Advantage Plans & Algorithms

WHO DECIDES WHAT CARE YOU NEED?

MEDICARE ADVANTAGE PLANS ARE USING ALGORITHMS, NOT DOCTORS

Barbara Moss

Elder Law of Nashville

There’s a big fight going on in the Medicare insurance world. Once again, we’ve put profit between the patients and the care they need.

History of Medicare and Advantage Plans

In 1982, Congress passed a law that allowed Medicare to contract with insurance companies to offer risk-based health plans. The companies were offered “capitated” payment, or a set rate for each patient enrolled in the health plan. These plans are known as Advantage or Part C Plans.

Advantage plans have prospered because they can offer benefits that appeal to younger, healthier people, like gym memberships. They also sometimes offer eye care, dental care, or prescription drug coverage.

There are drawbacks to Advantage plans. Even at the beginning the Centers for Medicare and Medicaid Services (“CMS”) estimated that it was paying 15% more for people enrolled in Advantage plans than for those enrolled in traditional plans.

In addition, people with Advantage plans have access only to doctors who have a contract with an HMO, or Health Maintenance Organization. In rural counties access to physicians in an HMO or even access to gym memberships, etc., can be more limited.

By 2022 nearly half (48%) of Medicare beneficiaries were enrolled in Advantage plans instead of traditional Medicare.

The Current Controversy

Beginning in March, 2023, we learned that Advantage plans are using algorithms, not doctors, to cut off care to patients on their plans. People with cancer or other devastating diagnoses are left to pay for care on their own or go without it.

An article in a medical journal told the story of Frances Walter, an 85 year old woman in Wisconsin, who in 2019 had a shattered left shoulder and was allergic to pain medicine. Hospital notes showed that her pain was at the top of the scale and that she could not dress herself, go to the bathroom, or push a walker without help.

An algorithm, however, predicted that it would be fine for Ms. Walker to return to her apartment alone 16.6 days after she had entered rehabilitation in a nursing home. It took a year for a federal judge to rule that the algorithm was “at best, speculative” and to award her thousands of dollars in medical expenses. While Ms. Walker was fighting the denial she had to spend her life savings and enroll in Medicaid.

In May, a Senate subcommittee held a hearing on Advantage plans, which included testimony from Gloria Bent, about the denial of care to her husband. She described the “devastating” last ten months of her husband’s life as they received denial after denial from the insurance company.

In the meantime, these insurers have been making a lot of money. In 2021, Medicare Advantage insurers report gross margins about double what insurers in the individual group market reported.

Earlier this year, President Biden proposed a rate cut of 2.3% in 2024. Many insurance companies and their trade group pushed back and lobbied against the decrease. Sens. Elizabeth Warren (D Mass) and Jeff Merkley (D Ore.) wrote a series of letters taking the insurance companies to task for lobbying against the rate cuts while their executives received huge salaries and made large payments to shareholders. The final rate adjustment was a 1.12 % decrease.

What Will be the Final Result on Algorithms?

The federal government has announced that it is moving forward with proposals to crack down on Advantage plan insurers for denying care inappropriately and specifically called out the use of algorithms. Lawmakers on both sides of the aisle have asked some of the insurance companies for documents on how they grant or deny access to care and whether they use artificial intelligence to do so.

A class action has also been filed in California against Cigna, claiming that the company has physician reviewers sign off on bates of denials without opening each patient’s file to conduct a review.

Let’s hope that doctors, and not robots, are returned to the helm of the decision making process for patients who need medical help and are insured under Advantage plans.