UPDATE:CMS investigating "3rd Party Payer" claims
2019 OPEN ENROLLMENT ENDS (most states)
Time: D H M S
SEE IMPORTANT UPDATE AT BOTTOM.
This story from Bruce Japsen of Forbes made some news a week or so ago, but I didn't get around to posting anything about it until now. Here's the key section:
Under the “third party” arrangements, nonprofit organizations work as a front for medical care providers trying to win higher payments from private insurers that pay more than government programs like Medicaid, insurers say. For example, UnitedHealth Group last month sued a dialysis chain, American Renal Associates, alleging fraud. In its suit, UnitedHealth said American Renal hooked patients up with a charitable organization that helped patients pay their premiums, according to media reports.
Even though patients were eligible for Medicaid coverage for the poor, according to this New York Times report, the kidney care company wanted them to be covered by a private insurer so the dialysis providers could be paid a higher reimbursement. American Renal has said the UnitedHealth lawsuit is without merit, theTimes report said.
It took me a little while to understand this, but here's the key:
How much do states provide compared to private insurance companies? Generally, Medicaid payment rates vary from state to state, but for many services pays on average only about 60% of what Medicare or private insurance pays. This is why many nursing homes, assisted living facilities, and other providers do not accept Medicaid patients.
Now, I'm a bit confused by Medicare being listed alongside private insurance, because it was my understanding that Medicare only reimburses doctors/hospitals for about 80% of private insurance rates; 60% of Medicare rates would be just 48% of private insurance rates, not 60%.
Either way, the point is that if a doctor sees/treats a patient enrolled in Medicaid, they're only going to get paid about half as much as they would if they provided the exact same treatment for the same patient enrolled in a private healthcare policy.
Now, as I understand it, anyone who qualifies for Medicaid in a given state who attempts to sign up for an ACA exchange policy is supposed to be automatically redirected towards Medicaid instead of enrolling in an exchange policy, so I'm not sure if part of the "scheme" involves fudging your estimated income to place you just above the minimum threshold for subsidized QHPs (ie, 101% FPL in non-expansion states, 139% FPL in expansion states) or what, but it sounds like the way it works is this:
- If Patient X is enrolled in Medicaid, let's say they rack up $30,000/year in (full reimbursement) treatments. The doctor only gets reimbursed around $15,000.
- If Patient X is enrolled in a private policy (either on or off exchange), the doctor gets reimbursed the full $30,000.
So, how can the doctor make up that extra $15,000/patient?
Well, let's assume that they enroll in a high-end Platinum plan with no deductible for, say, $400/month. Normally that would cost $4,800/year, which obviously the patient can't afford (they're supposed to be on Medicaid, remember). Plus, the patient would still have to pay 10% of the $30K, or another $3,000...$7,800 total.
If, however, the doctor volunteers to pay that $7,800/year, guess what? He gets reimbursed for the other 90% from the insurance carrier...$27,000. Subtract the $7,800 they put in, and their net earnings are $19,200...or $4,200 more than they would have been paid if the patient had just enrolled in Medicaid in the first place.
So, the doctor ends up with 64% of the full rate instead of only 50%, which is great for them, but gives the insurance company a sad, since they end up paying out $19,200 net.
(Note: I'm probably not getting all of the dollar amounts right in the example above, but I think I have the basic principle down).
Since it doesn't sound like it's legal for the doctor/hospital do go through the above steps directly, the insurance companies are claiming that some doctors/hospitals have set up and are funding "front" organizations posing as charities/non-profits, which then offer to pay for the patients to enroll in private policies instead of Medicaid.
Frankly, it sounds like an awful lot of fuss and bother (not to mention upfront expense) to me. After all, the above example only works in the doctor's favor if the patient really does rack up at least around $17,000 in expenses...anything below that and the doctor will end up making about the same amount as they would under Medicaid anyway. What happens if the Medicaid enrollee turns out to be healthy and never needs so much as an asprin? Now the doctor is out $4,800 with nothing to show for it.
However, if it's happening as the carriers claim, presumably it's overall worth it to the providers to do so in the end. In fact, if I'm understanding how this works correctly, it sounds like the sicker and more expensive-to-treat the patient is, the better it works for the provider.
Naturally the carriers are crying foul over this, since (if true) it's costing them money.
Anyway, it sounds like the issue (or at least the claims) are serious enough that CMS has leapt into action in response:
CMS examines inappropriate steering of people eligible for Medicare or Medicaid into Marketplace plans
Concerns raised about impact of 3rd party premium provider & affiliated organization payments
The Centers for Medicare & Medicaid Services (CMS) today issued a request for information seeking public comment on concerns that some health care providers and provider-affiliated organizations may be steering people eligible for, or receiving, Medicare and/or Medicaid benefits into Affordable Care Act-compliant individual market plans, including Health Insurance Marketplace plans, for the purpose of obtaining higher reimbursement rates. CMS also sent letters to all Medicare-enrolled dialysis facilities and centers informing them of this announcement.
