Physicians' Prescription: Scrap Medicare Private Insurance Plans

Main Category: Medicare / Medicaid / SCHIP
Also Included In: Health Insurance / Medical Insurance;  Primary Care / General Practice
Article Date: 07 Mar 2008 - 4:00 PDT

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The clock is ticking for Congress to address a 10-percent pay cut to physicians who care for Medicare patients. The deadline is June 30. But a stalemate among lawmakers exists over what many see as a shell game: increasing physician reimbursements by cutting reimbursements to other Medicare providers.

Instead, the physicians of the Texas Medical Association (TMA) prescribe another remedy that would tap into what some in Washington, D.C. view as a "sacred cow": Get the money from overpaid Medicare Advantage plans.

Physicians lose money every time they care for a Medicare patient. Medicare uses a flawed payment formula that pays doctors less than it costs them to provide the care. As Congress considers cutting physician payments more, many doctors say they will be forced to limit or stop seeing Medicare patients.

Physicians believe Medicare Advantage is a waste of taxpayer money and does not improve the quality of care for patients. Medicare Advantage is a type of Medicare coverage that merely pays private insurance companies to manage patients' coverage.

"Instead of Medicare Advantage, they should really call it 'Medicare Disadvantage,'" says David Taber, MD, a TMA physician leader and president of the El Paso County Medical Society. "The only advantage is to the health insurance companies."

Senior citizens and people with disabilities have two health insurance choices through Medicare: They can choose traditional Medicare coverage or Medicare Advantage private insurance plan coverage. Of the 43 million senior citizens and people with disabilities on Medicare, nearly one in five is covered by Medicare Advantage private insurance companies.

The Medicare Rights Center (MRC), an independent organization working to assist Medicare consumers, says Medicare Advantage plans often do not deliver the cost-effective care they promise. Gaps in coverage, limited physicians - especially specialists - and higher out-of-pocket expenses are just a few of the concerns. The MRC says administrative costs for the private plans that provide Medicare Advantage are 10 to 15 percent, compared with only 3 percent for traditional Medicare.

Meanwhile the private health insurance companies that provide Medicare Advantage reap double-digit multimillion dollar profits. In Medicare Advantage, the government pays the private health plan a set amount every month for every person enrolled. In 2007, for example, Humana Inc. saw pretax earnings from its government business, which includes Medicare Advantage premiums, total $288 million - a 98-percent increase over the previous year.

The MRC says the extra 12 to 19 percent per-person cost of Medicare Advantage costs taxpayers an extra $5 billion per year. Physicians are asking Congress to shift that money to pay physicians who treat Medicare patients. Congress could then eliminate two problems, doctors say: health care dollars that are wasted on something other than patient care, and fears that current and future generations will not have a physician available to care for them.

Dr. Taber, an El Paso urologist, calls Medicare Advantage "a billion dollar rip. It's wasteful spending on the part of Medicare, and a frivolous and costly adventure."

Strict Rules

Doctors say strict rules are a common problem for Medicare Advantage-covered patients facing the challenges of finding a physician. Lisa Ehrlich, MD, a TMA physician leader practicing internal medicine in Houston, says Medicare Advantage patients face two sets of rule restrictions: One dictated by traditional Medicare, and the other by the health plan. "Because of Medicare rules, if the patient is in Medicare Advantage, they can't see a regular Medicare doctor, period," she notes. "I'm sure the folks who sign up for this don't know that's the case. I know that's one of the big issues with it.

"In that way, Medicare Advantage limits patients' [ability to find a physician] even further," says Dr. Ehrlich. "I simply don't think Medicare Advantage is a good deal for patients. Traditional Medicare may not necessarily be ideal for patients, but Medicare Advantage is definitely worse."

Dr. Ehrlich estimates about one in three primary care physicians in the Texas Medical Center of Houston does not accept new Medicare patients, but far fewer accept Medicare Advantage patients.

More Cost

Traditional Medicare patients have to pay one premium each month, and a deductible for care. Medicare Advantage patients pay two monthly premiums, a deductible for care, and a copay when they visit the doctor.

Another Medicare Advantage problem MRC experts point to is the plans' inability to bridge gaps in insurance coverage. With traditional Medicare, patients can buy supplemental insurance to cover things basic Medicare may not cover, such as specialty care. However, no such supplemental insurance exists for people with Medicare Advantage. If a patient gets sick and Medicare Advantage does not cover the expense, the patient is stuck with high out-of-pocket costs.

William W. Hinchey, MD, TMA's president, adds, "Medicare Advantage plans should not come ahead of patient care. We need to stop Congress … from feeding the health insurance beast."

TMA is the largest state medical society in the nation, representing more than 43,000 physician and medical student members. It is located in Austin and has 120 component county medical societies around the state. Organized in 1853, TMA's key objective is to improve the health of all Texans.

Texas Medical Association