Stuart Figueroa, MSW, is a policy analyst at Boston University School of Public Health. He tweets at @RealStuTweets.
Turn on the TV to your favorite mid-day programming and there is a good chance you’ll see Joe Namath gracing the screen, selling Medicare Advantage. Far removed from gridiron glory with the New York Jets, 78-year-old Namath is less ‘Broadway Joe’, and a little more Medicare Joe. The question begs – what exactly is he selling and who actually benefits?
Background on Medicare Advantage
Medicare Advantage, also known as Medicare Part C, is a program that allows Medicare eligible beneficiaries to enroll in health plans offered by private insurers. These plans contract with Medicare and receive a capitated payment based on enrollment. Aside from its payment structure, MA differs from traditional Medicare (TM) in several important ways.
First, MA enrollees tend to have fewer health care provider options; this differs substantially from TM beneficiaries who have access to a broader network. From a benefits standpoint though, many MA plans offer more expansive benefits. For example, plans may include dental coverage, audiology, and other perks such as fitness programs and gym memberships. There are also significant differences when it comes to enrollee cost burden. In particular, MA plans cap out-of-pocket costs; such a cap does not exist under traditional Medicare.
As of June 2021, more than 26 million persons, approximately 42 percent of all Medicare enrollees, were enrolled in MA plans. Current enrollment projections anticipate that the proportion of beneficiaries participating in MA plans will increase to nearly 50% of all enrollees by 2029. Recent growth in MA enrollment has been disproportionately higher among racial/ethnic minorities and other traditionally marginalized groups, though the reasons why are not entirely clear.
But how do the two differ in treating chronic disease? And how about across racial and ethnic subpopulations? As the nation’s population ages, there is an urgent need to understand how well MA serves beneficiaries with chronic disease, and whether MA participation translates into improved disease management and health outcomes when compared to traditional Medicare.
Background on Diabetes
Let’s take diabetes. It is estimated that one in four dollars spent on health care is spent on diabetes related costs. Diabetes is a progressive disease that if untreated or mismanaged leads to serious complications such as stroke, cardiovascular disease, nerve issues, and kidney and liver problems. The risk of developing diabetes and experiencing complications increases dramatically with age, and those affected by the disease and its comorbid conditions are likely to require escalated care including more frequent and longer hospitalizations, increased outpatient care, and prescriptions.
Health Disparities in Diabetes Management
Racial and ethnic health disparities have been found to exist both between different MA plans and between TM and MA. Studies have documented differences in the management of blood pressure, cholesterol, and glucose, as well as hospital readmission following complications from surgery. When it comes to diabetes management, it is difficult but important to ascertain the extent that racial and ethnic disparities in health outcomes exist in MA.
In TM, numerous studies have explored the racial and ethnic health disparities associated with diabetes. Early studies found that, even as TM improved preventative care practices overall, non-White beneficiaries, especially Black beneficiaries, were less likely to receive preventative services. This resulted in a higher likelihood of both short- and long-term complications.
A 2019 study in Health Equity found that among traditional Medicare beneficiaries with diabetes, Hispanic beneficiaries fared significantly poorer across a number of health metrics when compared with their non-Hispanic White counterparts. The economic manifestation of this disparity was increased costs, utilization of acute care, and longer inpatient hospitalizations.
When considering the long arc of diabetes management under MA, the results are mixed. When the MA program was still in its infancy, many of the same issues found in TM were prevalent in MA. A 2007 study examining racial and gender differences on process of care and intermediate outcome measures (e.g., A1C screenings, cholesterol screenings, eye exams) found that, when compared to White beneficiaries, Black MA enrollees consistently fared poorer on five of six measures. This disparate performance relative to race and ethnicity and diabetes outcomes has been observed repeatedly. Complicating the picture further, MA plans are not created equal and significant variation in outcomes has been found both between and within plans.
More recent efforts comparing diabetes management more broadly between MA to TM have found improvements in the quality of diabetes care as well as reduced costs for MA beneficiaries. Studies found decreased utilization of diabetes services in MA health plans, as well as higher quality of care than in TM. In addition, MA plans tend to manage diabetes care with less expensive medications than TM, resulting in lower out-of-pocket costs for enrollees. (Caveat: as with all studies of MA, there’s a thorny issue of the extent to which beneficiary risk is adequately controlled for or reflects coding differences between MA and TM or in MA over time.)
Looking at diabetes care as a whole, MA would appear to be trending in the right direction. It is not clear, however, that the racial and ethnic health disparities previously identified have been eliminated.
Conclusion
Medicare Advantage has its…advantages. It reduces enrollees’ costs while offering greater benefits, and recent studies show improved quality, at least for diabetes management. These are among the arguments used by private health plans who are looking to expand their MA lines of business.
However, traditionally underserved populations continue to lag behind White beneficiaries in both care and access. As is the case with almost every facet of the healthcare system, MA plans still have a lot of work to do in addressing health equity. For this reason, non-White beneficiaries will want to evaluate their MA options carefully before taking Medicare Joe at his word.
Research for this piece was supported by Arnold Ventures.
Tasha McAbee (@tasha_mcabee) is an MPH student at Boston University School of Public Health.
For over 50 years, Medicare has provided affordable health insurance to hundreds of millions of people. At present, almost 62 million individuals depend on the public program to help cover the costs of medical services including hospitalizations, physician visits, prescription drugs, preventive services, and nursing facility or home health care.
