|UHC Cuts Doctors|
UnitedHealth Group Inc., the nation's largest provider of privately managed Medicare Advantage plans, has dropped thousands of doctors from its networks in recent weeks—spurring protest from lawmakers and physician groups and leaving many elderly patients unsure about whether they need to switch plans to keep seeing their doctors.
Doctors in at least 10 states [Florida, Connecticut, Rhode Island, Indiana, Ohio, New Jersey, New York, Missouri, Arizona & Hawaii] have received termination letters, some citing "significant changes and pressures in the health-care environment." The notices also tell doctors they can appeal within 30 days. That means many physicians and patients won't know for sure who is in or out of UnitedHealth's Medicare Advantage networks before the open-enrollment period to switch Medicare plans ends on Dec. 7.
|The Centers for Medicare & Medicaid Services (CMS) predicted that Medicare Advantage enrollment will be cut in half [an historic low point] due to the new [ACA] laws. The report forecast that reductions in Medicare Advantage payments—which will lead to less generous benefits for enrollees—will reduce total MA enrollees to 7.4 million by 2017 . . . .|
One question is why United is cutting its Medicare Advantage network so brutally right now. The company’s reticence about its rationale leaves plenty of room for speculation. United’s full-page ad in the October 19 Providence Journal says the issue is money (surprise!); specifically, it is the federal government’s “severe funding reductions for Medicare Advantage plans.” Now, it is true that Medicare Advantage plans have been targeted for cuts ever since it has become common knowledge that they cost the government more per beneficiary than standard Medicare. In fact, much of the cost of expanding Medicaid under the Affordable Care Act was always supposed to be offset by cuts to the Medicare Advantage program (officially known as Medicare Part C). But those cuts were famously postponed during the last presidential election campaign, and they still haven’t really happened. Still, over the next ten years the government does intend to nudge Medicare Advantage plans toward per-capita parity with regular Medicare, and next year an effective cut of about two percent will begin to take effect.
Another question: Why is United doing this so precipitously right now? Limited networks per se are nothing new. They grew out of the insight that it is possible to have any two, but never all three, of healthcare’s trifecta: affordability, quality and choice. Conventional wisdom says we haven’t seen anything yet, that the transformation of healthcare will bring a proliferation of new products built on limited networks. But note that what United is doing is radically different: it is pruning the network of an existing product. How many subscribers will notice that the value of what they bought is being substantially diminished by United’s action?
When I compare that two percent with the absurd cuts Medicare’s SGR formula has routinely threatened for doctors’ fees (most recently in the range of 30%), I find it hard to take seriously the industry apologists who predict that Medicare Advantage insurers will be forced from the market en masse. Do they really have so little confidence in their vaunted ability to manage cost and care at least as well as standard Medicare? [Not to worry, 2013 YTD 3rd quarter net earnings for United are $4.3 billion - almost exactly the same as 3rd Qtr 2012 and that keeps stockholders feeling all warm and fuzzy.]Now the good doctor takes a turn into a sensitive and vulnerable area of United's business ethics and corporate citizenship.
Perhaps cutthroat market competition is a more plausible explanation for United’s move. The ultimate objective may be to stick the competition with the poorer risks. United is highly sophisticated in managing data, and they know their bottom line. While they are now barred from dropping expensive patients or denying coverage to those with preexisting conditions, they can still achieve the same effect by dropping doctors who care for expensive panels of patients. Granted, we do not know what algorithm United is using to cull 15 to 30 percent of its Medicare Advantage physician panel, but they have at least made it clear that money is the leading criterion.
Given that patients (especially older patients) are known to be far more attached to their physician(s) than to their health plan, and given the fact that Medicare Advantage subscribers are mostly free agents, it seems likely that many United insureds will jump ship before December 7, the date when Medicare open enrollment closes, in order to stay with their doctors. United subscribers who happen to like the format of Medicare Advantage do have one other option in the Rhode Island market, and that option (still) has a robust physician network. But do the Blues [or elsewhere, Aetna or Humana] really want these particular patients, who may represent so many high-cost Trojan horses?Questioning UHC motives is a natural thing to do. It seems that United Health Group owns an Atlanta-based data-crunching subsidiary called Ingenix , which has an array of digital products used for health insurance claims data analysis. They sell services to both providers and insurers but, best of all, - at least from United's standpoint - they help the insurer in determining average charges for specific medical codes from all types of medical providers both inside and outside of UHC plans. In 2008, United Health found itself in deep doo-doo, getting caught shorting $1 billion in payments to out-of-network providers because Ingenix (now suddenly re-branded as Optum) manipulated the data at United's direction. After $350 million was paid at the behest of a New York judge, United was back in good stead with the Obama regime, the Centers for Medicare and Medicaid Services and AARP.
From a reliable source, United's "Attack of the Killer Algorithms" on Medicare Advantage is just the next step by "Big Healthcare" into Medicare and Medicaid cost control. Shortly, UHC's will penetrate further into "managed long-term care" by contracting with states that require (or will soon require) Medicaid's "frailest and costliest patients — the elderly and disabled" to enroll in a UHC plan. The implications of this business strategy is scary since government payments will be made directly to United to use as needed to care for these patients. In the past nursing homes provided the care services and filed claims for reimbursement. The new arrangement will draw monthly payments averaging $4,400 (initially) per patient and profits will come to UHC from fixed fee residuals. In other words, the question naturally arises as to when profitability will trump patient care.