Source: https://fortune.com/well/2024/01/06/older-americans-say-they-feel-trapped-in-medicare-advantage-plans/

In 2016, Richard Timmins went to a free informational seminar to learn more about Medicare coverage.

“I listened to the insurance agent and, basically, he really promoted Medicare Advantage,” Timmins said. The agent described less expensive and broader coverage offered by the plans, which are funded largely by the government but administered by private insurance companies.

For Timmins, who is now 76, it made economic sense then to sign up. And his decision was great, for a while.

Then, three years ago, he noticed a lesion on his right earlobe.

“I have a family history of melanoma. And so, I was kind of tuned in to that and thinking about that,” Timmins said of the growth, which doctors later diagnosed as malignant melanoma. “It started to grow and started to become rather painful.”

Timmins, though, discovered that his enrollment in a Premera Blue Cross Medicare Advantage plan would mean a limited network of doctors and the potential need for preapproval, or prior authorization, from the insurer before getting care. The experience, he said, made getting care more difficult, and now he wants to switch back to traditional, government-administered Medicare.

But he can’t. And he’s not alone.

“I have very little control over my actual medical care,” he said, adding that he now advises friends not to sign up for the private plans. “I think that people are not understanding what Medicare Advantage is all about.”

Enrollment in Medicare Advantage plans has grown substantially in the past few decades, enticing more than half of all eligible people, primarily those 65 or older, with low premium costs and perks like dental and vision insurance. And as the private plans’ share of the Medicare patient pie has ballooned to 30.8 million people, so too have concerns about the insurers’ aggressive sales tactics and misleading coverage claims.

Enrollees, like Timmins, who sign on when they are healthy can find themselves trapped as they grow older and sicker.

“It’s one of those things that people might like them on the front end because of their low to zero premiums and if they are getting a couple of these extra benefits — the vision, dental, that kind of thing,” said Christine Huberty, a lead benefit specialist supervising attorney for the Greater Wisconsin Agency on Aging Resources.

“But it’s when they actually need to use it for these bigger issues,” Huberty said, “that’s when people realize, ‘Oh no, this isn’t going to help me at all.’”

Medicare pays private insurers a fixed amount per Medicare Advantage enrollee and in many cases also pays out bonuses, which the insurers can use to provide supplemental benefits. Huberty said those extra benefits work as an incentive to “get people to join the plan” but that the plans then “restrict the access to so many services and coverage for the bigger stuff.”

David Meyers, assistant professor of health services, policy, and practice at the Brown University School of Public Health, analyzed a decade of Medicare Advantage enrollment and found that about 50% of beneficiaries — rural and urban — left their contract by the end of five years. Most of those enrollees switched to another Medicare Advantage plan rather than traditional Medicare.

In the study, Meyers and his co-authors muse that switching plans could be a positive sign of a free marketplace but that it could also signal “unmeasured discontent” with Medicare Advantage.

“The problem is that once you get into Medicare Advantage, if you have a couple of chronic conditions and you want to leave Medicare Advantage, even if Medicare Advantage isn’t meeting your needs, you might not have any ability to switch back to traditional Medicare,” Meyers said.

Traditional Medicare can be too expensive for beneficiaries switching back from Medicare Advantage, he said. In traditional Medicare, enrollees pay a monthly premium and, after reaching a deductible, in most cases are expected to pay 20% of the cost of each nonhospital service or item they use. And there is no limit on how much an enrollee may have to pay as part of that 20% coinsurance if they end up using a lot of care, Meyers said.

To limit what they spend out-of-pocket, traditional Medicare enrollees typically sign up for supplemental insurance, such as employer coverage or a private Medigap policy. If they are low-income, Medicaid may provide that supplemental coverage.

But, Meyers said, there’s a catch: While beneficiaries who enrolled first in traditional Medicare are guaranteed to qualify for a Medigap policy without pricing based on their medical history, Medigap insurers can deny coverage to beneficiaries transferring from Medicare Advantage plans or base their prices on medical underwriting.

Only four states — Connecticut, Maine, Massachusetts, and New York — prohibit insurers from denying a Medigap policy if the enrollee has preexisting conditions such as diabetes or heart disease.

