Why so little news about Medicare Advantage plan rate increases?

The following is a guest blog post by Trudy Lieberman, who has specialized in health policy and health care reform news coverage throughout much of her career.

Sellers of Medicare Advantage (MA) plans couldn’t have asked for a better result in their latest quest for higher government payments. In February, Medicare announced plans to hit these companies with a proposed 0.95 percent cut in payments. And yet by April — thanks to a concerted lobbying campaign by insurers and their allies — these companies instead were celebrating a 1.25 percent increase.

Healthcare and Money

This is the third time in the last two years that a proposed cut has turned into an increase, even though President Obama came to office vowing to cut the government’s excessive payments to these plans. (It was costing Medicare more to provide benefits under these Advantage arrangements than under the traditional program.) What’s more, there was almost no media scrutiny of the insurers’ campaign for payment increases to get in the way. Our Internet searches turned up almost no coverage of the extensive lobbying that went on or what the changes will mean for people on Medicare.

It’s worth repeating: There was virtually no press oversight of an important health policy issue that affects millions of Americans. Contrast this with the gobs of coverage drug companies get whenever they have a new drug to sell.

Why the difference? The fact that health policy is wonky stuff and new drugs offer hope may be one explanation. Another may be a belief—mistaken in my view—that the public is not interested. Every time I write about the government’s inability to negotiate the prices of drugs it pays for under the Medicare program, readers always ask why. The why behind the Medicare Advantage rate increases is a story about the power of special interest lobbying, unkept presidential promises, and what Medicare will look like in the future. That’s more than enough to qualify as legitimate health journalism in my book.

There were plenty of news releases from America’s Health Insurance Plans (AHIP), the insurers’ trade group, calling attention to the battle over payments. And a newcomer lobbying outfit, the Better Medicare Alliance, also got into the act with a slew of media announcements extolling the benefits of MA plans and calling for a reversal of proposed cuts. And yet the media by and large ignored the story. One exception was a Washington Post op-ed which told of the debut of the Better Medicare Alliance and reported that as of mid-March, the group “has elicited the obligatory letter from 239 members of Congress, from both parties, telling HHS of their ‘serious concern’ over the ‘significant threat to the health and financial security of seniors in our congressional districts.’”

Unlike drug manufacturers, which have a keen interest in reaching ordinary Joes who will demand their products, the insurance companies targeted their campaign squarely at members of Congress. While Congress doesn’t set Medicare payment rates, the Centers for Medicare and Medicaid Services (which does set them) listens to Congress attentively. Over the past few years, lobbying efforts to stop MA cuts have included “grassroots lobbyists” sending mail or calling members of Congress. This year AHIP, as it has done in the past, ginned up its Coalition for Medicare Choices, a group with some two million members, to call or write to members of Congress voicing concern over cuts. Ads from the Better Medicare Alliance strategically placed on the Politico website also made the case to the policymakers who visit the site. And there were TV commercials and stories from satisfied beneficiaries to share with Congress. Fred Schulte, who has been revealing how Medicare Advantage plans have been upcoding their bills to enhance their bottom lines, noted in a recent piece that this year’s lobbying for higher reimbursements featured a food truck in Washington offering coffee and cookies to those who stopped by, including Senators Orrin Hatch and Mark Warner.

One of the few outlets that did devote some coverage to the story ended up treating it in a superficial, slanted way. The Honolulu Star-Advertiser (login required) led with the news that seniors covered by MA plans could face premium increases and lower benefits under the government’s proposal to cut reimbursements to the plans. As evidence, it cited a study by Oliver Wyman, a consulting firm that has worked for AHIP on this study and others. The company’s relationship to the insurers was not disclosed. Other evidence of the need for an increase was pulled from an AHIP press release. The brief story noted AHIP’s grassroots campaign “to urge policymakers to protect Medicare Advantage from proposed cuts that could affect their coverage.” Where’s the other side, other studies, other spokespeople? Will people really lose benefits? Where’s the real reporting? There wasn’t any. Instead, readers got the health policy equivalent of a cheerleading, one-sided puff piece that hypes benefits and ignores the harms of a new drug or device — the kind of weak health reporting that reviewers at HealthNewsReview.org have been skewering for years.

While the press seems to be snoozing when it comes to Medicare, some members of Congress are waiting in the wings for the right time to make what they call “structural” changes to the program. Such changes could transform the program from social insurance to a more privatized arrangement similar to the Affordable Care Act. Seniors would get a government subsidy euphemistically called “premium support” that they could use to buy insurance in the private market. If they wanted more coverage than the subsidy covered, they’d have to pay the difference. In a year-end interview with Politico, Rep. Paul Ryan, who chairs the House Ways and Means Committee, dropped a big hint: “the best days are yet ahead on comprehensive Medicare reform and premium support. It’s an idea whose time is coming.”

