State wants to revise process used by insurance companies to terminate an enrollee's health policy

Tatiana Fassieux, a health insurance counselor for senior citizens at Passages, a nonprofit social services agency in Chico, hung up the phone in exasperation. She had just spent a half hour talking to an oxygen supply company so that her 74-year-old client with emphysema would continue getting his desperately needed oxygen, even though the company hadn't been paid in six months.

"It's an example of how things can go so very wrong when a person unknowingly signs for one of those Medicare Advantage plans," she said. "My client's health is being affected because he can't cope with the volume of paperwork coming into his home."

Medicare Advantage plans, which promise traditional fee-for-service Medicare beneficiaries, increased benefits for enrolling in either health maintenance organizations or insurance company-run fee-for service plans. They are now under fire across the United States. Many of the nearly 9 million seniors who've enrolled in the plans complain when they learn their choice of doctors has been limited, or they have to get a recommendation from their primary care physician to visit a specialist. Others say they've been fooled into signing up for the plans by insurance brokers claiming to represent the government.

Now, with the Democrats who control Congress looking for ways to raise enough money to roll back the 10 percent physician pay cut that is scheduled to go into effect on July 1, the plans could be on the chopping block. The Democratic leadership wants to avoid the cutbacks in traditional Medicare and Medicaid included in President Bush's proposed budget.

"The Administration's proposed cuts in Medicare and Medicaid, even larger than last year's, are particularly unjustified when the largest subsidies in the Medicare program — payment to Medicare Advantage plans — are left untouched," House Speaker Nancy Pelosi said in a prepared statement.

The insurance industry's management of the plans has made them vulnerable. The government has been swamped with complaints from seniors and social service workers, who claim insurance brokers are misrepresenting the plans' benefits and how they work. The brokers can earn as much as $800 for enrolling a senior in a Medicare plan run by insurance companies, which themselves get a 12 percent bonus over what the average Medicare beneficiary costs the government.

Yet many seniors often find they are paying higher co-payments under the plans. "The insurance companies claim they offer better benefits, but some things in their plans require a 30 percent co-pay instead of the 20 percent in traditional fee-for-service Medicare," said Katharine Raley, a program manager in Ventura County's Health Insurance Counseling and Advocacy Program. "We've had probably a hundred cases of this type of marketing where the people wanted to get out after they realized what they had purchased."

There have been numerous instances where out-of-state call centers have sought to enroll seniors in her area in the plans by claiming an agent "from Medicare" would soon visit their homes to explain their superior benefits. "That's fraud," Raley said. "The way they did it was illegal." She has referred dozens of cases to the Health and Human Services department's Inspector General and the California Attorney General.
Private fee-for-service plans are the fastest growing part of the Medicare Advantage, accounting for 22 percent of the 8.8 million seniors enrolled in the program, according to a new report released last month by the Menlo Park-based Kaiser Family Foundation. But the average beneficiary enrolled in the private fee-for-service plans received fewer benefits than Medicare Advantage HMOs or, in many areas of the country, traditional Medicare.

"There is evidence that beneficiaries have difficulty assessing the relative benefits of the different plans available to them, or in understanding key features of various plans, such as network restrictions," the report noted.

Health care advocates are lobbying Congress to roll back the extra payments for Medicare Advantage providers in order to avoid cutbacks in traditional Medicare. "In order for any changes to be paid for, they have to get rid of the overpayments for the Medicare Advantage program," said Bonnie Burns, a policy specialist with California Health Advocates.

Physician groups have also taken aim at the program to avoid the cutback in reimbursement schedules postponed until July 1. The lines got drawn last fall when the House, which under Pelosi's leadership has tried to reestablish the so-called "paygo" rules where new expenditure is paid for by eliminating some other program, tied elimination of Medicare Advantage to the expansion of the states children's health insurance program and the rollback of the physician pay cuts.

During that battle, the American Medical Association joined the AARP, the senior citizen advocacy group, in running television ads lambasting the insurance industry. The charged insurers with taking "billions in excess Medicare payments" that threatened to undermine the traditional program.
The insurance industry, meanwhile, isn't standing still. Its trade group, America's Health Insurance Plans, ran its own ads claiming that three million seniors would lose their Medicare Advantage coverage if the extra payments for the program are eliminated.
As far as some senior counselors in the field are concerned, that wouldn't be a bad thing. "Quality of care with these plans is an issue," Raley said. "Doctors are complaining they're not getting paid for six months so they won't take these Medicare Advantage fee-for-service beneficiaries."

For more information or for free Medicare counseling, you can call the Health Insurance Counseling and Advocacy Program (HICAP) at 1-800-434-0222.

—By Merrill Goozner

Merrill Goozner is a freelance journalist in Washington, D. C.