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Medicare Advantage corporations have rigged the system�Let’s Level the Playing Field

Ed Weisbart MD

Physicians for a National Health Program

National Board Secretary

edweisbart@gmail.com

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PNHP.org/MAReport

“Medicare Advantage is just another example of the endless greed of the insurance industry poisoning American health care, siphoning money from vulnerable patients while delaying and denying necessary and often life-saving treatment.”

Our Payments, Their Profits

2023 PNHP Report

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https://www.kff.org/medicare/issue-brief/higher-and-faster-growing-spending-per-medicare-advantage-enrollee-adds-to-medicares-solvency-and-affordability-challenges/?utm_campaign=KFF-2021-Medicare&utm_medium=email&_hsmi=2&_hsenc=p2ANqtz--NbWFYepJ3_bF07nVVqdBF1nXFKwXuVn9L66uGcqn5hPdz7Tiot2L7eMwnyN0vSl6Bnbb1hZiyrztywKa3saASppissA&utm_content=2&utm_source=hs_email Accessed Oct. 6 2023

“Medicare Advantage has

never generated savings

relative to Traditional Medicare.

In fact, the opposite is true.”

– Kaiser Family Foundation

2021 report

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PNHP’s 2023 report on overpayments to Medicare Advantage

https://pnhp.org/system/assets/uploads/2023/09/MAOverpaymentReport_Final.pdf

Source	Percentage of Overpayment	Amount in $ per year (based on 2022 MA spending)
Favorable Selection	11-14%	$44-56 Billion
Upcoding	5%	$20 Billion
County Benchmarks and Quality Bonuses	6-7%	$24-28 Billion
Subtotal	22-26%	$88-104 Billion
Induced Utilization	9%	$36 Billion
Total (Including Induced Utilization)	31-35%	$124-140 Billion

Source	Percentage of Overpayment	Amount in $ per year (based on 2022 MA spending)
Favorable Selection	11-14%	$44-56 Billion
Upcoding	5%	$20 Billion
County Benchmarks and Quality Bonuses	6-7%	$24-28 Billion
Subtotal	22-26%	$88-104 Billion
Induced Utilization	9%	$36 Billion

Overpaying MA plans as if they removed financial

barriers to care, despite that not being true.

Source	Percentage of Overpayment	Amount in $ per year (based on 2022 MA spending)
Favorable Selection	11-14%	$44-56 Billion
Upcoding	5%	$20 Billion
County Benchmarks and Quality Bonuses	6-7%	$24-28 Billion
Subtotal	22-26%	$88-104 Billion

Source	Percentage of Overpayment	Amount in $ per year (based on 2022 MA spending)
Favorable Selection	11-14%	$44-56 Billion
Upcoding	5%	$20 Billion
County Benchmarks and Quality Bonuses	6-7%	$24-28 Billion

Source	Percentage of Overpayment	Amount in $ per year (based on 2022 MA spending)
Favorable Selection	11-14%	$44-56 Billion
Favorable Selection	11-14%	$44-46 Billion

Source	Percentage of Overpayment	Amount in $ per year (based on 2022 MA spending)
Upcoding	5%	$20 Billion

Source	Percentage of Overpayment	Amount in $ per year (based on 2022 MA spending)

Pre-paid for “average” patients but attracting the healthiest

Adding inactive diagnoses to increase capitation rates

Extra payments without clear value for patients

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PNHP’s 2023 report on overpayments to Medicare Advantage

https://pnhp.org/system/assets/uploads/2023/09/MAOverpaymentReport_Final.pdf

MA corporations

rigged the payment model

PNHP estimates

up to $140 billion per year

$106 billion of that could be used to improve TM

MedPAC estimates

$83 billion

Ending MA subsidies would make

$83-106 billion

available to improve Medicare.

What could we do with those funds?

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When we reclaim the MA subsidies, we can afford to �Match MA’s Benefits in Traditional Medicare

2024 supplemental benefits data updated based on 2022 data from GAO at https://www.gao.gov/assets/d23105527.pdf

Unpublished analysis by Rick Gilfillan MD (former administrator of CMMI)

$ Billions per year

$83

(MedPAC)

$106

(PNHP)

$41B + $31B + $13B = $85B

Leveling the playing field

is budget neutral.

SLOW THIS DOWN A BIT.

So PNHP’s estimate of dozens of economic analyses reveals a range from $88B to a reasonable upper level of $140B. For all the reasons I’ve said earlier, I think the $140B number itself is pretty conservative and likely lowball.

Is $140B a large number in the scope of something as enormous as a federal budget? For me, that question is like asking whether Mars is closer than Venus. Whenever I see numbers this big, it helps to have a context of other numbers.

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To start, a shocking number emerged when we looked at the premiums paid by virtually all seniors and people with disabilities for Medicare Part B. Most pay about $170 a month, and most just have it taken out of their Social Security check. They know they do it, but they usually don’t see it. Nearly invisible.

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If you add up all of those monthly $170 payments by millions of people, that’s $131B across the country every year. That’s less than the money being grifted by MA corporations.��Medicare members all pay that because they’ve been told that’s the only way the federal government can afford to provide a Part B benefit. I believe they would be pretty angry if they realized that MA profiteers are diverting all of those premium dollars being taken out of their Social Security checks every month. Increasing their Social Security checks by $170 a month would be a big win for people on Medicare, and frankly for the politicians who made it happen. One of PNHP’s projects is to make sure this is widely understood. People would be angry about this, if they knew.

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Or, remember all the controversy and fighting over Medicare Part D? The entire federal spend on Part D is less than our estimate of the overpayments to MA.

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Or one of the things we really need to do to improve Traditional Medicare and level the playing field against MA – put in a maximum out-of-pocket cap. Those copays and deductibles can quickly bankrupt people, and there’s no limit to that in TM today. That’s why people have to buy Medigap if they can afford to, or go into MA and risk not getting the healthcare they need. So if we limited the out-of-pocket risk in TM, we’d help people avoid MA. PNHP would of course like to see that out-of-pocket max set at zero, but the Urban Institute modeled out a more modest out-of-pocket maximum of $5,000 per year. That would cost a tiny fraction of what MA drains from us, and would go a long way towards leveling the playing field.

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Finally, we could add the missing benefits that most people really want like dental, hearing, and vision. MA corporations market the heck out of that, people join MA to get those benefits, and then later find out how limited the benefits really are. It turns out that adding dental, hearing, and vision – not just to Medicare but even to all of Medicaid – would cost less than our lowest estimate of the overpayments.

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Three critical policy reforms would enable Traditional Medicare and MA to�Compete on a Level Playing Field

Make better use of taxpayer dollars by improving Medicare.

Redeploying overpayments pays for the improvements

Include pharmacy, dental, hearing, and optical benefits in Traditional Medicare

Stop overpaying

MA insurers

Close the gaps in the list of benefits

Protect people

from financial harm

Limit out-of-pocket expenses in Parts A and B

Medigap would become less important, and less expensive)

These three strategies must be done together