But it doesn’t cover everything. Most Medicare beneficiaries rely on additional supplemental insurance beyond traditional Medicare. This additional insurance commonly consists of employer retiree benefits, privately purchased Medigap policies, or Medicaid for people with low income.
This is where Medicare Advantage comes in. Today, over 24 million Medicare recipients needing fuller coverage then what Medicare has to offer, instead enroll in more robust private plans obtained through Medicare Advantage. These managed care programs offer an expanded list of benefits at a fixed cost compared to Medicare, for which needed services may not be covered at all or come at a high price.
Growing pains
Enrollment in Medicare Advantage has rapidly grown since its implementation, from 18% of Medicare beneficiaries enrolled in 1999 to 39% in 2020. This growth, however, has not always been healthy.
Being a private market, Medicare Advantage plans behave differently than traditional Medicare. Any program, private or public, must maintain profit to stay afloat, but a number of Medicare Advantage plans were initially riddled with aggressive marketing tactics and lacked government oversight to protect consumers. Some companies hired revenue maximization experts, who went beyond ensuring earnings, and encouraged private insurers to engage in questionable marketing tactics that weren’t always in the best interest of the consumer. In the early days, a large number of beneficiaries were enrolled without a full understanding of the program or its disadvantages, and consumer satisfaction was low.
Government regulation eventually caught up, establishing means to curtail any predatory practices in Medicare Advantage marketing when the Medicare Improvements for Patients and Providers Act was passed in 2008. The legislation strengthened government oversight over Medicare Advantage sales activities and consumer satisfaction has since improved, reaching a record 94% satisfaction in 2019.
Bipartisan support for the program continues to foster steady growth no matter the political party of the sitting president, but howmuch growth and whom that growth most benefits — consumer or insurer — depends on which policy levers that administration pulls.
Further, the Trump administration failed to gain regulatory control over Medicare Advantage companies and their ability to alter risk adjustment scores, which determine the amount of money the federal government pays to subsidize the plans. The more control Medicare Advantage companies have over risk adjustment scores, the greater their potential ability to exaggerate the severity of a patient’s illness in order to maximize the amount of money they receive from the federal government. Inadequate auditing over risk adjustment not only allows for exploitation, but is a system that experts warn is “fatally flawed”, and has already resulted in several whistleblower lawsuits alleging risk adjustment fraud. When a Medicare Advantage plan over-withdraws funds from the federal government, it is more money drained from taxpayers and away from traditional Medicare needs.
Where to go from here…
The Biden administration is now left with the responsibility to manage continued growth while reining in the regulatory loosening that occurred under the prior administration. This administration should prioritize regaining regulatory control over risk adjustment practices and refocus policy decisions towards value-based care and consumer protection rather than policies that favor the facilitation of sales.
For example, although it may sound entirely beneficial to consumers that Trump expanded the list of benefits covered by Medicare Advantage plans, it can also be interpreted as a move to simply increase profit, especially if the value of these newly permissible services to the consumer cannot be demonstrated. The Biden administration will need to balance the complexities of private plans so that they best serve the public.
Medicare Advantage stands today as a more effective and stable program than when it was born. It is a powerful means for Medicare patients to get more value out of their spending and to maximize benefits. Moving forward, the government’s regulatory relationship with the program will need to ensure that as more people enroll, it doesn’t result in more consumers, or the government itself, being taken advantage of.
Paul Shafer is an assistant professor of health law, policy, and management at the Boston University School of Public Health, follow him on Twitter @shaferpr. Nambi Ndugga is a policy analyst at the Boston University School of Public Health, follow her on Twitter @joerianatalie.
In January 2020, the Centers for Medicare and Medicaid Services (CMS) issued a letter to state Medicaid directors that let them convert Medicaid programs from the current state-federal partnership model to a block grant model. The block grant model would introduce caps to Medicaid funding. These changes could have detrimental impacts on historically marginalized populations who have already been adversely affected by the pandemic.
In an editorial in the American Journal of Public Health, we discuss how block grants and other recent pushes, like work requirements and elimination of retroactive eligibility, in Medicaid policy in combination with established structural discriminatory practices negatively affect Black Americans and other people of color.
As we wrote,
HAO [Healthy Adult Opportunities] could have devastating impacts on lower-income families who may be unable to pay ‘up to 5% of their household income’ to cover out-of-pocket costs or will be punished by suspension from Medicaid for failing to pay any required premiums. States will also be able to adjust benefits, cost-sharing, and other requirements to stay within budget without additional CMS approval. Due to the large and persistent structural inequities faced by Black Americans and other people of color daily, this could have a particularly devastating impact on their health.
The persistent inequities experienced by marginalized populations and their ties to poor health outcomes has been extensively documented. As we navigate a pandemic and economic recession, now, more than ever is the time for public health professionals and policy-makers to call out these injustices.
Elsa Pearson is a senior policy analyst with Boston University School of Public Health. Follow her on Twitter: @epearsonbusph. Research for this piece was supported by the Laura and John Arnold Foundation.
The first post of this series defined upcoding – billing and coding for more intensive and expensive diagnoses and treatments than what was provided or medically necessary – and presented research on its prevalence. If upcoding is fraudulent or, at the very least, not ideal, and as common as the literature suggests, what can be done about it?
