider is affiliated with a DCE. Then, the only way for a senior to opt out is to change primary care physicians, a bait-and-switch for Traditional Medicare beneficiaries. Forcing seniors to switch providers is a terrible burden, and undermines the importance of the patient-provider relationship.
This new model assumes that DCE middlemen will somehow lower costs and improve coordination of care. But former CMS and CMMI officials estimate that DCEs may spend as little as 60% of their Medicare payments on patient care, keeping the other 40% as profit and overhead. How is this an improvement on Traditional Medicare, which spends 98% of its funds on care? As for coordination, primary care physicians like me understand that it is our responsibility to make care decisions in partnership with our patients, not answer to third-party investors.
From a Provider’s Perspective
I spent my entire professional life as a Medicare provider. In that role, I could only charge what was allowed in the Medicare Physician Fee Schedule (MPFS). Those fees were arrived at using three components: a) professional component (i.e., work as expressed in the amount of time, technical skill, physical effort, stress, and judgment for the procedure required of physicians and certain other practitioners); (b) technical component (i.e., the practice expense expressed in overhead costs such as assistant’s time, equipment, supplies); and (c) professional liability component.
The MPFS is calculated each year and has adjustments made for geographic location, service location (i.e., in a facility or outpatient), and an annual conversion factor. I had no say in how much I would receive or how my rates were calculated. Fees are reviewed and approved every year by Congress.
I also was contracted with several private insurance companies. Fees paid to me by them were always less than the Medicare rate. The insurance company was only legally obligated to its investors and shareholders, so they could set payments for providers at any rate they chose, set premiums for policy holders at any rate they chose, and pocket the profits.
I chose to remain a Medicare provider because it was the better plan for the majority of my patients. I counseled many not to purchase Medicare Advantage plans only to have to spend a lot of time helping them transferring their care to new providers or locating specialty providers far away who would take their new insurance. The stress of this was enormous, and the savings negligable.
What You Can (and Should) Do About This
I don’t expect readers to become policy wonks and follow the nitty-gritty of these and other initiatives to undermine Medicare. But you can (and should) make a note and at least send an email, text, or old-fashioned letter to your elected representative letting him or her know that you would like to be the one who decides who you see for medical care, where you can go if you need to be hospitalized or need surgery, and where you can purchase your medications.
For those of you who are healthy, I understand why you don’t want to pay a lot of money for your insurance coverage. But please, make sure you switch policies BEFORE you get sick. And if you have a crystal ball that predicts that with any accuracy, make sure you get a patent on it, because it will make you rich.
Dr. Rogers said it best, “Medicare was designed as a lifeline for America’s seniors and those with disabilities, NOT a playground for Wall Street investors.”
Let’s keep it that way!