This time of year, those of us on Medicare get to decide which version we want to have for the next year. The emergence in 1998 of Medicare Advantage plans, which offered privatized capitation alternatives to the traditional Medicare fee-for-service system led to many different plans from many different insurance companies.
Medicare Advantage is lucrative for the insurance companies that participate. Profits for Advantage plans are typically twice what insurance companies earn from their regular insurance products ($1,608/covered person for Advantage vs. $779), and so this time of year elders are besieged with advertising by the insurance companies that offer Advantage programs.
Insurance companies make money by paying out less than they take in or by figuring out ways to get more reimbursement. In the Advantage system, this means recruiting healthier elders, or maximizing billing to the federal government. Maximizing billing can be done by ensuring that patients have accurate diagnoses and services are fully billed, or it can be done through looking for ways to exaggerate billable services, sometimes called “upcoding.”
Unfortunately, the Advantage program has gotten a reputation for the latter. In a recent New York Times article (“'The Cash Monster Was Insatiable’ – How Insurers Exploited Medicare for Billions” 10/8/22), an investigation disclosed that of the ten largest Advantage insurers, eight have overbilled the federal government, and five have been accused of fraud. Among the worst is the very popular Unitedhealthcare Group, which has been accused of fraud by both the US government and a whistle-blower, and is guilty of overbilling, according to the Inspector General of the US. The best Advantage plans increase profits by better management of patient care and heavy marketing to recruit healthier elders.
Advantage plans typically have a lower monthly cost than traditional Medicare, which is an inducement when on fixed income. But unlike traditional Medicare, many Advantage plans also offer some dental insurance, eye care, and coverage for over-the-counter medications. As a result, Advantage plans this year will enroll a larger share of the insured than traditional Medicare.
The problem is that the cost isn’t just the monthly premium. The overall cost to the subscriber depends on whether the plan is a PPO or HMO; its deductibles, co-payments, co-insurance, service area coverage, pharmacy and other “doughnut holes,” fees following deductibles, out-of-network coverage, and charges. These terms are esoteric to most patients and clients.
People who have many health needs, or who don’t worry about cost, will likely choose traditional Medicare with a higher cost Medigap insurance. The result is that while you may pay upwards of $350 per month for Medigap and pharmacy benefits on top of your Medicare Part B premium from the federal government, you won’t be paying anything out of pocket.
I spent 42 years running health care organizations, and I am mystified by much of this. I can’t imagine what a person who is not affiliated with the health care system makes of it all. Perhaps they just believe the massive advertisements and go with what a friend or family member says. This probably works for most people, who may not have much need of healthcare, but for those who do, inadequate insurance plans can cause a major drain on finances. Even after all the efforts to increase access to health insurance, 66.5 percent of US bankruptcies are related to medical issues. This is no way to run a healthcare system, but it’s what we have available to us as Americans.
So,what did I do?
I reached out to a state program called SHINE that helps seniors navigate Medicare and I spoke with marketing people from a few insurance companies. I learned a lot. For instance, an HMO plan I was considering would not cover me beyond New England; the plan I currently have does not cover me outside the US; there are copayments for skilled nursing services that are beyond complicated; the pharmaceutical benefit for traditional Medicare is expensive; and the experts I spoke with had gaps in their knowledge of Medicare.
I got past the notion that it’s all about gambling on how healthy you plan to be. (To mis-quote Dirty Harry, “How lucky do I feel, punk!”) I assumed that I’ll likely be relatively healthy, maybe requiring an emergency room visit or two, maybe a CT scan or two, several visits to my primary care doctor at Codman Square Health Center, a few specialty visits, and the likelihood that I’ll still be on the same generic pills. I’d like to get an eyecare exam and dental visit.
I decided that an Advantage plan would give me most of what I need and save me money, as the monthly premium for Advantage plans range from zero to $100/month. If I’m wrong and need hospitalization, the copayments can be $200-300/day, though there is a maximum annual out of pocket expense which ranges from $3,000 to $8,000. My gamble is that I’ll be pretty healthy in 2023 and can change the plan for 2024 if necessary.
I only looked at Blue Cross and Tufts PPO and HMO Advantage plans. Both are ranked very high for quality and performance by Medicare. Both insurances have premiums that range from $0-100 per month, with limits on maximum annual out-of-pocket expenditures and dental and eye care benefits.
I went back and forth between the Blue Cross PPO and the Tufts HMO plans, and initially chose the Tufts plan with a $0 monthly premium and a five-star (the highest) ranking by Medicare. Then I found out that Brigham and Women’s Hospital, where I receive some of my care, is out of network, so, in the interest of preserving greater choice, I went with the four-star Blue Cross PPO Blue Value plan. It has a $75 per month premium, but preserves greater choice. In case I’m sicker than I think/hope I’ll be, I am somewhat comforted that the maximum annual out-of-pocket expenditure is $4,900. Primary care visits have no copayment, specialties have a $40 copayment, emergency room is $90. And if this choice is a mistake, I can change plans for 2024.
It took me weeks to determine my best option. But my assumptions could be completely wrong, which makes this system of providing health care preposterous. None of us can predict what our health will be next year. We all know people who were suddenly diagnosed with a dreaded disease. What we need to preserve our health or deal with disease should determine what health services we get, which is how most developed countries’ health care systems operate. That would be a real Medicare advantage.