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Medicare Advantage plans may start to see more network turnover

Last October UnitedHealthcare dropped 2,250 physicians from its Medicare Advantage networks in Connecticut, including those of the popular AARP plans. Soon after, the state’s two U. S. senators denounced UnitedHealthcare, or UHC, for its decision, pointing out that it would hurt vulnerable people, many with serious illnesses, by interrupting their continuity of care. Two medical associations succeeded in getting a judge to issue a temporary restraining order against UHC, with the state attorney general later filing a brief in support of the doctors.

UHC president Austin Pittman said that his company cut back on its number of doctors in Connecticut and 10 other states because of substantial funding pressures from Medicare. He was expressing a sentiment common among Advantage plan sponsors — as payments from the government shrink, they will reduce benefits and lay off physicians deemed to be too expensive.

The government’s payments to Advantage plans are 6% lower this year than they were last year, according to the trade group America’s Health Insurance Plans. And another 6% cut is scheduled next year. Those reductions, which come to $150 billion over the next decade, are tied to provisions in the Affordable Care Act that will bring payments to Advantage plans in line with those for traditional Medicare.

Publicly traded insurers in particular are being squeezed. At the same time that the government wants to limit its payments to plans, shareholders expect the plans to maintain or even expand profit margins. A company like UHC has little choice but to seek out doctors who will accept lower reimbursements and who order fewer and more limited medical services. A physician who orders an MRI for a simple fracture will probably not remain in a company’s network for long.

If you are enrolled in an Advantage plan, welcome to a world in which you may have to switch doctors to obtain affordable coverage. It’s the same dilemma faced by thousands of younger people enrolling in Affordable Care Act plans.

When your doctor leaves your Advantage plan’s network and you’re unwilling to switch doctors, your only options are to find another Advantage plan with your doctor in its network or to spend more money to buy a Medigap policy. Annual Medigap premiums for a 65-year-old are in the $1,400-$2,400 range, depending on the plan you choose and the state you live in.

One problem with UHC’s announcement was that it came barely a week before open enrollment began on October 15. That meant seniors in UHC Advantage plans whose doctors were leaving the plans’ networks had to scramble to find new doctors and in some cases, new plans.

Medicare has since issued new rules that require Advantage plans to give at least 90 days notice of significant network changes, although the plans get to determine what is significant. And the new rules still allow plans to drop providers during the year, even though seniors can change plans only during annual open enrollment.

Cost-conscious seniors in Advantage plans have relatively few ways to protect themselves from having to switch doctors. If networks become volatile and, as in UHC’s case, drop 2,250 doctors who help to provide care for 58,000 patients, quality of care suffers in the short term. Out-of-pocket costs also increase because some patients will pay more to continue seeing doctors who are no longer in the network.

While the UHC example is unusual because it involves so many doctors, Advantage plan turnover rates are expected to rise in coming years. Some of that turnover will occur because doctors will voluntarily leave as plan reimbursements drop. But much of that turnover will take place as plans cancel their contracts with some physicians.

For retirees, the possible downsides of higher turnover rates should be weighed against Advantage plans’ improved quality of care. If a plan has excellent quality, doctor turnover may be less important.

Medicare is in the final year of a three-year experiment that gives generous — some would say lavish — bonuses to Advantage plans based on their quality ratings. The plans have reacted by concentrating on quality. Only 24% of Advantage plan contracts were rated four stars or better in 2012, but this year 38% of contracts are rated four stars or better. Also, seniors appear to be choosing higher-rated plans. In 2012, for instance, only 29% of Medicare beneficiaries were in plans with four-star or higher ratings, but this year 53% are.

How important is it that you see only doctors who are in your plan’s network? In an HMO, it’s very important since, except in emergencies, you will likely pay full cost if you are treated by an out-of-network doctor. So long as you’re in good health, it makes financial sense to see only network doctors. If you have a serious illness, however, you may want to go outside the network to see a particular specialist or to get a second opinion.

Dr. Ezekiel Emanuel suggested in a recent New York Times op-ed that there need to be legal protections for seriously ill patients when they venture outside a plan’s network for a second opinion. Emanuel, who is one of the architects of the Affordable Care Act, called this a “safety valve.”

He cited the example of a colon cancer patient from Colorado whose surgeon and oncologist did not agree on her treatment. The patient scheduled an appointment for a second opinion at the MD Anderson Cancer Center in Houston. But her insurance company refused coverage because the cancer center is not in its network. If she went to MD Anderson, she would have to pay $10,000 for her consultation, and so she decided to remain in her plan’s network.

The Connecticut judge who in December issued the temporary restraining order against UHC lifted it in February, illustrating seniors’ powerlessness to do anything about network changes. The only concession made by UHC was to extend by three months the deadline for patients to switch to network doctors. Except for the negative publicity it received, UHC met its initial objective with only minor costs. The company’s only remaining hurdle is the remote possibility of lawsuits by a few doctors who are losing most of their patients.

Several proposals, including some by Dr. Emanuel, would help people assess the strength of a plan’s network before they enroll. But these are only proposals. Medicare requires that Advantage plans comply with a “network adequacy” standard to make sure there are enough primary care doctors and specialists to serve a plan’s patient base. But that doesn’t protect people from large changes in a plan’s network.

Some network turnover is desirable, of course. Younger doctors are needed to replace retiring ones. One study in 2010 by the American Medical Association found that the average turnover rate of doctors in managed care plans was just over 6%, but the same study also found wide variance among plans. When UHC dropped 2,250 doctors from its Advantage plans, for example, it represented 12.5% of the company’s regional PPO plan network of 18,000 physicians.

Here are suggestions for assessing an Advantage plan’s network stability before you enroll.

First, non-profit plans should have lower turnover rates. Such plans often employ their own doctors and are free of shareholder pressure to maintain profit margins. They also earn consistently higher marks for their medical quality and so are less likely to feel the effects of network turnover. Kaiser Permanente is the largest non-profit sponsor of Advantage plans, and its contracts have an average quality score of 4.93 stars out of a possible 5 stars. Kaiser employs its own physicians.

Second, before joining an Advantage plan, confirm with your doctors that they accept this plan’s insurance. Most insurance company websites list the doctors in a particular plan’s network, but the information is sometimes out of date. A state lawmaker in California recently introduced a law to require insurers to keep their provider lists current. While outdated lists of network doctors have been fairly common in some of the new Affordable Care Act policies, Advantage plans occasionally have the same problem.

Third, consider a plan’s quality rating. A high turnover rate will typically damage a plan’s quality rating. When there’s too much turnover, it may mean that experienced doctors who understand plan rules are being replaced by doctors who are learning the rules. And so there’s greater opportunity for problems – poor coordination with other doctors, missed screenings and overlooked preventive tests. ◊◊

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