Matthew Fiedler of the Brookings Institution put it aptly when he told me via email that “the right policy response depends some on how you conceive of the problem.” Experts have an array of ideas on how to mitigate upcoding and none will defeat it singlehandedly.
A policy brief written for the American Medical Association’s Journal of Ethics suggested two strategies: medical education and front end analytics. The authors argued that medical education and training is the time to familiarize future physicians with upcoding and other fraudulent billing practices. (I would argue this concept should also apply to training for non-physician providers and administrative staff.) Their review of the literature showed that only one third of medical schools currently have any curriculum time dedicated to fraud and abuse. Without teaching physicians how to code and bill properly, it’s hard to expect them to learn these habits on their own.
Front end analytics seeks to catch fraudulent upcoding algorithmically. Medicare’s Fraud Prevention System already employs this approach. In 2014, the Fraud Prevention System saved Medicare over $210 million from inappropriate billing. It’s clear that front end analytics can work. However, it’s also clear that the current system isn’t doing enough. Medicare should expand its use of front end analytics and private insurers should adopt a similar approach.
Another proposal focuses not on auditing but on Medicare Advantage’s (MA)’s “coding intensity adjustment.” This benchmark of sorts allows the Medicare program to financially adjust (i.e., reduce payment) for common coding differences between traditional Medicare and MA. These coding differences are related to patient complexity-based payments: MA pays more than traditional Medicare for more complex patients, incentivizing MA providers to upcode.
Richard Kronick of the University of California San Diego argued in Health Affairs that the current coding intensity adjustment is smaller than what it could and should be and will lead to $200 billion in overpayments in the next decade. As it stands, the coding intensity adjustment is set annually by political appointees at the Centers for Medicare and Medicaid Services (CMS). Kronick contends it should instead be both mandated by law and methodologically determined so as not to be influenced by ever changing political agendas.
Lastly, Paul Van der Water of the Center on Budget and Policy Priorities suggested MA should not include diagnoses collected in health risk assessments in risk score calculations. Because MA bills based on patient complexity, the incentive is to attach more diagnoses to each patient. Health risk assessments, though intended to inform care, often influence the patient’s documented complexity by added new diagnoses. By omitting those diagnoses from risk score calculations, MA would paint a more accurate representation of its enrollees and reduce upcoding associated with patient complexity.
Van der Water notes that the Medicare Payment Advisory Commission (MedPAC) recommended this to CMS in 2016 but CMS has yet to act. MedPAC also recommended CMS use two years of diagnostic data in risk score calculations to ensure a more accurate representation of patient complexity.
While most of the above solutions are presented in the context of traditional Medicare and MA, many of the concepts are applicable to private providers and insurers as well. Moving the needle on upcoding will require a multifaceted approach, dependent on both regulatory oversight and buy-in from payers and providers.
Elsa Pearson is a senior policy analyst with Boston University School of Public Health. Follow her on Twitter: @epearsonbusph. Research for this piece was supported by the Laura and John Arnold Foundation.
The complexity and opaqueness of health care billing seems to be an unfortunate given. Patients expect to be flummoxed by hospital bills and providers expect to fight to get reimbursed. Though this complexity, while frustrating, is not itself fraudulent, it provides the opportunity for more nefarious billing.
Specifically, providers and payers can sometimes hide behind that complexity to intentionally bill erroneously. Upcoding is one potentially fraudulent form of billing. Upcoding occurs when more intensive and expensive diagnoses or treatments are documented than what was actually provided to the patient or medically necessary.
Upcoding is happens and often. But before diving into the research, it is worth noting up front that not all billing investigations have found evidence of upcoding. Not every bill has been upcoded.
For example, one study of anesthesia services reviewed almost 50,000 surgical records from patients aged 50 to 79 years with non-deferrable conditions, expecting to see upcoding trends in patient physical status scores (a measure of patient complexity). Because private insurers that serve the under-65 population pay higher rates than Medicare does for more complex patients, the authors hypothesized that providers would upcode more in younger patients. However, after conducting several regression analyses, they found no evidence of a statistically significant shift in physical status score at age 65, suggesting no upcoding in younger patients as a way to increase payment from private insurers. (Of course, their findings still do not rule out more general upcoding across the age gradient, independent of physical status scores and/or payer incentives.)
Exceptions aside, research overwhelmingly suggests upcoding happens nationwide and often. Massachusetts recently found that a steady increase in coded patient acuity and patient risk scores contributed to higher state health care spending over the past few years. These increases could not be explained in totality by changes in actual patient demographics or disease prevalence, suggesting inappropriate upcoding rather than a true change in the patient population.
Surgical specialties seem to be ripe for upcoding, perhaps given the number of unique services delivered and coded for in a finite period of time compared to nonsurgical specialties. A study of over 1.3 million gastroenterology surgeries completed from 2001 to 2011 analyzed the number of codes assigned to each admission. The authors found a systematic increase in the number of codes assigned to each case over time, even when they isolated only low risk patients (no comorbidities, elective procedures only). While the former may suggest simply more accurate coding practices, the latter suggests unnecessary upcoding given no available explanation due to patient complexity or disease severity.
Another study of over one million gastroenterology procedures and their associated anesthesia services found that the number of patients with higher physical status scores increased by almost 8 percentage points from 2005 to 2013. The authors note this increase “cannot be explained by the severity of patients’ conditions… [nor by] changes in the physician population.”
