Libby and Andrew Potter usually ignore the avalanche of Medicare Advantage ads that land in the mailbox at their home in Huntsville, Alabama, each fall as Medicare’s open enrollment period begins.
Libby, a retired middle school librarian, has what she considers good health insurance through the state employee health plan. Andrew has insurance through his job as a university professor and plans to join Libby’s insurance when he retires next year.
But this year, a few days before open enrollment began, a letter arrived from UnitedHealthcare, informing the Potters that the region’s largest hospital system would no longer be considered in-network for Libby’s Medicare Advantage plan.
The Potters spent the next couple of weeks worried and unsure what to do. It seemed incredible that 14 area hospitals, including the area’s only Level 1 trauma center, could suddenly become much, much more expensive.
“We were being very careful in how we go up and down stairs,” Libby joked.
Medicare is the federal health insurance program for people over 65 and those with certain disabilities. Medicare Advantage is a version of Medicare run by private insurance companies that contract with the government. These plans typically offer extra benefits, such as dental, vision and prescription drug coverage, that aren’t included with traditional Medicare. More than half of eligible Medicare beneficiaries now get their coverage through private Medicare Advantage plans.
But this year, as Medicare’s open enrollment season kicks off, more than 1 million patients will have to shop for new health insurance. Facing financial and federal regulatory pressures, many insurers are pulling their Medicare Advantage plans from counties and states they’ve deemed unprofitable. Meanwhile, large health systems in states including Alabama, Minnesota and Vermont have cut ties with some Medicare Advantage plans.
It’s a situation that’s alarmed state insurance regulators, who are fielding questions from older adults concerned about their hospitals and doctors withdrawing from their Medicare Advantage plans. Last month, the National Association of Insurance Commissioners sent a letter to the federal Centers for Medicare & Medicaid Services asking for guidance.
“Beneficiaries are faced with either paying the increased out-of-network costs or rescheduling their necessary medical services with another provider who may not have prompt availability,” the insurance commissioners’ group wrote. “A delay in access to medically necessary services is likely to result in harm.”
The Potters eventually learned that Libby’s copayments at the hospital would remain the same whether or not the hospital was in-network for the state educators’ Medicare Advantage plan. But those with other UnitedHealthcare Medicare Advantage plans will have to pay more — or find another plan.
“When a contract leaves the market, that can threaten continuity of care and access to care,” said Dr. Amal Trivedi, professor of health services, policy and practice at the Brown University School of Public Health. “The beneficiary will have to choose a new plan, and each of these plans is going to have a different benefit structure, different provider network, different prior authorization policies and different [prescription drug] formularies.
“The worry is that’s going to affect their out-of-pocket costs, expose them to catastrophic spending, or compromise their access to care.”
How we got here
Insurance giants such as UnitedHealthcare have been aggressively pushing enrollment in their Medicare Advantage plans for the past several years, luring customers with perks and bonuses not available through traditional Medicare. These plans tend to have low or even no monthly premiums and offer extra benefits such as vision and dental coverage, gym memberships, transportation to medical appointments, and even debit cards for medical supplies.
And they’re simple: They provide all of a person’s coverage in one plan, unlike traditional Medicare, under which people must get separate prescription drug coverage and supplemental coverage.
But there are trade-offs. Medicare Advantage plans often have a limited network of hospitals and physicians. And while the premiums are typically low, enrollees could end up paying more in the long run in copays and deductibles if they develop a serious illness.
Medicare Advantage programs also are more likely than traditional Medicare to require prior authorization for hospital stays and other high-cost services. The plans’ prior authorization requirements have prompted increased scrutiny in recent years. A congressional investigation by Democratic Senate staff released this month, for example, found the nation’s largest Medicare Advantage insurers denied a quarter of all prior authorization requests for post-acute care in nursing homes, rehab hospitals and long-term care.
Medicare Advantage is popular among large employers, many of which are shifting their Medicare-age retirees into these plans. And most states offer Medicare Advantage plans to retired state employees; in 13 states, it’s the only option. In some of those 13 states, retirees forfeit their health benefits in perpetuity if they choose coverage under traditional Medicare.
North Carolina Treasurer Dale Folwell, whose office administers the state health plan, said its Medicare Advantage plan is popular.
