How do Medicare Advantage providers not go broke?
I recently blogged about Medicare Advantage (MA). A commenter described in detail why he went with that, and noted that he isn’t sure how insurance companies are able to offer the kind of deal he got without losing money. Which piqued my interest, and I checked things out.
First, I need to make clear that nothing I blog on this topic is meant to be critical of seniors who choose MA. They have every right to go with what looks to work best for them. Not that they should give a hoot in heck what I think, in any case.
The best brief, clear explanation that I found is actually from an insurance company website.
Medicare Advantage companies have a contract with the federal government.
Medicare pays these private companies to take on the risk of its policyholders. So, instead of Medicare paying for your claims, they pay the insurance company to manage them.
Medicare Advantage plans are managed care, which means you might need prior authorization for a medication, you may need a referral to see a specialist, and you may have to try a cheaper treatment plan before your plan will approve a more expensive one. That’s how Medicare Advantage plans manage their costs.
Most Medicare Advantage plans are paid enough by the government to offer very low – sometimes even $0 premium plans – in addition to extra benefits that go above and beyond what Medicare regularly covers. For example, you might get some dental, vision, and fitness benefits.
This provides a lot more wonky detail, if that’s something that “turns your crank.”
And this is worth knowing about, too. It’s from about a year and a half ago, but I saw no reason to believe that anything’s changed.
Switching seniors to Medicare Advantage plans has cost taxpayers tens of billions of dollars more than keeping them in original Medicare, a cost that has exploded since 2018 and is likely to rise even higher, new research has found.
Richard Kronick, a former federal health policy researcher and a professor at the University of California-San Diego, says his analysis of newly released Medicare Advantage billing data estimates that Medicare overpaid the private health plans by more than $106 billion from 2010 through 2019 because of the way the private plans charge for sicker patients.
You get the point. The system has provider profits, and plenty of them at that, built in. I for one don’t see any good reasons why it has to be that way, much less why it’s the best way. I’d prefer to see all the money going to patient care, and to fair compensation for the workers who do the actual care (except, of course, for the relatively minimal administrative costs needed to keep the wheels turning). And I know that I have plenty of company with that mindset. Just, not quite enough, it seems, to get those kinds of changes happening, yet.
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