A 2018 NBER working paper found that Medicare Advantage upcoding costs taxpayers $2 billion a year. The authors noted that “the ‘coding inflation’ correlated with how closely tied the doctors were to the insurance plan, with the [coded] risk scores for enrollees in physician-owned plans 16 percent higher than otherwise would be expected.”
ProPublica reported on an Inspector General report that found that Medicare overpaid $6.7 billion in upcoding in 2010 for evaluation and management clinic visits. What’s more, in a sub-analysis of Medicare claims, the Inspector General found that more than half of the claims were coded incorrectly. Nevertheless, the government said it wouldn’t investigate the physicians most responsible (those who upcode most often) given other active reviews.
ProPublica also found that there are physicians who notoriously, and unnecessarily, bill for more complicated visits and treatments more frequently than their peers. For example, one physician coded and billed for the most complex type of office visit 95 percent of the time when his peers only did so about 5 percent of the time.
Even in light of the evidence, it’s challenging to legally demonstrate that instances of upcoding are fraudulent. One JAMA commentary noted that proving coding fraud is difficult because of how the Centers for Medicare and Medicaid Services delineate fraud and abuse. One must prove intent to prove fraud; abuse is simply poor practice but not intentionally harmful.
There can also be good, or acceptable, forms of aggressive coding that might be viewed as upcoding. This occurs when hospitals, providers, or insurance plans simply try to code and bill more accurately. The administrative burdens of health care are substantial and coding can easily become an afterthought, leading to inaccuracies. Simply addressing this is not necessarily bad, particularly if it aligns payment with actual patient need and complexity or intensity of services delivered. But it can be confused with fraudulent or abusive upcoding.
For example, a lawsuit against the Baylor, Scott & White Health system that claimed the health system “inflated medical codes in order to maximize Medicare reimbursement” was recently defeated in court. The lawsuit argued upcoding between 2011 and 2017 led to $61.8 billion in false Medicare claims. But the court determined the health care system was simply implementing changes soon to be required by Medicare.
The next post in this series will discuss what is being done to limit upcoding now and what else can be done in the future.
There have been a lot of innovations in Medicare over the last decade or so, with the intent of improving the program’s value. There have been some successes, but there is still a lot to be done.
This video was adapted from a column Austin wrote for the Upshot. Links to sources can be found there.
The following originally appeared on The Upshot (copyright 2019, The New York Times Company). It also appeared on page B5 of the print edition on September 24, 2019.
For most of its history, Medicare paid for health care in ways that encouraged more services — whether they improved health or not.
Critics called it an emphasis on volume, not value.
The Affordable Care Act was intended to change that, and Medicare started a number of programs to do so, including several new ones this year. Nearly a decade after passage of the A.C.A., is value-based payment working?
“It doesn’t mean that the vast majority of the care Medicare purchases is linked to actual value,” said Sherry Glied, a health economist, and dean and professor at the Wagner School of Public Service at N.Y.U. “We don’t even know what we mean by value. How do you pay for something when you don’t know what it is?”
Different programs have different notions of “value.” Medicare’s Hospital Readmissions Reduction Program, established in 2010, penalizes hospitals that have high rates of readmissions for certain illnesses. Although hospitals can lose only up to 3 percent of payment, 100 percent of their payment is considered “tied to value.”
The key is whether programs like this improve health care quality or reduce health care spending. The Hospital Readmissions Reduction Program has been extensively examined, with studies drawing different conclusions. Initial analyses of the program suggest it is responsible for reducing hospital readmissions, saving Medicare billions of dollars a year.
But some later studies found that these reports of success were overstated, among other concerns. Some studies found that reduced hospital readmissions were associated with increased risk of death, though not all studies agree on this point, and experts disagree on the value of the program. What is clear is that the program has had a smaller impact on hospital readmissions than originally thought — perhaps reducing them by as little as one-third of a percentage point.
Another Medicare value-based payment program is considerably more broad. The Hospital Value-Based Purchasing Program was introduced in 2011 and rewards or penalizes hospitals based on mortality; infection rates; patient experience and safety; cost; and other measures of quality — 20 in all. Typical bonuses or penalties are a fraction of 1 percent of a hospital’s total Medicare payments.
A study published in Health Services Research compared about 2,800 hospitals in the program with about 300 exempt from it. The study found no effect from financial incentives of the program on quality of care or patient satisfaction. But the study included data only up to nine months after the program’s start, and it may take hospitals longer to make measurable changes.
Another study, published in BMJ, looked at outcomestwo and a half years after the start of the Hospital Value-Based Purchasing Program. It found no differences in changes in mortality rates between hospitals in the program versus those exempt from it. And another study, published in Health Affairs, found no evidence that the program improved patient satisfaction up to three years after implementation.
Jose Figueroa, a physician at Brigham and Women’s Hospital in Boston, and an assistant professor of medicine at Harvard Medical School, was an author of both of these longer studies. “So far, there’s no evidence the program has improved quality or patient satisfaction,” he said. He ticked off some possible reasons: “The financial incentives are too weak to drive any meaningful changes across hospitals. The program’s design, with numerous measures across different domains, makes it hard for hospitals to understand what to focus on.”
Medicare has achieved greater success with programs that have raised the stakes — ones that have put hospitals and health care organizations at greater risk of financial loss or have offered prospects for larger financial gain.