The request for information and letters to providers focus on situations where patients may be steered away from Medicare or Medicaid benefits, which can among other concerns, result in beneficiaries experiencing a disruption in the continuity and coordination of their care as a result of changes to their network of providers. These actions reflect ongoing efforts by the CMS Center for Program Integrity to address possible issues in the Marketplace that could affect the integrity of the programs for both consumers and issuers, and the costs of the individual insurance market, while at the same time help ensure patients are enrolled in the right plan for them.
“Ensuring access to high quality patient care is a top priority for us. We are concerned about reports that some organizations may be engaging in enrollment activities that put their profit margins ahead of their patients’ needs,” said CMS Acting Administrator Andy Slavitt. “These actions can limit benefits for those who need them, potentially result in greater costs to patients, and ultimately increase the cost of Marketplace coverage for everyone.”
“It is improper to influence people away from Medicare or Medicaid coverage for the purpose of financial gain,” said Shantanu Agrawal, M.D., CMS Deputy Administrator and Director of the Center for Program Integrity. “Our goal is to protect patients from being unduly influenced in their decisions about their health insurance options, and to protect the integrity of all the programs we oversee.”
Currently, third-party payment of premiums and cost sharing of qualified health plans in the individual market by health care providers such as physicians, medical facilities or affiliated non-profit organizations are discouraged, but the ultimate decision about accepting those payments are left to health insurance companies. This guidance does not apply to certain federal, state or local government programs, Ryan White HIV/AIDS programs or Indian tribes, tribal organizations and urban Indian organizations, which are expressly permitted to pay insurance premiums for consumers under CMS regulations. Recently, concerns have been raised that certain providers or organizations affiliated with specific providers may steer consumers into individual market plans, including Marketplace health plans, because they would receive higher payment rates under a private plan than under Medicare or Medicaid.
In addition to asking for more information on instances of problematic steering of consumers to individual market plans, CMS is also considering potential regulatory and operational options to prohibit or limit premium payments and routine waiver of cost-sharing for qualified health plans by health care providers, revisions to Medicare and Medicaid provider enrollment rules, the imposition of civil monetary penalties for individuals that fail to provide correct information about consumers enrolling in a plan, and potential changes that would allow issuers to limit their payment to health care providers to Medicare-based amounts for particular services and items of care. In particular, CMS is looking at authorities to impose civil monetary penalties on health care providers when their actions result in late enrollment penalties for Medicare eligible individuals who are steered to an individual market plan and, as a result, are delayed in enrolling in Medicare.
Like reducing inappropriate use of special enrollment periods and other efforts, today’s steps are a part of the Administration’s ongoing work to strengthen and expand the Health Insurance Marketplace.
UPDATE 8/18/16: To be honest, I'm personally not sure I understand what's actually "wrong" with this scenario, assuming it's happening. I mean, yes, it's a bit convoluted, and in the example I described it's obviously not being done for altruistic reasons, but...I'm sorry, I just can't seem to work up a whole lot of moral outrage here.
On that line of thinking, here's the official response to CMS's letter from the American Kidney Fund:
Statement from LaVarne A. Burton on CMS Request for Information
ROCKVILLE, Maryland (August 18, 2016) -- In response to media inquiries about the Centers for Medicare & Medicaid Services request for information issue today, American Kidney Fund President and Chief Executive Officer LaVarne A. Burton issued the following statement:
We look forward to commenting to CMS on this important issue that affects so many patients, especially low-income patients with chronic illnesses.
We have always operated our Health Insurance Premium Program (HIPP) with the highest integrity, ensuring that patients have access to the insurance coverage that they choose to best meet their needs.
We vigorously defend HIPP from inappropriate use or fraud and abuse—some of the nation’s most vulnerable patients depend on our help to access the health care they need to stay alive. We have in place safeguards that we have proposed to the federal government to help ensure that bona fide charitable organizations can continue to help patients in need.
AKF provides help to patients solely on the basis of their financial need. We carefully review each applicant’s financial status and require that they meet specific income-to-expense criteria in order to qualify for our help. Under our assistance program, patients choose their health insurance coverage with no input from AKF—we are not involved in helping patients find insurance nor do we provide patients with advice on which insurance plan(s) to choose. Patients may change their health insurance coverage—and their provider—at any time, and AKF will continue to help them.
Let’s not lose sight of the critical fact that end-stage renal disease (ESRD, or kidney failure) patients have as much right under the law as anyone to access ACA plans. For some, these plans may provide more comprehensive coverage for the full range of medical care they need, including dialysis. For others, Medicare (with Medigap if available to them) or Medicaid may indeed be the best choice. What’s important is that the patient has the choice. Insurers are actively working to take this choice away from low-income patients with chronic illnesses who need charitable assistance to pay their premiums.
We help people with all types of insurance—Medicare Part B. Medigap, commercial, COBRA, and employer group health. The majority—more than 60 percent—receive our help to afford Medicare Part B and/or Medigap premiums. A small minority—about 6,400 patients—receive grants to pay for plans through the insurance marketplace.
Clearly there are fixes that need to be made to the Affordable Care Act but blocking patients’ legitimate right to access these plans—as some of the nation’s largest health insurers are trying to do—is not the answer.