Asclepios
A Kiss Goodbye
April 10, 2008 • Volume 8, Issue 15
One of the most persistent problems in Medicare’s Part D prescription drug benefit is the instability in the coverage provided to low-income people with Medicare, most of whom had drug coverage through Medicaid prior to 2006.
This week’s announcement of 2009 payment rates for Medicare private health plans included a parting gift from the Bush administration to the insurance companies that sponsor these plans. The administration decided it would not reduce payment benchmarks to compensate for upcoding—the systematic downgrading of plan enrollees’ health status—in order to boost the subsidies the companies receive from taxpayers.
On Wall Street, the decision prompted a rise in the share prices of insurance companies. In Washington, it is merely the latest in the long line of favors the Bush administration has handed its pals in the insurance industry, the most recent of which are
- threatening to veto legislation that makes modest reductions to the $150 billion in excess subsidies Medicare private health plans will reap over the next 10 years;
- threatening to veto legislation that would allow states to hold Medicare private health plans accountable for the abusive and fraudulent marketing tactics employed by their agents.
For a long time, Medicare private health plans have used a combination of benefit designs (higher home health copayments but free gym membership) and subtler marketing strategies to attract healthier, less costly enrollees. To counteract this practice, payments to plans began to be adjusted according to the health status of the enrollee, with plans receiving more money for enrollees in poor health who require more costly care.
The phase-in of these “risk-adjusted” payments threatened a reduction in subsidies to the insurance companies, so the Bush administration unilaterally adjusted payments to prevent any overall reduction in subsidies (and any savings to taxpayers). It took Congressional action to phase out this boost in subsidy levels. Congress also instructed the administration to adjust payments for upcoding, but the administration has effectively ignored those instructions.
As payment rates to health plans began to reflect the health status of their enrollees, plans began to report (“code”) that their enrollees were in poorer health. It is a truism among health policy analysts that provider practice patterns track reimbursement levels. The more Medicare pays for an MRI, for example, the more people with Medicare seem to need MRIs. As Medicare begins to pay health plans more for sicker enrollees, health plan enrollees get sicker. For other providers receiving payments that are adjusted according to health status, such as home health agencies, the administration has reduced payments to compensate for such upcoding. Insurance companies, however, get a free pass. Once again, the Bush administration has proven its generosity—with your money.
Medical Record
“To determine the health status of patients enrolled in private plans, the risk adjustment process uses the diagnostic codes that hospitals and physicians assign to their patients. The phenomenon of ‘upcoding,’ or ‘coding creep’—whereby Medicare beneficiaries may be unintentionally or intentionally assigned diagnostic codes over time that make them appear less healthy than they actually are—could enable private plans to continue being overpaid for healthier Medicare beneficiaries whom they serve, despite the phase-out of the hold harmless payments” (”Options Exist for Offsetting the Cost of Extending Health Coverage to More Low-Income Children,”Center on Budget and Policy Priorities, April 2007).
“The Centers for Medicare and Medicaid Services have reported that as risk adjustment has been fully implemented between 2004 and 2006, the ‘risk scores’ (a measure of health status, with a higher score meaning a sicker beneficiary) of enrollees in private plans have risen more rapidly than the risk scores of enrollees in traditional Medicare. Unfortunately, this suggests that upcoding is rendering an already imperfect risk adjustment system even less able to adjust for differences in health status between enrollees in private plans and those in traditional Medicare” (“Congress to Consider Repeal of Medicare Demonstration Project Designed to Promote Privatization, Rather than Yield Valid Results,” Center on Budget and Policy Priorities, July 2007).
“UBS analyst Justin Lake said a risk score change could have slashed industry revenues by $640 million. ‘The lack of adjustment in 2009 is clearly a positive from plan perspectives, although we continue to believe it remains a meaningful risk long-term,’ Lake wrote in a note to investors. Health insurers steadily climbed in midday trading” (“Health Insurer Shares Rise After Medicare Delays Payment Adjustment Until 2010,” Associated Press, April 2008).
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Medicare Part D Appeals Help for Advocates Is Here!
MRC’s new Medicare Part D Appeals: An advocate’s manual to navigating the Medicare private drug plan appeals process offers an easy-to-understand, comprehensive overview of the entire appeals process, including real-life case examples, a glossary of important appeals terms, a sample protocol for advocates, and links to important resources.
Register for a FREE copy of this great resource.
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Medicare Part D Monitoring Project
The Medicare Rights Center (MRC) would like to hear about your experience, or that of someone you know, enrolled in a private health plan. With information about what the issues are with Medicare Advantage plans, we will be able to demand that those problems be fixed.
Submit your story at www.medicarerights.org/partdstories.html.
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The Louder Our Voice, the Stronger Our Message
Asclepios—named for the Greek and Roman god of medicine who, acclaimed for his healing abilities, was at one point the most worshipped god in Greece—is a weekly e-newsletter designed to keep you up-to-date with Medicare program and policy issues, and advance advocacy strategies to address them. Please help build awareness of key Medicare consumer issues by forwarding this action alert to your friends and encouraging them to subscribe today.
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