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Managing Medicare's Costs

When choosing a Medicare Advantage plan, pay close attention to the networks

Seventeen million people are enrolled in Medicare Advantage plans, triple the number of a decade ago. Ironically, though, during the same period that Advantage plans have been rapidly expanding, they have been reducing the numbers of providers in their networks. The result is that in many plans there are fewer doctors willing to accept accept new patients, there’s a scarcity of specialists, and extended wait times are the norms when scheduling appointments.

Advantage plans have downsized their networks to control costs. As Medicare’s payments to plans have been trimmed in recent years, they have responded by reducing medical benefits and terminating the contracts of thousands of doctors. In most cases they get rid of doctors they believe to be high-cost providers who order too many tests or spend too much time with each patient.

Apparently the cutbacks are improving the companies’ bottom lines and encouraging additional insurance companies to enter the Advantage plan marketplace. Next year there will be 56 more plans nationwide than there are this year, with several companies sponsoring Advantage plans for the first time, according to a Kaiser Family Foundation report.

Shrinking networks are not unique to Advantage plans. Plans sold in the health insurance exchanges are often criticized for their narrow networks and error-filled online directories of network doctors. Last month California fined two large insurance companies a total of $600,000 for their inaccurate online directories that wound up costing patients who enrolled in plans believing that their doctors were in the plans’ networks.

Unlike plans sold in the exchanges, Advantage plans are regulated by a single entity — Medicare. And the good news for seniors is that after years of neglect, Medicare is beginning to examine the adequacy of networks more carefully. In the past Medicare has not done a good job of that, according to a report in August by the Government Accountability Office.

During a three-year period Medicare reviewed fewer than one percent of all Advantage plan networks, according to the GAO report. What’s more, when Medicare did review a network, it relied on the same information that was in the frequently out-of-date directories. A positive note is that government officials have promised to implement the recommendations of the GAO report. And when that happens, Advantage plans will be under greater pressure to make sure their networks have an adequate supply of doctors, including specialists.

Another reason Advantage plans’ networks may be improving is that the plans are now being compensated fairly for their less healthy patients. In the past plans routinely lost money on enrollees in poor health because Medicare’s risk-adjusted payments for those patients were too low.

That gave the plans an incentive to keep sick people from enrolling in their plans, and one way to do that was to have a limited number of network specialists. In theory at least, an Advantage plan might choose have only one oncologist in its provider network, prompting cancer patients to look elsewhere for their coverage.

But a large study has recently found that Medicare’s current risk-adjusted payments properly compensate the plans for sicker patients. And if plans’ profit margins are roughly the same for healthy and unhealthy people, they have less incentive to favorably select only healthy patients by limiting the number of doctors, and particularly specialists, in their networks.

Your best defense against being stuck with a limited network of doctors is not to rely on Medicare, but to do your homework before enrolling in a Advantage plan. Even when choosing a PPO plan, if your doctors are not in the plan’s network you could be stuck paying 30% or more of the oosts for out-of-network services.

Here are three questions you should ask:

1) Does the network have a sufficient number of specialists? How can you tell if there are enough specialists, particularly if the online directories are often wrong? The best you can do is to call the offices of your current specialists to verify that they are in the network of the Advantage plan you’re considering. You can’t foresee your medical needs, though, and it’s possible you’ll want to find a new specialist next year. If that happens, you’re clearly better off in a plan with a large network that includes your present physicians.

The caveat is that although a larger network will give you more choices, it is not necessarily a guarantee that you can find a nearby specialist who is willing to accept new patients. Some Advantage regional PPO plans list 20,000 or more providers in their directories, including an ample number of specialists willing to accept new patients. Yet regional PPO plans cover very large areas, and if you do not live near a large urban center, the closest network gastroenterologist might be 75 miles away.

2. How can you tell if an Advantage plan’s directory is up to date? You can’t, and therefore you need to check with all of your doctors to see if they are in a plan’s network. The authors of a study in JAMA Dermatology tried to contact every dermatologist who was listed as a network doctor in the largest Medicare Advantage plan in 12 metropolitan areas. A total of 4,700 dermatologists were listed in the 12 plans, but more than 45% of those turned out to be duplicate listings.

After the duplicates were removed, 2,590 dermatologists were left. Calls to their offices revealed that many of those doctors were deceased, had retired, no longer accepted new patients, or had moved away. In one large Advantage plan the caller was unable to schedule an appointment with any network dermatologist. And for the 12 plans combined, the average wait time for an appointment was 45 days.

Help is on the way in the form of a new regulation that goes into effect in 2016, when Advantage plans will be required to update their online directories at least once every three months. Plans will also have to make sure that their network providers accept new patients. There will be strong incentives for plans to comply with the new rules, since failing to do so can result in fines of up to $25,000 a day and a ban on enrolling new patients.

3. What can you do if your doctor leaves the network in mid-year? In 2013 UnitedHealthcare (UHC) was hit with a temporary restraining order and a ton of unfavorable publicity when it dropped 2,250 physicians from its Medicare Advantage networks in Connecticut. UHC eventually prevailed in court, however, after agreeing to delay the terminations by three months. It was the first Advantage network to go through a large downsizing.

Since then the terminations have continued, at by the end of last year UHC had shrunk its Advantage plan networks by between 10% and 15%, according to a company source quoted in an article in the Washington Post.. The article also quoted Dr. Arthur Vogelman, a New York City gastroenterologist, who was one of thousands of physicians dropped by UHC without being given a reason. “I have patients in their 80s and 90s who have been with me 20 years,” Vogelman said, “and I’m having to tell them that their insurer won’t pay for them to see me anymore. The worst thing is I can’t even tell them why.”

Your only defense is to be aware of a little knwon Medicare rule that gives you some protection from mid-year changes in your plan’s network. Medicare allows you to switch Advantage plans or to change to traditional Medicare if during the year there are significant network changes that will affect you. Also, legislation has been re-introduced in Congress to prohibit Advantage plans from terminating doctors’ contracts during the year. Two years ago a similar version of this bill failed to pass. ◊◊

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