Medicare Advantage Plans and Medicare Secondary Payer (Part 6)
Cattie & Gonzalez, PLLC
Legal services on Medicare/Medicaid Secondary Payer compliance: mandatory reporting, conditional payments, set asides.
Rafael Gonzalez, Esq. Cattie & Gonzalez, PLLC
If you have been paying attention to Medicare Secondary Payer issues over the last decade, then you know that Medicare Advantage reimbursement of conditional payments has been and continues to be a significant issue for primary payers in liability, no-fault, and workers compensation cases. At one point, federal courts had determined that Medicare Advantage plans were not entitled to use the Medicare Secondary Payer Act to seek reimbursement of conditional payments, but had to instead seek such recoveries at the state level based on contractual language found within each policy. That all changed in 2012 when the United States Court of Appeals for the 3rd?Circuit ruled that Medicare Advantage plans were in fact allowed to use the MSP Act to seek reimbursement of conditional payments, including seeking double damages when primary payers refused to pay back such conditional payments forcing the Advantage plan to seek legal remedy in court.
Fast forward a decade later and today Medicare Advantage conditional payments are front and center, or should be, in the MSP compliance program of every primary payer in the country. With numerous United States District Courts and several United States Court of Appeals agreeing, and with the PAID Act becoming law in December 2020, and thereafter becoming effective in December 2021, there is no longer a void in the identification of Advantage plans that may have made payments related to the liability, no-fault, or workers compensation claim, entitling them to reimbursement pursuant to the MSP Act.
Perhaps not as top of mind for most primary payers, but certainly a concern for those of us who work with MSP issues on a daily basis, is the extension of supplemental benefits or “extra benefits” such as vision, fitness, telehealth, hearing or dental benefits to the items covered by Advantage plans that are generally not available in the traditional Medicare program. As Medicare Advantage plans continue to increase their offerings to include meals, transportation, acupuncture, chiropractic, in-home support, and enrollee caregiver support services, will these extended benefits make their way to the traditional Medicare program and become reimbursable conditional payments and an expected component of the Medicare Set Aside program when taking Medicare’s future interests into consideration when settling future medical needs associated with a liability, no-fault, or workers compensation claim?
I have been talking and writing about it for more than 20 years- the privatization of Medicare. Twenty years ago, it seemed an impossible task, but over the last decade, Medicare Advantage, the private plan alternative to traditional Medicare, has taken on a more prominent role in the Medicare program. In 2022, more than 28 million Medicare beneficiaries were enrolled in a Medicare Advantage plan, nearly half of the total Medicare population. How did this happen, and why is it still going on? Why would half of the Medicare population bypass the traditional Medicare system and instead go to private group health insurance companies to obtain their Medicare coverage?
Over the last several weeks, I have discussed various components of why this phenomenon has occurred and is predicted to continue for the foreseeable future. As always, I am grateful for Kaiser Family Foundation (KFF) studies, analysis, statistics, research, and published articles as they were my source for all numbers and conclusions mentioned and discussed throughout the series.?
More Medicare Advantage plans are being offered in 2023 than in any other year since 2010, confirming the attractiveness of this market for insurers and beneficiaries across the country. The average Medicare beneficiary has a choice of 43 plans in 2023, offered by an average of 9 insurers, an increase in the number of plans over prior years. Medicare Advantage plans can be attractive to beneficiaries because they typically offer extra benefits, such as dental, vision and hearing, often for no additional premium, with the trade-off of more restrictive provider networks and greater use of cost management tools, such as prior authorization.?
The sheer number of plans presents both opportunities (to shop for better coverage) and challenges (to decipher potentially important differences across plans).?Insurers are drawn to the Medicare Advantage market because it is more profitable than other health insurance markets. But,?this comes at a cost to Medicare and taxpayers, in that Medicare currently pays Medicare Advantage 104% of traditional Medicare costs, on average.?
Medicare Advantage plans may provide extra benefits that are not available in traditional Medicare, considered “primarily health related,” and can use rebate dollars (including bonus payments) to help cover the cost of these extra benefits. Beginning in 2019, CMS expanded the definition of “primarily health related” to allow Medicare Advantage plans to offer additional supplemental benefits. Medicare Advantage plans may restrict the availability of these extra benefits to certain subgroups of beneficiaries, such as those with diabetes or congestive heart failure, making different benefits available to different enrollees.
