Wednesday, June 28, 2017

Medicare Advantage: “The Average Person Is Probably Appalled by This”

Drugs, Crime, Medicare, Nixon - Nygaard Notes
"Young people may not know that there is a “private option” for seniors to choose when they become old enough to qualify for Medicare. If a senior does not want to participate in the traditional fee-for-service Medicare program, they can choose “Medicare Advantage.” I’ll let the Center for Medicare Advocacy explain what we’re talking about: “Traditional Medicare is administered and run by the federal government. Traditional Medicare includes both Part A which covers hospital care and Part B which covers medical insurance. Part C is an alternative to traditional Medicare that allows private health insurance companies to provide Medicare benefits. The private health plans are known as Medicare Advantage plans.”

The Medicare Advantage program—that is, the partial privatization of Medicare—was sold to the public with the traditional pitch that “increased competition” in the “marketplace” would result in better care for less money. This doesn’t appear to be the case, and just this month reports are coming out that offer details about a fairly huge scam that’s been going on for a very long time. In fact, the original complaint about the scam was filed in 2011, but the record was just unsealed in February of this year, and the details are now coming to light as the Justice Department has decided to sue UnitedHealth on the basis of the recently-revealed claims.

The New York Timesreports in its May 16th edition that “now a whistle-blower, a former well-placed official at UnitedHealth Group, asserts that the big insurance companies have been systematically bilking Medicare Advantage for years, reaping billions of taxpayer dollars from the program by gaming the payment system.”

Adds the Times, “The amounts in question industrywide are mind-boggling: Some analysts estimate improper Medicare Advantage payments at $10 billion a year or more.”

“In the first interview since his allegations were made public, the whistle-blower, Benjamin Poehling of Bloomington, Minn. [just minutes from Nygaard Notes HQ!], described in detail how his company and others like it—in his view—gamed the system: Finance directors like him monitored projects that UnitedHealth had designed to make patients look sicker than they were, by scouring patients’ health records electronically and finding ways to goose the diagnosis codes. The sicker the patient, the more UnitedHealth was paid by Medicare Advantage—and the bigger the bonuses people earned, including Mr. Poehling.”

“There were bonuses when Mr. Poehling and his team hit their revenue targets, Mr. Poehling said, but no bonuses for better health outcomes or for more accurate patients’ charts. ‘You or I or the average person is probably appalled by this,’ Mr. Poehling said. ‘But the scheme here was not about delivering better care to members—the thing you would expect from a health care company. It was about increasing the bottom line.’”

I have no doubt that “the average person” believes that the primary concern of a private health care company is to provide better care. That’s the basis upon which Medicare Advantage—in fact, the entire private health care sector in the United States—is sold to the public. The sales pitch goes like this: “Public” programs are rife with waste, fraud, and abuse, while “private” corporations that follow the laws of the market are run like well-oiled machines.

That second part is correct: There is a well-oiled machine at work. The Times quotes Poehling as saying “They’ve set up a perfect scheme here. It was rigged so there was no way they could lose.” But UnitedHealth, and the others, are profit-generating machines, not health-generating machines. And, well-oiled though they are, whistle-blowers like Benjamin Poehling are throwing sand into the gears.

Buried deep in the article, the Times succinctly sums it up the meaning of all of this: “Mr. Poehling’s allegations, if true, could help explain why insurers are staying in the Medicare Advantage program even as they pull out of the Affordable Care Act exchanges in some states: Medicare Advantage offers a way to get extra money from the federal government.”

Almost all of the reporting about Medicare—about health care policy in general—appears in the Business pages. That’s a powerful message in itself (telling us as it does that health care is a “business”), but it also means that most citizens remain ignorant about these developments, as most people do not regularly read the business press. Despite the long-standing advice from Nygaard Notes to do so.

Who knows where the President stands on the issue, but privatizing Medicare is certainly a high priority for House Speaker Paul Ryan and also for Tom Price, the new head of the Department of Health and Human Services. And the sales pitch, as always, will be the promise that a privatized system will deliver better health care for less money. The Benjamin Poehling whistle-blower suit tells a different story, and it’s up to us to talk about this story and to help make the real goal of privatization—increased profits for Wall Street, not better health care—clear for all to see."

1 comment:

Craig said...

I'm summarizing this history as follows:

From the late 1800s through well into the 1950s,
U.S. physician practices were forming cooperatives and prepaid group practices in which communities paid a monthly amount to receive all the health care they needed. Physicians were paid a salary.
Physicians made the transition from individual practices to group practices as health care became more specialized, to integrate care so various practitioners were on the same page about treatment plans, and economies of scale. Note that there were no insurance companies in this structure, health care was exclusively a relationship between patients and practitioners.
However, every time these self-funded coverage models were formed,(described as a "movement"), it was the AMA, and County
Medical Societies, whose members sat on state licensing Boards, whom would have such practitioners licenses revoked, or prevent hospital admitting privileges, in order to stop this movement.
In short, the AMA and organized medicine so vehemently opposed these physician group practices and later, government intervention, (such as Trumans Universal Health Insurance proposal), that the AMA embraced and launched the health insurance company model, including the establishment of Blue Cross in the 1930s. The AMA was a staunch proponent of individual, fee-for-service practice under the private intervention of insurance companies.
But the physicians whom created prepaid cooperatives and group practices fought back and filed suits against the AMA, as did farmer, consumer, and employer groups whom also started to jointly sponsor the prepaid group practices, (again completely devoid of insurance company involvement). And in every case group practices and communities won on the basis of "restraint of trade", or "antitrust" and received payments, often in the millions.
The article immediately prompted me to revisit
a book on my shelf about the history of Group Health Cooperative in MN, entitled, " An Enduring Mission." Sure enough, Group Health was to be a prepaid group practice under physician control, starting in 1937, but, for the exact reasons I just stated above, and because MN State statutes only permitted it to incorporate as "Group Health Mutual Insurance Company", it did so in 1957. That was a key turning point toward health insurance company intervention, rather than keeping medical coverage community and practitioner based.
A New England J. Of Medicine article from 1985, "HMOs: Origins and Development", corroborates the above point. Before this, in 1932, the AMA issued a statement strongly opposing prepaid group practices, which, again, paved the way for the creation of Blue Cross, that is, the intervention of a health insurance company.
I believe that once practitioners and communities understand, in historically developing terms, that self-funded insurance, i.e. prepaid group practices, was the norm, yet was undermined, that practitioners and communities can take health care back.
Certainly today's advances in health information technology make this feasible, practical and sensible. An self-funded AgCoop for MN farmers' health insurance was just created this year via an ERISA waiver. Getting back to this community and practitioner based approach is a reasonable strategy for proceeding to a single payer system.
I emailed the book's writer who replied to say: "the AMA had over 30 states pass laws "against the corporate practice of medicine." They varied from state to state but most of them were used against medical cooperatives and prepaid physician groups." She also said her article was the most widely read and shared that day and the next, and that few physicians know this history.


Joel Albers
Health Economist
Co-op Care, an initiative of Universal Health Care Action Network of MN > 501(C)(3)