Tight provider networks have some seniors dropping private plans after losing access to ‘preferred doctors and hospitals’ and experiencing issues with ‘access to care’

Medicare Advantage Plans continue to rise in popularity. That trend has implications for clinical laboratories and anatomic pathology groups because private insurers running Medicare Advantage plans tend to have narrow or exclusive lab networks.

Thus, as Medicare patients shift from Medicare Part B (which pays any provider a fee-for-service reimbursement) to a Medicare Advantage plan (with a narrow network), labs in that community lose access to that patient.

Now a recent government study of the Medicare Advantage program has interesting findings. For seniors in poor health, the private healthcare plans can prove costly if they lose access to specialized healthcare and the freedom to go to any doctor or hospital.

High Turnover Could Mean Poor Quality Plans

A 2017 report by the Government Accountability Office (GAO) found that beneficiaries in poor health are more likely to disenroll from Medicare Advantage Plans—a sign that the quality of plans with higher than normal turnover may be poor. The agency reviewed 126 Medicare Advantage plans and found that 35 of them had disproportionately high numbers of sicker people dropping out. Many seniors cited problems with “coverage of preferred doctors and hospitals” and “access to care.” The GAO is urging the Centers for Medicare and Medicaid Services (CMS) to review disenrollment data by health status and disenrollment reasons as part of the agency’s routine monitoring efforts.

“People who are sicker are much more likely to leave [Medicare Advantage plans] than people who are healthier,” James Cosgrove, Director of Healthcare at the GAO, told Kaiser Health News.

David Lipschutz, JD, Managing Attorney at the Center for Medicare Advocacy, called for tighter government oversight of Medicare Advantage plans.

“A Medicare Advantage plan sponsor does not have an evergreen right to participate in and profit from the Medicare program, particularly if it is providing poor care,” Lipschutz told Kaiser Health News.

David-Lipschutz

David Lipschutz, JD (above), Managing Attorney for the Center for Medicare Advocacy, is calling for tighter oversight of Medicare Advantage Plans following a report by the Government Accountability Office (GAO) showing an exodus of sicker patients from some Medicare Advantage plans. (Photo copyright: Center for Medicare Advocacy.)

Threat to Regional Medical Laboratories by Narrow Networks

Dark Daily previously reported on how enrollment shifts from traditional Medicare to Medicare Advantage threaten the financial health of regional clinical labs, which typically lose access to Medicare Advantage beneficiaries. In 2017, one in three (33%) Medicare beneficiaries was enrolled in a private Medicare Advantage plan, reflecting 8% growth (1.4 million beneficiaries) between 2016 and 2017, according to a Kaiser Family Foundation (KFF) report.

Medicare Advantage’s private health plans are attractive to many seniors because of lower cost sharing and expanded benefits, such as hearing aid and eyeglass coverage and fitness club memberships. The tradeoff, however, requires forfeiting access to Medicare Part A (hospital insurance) and Part B (medical insurance) and accepting a narrower network of providers and hospitals.

KFF-Medicare-Advantage-Narrow-Networks

An analysis by the Kaiser Family Foundation shows that more than three in 10 (35%) of Medicare Advantage enrollees in 2015 were in narrow-network plans. On average, Medicare Advantage networks included less than half (46%) of physicians in a county. The size and composition of Medicare Advantage Provider networks greatly impacts smaller clinical laboratories and anatomic pathology groups, which often are excluded from narrow-network plans. (Image copyright: KFF.)

Ron Brandwein, Health Insurance Information, Counseling and Assistance Program Coordinator at Lifespan of Greater Rochester, N.Y., believes consumers need to understand the limitations of Medicare Advantage plans.

“It’s very competitive, very dog eat dog,” he told the Democrat and Chronicle, adding that, once a person signs up with a Medicare Advantage plan, all their dollars for care are sent to that plan. “If they wind up going to a doctor or hospital that doesn’t accept it, they can’t fall back on Medicare because Medicare won’t pay their bills anymore because they’ve given their dollars to their chosen Advantage plan,” he said.

The 2017 KFF report “Medicare Advantage: How Robust Are Plans’ Physician Networks,” found:

  • One in three Medicare Advantage enrollees in 2015 were in a plan with a narrow physician network (less than 30% of physicians in the county);
  • 43% were in medium-sized networks (30% to 69% of physicians in the county); and,
  • Just 22% were in broad plans that included 70% or more of physicians in the county.

“Insurers may create narrow networks for a variety of reasons, such as to have greater control over the costs and quality of care provided to enrollees in the plan,” KFF reported. “The size and composition of Medicare Advantage provider networks is likely to be particularly important to enrollees when they have an unforeseen medical event or serious illness. However, accessing the information may not be easy for users, and comparing networks could be especially challenging. Beneficiaries could unwittingly face significant costs if they accidentally go out-of-network.”

But Kristine Grow, Senior Vice President, Communications, at America’s Health Insurance Plans (AHIP), contends most consumers are satisfied with their Medicare Advantage plans, as evidenced by the growth in Medicare Advantage enrollment. She told Kaiser Health News that patients in the GAO study mostly switched from one health plan to another to take advantage of a better deal or more inclusive coverage.

“We have to remember these are plans working hard to deliver the best care they can,” Grow said. Insurers compete vigorously for business and “want to keep members for the longer term,” she added.

Smaller Clinical Laboratories at Greatest Risk

The implications for anatomic pathology groups and medical laboratories is clear. As Dark Daily has reported, increasing reliance by insurers on narrow networks to stem raising costs limits the number of physicians ordering medical testing, reducing lab revenues and threatening the entire pathology industry—especially smaller clinical laboratories. And, since Medicare patients now represent more than 50% of all patients in the healthcare system, the impact of that aging population’s behavior increases each year.

—Andrea Downing Peck

Related Information:

As Seniors Get Sicker, they’re More Likely to Drop Medicare Advantage Plans

Medicare Advantage 2018 Data: First Look

Medicare Choices More Complicated for Seniors Who Use Rochester Regional Health

Medicare Advantage: How Robust Are Plans’ Physician Networks?

Medicare Advantage Plans in 2017: Short-term Outlook is Stable

Medicare Advantage: CMS should Use Data on Disenrollment and Beneficiary Health Status to Strengthen Oversight

Sustained Growth in Medicare Advantage Plans Threatens Financial Health of Smaller Pathology Groups and Local Medical Laboratories

Kaiser Family Foundation Study Predicts Big Increases in Obamacare Premiums for 2017; However, Narrow Networks Often Exclude Clinical Laboratories and Other Providers

McKinsey Study Confirms Trend Toward Narrow Healthcare Networks on Health Insurance Exchanges; Smaller Clinical Laboratories and Pathology Groups Often Excluded

Narrow Networks Mean Shrinking Opportunity for Pathology and Clinical Medical Laboratories

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