Medicare Advantage plans: Beware of the hype

I missed writing about Medicare Advantage plans during open enrollment from Oct. 15 to Dec. 7 when you can join, switch, or drop a plan. I always know when it occurs: my mail box and email are flooded with ads and TV and social media, too. I also get phone calls about the plans.

The TV ads this year featured two African American women getting really excited about zero premiums. This is a deception, as I’ll get to later.

There also was a guy sitting at a table at my local Safeway. Apparently, he had a deal with the Safeway corporate office to sell Medicare Advantage plans inside the store.

I missed writing about the open enrollment period because I was busy getting ready for an early Christmas celebration with my daughters, then a Christmas trip to California.

However, I’m writing about my yearly Medicare Advantage tips now because from Jan. 1 – March 31 each year, if you’re enrolled in a Medicare Advantage plan, you can switch to a different one or switch to Original Medicare – and join a separate Medicare drug plan – during this time. Note: You can only switch plans once during this period.

So, if your Medicare Advantage plan isn’t working for you, you can switch to another one or switch to Original Medicare until March 31.

Why am I skeptical about Medicare Advantage plans?

It’s because of the hype. If a medical plan is so great for older adults, why does it need yearly, constant, expensive, and annoying advertising?

What is Medicare Advantage?

With Medicare Advantage, instead of getting health care through Medicare, private organizations provide the service. It can be offered through an insurance company, an HMO, or a preferred provider organization, which is a health plan with doctors, hospitals, and other providers in a network.

Medicare Advantage plans are paid a fixed amount per enrollee to provide benefits covered by traditional Medicare. The Centers for Medicare and Medicaid Services or CMS, which oversees the Medicare program, can pay more to Medicare Advantage plans based on demographic information and the health status of each plan beneficiary.

What are the disadvantages of a Medicare Advantage plan?

These are the general problems with Medicare Advantage that I’ve written about for years:

• Comparing insurance policies is difficult. Unless seniors are careful, they could end up paying more money for fewer services.

• Seniors may have to change doctors and hospitals.

• Some Medicare Advantage plans don’t offer prescription drug benefits.

• Seniors may have to wait for the next enrollment period to transfer out of the plan if they don’t like it.

• Many members of Congress think giving private companies extra money to manage Medicare recipients’ benefits is too expensive. As a result, Medicare Advantage plans could be changed significantly or eliminated.

• Insurance companies may use high-pressure sales to get seniors to switch to Medicare Advantage plans.

What are other serious problems with Medicare Advantage plans?

Delayed or denied services

A review of case files by the Office of the Inspector General or OIG determined that Medicare Advantage Organizations or MAOs sometimes delayed or denied Medicare Advantage beneficiaries’ access to services, even though the requests met Medicare coverage rules. The OIG is an oversight agency within the U.S. Department of Health and Human Services.

MAOs also denied payments to providers for some services that met both Medicare coverage rules and MAO billing rules, according to OIG’s April 2022 report.

Examples include denying advanced imaging services, for example, MRIs, and stays in post-acute facilities, for example, inpatient rehabilitation facilities.

Fraudulent coding

For years, the federal government has been cracking down on fraudulent coding in Medicare Advantage plans. These inaccurate codes cause inflated payments to be made to the plans.

In 2021, Sutter Health, a California-based health care services provider, and several affiliated entities agreed to pay $90 million to resolve allegations by the U.S. Department of Justice that Sutter Health violated federal law by submitting inaccurate information about the health status of beneficiaries enrolled in Medicare Advantage plans.

Also in 2021, Kaiser Foundation Health Plan of Washington, formerly Group Health Cooperative, paid $6.3 million to resolve allegations that it submitted invalid diagnoses and received inflated payments as a result.

The Justice Department has also investigated Anthem, Humana, UnitedHealth, and others for faulty Medicare Advantage coding.

Is Medicare Advantage producing saving for the Medicare program?

The Medicare Advantage program was supposed to reduce Medicare spending. Since its beginning in 1985, payments to private plans were set at 95 percent of fee-for-service Medicare payments under traditional Medicare.

The private Medicare Advantage plans have never produced savings for Medicare, due to policies governing payment rates to the plans that the Medicare Payment Advisory Commission or MedPAC has found to be deeply flawed. MedPAC is independent congressional agency that advises Congress on issues affecting the Medicare program.

Adding false diagnoses to patient records to increase payments to Medicare Advantage plans undermines the goal of plans competing to improve quality and reduce health care costs, MedPAC said.

What MedPAC calls “excess payments” increased to $12 billion in 2020 out of total program costs of $350 billion and are estimated to be more than $16 billion in 2023.

When Medicare Advantage plans submit unsupported diagnosis codes to increase their profits, it makes their patients appear sicker than they actually were, according to the Justice Department.

This may cause problems for consumers who may be given unneeded or wrong medications and treatments based on faulty diagnosis codes.

How popular are Medicare Advantage plans?

Enrollment in Advantage plans has more than doubled over the last decade, and half of Medicare beneficiaries are expected to choose a private insurer over the traditional government program in the next few years.

How do you get the Medicare coverage that’s right for you?

Even though the ads hype that you can get Silver Sneakers, eye glasses and dental coverage, zero premiums, and money back on your Medicare payments, be careful about selecting a Medicare Advantage plan. These seeming perks can be a trick to get you to sign up.

Clark Howard, personal finance writer, thinks Medicare Advantage plans stink. His reasoning is as follows:

My objections are simple. Once you are in an Advantage plan, it’s difficult to switch to regular Medicare. After your first 11 months, in most states, you can’t easily buy a supplement without passing a medical evaluation. And you likely will have trouble switching to a competitor’s Advantage plan if yours turns out to be a bad choice.

In other words, you could end up being a prisoner of the Advantage plan you pick at 65 for the rest of your life — even if it turns out to be crummy or becomes rotten over time. In my opinion, this is a fatal flaw of Medicare Advantage plans. You could also end up with a serious illness, and the choice of doctors and facilities you are allowed under your particular Advantage plan could be the difference between life and death. With traditional Medicare, you have many more options to seek out the best care, best specialists and best hospitals for your illness.

Yes, traditional Medicare is more difficult to understand and buy upfront. Your premiums may be higher. But you are your own boss of your healthcare. With Medicare Advantage, understand that the insurer makes money by limiting your care and your options.

That lower cost could kill you.

Whether you decide on selecting a Medicare Advantage plan or a medigap policy to supplement Original Medicare, compare plans carefully. Making a mistake could be costly for your health and finances. You can get help from the Insurance Commissioner’s Office in your state. Each state has a State Health Insurance Assistance Program or SHIP. Check this list to find the website of the insurance commissioner in your state.