During open enrollment, millions of Medicare beneficiaries are in the process of deciding whether to choose a Medicare Advantage plan or stick with traditional Medicare, augmented by a supplemental policy called a Medigap plan. Those Medicare Advantage plans are often slickly packaged and heavily advertised, and data seems to indicate that about half of all Medicare beneficiaries have chosen MA plans for their health insurance.

While an MA plan might be your best choice, we here at the Blog strongly advise you to proceed with caution and shop carefully before you give in to the lure of advertising. Recent news coverage including this article from USA Today paint a picture of major tension between Medicare Advantage companies and large healthcare groups all across the country. Many are either threatening to drop certain MA plans or have already done so, leaving thousands of patients scrambling to find new coverage.

We’ll take a look at this cautionary tale, based on the work of Ken Alltucker, USA Today reporter.

Large Health System to Refuse Some Medicare Advantage Plans

Alltucker begins with a laundry list of conflicts all over the U.S.

“One large health system with hospitals in Virginia and Ohio this year cut off in-network access to consumers enrolled in some Anthem Blue Cross Blue Shield Medicare and Medicaid health insurance plans,” he writes. “Two doctors groups with Scripps Health in San Diego are terminating contracts with private Medicare plans over concerns about payments and routine denials.” The implication: these blow-ups are the tip of the iceberg.

The problems, he says, are financial. “For years, hospitals, doctors and health insurance companies have squared off over how much to pay for medical services,” Alltucker writes. “Insurers negotiate contracts with hospitals and doctors so their customers can get lower, in-network rates at those facilities. These negotiations, usually hammered out behind the scenes, are becoming increasingly tense and public as hospitals seek adequate payments and health insurance companies attempt to check spiraling medical bills.”

“Early Warning Sign” for Medicare Advantage Plans?

The USA Today analysis describes storm clouds on the healthcare horizon. “Experts say these disputes could be an early warning sign of more contract terminations ahead as hospitals and large doctor groups seek lucrative payments to offset inflation, healthcare workers’ double-digit raises and escalating prices for medical supplies,” says the article. “But for patients caught in the middle of these disputes, the results can be devastating.”

Indeed, patients are between a rock and a hard place – either having to switch doctors to pay higher, out-of-network rates. This, says the article, comes “at a time when half of Americans are struggling to afford the rising cost of medical care.”

Medicare Advantage Plans: “Delay, Deny, Don’t Pay”

As an example, San Diego-based Scripps Health terminated Medicare Advantage plan contracts for 2024 with two medical units affecting about 32,000 patients who will either need to switch Medicare plans or find new doctors.

“We’re unfortunately on the vanguard of what I think is going to be a very ugly few years between hospitals and commercial insurance companies,” said Chris Van Gorder, President and CEO, Scripps Health. He told USA Today that the Medicare Advantage exit was a “very difficult decision” but one he had to make due to more than $75 million in annual losses. He tried to negotiate more lucrative reimbursement rates, but those talks fizzled.

While private Medicare plans are funded by government-run Medicare, they’re also profitable because insurers keep a portion of those payments before paying for care, he said. Van Gorder described private Medicare offerings as “delay, deny or don’t pay” plans. “They’re in the business of making money,” he said.

Hospitals Rejecting Medicare Advantage Plans Over Reimbursement

The USA Today report notes that many hospitals are unhappy with Medicare Advantage plans. “While traditional, government-run Medicare allows enrollees to choose from a wide variety of doctors and hospitals,” the article explains, “[Medicare Advantage] plans restrict access through networks and impose some cost-sharing requirements such as copayments or deductibles.”

Alltucker adds, “Hospitals that are rejecting private Medicare plans say they don’t reimburse at the same levels as traditional Medicare, delay or deny care through prior authorizations or impose other limitations.”

Medicare Advantage Plans Have Received Critical Scrutiny

As described in the USA Today article, one reason healthcare providers are more willing to air frustrations about Medicare Advantage is that these plans have been the topic of criticism from think tanks and government watchdog agencies. That’s according to David Lipschutz, associate director and senior policy attorney for the Center for Medicare Advocacy.

“In 2022, a government watchdog report said private Medicare plans routinely rejected claims that should have been paid and denied services found to be medically necessary,” Alltucker states. “These private plans rejected nearly one in five claims allowed under Medicare coverage rules and denied 13 percent of authorizations for medical services that government-run Medicare would have allowed, the U.S. Department of Health and Human Services inspector general investigators found.”

Doctors and hospitals “are more willing to publicly express their frustration,” Lipschutz said, because these private Medicare plans get what “many people would characterize as overpayments.”

Medicare Advantage Plans “Remain Wildly Popular”

The paradox, says USA Today, is that seniors are still flocking to Medicare Advantage plans, in spite of the controversy. “Despite these recent contract disputes, industry officials representing private Medicare plans say they remain wildly popular with seniors,” Alltucker writes.

Naturally, the insurance industry touts these plans, which, as noted above, have now attracted more than half of eligible Americans. This is because they deliver “better services, better access to care and better value,” David Allen, a spokesman for America’s Health Insurance Plans, an industry group representing private health insurers, told USA Today.

Allen added private Medicare plans must maintain adequate networks of doctors and hospitals and notify customers when there are significant changes to these networks. “Medicare Advantage includes robust protections for the people it serves,” Allen said.

Many Medicare Advantage Patients Caught in the Middle

Naturally, as USA Today observes, it’s the policy-holder who gets the shaft. “As health providers such as Scripps Health sever ties with some insurers, consumers are confronted with difficult decisions on how and where to get medical care,” says Alltucker. “Some face the prospect of seeking out-of-network care that might cost more.”

This has left San Diego seniors “scrambling to assess their options,” in the words of one insurance broker. “People are really upset with Scripps.”

Open enrollment, which runs through December 7, does give seniors the opportunity to switch plans. They can choose traditional government-run Medicare or switch to a private Medicare Advantage plan. But, as the article notes, some scenarios may catch enrollees off guard.

Dropping Medicare Advantage for Medigap Might Not be Possible

“Traditional Medicare charges 20 percent coinsurance for medical care with no maximum limit,” Alltucker explains. “People on Medicare can purchase a supplemental insurance plan, called Medigap, which largely covers those extra medical bills. However, people can only enroll in Medigap at certain times such as when they turn 65 and initially sign up for Medicare coverage.”

Translation: after that initial period of guaranteed eligibility, those who might want to switch from Medicare Advantage to traditional Medicare plus a Medigap plan might be rejected. “Insurers can deny coverage for existing health conditions such as diabetes or heart disease or charge consumers more,” says the article. “Only states such as New York and Connecticut that have ‘guaranteed issue’ laws that allow seniors to sign up for Medigap year-round.”

There’s more to this story at the USA Today website.  Meanwhile, we’ll keep an eye on this developing situation.

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(originally reported at www.usatoday.com)