One popular approach, called “bundled payments,” pays health providers one amount for all of the care for a certain condition within a certain period — like 90 days for hip replacement care. There is evidence that some of these programs can save money without reductions in quality, although design details matter.
“Bundled payments are a straightforward way to make hospitals consider all the costs they are responsible for,” said Adam Sacarny, assistant professor with Columbia’s Mailman School of Public Health. “The evidence suggests they encourage hospitals to treat patients more efficiently, although the cost savings are at least partly offset by extra payments to hospitals to reward them for saving money in the first place.”
Another approach — accountable care organizations — also takes many forms. What they have in common is they offer health care organizations the chance to earn bonuses for accepting some financial risk, provided they meet a set of quality targets. Many studies of accountable care organizations (A.C.O.s) have found they reduce spending with no quality degradation.
“There is strong evidence that, on average, Medicare A.C.O.s save a modest amount of money,” said Alice Chen, assistant professor at the University of Southern California Sol Price School of Public Policy.
Although accountable care organizations have saved a few percent of Medicare spending, the amount varies by program design. “We’ve found that A.C.O.s that are physician groups as opposed to big hospital systems have produced more savings,” said Michael McWilliams, a professor at Harvard Medical School and a general internist with Brigham and Women’s Hospital. “That’s because physician groups don’t erode their own revenue when they keep their patients away from hospitals.”
So over all, is Medicare moving toward higher value? “There has been some progress, but even the most generous read of the evidence is very far below the projections made by fans of value-based payment before the A.C.A.,” Ms. Glied said.
Robert Berenson, a fellow at the Urban Institute, agreed: “Value payment overemphasizes performance measurement, but even so, it’s been disappointing. We simply lack good metrics that can’t be gamed or evaded by most targeted providers.”
But some are more optimistic. “The successes are more like singles than home runs,” said Michael Chernew, a health economist with Harvard Medical School. “Despite the modest results, I think some approaches, like A.C.O.s, are a foundation for future improvements.”
Paying for health care value is a popular slogan, but Medicare is still figuring out how to do it.
We’ve been hearing a lot of pretty general plans to implement Medicare for all Americans. How would that work? Medicare as it exists today has some coverage gaps. How would that be addressed in Medicare for All?
This video was adapted from a column Austin Frakt and Elsa Pearson wrote for the Upshot. Links to sources can be found there.
The following originally appeared on The Upshot (copyright 2019, The New York Times Company) and is coauthored by Elsa Pearson and Austin Frakt. It also appeared in the August 5, 2019 print edition on page B3.
In the first congressional hearing held on “Medicare for all” in April, Michael Burgess, a Republican congressman from Texas and a physician, called such a proposal “frightening” because it could limit the treatments available to patients.
The debate over Medicare for all has largely focused on access and taxpayer cost, but this raises a question that hasn’t gotten much attention: What treatments would it cover?
A good starting place for answers is to look at how traditional Medicare currently handles things. In one sense, there are some important elements that Medicare does not cover — and arguably should. But a little digging into the rules governing treatments also reveals that Medicare allows a lot of low-value care — which it arguably should not.
Many countries don’t cover procedures or treatments that have little medical value or that are considered too expensive relative to the benefits. AmericanMedicare has also wrestled with the challenge of how to keep out low-value care, but for political reasons has never squarely faced it.
You might remember the factually misguided “death panel” attack on the Affordable Care Act, which preyed on discomfort with a governmental role in deciding what health care would or would not be paid for. (This discomfort also extends to private plans, exemplified by the backlash against managed care in the 1990s.)
Perhaps as a result, Americans don’t often talk about what treatments and services provide enough value to warrant coverage.
Two classes of Medicare
You can divide current Medicare coverage into two layers.
The first is relatively transparent. Traditional Medicare does not cover certain classes of care, including eyeglasses, hearing aids, dental or long-term care. When the classes of things it covers changes, or is under debate, there’s a big, bruising fight with a lot of public comment. The most recent battle added prescription drug coverage through legislation that passed in 2003.
Over the years, there have also been legislative efforts to add coverage for eyeglasses, hearing aids, dental and long-term care — none of them successful. Some of these are available through private plans. So a Medicare for all program that excluded all private insurance coverage and that resembled today’s traditional Medicare would leave Americans with significant coverage gaps. Most likely, debate over what Medicare for all would cover would center on this issue.
But there is a second layer of coverage that receives less attention. Which specific treatments does Medicare pay for within its classes of coverage? For instance, Medicare covers hospital and doctor visits associated with cancer care — but which specific cancer treatments?
This second layer is far more opaque than the first. By law, treatments must be “reasonable and necessary” to be approved for Medicare coverage, but what that means is not very clear.
Local versus national
We think of Medicare as a uniform program, but some coverage decisions are local. What people are covered for in, say, Miami can be different from what people are covered for in Seattle.
Many treatments and services are covered automatically because they already have standard billing codes that Medicare recognizes and accepts. For treatments lacking such codes, Medicare makes coverage determinations in one of two ways: nationally or locally.
Although Medicare is a federal (national) program, most coverage determinations are local. Private contractors authorized to process Medicare claims decide what treatments to reimburse in each of 16 regions of the country.
In theory, this could allow for lots of variation across the country in what Medicare pays for. But most local coverage determinationsare nearly identical. For example, four regional contractors have independently made local coverage determinations for allergen immunotherapy, but they all approve the same treatments for seasonal allergy sufferers.
