When I was in high school, I went to New York City with my friends to “hang out”  in Times Square, where there was a “99-cent” store.  

At the time, I was thrilled that for $0.99, I could buy anything in the store, and to my adolescent eyes, there seemed to be thousands of items for sale that I wanted.  

Over time, I realized that even if something cost 99 cents, I still might be overpaying.  

And that is the case with many Medicare Advantage plans. They seem like a good deal, but upon closer examination, many of these plans are a bargain you cannot afford.  

The HHS Inspector General Found Medicare Advantage Organizations Incorrectly Denied Coverage Approximately 1 Out Of 5 Times

According to the Health and Human Services Inspector General…

Our case file reviews determined that [Medicare Advantage Organizations] sometimes delayed or denied Medicare Advantage beneficiaries’ access to services, even though the requests met Medicare coverage rules.

[Medicare Advantage Organizations] also denied payments to providers for some services that met both Medicare coverage rules and [Medicare Advantage Organization] billing rules. Denied requests that meet Medicare coverage rules may prevent or delay beneficiaries from receiving medically necessary care (bold added for emphasis)

Imaging services stay in post-acute facilities, and injections were three prominent service types among the denials that met Medicare coverage rules.

Notably, the Inspector General did not find that 20% of enrollees were denied care. 

Only sick patients weren’t cared for, meaning the level of non-compliance among Medicare Advantage Organizations is much higher than 20% among those who are ill and need healthcare the most. 

Just last month, I witnessed the potentially devastating consequences of denial of benefits. The 90-year-old mother of a close friend of mine was denied rehabilitation services after she fell and broke her hip. She was told that she was being sent home even though she could not walk or use the bathroom. I helped my friend appeal the benefits denial, and after some hardball tactics, her Medicare Advantage Organization decided to reconsider and treat her. After a month of rehabilitation, my friend’s mom could walk again. She is now at home (in an assisted living facility) instead of being discharged to a nursing home and permanently disabled.  

My friend’s mom was going to be denied post-acute care.  I am convinced that had she been discharged to a nursing home rather than rehabilitation, she would have died.  Rather than being able to walk, my friend’s mother would have laid in bed, been forced to use a bed pan, and lost all hope.  

My friend’s mom’s experience is exactly what the Inspector General found, i.e., denial of medically necessary care.  Had I not helped my friend deal with the Medicare Advantage Organization, we would have planned a funeral rather than weekend visits to see mom.  

What is a Medicare Advantage Organization? 

Medicare Advantage Organizations are essentially HMOs for Medicare patients.  

Compared with “original Medicare,” where doctors and hospitals are paid on a fee-for-service basis, Medicare Advantage Organizations are paid a fixed amount per covered person. 

If you want to understand why a Medicare Advantage Organization would deny care, just follow the money!!

If a Medicare Advantage Organization can get away with saving money by denying care, it will do so. After all, assuming the Medicare Advantage Organization doesn’t kill the patient, it gets paid the same amount whether it cares for its enrollees or merely pretends to care. So, to maximize profits, the trick is to keep enrollees alive while spending the least amount possible.  

So, why do Medicare Advantage Organizations deny care?  

The answer is simple…to pad their profits.

In any given year (assuming they don’t kill off too many of their enrollees), revenue stays the same regardless of the quality of care, but expenses are reduced if care is denied.  

The same revenue with lower expenses translates into bigger profits and higher executive salaries.  

As an example of how much money we are talking about, Humana (one of the largest Medicare Advantage Organizations) earned more than $930 million in the first quarter of 2022.  

Is this a big problem? Are many seniors enrolled in Medicare Advantage Plans? 

Yea… it’s a big problem.

Medicare Advantage Plans are growing faster than crabgrass.  

Currently, 45% of all Medicare recipients are enrolled in Medicare Advantage plans. And these plans are growing at the expense of original Medicare coverage.  

Graph showing cost of medicare advantage vs. original medicare and

What you need to know…

Medicare Advantage plans are great bargains unless you get sick and need care.

If you get sick and need diagnostic imaging, rehabilitation, or injections, then I wish you lots of luck.   Just like the 99-cent store I used to go to as a kid, some bargains just aren’t worth the price.

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