In 2023, more than 97% of individual plans offer some vision, fitness, telehealth, hearing or dental benefits. Other extra benefits that are frequently offered in 2023 include over the counter items, such as adhesive or elastic bandages (87%), meal benefits, meal delivery (71%), and transportation benefits (43%). Ten percent of plans offer access to bathroom safety devices (10%), while 4 percent offer support for caregivers of enrollees or telemonitoring services (3%). This is not an exhaustive list of extra benefits that plans offer, and plans may provide other services such as home-based palliative care, therapeutic massage, and adult day health services, among others.
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Medicare Advantage enrollment has increased steadily since 2006, with nearly half (48%) of all eligible Medicare beneficiaries enrolled in Medicare Advantage plans in 2022. The share of Medicare Advantage enrollees varies across the country: in 25 states and Puerto Rico, at least 50 percent of Medicare beneficiaries are enrolled in Medicare Advantage plans in 2022. In a growing number of counties, 60 percent or more of all Medicare beneficiaries are in a Medicare Advantage plan, in lieu of traditional Medicare. Enrollment continues to be highly concentrated among a handful of firms, both nationally and in local markets, with UnitedHealthcare and Humana together accounting for 46 percent of enrollment in 2022.
As Medicare Advantage takes on an even larger presence in the Medicare program, and with current payments to Advantage plans higher than traditional Medicare for similar beneficiaries, it will be increasingly important to assess how well Medicare’s current payment methodology for Medicare Advantage is working to enhance efficiency and hold down beneficiary costs and Medicare spending. It will also be important to monitor how well beneficiaries are being served in both Medicare Advantage and traditional Medicare, in terms of costs, benefits, quality of care, patient outcomes, and access to providers, with particular attention to those with the greatest needs.
In 2022, nearly 7 in 10 Medicare Advantage enrollees (69%) are in plans that do not charge a premium (other than the Part B premium) with the remaining third paying a premium, averaging about $58 per month. Most enrollees are in plans that provide access to a variety of supplemental benefits, such as eye exams, dental and fitness benefits. Nearly all enrollees are in plans that require prior authorization for some services. Medicare Advantage cost sharing for Medicare-covered and other benefits varies across plans and can be lower than traditional Medicare, but that is not always the case. Plans also vary in in terms of provider networks and prescription drug benefits.
While data on Medicare Advantage plan availability and enrollment and plan offerings is robust, the same cannot be said about service utilization and out-of-pocket spending patterns, which is essential for assessing how well the program is meeting its goals in terms of value and quality and to help Medicare beneficiaries compare coverage options. As enrollment in Medicare Advantage and federal payments to private plans continues to grow, this information will become increasingly important.
Across all markets, 2021 gross margins were by far the highest for Medicare Advantage plans. Medicare Advantage plans have both higher average costs and higher premiums (largely paid by the federal government), because Medicare covers an older, sicker population. So, while Medicare Advantage insurers spend a similar share of their premiums on benefits as other insurers in other markets, the gross margins—which include profits and administrative costs—of Medicare Advantage plans was highest among all health insurer types.
Potentially spurred by the prospect of strong financial returns, the Medicare Advantage market has grown substantially in the last decade, with more than 50% of eligible beneficiaries expected to enroll in a Medicare Advantage plan in 2023. Some Medicare Advantage insurers are offering new or more generous extra benefits, such as over-the-counter allowances, meals following hospital stays, or transportation, in addition to gym memberships, dental, vision and hearing benefits that are offered nearly universally to help retain and attract new enrollees.
About Rafael Gonzalez?
Rafael earned his Bachelors of Science degree from the University of Florida, and his Jurisprudence Doctorate degree from the Florida State University.?
Rafael has over 35 years experience in the legal and insurance industries. He is currently a partner in Cattie & Gonzalez, PLLC, a national law firm serving clients in all 50 states, focused on Medicare and Medicaid secondary payer law and compliance in auto, bodily injury, liability, mass tort, medical malpractice, nursing home, no-fault, products, workers compensation, and wrongful death claims and litigated cases.?
Rafael writes and speaks about workers compensation, social security, medicare, medicaid, marketplace, mandatory insurer reporting, conditional payments resolution, set aside allocations, msa and snt administration, social determinants of health, and diversity, equity, and inclusion throughout the country.?
Rafael can be reached at 844.546.3500 or at [email protected]. You may also reach out to him on social media, as he is active on linkedin, twitter, facebook, instagram, and youtube.?