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Don’t Fall into the Trap of Dropping Medicare Advantage When You Get Sicker

Old guy looking at Open Enrollment Form for Medicare Advantage Option

At the time of writing, health care plans had few incentives to avoid insuring sick patients when compared to the state of play before the Affordable Care Act (ACA). As the government is responsible for paying Medicare Advantage plans on a “risk-adjusted” basis, insurers are not concerned about a person’s health status when he or she purchases a plan.

That’s true at least in theory. In practice, it appears as if sick seniors are worse off under the rules of Medicare Advantage. A report from the Government Accountability Office (GAO) reviewed 126 MA plans and found that 35 of them had exceptionally high numbers of people leaving the plan.

More Results from the Study

In 2016, approximately 30% of Medicare beneficiaries were in an MA plan. The purpose of the GAO report was to analyze the extent of health-biased disenrollment, the reasons why beneficiaries left the plan, and if the Centers for Medicare & Medicaid Services (CMS) can identify plans with health-biased disenrollment.

According to the GAO, a “high disenrollment” rate is anything over the 10.6% median rate. It identified 35 contracts with health-biased disenrollment, and in these plans, the GAO found that beneficiaries in poor health were 47% more likely to drop the plan. These statistics suggest that these plans don’t meet needs of beneficiaries in poor health.

Restricted Access

A major concern amongst beneficiaries in poor health was an inability to access their preferred hospitals and doctors. While the GAO refused to name the 35 plans, we know they are all relatively small health plans with no more than 15,000 enrollees. The report also pointed out that the plans also scored poorly on other government quality measures. In 2014, up to 20% of enrollees dropped one of the 35 plans, almost double the median rate.

Should You Drop Your Medicare Advantage Plan?

If you are in ill health and believe your Medicare Advantage Plan does not cater to your needs, by all means, drop it. However, you should not completely abandon the MA market; there are dozens of plans suitable for patients with all manner of medical needs.

A representative for America’s Health Insurance Plans, Kristine Grow, pointed out that MA continues to expand because the vast majority of people that sign up are happy with the level of care they receive. At present, there are approximately 19 million people using an MA plan, a number certain to increase as the nation’s Baby Boomer generation reaches retirement age. Grow also said it was worth noting that most of the beneficiaries that used one of the 35 plans simply switched plans on the marketplace because they either received a better price or improved coverage.

However, an increasing number of seniors are so concerned about any problems that could lie ahead that they are intent on sticking with Original Medicare. These beneficiaries tend to purchase a Medigap plan to fill in the gaps in their health care plan. This practice is potentially a mistake because the majority of MA plans offer benefits not covered by Medicare, including vision care, dental care, and fitness club memberships. In addition, these plans do an excellent job in terms of coordinating medical care to ensure beneficiaries stay out of hospitals.

CMS Is Upping Its Game

Despite Grow’s comments, it is clear that there are problems with certain MA plans, and the CMS is ramping up its efforts to penalize poorly performing plans. It has a number of actions in place, and in first two months of 2017, the CMS fined multiple MA plans several millions of dollars for delaying or denying access to covered benefits such as prescription drugs.

In some of these instances, plans failed to inform patients of their right to appeal denials and overcharged patients for medication. According to experts in the industry, the CMS is only getting started. In early 2016, the CMS issued a 16-month ban on Cigna’s MA plans after the company was responsible for “widespread and systematic failures” to provide enrollees with a sufficient level of medical care and prescription drugs.

In May 2017, Freedom Health of Florida paid $32 million in settlements. It apparently boosted profits by exaggerating the illnesses of patients. The company also allegedly kept a list of patients deemed “unprofitable” and sought to remove them from the plan while actively seeking “profitable” patients.

Final Words

If you are in poor health, and you believe your Medicare Advantage plan is not providing you with the coverage you need, it is better to switch instead of dropping Part C altogether. Find a plan that suits you and make the switch during one of the requisite Enrollment Periods. The OEP, from October 15 to December 7, is not necessarily the only time you can switch. Once you select a new plan, the disenrollment process is automatic.