Paul Ginsburg is a former commissioner on the Medicare Payment Advisory Commission, also known as MedPAC. It’s a legislative branch agency that advises Congress on the Medicare program. He said the inability of enrollees to easily switch between Medicare Advantage and traditional Medicare during open enrollment periods is “a real concern in our system; it shouldn’t be that way.”

The federal government offers specific enrollment periods every year for switching plans. During Medicare’s open enrollment period, from Oct. 15 to Dec. 7, enrollees can switch out of their private plans to traditional, government-administered Medicare.

Medicare Advantage enrollees can also switch plans or transfer to traditional Medicare during another open enrollment period, from Jan. 1 to March 31.

“There are a lot of people that say, ‘Hey, I’d love to come back, but I can’t get Medigap anymore, or I’ll have to just pay a lot more,’” said Ginsburg, who is now a professor of health policy at the University of Southern California.

Timmins is one of those people. The retired veterinarian lives in a rural community on Whidbey Island just north of Seattle. It’s a rugged, idyllic landscape and a popular place for second homes, hiking, and the arts. But it’s also a bit remote.

While it’s typically harder to find doctors in rural areas, Timmins said he believes his Premera Blue Cross plan made it more challenging to get care for a variety of reasons, including the difficulty of finding and getting in to see specialists.

Nearly half of Medicare Advantage plan directories contained inaccurate information on what providers were available, according to the most recent federal review. Beginning in 2024, new or expanding Medicare Advantage plans must demonstrate compliance with federal network expectations or their applications could be denied.

Amanda Lansford, a Premera Blue Cross spokesperson, declined to comment on Timmins’ case. She said the plan meets federal network adequacy requirements as well as travel time and distance standards “to ensure members are not experiencing undue burdens when seeking care.”

Traditional Medicare allows beneficiaries to go to nearly any doctor or hospital in the U.S., and in most cases enrollees do not need approval to get services.

Timmins, who recently finished immunotherapy, said he doesn’t think he would be approved for a Medigap policy, “because of my health issue.” And if he were to get into one, Timmins said, it would likely be too expensive.

For now, Timmins said, he is staying with his Medicare Advantage plan.

“I’m getting older. More stuff is going to happen.”

There is also a chance, Timmins said, that his cancer could resurface: “I’m very aware of my mortality.”

The Truth About Those Medicare Advantage TV Commercials

Why the ‘Friends Talk Money’ podcast hosts say the ‘free’ policy come-ons can be misleading

Credit: Bill Clark/CQ Roll Call via PBS

Now that it’s Medicare Open Enrollment season through Dec. 7, if you’re 65 or older and eligible for Medicare, or a loved one is, you’ll want to know the answer.

My “Friends Talk Money” podcast co-hosts and I just looked into the popular Medicare Advantage plans (also called Medicare Part C plans) for our latest episode, speaking with Medicare maven Diane Omdahl, of the 65Incorporated.com site. These plans, now chosen by 42% of Medicare beneficiaries, are sold by private health insurers, as opposed to the alternative Original Medicare program offered by the federal government.

The commercials, said “Friends Talk Money” co-host Terry Savage, a syndicated personal finance columnist and author and Medicare expert, promote their one-stop shopping and potential money savings.

Savage noted the ads often say: “Let us do everything! And we’re going to give you hearing [coverage] and we’re going to give you dental and we’re going to pick you up and drive you to your doctor’s appointments. We’re going to give you a turkey on Thanksgiving! They promise so much.”

Omdahl told listeners: “Based on the commercials that are on television every day, people see something they think is going to be more cost effective and then they opt for that [Medicare Advantage] coverage without really knowing what they’re getting into.”

She’s right. A recent survey by the Kaiser Family Foundation found that seven in 10 Medicare beneficiaries didn’t compare coverage options during the most recent Open Enrollment period. And in a MedicareAdvantage.com survey of over 1,000 beneficiaries, three out of four called Medicare “confusing and difficult to understand.”

According to the Kaiser Family Foundation, the average Medicare beneficiary has a choice of 54 Medicare plans, there are 766 Medicare Part D prescription drug plans and a record 3,834 Medicare Advantage plans will be available in 2022 (up 8% from 2021).