About the same time that Medicare announced this year’s rate increase to MA plans, the House passed legislation that fixed the doctors’ payment formula and also began to change Medicare. (The Senate later passed similar legislation.) Five years from now, no one eligible for Medicare will be able to buy coverage under a Medigap policy for Medicare’s Part B deductible which applies to physician and out-patient services. The pols and policymakers, it seems, want old people and those with disabilities to pay more of the cost for their care—to have more skin in the game. There hasn’t been much media coverage of that story, either.

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Comments (3)

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Dennis Byron

April 22, 2015 at 6:13 pm

Here is a short list of the deceptive statements or outright lies in this article

1. The “Sellers of Medicare Advantage (MA) plans” are the same insurance companies that run traditional Medicare, sell Obamacare, run Medicaid programs, sell private Medigap insurance, administer your employer insurance if you work for a large employer, and so forth. There is no separate set of “sellers of Medicare Advantage (MA) plans.” Medicare Advantage is a small part of their businesses in most cases and where it is significant, the insurance company also sells Medigap so really doesn’t care which way a person supplements his or her Medicare.

2 There is no cut or increase in payments settled yet for 2016.The value of 2016 payments depends on the bids received in the next few months. All that happens in the first quarter of the year is the setting of the county benchmarks (of course making the story about as interesting to the general public as setting crop-price supports)

3. The setting of the benchmark is 99.99% a mathematical formula and has very little to do with lobbying. The one year that was different was the year that the GAO alleged that the Obama administration ran a “qualify bonus award program” where everyone won the award.

4. It is true that “President Obama came to office vowing to cut the government’s excessive payments to these plans” but not only did Obama lie about there being excessive payments, the payment differential has now reversed and those on traditional fee for service (FFS) Medicare are projected to received on average more per capita in 2015 than those on capitated fee managed Medicare. (In the highest year of a difference between per-capita traditional FFS payments and capitated fee payments, the excess was 6%. On average over the 17 years of the program, the difference has been plus 2% for capitated fee beneficiaries, which ironically goes mostly to Obama supporters in unions and among the urban poor. You will hear MedPAC numbers that range from 2% to 14% depending on year but MedPAC cooks the books by not counting all beneficiaries in both programs.)

5. You really don’t have to extol the benefits of public Part C Medicare Advantage over traditional Medicare. If your provider accepts Part C, the advantage amounts to thousands of dollars and the managed care is much better. The managed care concept in Part C is so good that all of Obamacare also uses it. (Similarly why is premium support “euphemistic” when used in the context of Medicare reform but not used in any discussion of Obamacare?)

6. Public Part C Medicare Advantage has grown in popularity exponentially since its formal debut in 1998-1999. The author hates seniors and thinks anyone that chooses Medicare Advantage is a stupid dupe. But do you really think 17,000,000 people have been duped (the only meaningful determinant is whether a senior’s provider accepts it.) None of this has anything to do with hundreds of Congressmen who never go on Medicare (or SS) and could care less about seniors… or food trucks. There is no “other side.”

8, The description about proposals for seniors to buy insurance in the “private market” is a lie.

Brad F

April 22, 2015 at 6:17 pm

GIven the limited number of stories the press covers on the policy front–usually abortion, rx prices, or or assisted suicide lately–could it be, a) some crowd out occurred during the rate deliberation period (granted, theres always something going on year in and out), b) MA penetration has reached a point whereby folks favor the subsidies and dont care to voice objections, or c) folks dont care.

Now on the latter, Im being glib, but to use the SGR fix for example–no bigger policy story has arisen in the last year or so. But ask any lay person about the significance, and they would not have a clue. Whether poor press has made that so, I cant say, but the SGR has been written about and had been in op sections, TV segments, and radio. No reaction.

Not pushing back on what you wrote, but would have liked to see your thesis aired out more. Dont know if absent coverage causation or correlation.

Also, on your last paragraph re: Medigap. I think KFF broke out the financials on the impact change will have on seniors. Its minimal, almost to the point of being inconsequential.


SHould the MA rates get a spotlight? Yes. But why just MA. Theres

Patricia L

April 27, 2015 at 10:11 am

Government has been making health insurance and health care more expensive and less accessible for decades. Everything government touches increases in cost and decreases in quality and afforability. I invite you to read John Goodman’s book, Priceless: Curing the Health Care Crisis. Until market forces are allowed to work in health care, the system will continue to deteriorate. In the old days, before government started “helping”, doctors had the time and means to help poor people, charging no fee or a minimal one. Now, providers are too pressed for time and income by all the regulations and paperwork required due to government being the 800-pound gorilla in the health care market to be able to afford charity work.

We need a more direct connection between patient and provider, which will not only increase the satisfaction of the part of both parties, but will also eliminate much of the waste and corruption inherent in all government programs. Those areas where insurance and government are not major players (cosmetic surgery, Lasik eye surgery, dental implants) have seen the greatest increase in innovation, access, and affordability.

As Milton Friedman said, if the government were in charge of deserts, there would soon be a shortage of sand.