“What we hear from our retirees, is that they are grateful and happy to have such a great offering as a result of their retirement benefit,” the Republican said. “That’s why nearly 89% of our retirees over age 65 have availed themselves of the [Medicare Advantage] product we offer them.”
Insurers retreat
This year, the handful of insurance giants that dominate the Medicare Advantage market have said they’re scaling back or eliminating plans, to shed members and boost sagging profits. They blame new federal changes to their reimbursements, including a small cut to their base payments, and say patients are using more medical services and benefits than they anticipated.
Though most companies haven’t released data on specific counties where they’re making cuts, plans are reportedly shuttering in states such as Alabama, Massachusetts, Missouri, New Hampshire, New Mexico, Texas and Vermont, affecting hundreds of thousands of older adults. Experts say the reasons why a company might find certain markets unprofitable are complex, but can include demographics, availability of providers and plans that are already in the market.
“[T]he industry broadly is going to be trimming benefits and in some cases significantly, and exiting from certain counties that aren’t profitable,” Aetna’s former President Brian Kane told shareholders on an earnings call in May, before he left his position. Aetna, a subsidiary of CVS Health, is the third-largest Medicare Advantage insurer in the nation. “I think that’s an industry issue and I think it’s clearly an Aetna focus as well.”
Executives at CVS Health, Aetna’s parent company, told shareholders the priority for its Medicare Advantage program would be improving profit margins rather than increasing the number of enrollees.
They have not announced publicly which counties will lose Medicare Advantage plans, but noted their changes could push out 10% of their membership, meaning up to 420,000 patients could be forced to shop for a different plan.
Canceled plans
Even with the decline in the number of plans available next year, “there are still a lot of plans and people have a lot of options,” said Jeannie Fuglesten Biniek, associate director of the Medicare policy program at KFF, a health policy research organization. Next year, the average Medicare beneficiary will have access to 34 Medicare Advantage plans that include drug coverage, down from 36 this year, she said.
But that average masks wide variation across states and even counties in how many plans are available.
“There are a handful of counties, more than in previous years, where all Medicare Advantage plans exited and those look to be predominantly rural counties,” said Fuglesten Biniek. “We’re talking fortyish counties out of 3,000. For those people in those counties, that matters, but overall, it’s a smaller number.”
Experts say there isn’t enough data available yet to know whether the plan exits are concentrated in certain states or counties.
But research has shown that Medicare Advantage plans that enroll higher shares of Black beneficiaries are more likely to be terminated, said Trivedi, of Brown University. Black enrollees have more lower-quality Medicare Advantage plans available in their counties of residence than white enrollees, research shows; terminated contracts tend to have lower-quality ratings.
“The consequence is that contract terminations in Medicare Advantage seem to have a disproportionate effect on Black beneficiaries because their contracts are more likely to be terminated,” Trivedi said.
A disproportionate share of Medicare Advantage beneficiaries are Black, Hispanic, and Asian and Pacific Islander. These patients tend to have lower incomes than white beneficiaries, and may by drawn by the lower upfront costs of Medicare Advantage plans.
“[Insurers] like to frame it as, ‘People are choosing us because we’re awesome,’” said Brandon Novick, program outreach assistant at the Center for Economic and Policy Research. “But it’s because financially it makes more sense in the short term” for people with limited incomes.
Meanwhile, at least 28 health systems in 21 states have stopped accepting some Medicare Advantage plans this year, according to an analysis from Becker’s Hospital Review, an industry publication.
Health systems have cited delayed reimbursements, cumbersome prior authorization requirements and high rates of patient claim denials for their decisions to drop Medicare Advantage plans. Nearly 1 in 5 health systems stopped accepting one or more Medicare Advantage plan s last year, according to a report by the Healthcare Financial Management Association.
‘A tough ask’
For retirees like Libby and Andrew Potter, losing access to trusted doctors and hospitals can mean going longer without needed medical care. Finding a new doctor and getting an appointment can take months, particularly for specialists. And for older adults living in rural areas, losing an in-network hospital or physician can mean choosing between a long drive for care or high out-of-pocket costs.
“There are really important access-to-care issues when providers no longer contract with your Medicare Advantage plan,” Trivedi said.
He said the sheer number of plans and differences in benefits might be overwhelming for older adults.
“To sort through all of that when somebody also may have frailty or cognitive impairment, that’s a really tough ask,” Trivedi said. “I study health policy for a living and it’d be hard for me to sort through 40 different options.”
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