There are more than 2,000 local coverage determinations like these. National coverage decisions, which apply to the entire country, are rarer, with only about 300 on the books.
Clinical trials
When Medicare makes national coverage decisions, sometimes it does so while requiring people to enter clinical trials.
It has been doing this for over a decade. The program is called coverage with evidence development, and its use is rare. Fewer than two dozen therapies have entered the program since it was introduced in 2006. But it allows Medicare to gather additional clinical data before determining if the treatment should be covered outside of a trial. To be considered, the treatment must already be deemed safe, and it must already be effective in some population. The aim is to test if the treatment “meaningfully improves” the health of Medicare beneficiaries.
Only one therapy (CPAP, for sleep apnea) that entered this process has ever emerged to be covered as a routine part of Medicare. The others are in a perpetual state of limbo, neither fully covered nor definitively not covered. CAR-T cell therapy, a type of cancer immunotherapy, which appears to be very successful but is also very expensive, is one of the most recent to enter this process.
Unwillingness to talk about cost-effectiveness
Despite the complexity of all these coverage determination methods — local, national, contingent on clinical trials — the bottom line is that very few treatments are fully excluded from Medicare, so long as they are of any clinical value. And this suggests that it’s not very likely that Medicare for all would deny coverage for needed care.
A 2018 study in Health Affairs found only 3 percent of Medicare claims were denied in 2015. And traditional Medicare doesn’t limit access to doctors or hospitals either, as it is accepted by nearly every one. (This is in contrast with Medicare Advantage.)
Medicare has a troubled history in considering cost-effectiveness in its coverage decisions. Past efforts to incorporate it have failed. For example, regulations proposed in 1989 were withdrawn after a decade of internal review.
As a result, Medicare covers some treatments that are extremely expensive for the program and that offer little benefit to patients. The Medicare Payment Advisory Commission recently studied this in detail. In a 2018 report to Congress, it noted that up to one-third of Medicare beneficiaries received some kind of low-value treatment in 2014, costing the program billions of dollars. If Medicare for all followed in traditional Medicare’s path, it could be wastefully expensive.
The United States has had a historical unwillingness to face cost-effectiveness questions in health care decisions, something many other countries tackle head-on. Some Americans favor Medicare for all because it would make the system more like some overseas. And yet, in choosing not to consider the value of the care it covers, Medicare remains uniquely American.
The following originally appeared on The Upshot (copyright 2019, The New York Times Company) and is co-authored by Austin Frakt and Aaron Carroll. If you want to use the interactive features of the article, click over to the Upshot version. This also appeared on pages A12 and A13 of the print edition on August 13, 2019.
“Medicare for all” is popular, and not just among Democrats. Most Republicans favor giving people under 65 at least the choice to buy into Medicare.
But when people hear arguments against it, their support plummets. It turns out that most people don’t really know what Medicare for all means. Even asking three policy experts might yield three different answers.
By our count, there are at least 10 major proposals to expand Medicare or Medicaid.
Some, like Senator Bernie Sanders’s bill, would create a single health care plan for all American residents. Others, like Senator Debbie Stabenow’s Medicare at 50 Act, would expand Medicare eligibility, but not to everyone. Still others would make Medicare or Medicaid a health care insurance option for many more Americans without necessarily eliminating private coverage.
Collectively the proposals vary in at least five fundamental ways, and you can vote on each category below to compare your responses with those of other readers and to see which proposals come closest to your views. We’ve also asked 11 health policy experts to weigh in on each choice. (The ideological composition of the panel spanned generally from center to left because, for now, this is a Democratic intraparty debate.)
Achieving Universal Coverage
PANELISTS’ VERDICT
Nearly all the experts favored universal coverage.
BACKGROUND
Universal coverage is found in every developed country except the United States, where 10 percent to 14 percent (depending on the survey) of the population is uninsured, down from a high of about 18 percent before the Affordable Care Act’s coverage expansion.
PRO/CON
For some panelists, the decision was simple. “Universality is essential,” said Harold Pollack, a professor of social service administration at the University of Chicago. “At bottom, this is a moral issue.”
“Any decent society provides universal health care,” said Dr. Marcia Angell, a senior lecturer at Harvard Medical School.
While many Americans loathe the idea of losing choice, opting in doesn’t always work. “Some people will fail to sign up for coverage, even if it’s free,” said Sherry Glied, a health economist at N.Y.U. “People who don’t sign up may eventually need and benefit from care, and we want them to get it, so we want to make enrolling in coverage as easy as possible.”
NUANCES/POLITICS
“Universal” may not apply to everyone, perhaps leaving out undocumented residents. Some panelists favor a system in which people can opt out of coverage, which would undermine universality. There is a workaround, though, according to Dr. Ashish Jha, a physician with the Harvard T.H. Chan School of Public Health: “Asking people who opt out to pay a tax is a reasonable way to ensure that if they end up having catastrophic spending, society has a pool of funds to pay for it.”
Universality has trade-offs. It’s costly, part of why it has always faced political resistance. “Expanding coverage to a subset of the population, for example those nearer retirement age, will be cheaper and more politically palatable,” said Ellen Meara, a health economist and a professor at Dartmouth. “The desire for incremental approaches led us to create Medicare, Medicaid and the Children’s Health Insurance Program, each targeted to specific subgroups of the population.”