Here’s the bottom line from Omdahl and the “Friends Talk Money” hosts: Some of what you hear on those Medicare Advantage TV ads is true, but the fine print shows that “free” isn’t really “free.” When the commercials say “zero premium, zero deductible and zero co-pay,” that’s not the whole story.

Before I explain the truth about Medicare Advantage’s costs and coverage, it may help to provide a little context about Open Enrollment and Medicare Advantage plans. (Buckle up: Medicare Open Enrollment rules are complicated.)

During annual Open Enrollment, Medicare enrollees can switch from Original Medicare to Medicare Advantage or the other way around; switch from one Medicare Advantage plan to another and enroll in a Medicare Part D prescription drug plan in certain instances.

There’s also a Medicare Advantage Open Enrollment period, from Jan. 1 through March 31, when you can switch your Advantage plan to a different one or switch back to Original Medicare and sign up for a Part D plan.

Medicare Advantage plans, usually bundled with prescription drug coverage, typically require you to use health care providers in their network. The policies limit your annual out-of-pocket costs for covered services.

“People need to go beyond the commercials” to understand the fine print of Medicare Advantage plans, Omdahl said. “There are indeed zero-premium Advantage plans and many of the plans do not have any [annual out-of-pocket] deductibles. But the zero co-pay is misleading. Zero co-pay is for your primary doctor; depending on where you live, co-pays may apply in other situations.”

In addition, noted Omdahl, “start digging into the evidence of coverage and you will see that Medicare Advantage is pay-as-you go: fifty dollars to see a specialist, four hundred dollars a day for five or six days of hospitalization. So you are writing checks, and that’s what people don’t realize. They think ‘zero premium’ means it’s free, which it’s not.”

Savage said that due to the Medicare program’s rules, Medicare Advantage enrollees could wind up paying out of pocket as much as $7,500 a year; more than $11,000 a year if you use out-of-network health care providers.

“These plans work best if you don’t get sick,” she said. “Once you need to see a lot of specialists, then you start paying.”

Omdahl said that before signing up for a Medicare Advantage plan, understand that anytime you want care other than an emergency, the plan has to approve it.

“If you need physical therapy, for instance, the plan has to approve the request for the service and then they’ll usually say the person gets three visits or five visits or whatever. So, they are controlling the utilization of services of the members,” she explained.

Savage said if you’re in a Medicare Advantage plan and want to switch back to traditional Medicare for 2022, you could run into a problem. “If you have become ill, there’s a medical underwriting [a health care provider must check you out before you’re granted coverage] and in most states they can turn you down for the most comprehensive Medicare supplement [Medigap] plan.”

So, Savage advised, “think very carefully before you switch out of traditional Medicare, which lets you see just about any doctor or go to any hospital.”

I noted a recent study by the nonprofit health care research group The Commonwealth Fund that looked at Medicare Advantage plans and traditional Medicare. Overwhelming majorities of Medicare beneficiaries in both traditional Medicare and Medicare Advantage were satisfied with their care.

The researchers discovered that the Advantage plans didn’t substantially improve beneficiaries’ health care experiences compared to traditional Medicare, but did offer somewhat more care management.  That means of those with a health condition, a larger share of Medicare Advantage enrollees in the study said that a health care professional had given them clear instructions about symptoms to monitor and had discussed their priorities in caring for the condition.

The American Association for Medicare Supplement Insurance just completed its 2020 Medigap Cost Comparison for those turning 65, and it reveals an important finding that has real significance for insurance agents marketing Med Supps.

“With Medigap Plan F no longer available for new enrollees, we compared Plan G that we expect will become 2020’s No. 1-selling option,” says AAMSI Director Jesse Slome.

Here’s what they found: A 65-year-old man in Manhattan buying Medicare Supplement insurance (Plan G) could pay as little as $268 a month or as much as $476 a month. A 65-year-old woman shopping for Medigap Plan G in Dallas could find coverage for $99 or $381 (monthly).

The Association’s 2020 Price Comparison examined costs for Medicare Plan G costs for Top 10 U.S. Metro Areas. The chart shows the increase in costs for both men and women who will be first applying at age 65. No one Medicare insurance company was consistently the lowest cost for Plan G. No one company was the highest. In fact, for the 20 Zip Codes, the survey found 13 different Medicare insurance companies had either the lowest or the highest prices.

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