Ending Employer-Based Private Coverage
PANELISTS’ VERDICT
Most agreed that if they were starting from scratch, they would not create a system with employer-based coverage. But most also said plans that eliminate it now are politically infeasible.
BACKGROUND
Most adults under 65 get health insurance through their jobs or through a job of a working family member. Many are happy with their coverage and might rebel if forced to drop it.
PRO/CON
One disadvantage of coverage through work is that it can cause some people to stay in jobs they don’t want. One advantage is that private coverage can offer benefits that public plans like Medicare don’t. Many other countries, even those with universal public coverage like Canada and Britain, also allow employers to offer additional coverage. “Americans like choice, and flexibility,” said Elizabeth Bradley, a public health scholar and president of Vassar College.
Other experts said it was time for employer-based coverage to go. A profusion of coverage options “generates complexity that drives up administrative costs,” said Dr. Steffie Woolhandler, a physician and a professor at Hunter College.
“We should transition away from employer-based private coverage,” Ms. Meara said.
“Employer-based coverage should be ended,” Dr. Angell said.
NUANCES/POLITICS
“From a political perspective, people with coverage from large, high-wage firms are going to be a potent force against taking it away,” Ms. Glied said.
Although he argued in favor of eliminating employer plans, John McDonough, a Harvard professor who helped write the Affordable Care Act, agreed that doing so would be politically difficult or even impossible: “It’s hard to turn around an ocean liner.”
Mr. Pollack concurred: “Any proposal to ban employer-based coverage would self-immolate.” Nevertheless, job-based coverage has some undesirable features. “Employers typically lack the bargaining power with providers to really discipline prices or health care delivery,” he said. “And the tax subsidization of employer coverage is regressive.”
Dr. Don Berwick, a senior fellow at the Institute for Healthcare Improvement, sees a way to meld work-based coverage within a single-payer system. “If employer-based coverage is retained, that does not make a single-payer approach impossible,” he said. “Employers could contribute to the single, common payment pool, as they do today to premiums for private plans.”
Replacing Individually Purchased Private Coverage
PANELISTS’ VERDICT
Mixed
BACKGROUND
One major objective of the Affordable Care Act was to give a reasonable option to people who didn’t qualify for public programs and could not obtain employer-based coverage. Medicare also has an individual market, through Medicare Advantage — private plans that offer alternatives to the public and traditional Medicare program.
PRO/CON
“Having choices among plans, with insurers competing to provide plans that meet enrollees’ needs, can be a driver of innovations in benefits that respond to consumer demand, improved quality and lower premiums,” said Kate Baicker, a health economist at the University of Chicago.
Ms. Meara concurred with these advantages, but brought up a key problem with an individual market with many competitors: “Variation across health plans in approaches to quality and costs can translate into a hassle for doctors, hospitals and other health care providers.”
She pointed out that the large variety of payers in the U.S. system had led to over 1,700 distinct quality measures and a wide variety of billing requirements.
A reason to have both public and private options in one market is to provide choice. “For a country as large and diverse as ours, a single plan for all would be unworkable,” Dr. Jha said.
Yet for some, the downsides overwhelm the value of choice. “Individually purchased private coverage, like job-based coverage, generates inequality and complexity,” Dr. Woolhandler said.
“I would prefer a single-payment system more like traditional Medicare for everyone,” Dr. Berwick said. “It would not be a perfect solution at all, but it would have the enormous advantage of simplicity and lower transaction costs.”
NUANCES
The A.C.A. marketplaces are quite different from Medicare Advantage, though both are individual markets. Details matter, our experts said.
“In part, the marketplaces struggle because we didn’t throw enough money at them,” Mr. Pollack said. “Medicare Advantage is a much better experience, largely because both parties have collaborated to support it with generous subsidies. And less competitive Medicare Advantage market areas have the backstop and competition provided by traditional Medicare, a public option for seniors.”
Eliminating Premiums
PANELISTS’ VERDICT
Most of our experts saw a role for some premiums, in some cases because they thought a “no premiums” approach was politically unrealistic.
BACKGROUND
Americans are accustomed to paying at least some of the premium of a health insurance plan, although some people on Medicaid or with A.C.A. marketplace coverage pay none.
PRO/CON
Dr. Woolhandler argued for a fully tax-financed system: Everyone could be automatically covered “whether or not they’re able to (or remember to) pay their premiums.” Additionally, “using the existing tax collection system is far more efficient than setting up a duplicative apparatus to collect premiums.”
Dr. Berwick said: “Moving to tax-financed health care makes the most sense logically. One advantage of a tax-funded system is the opportunity to engage in socially progressive financing, with wealthy people bearing a greater share of the costs.”
Ms. Bradley said “a mix is likely necessary.”
NUANCES/POLITICS
Paul Starr, a professor of sociology and public affairs at Princeton, favors tax financing, but a look at the numbers convinced him that it was not realistic. If taxes were to replace all private premiums as well as out-of-pocket spending (as in some single-payer plans), the government would have to nearly double what it now collects in personal income tax. “There’s no precedent in American history for a tax increase of that magnitude,” he said. “It’s not going to happen.”
Mr. McDonough reminded us that when Vermont considered a tax-financed single-payer system, sticker shock killed it. The required tax increase “was recognized by then-governor and single-payer champion Peter Shumlin as political suicide.”
Ms. Meara and Dr. Jha pointed out that premiums become necessary once you allow some choice in coverage through markets. More generous coverage is more expensive and would warrant some premium payment.
Finally, Ms. Baicker thought tax financing should be focused on low-income people: “My preference would be to have public programs that focus on lower-income populations, rather than using taxpayer dollars for high-income people who could afford coverage on their own.”
Eliminating Cost Sharing for Everyone
PANELISTS’ VERDICT
All but two of our panelists supported some type of cost sharing.
BACKGROUND
In addition to premiums, most Americans are accustomed to paying for some health care through deductibles and co-payments. High deductibles have become one of the biggest criticisms of A.C.A. plans.
PRO/CON
Most of the panelists and most of the proposals would keep cost sharing, but Dr. Woolhandler and Dr. Angell preferred to eliminate it. “There should be no co-payments or deductibles,” Dr. Angell said.
“Cost sharing penalizes the sick and poor, who forgo vital as well as unneeded care, and suffer grave financial harms,” Dr. Woolhandler said. “Experience in some nations proves that cost sharing is not necessary to control costs.” On the contrary, she argued, collecting co-payments and deductibles just adds a costly, administrative burden.
A downside of cost sharing is that it “can lead to patients and families delaying necessary care or skimping on prevention,” Ms. Bradley said.
NUANCES
Ms. Glied articulated a common sentiment among many of the experts we interviewed: “Co-pays deter excessive use of the system, but the biggest effects are moving from zero to something.”
If that “something” is too big, it is “effectively just a tax on those with pre-existing conditions.”
“So the design of cost-sharing, like any incentive scheme, must be carefully considered so that it reduces overuse without limiting necessary care,” Ms. Bradley said.
This, known as value-based insurance design, was favored by many experts, including Ms. Meara, Ms. Baicker, Dr. Jha and Dr. Berwick.
We acknowledge that there are other key variations beyond these five big questions, like which benefits are covered and whether and how the government might regulate health care prices. There are also plenty of nuances among the proposals (which we hope to follow up on).
Some plans, including the one offered by Senator Sanders, as well as the Medicare for America Act, backed by Representatives Rosa DeLauro and Jan Schakowsky, would provide universal coverage. Others, like the Healthy America Program from fellows at the Urban Institute, would not necessarily do so.
Most proposals would retain employment-based coverage and individual markets. These include Medicare X (Representative Brian Higgins, Senator Tim Kaine, Senator Michael Bennet); theChoice Act (Ms. Schakowsky, Senator Sheldon Whitehouse); and the Choose Medicare Act (Senators Jeff Merkley and Chris Murphy).
Most plans would also keep premiums, though some would have subsidies for low-income families. But a few, including from Representative Pramila Jayapal and the Congressional Progressive Caucus, would do away with premiums entirely.
Almost all proposals would keep cost sharing, with some shedding it for those below the poverty threshold.
Medicare for all is not the only way to achieve major coverage expansion. Several panelists, including Ms. Glied and Mr. Pollack, like the idea of a public option or federal fallback plan — perhaps a Medicare-like plan that competes with other, private coverage. A proposal from the Center for American Progress includes versions of this idea.
Ms. Meara suggested a related idea, similar to one that Representative Ben Ray Luján and Senator Brian Schatz have proposed: “A more realistic path would make some basic set of benefits available — like a Medicaid buy-in — leaving open a path for those wishing to spend more to do so.”
Mr. Starr said the next Democratic president would not repeat the mistake of exhausting his or her political capital on health reform. Mr. McDonough agreed, saying coverage expansion debates have a way of “sucking up all the political oxygen.” He would like to see “space for consideration” on education, taxes, climate change, ethics and campaign finance reform, “and so much else.”
If Democrats win in 2020, there is sure to be a tension between ideas reflected in Dr. Woolhandler’s declaration that “health care is a human right” and Mr. McDonough’s warning that pursuing a fully government-run Medicare for all might “pre-empt progress on everything else.”
Marcia Angell, former editor of the New England Journal of Medicine, and senior lecturer in the Department of Global Health and Social Medicine at Harvard Medical School
Panel of Experts
Kate Baicker, a health economist and dean of the University of Chicago’s Harris School of Public Policy
Don Berwick, former administrator of the Centers for Medicare and Medicaid Services, and president emeritus and senior fellow of the Institute for Healthcare Improvement
Elizabeth Bradley, a public health scholar, president of Vassar College and a professor of science, technology and society
Sherry Glied, a health economist, and dean and professor at the Wagner School of Public Service, New York University
Ashish Jha, physician and director of the Harvard Global Health Institute, and professor at the Harvard T.H. Chan School of Public Health
John McDonough, former Senate staffer involved in writing and passage of the A.C.A. and professor of practice, Harvard T.H. Chan School of Public Health
Ellen Meara, a health economist and the Peggy Y. Thomson professor of evaluative clinical sciences at the Dartmouth Institute for Health Policy and Clinical Practice
Harold Pollack, professor of social service administration, University of Chicago
Paul Starr, professor of sociology and public affairs, Princeton University
Steffie Woolhandler, a primary care doctor, a distinguished professor at Hunter College, and a lecturer in medicine at Harvard. She co-founded Physicians for a National Health Program
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09/16/2021
Stuart Figueroa
