The stability of $0 premiums in Medicare Advantage

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Arbitration, the land where nobody is happy

After Congress officially outlawed most types of surprise medical bills last year, there’s been endless, litigious debate as to how health insurance companies and providers should settle their differences while patients are held harmless. That behind-the-scenes arbitration process has turned into a gigantic, gummed-up mess, leading to very few resolutions between disputing parties.

Turns out, the process is getting messier, even when resolutions are found. An air ambulance provider is suing Blue Cross Blue Shield of Arizona for not paying the amounts finalized by the arbitrator, alleging it has been stiffed out of $320,000, my colleague Brittany Trang reports. This case is one of the first where the provider isn’t disputing the arbitration process itself, or the amount chosen — but that an insurance company isn’t even paying the amount it proposed.

Insurers contend there have been technical glitches. Experts also told Brittany this is emblematic of yet another hiccup in the rollout of anti-surprise-billing rules. Read Brittany’s story, which includes all of the handy lawsuit documents and explains why this and other arbitration disputes may have even happened in the first place.

Q3 utilization numbers are nigh

It feels like the latest earnings season just ended. And yet here we are, another quarter in the books, and our pruney toes are about to dip back into the boiling hot water of new financial statements and robotic conference calls.

When it comes to health care providers and health insurance companies, one major question continues to hang over them: How much care is everyone actually getting?

The short answer: It appears people continue to fill prescriptions, see their doctors, and get recommended surgeries. The latest industry reports, surveys, and conferences still show higher volumes for hospitals and other providers — which means more premium dollars flowing out the doors of health insurance companies. Read our quick preview of what to expect in Q3.

Breaking: Cigna settles Medicare Advantage probes

Health insurance giant Cigna agreed to pay more than $172 million to settle allegations that its Medicare Advantage plans fraudulently submitted inaccurate diagnosis codes to the federal government.

The settlement stems from a wide-ranging government investigation into the coding practices of Medicare Advantage insurers, as well as a specific whistleblower lawsuit against Cigna that the Department of Justice joined last year. Read the story for the details.

The stability of $0 premiums

The federal government last week released the important “landscape files” for 2024 Medicare Advantage plans, and the big takeaway is health insurers really didn’t ratchet up premiums despite wailing they would.

The landscape files provide a glimpse into some of the benefits of next year’s MA plans. The most important data point is whether the plan will offer a $0 premium — making it free for older adults and people with disabilities to sign up. No premium and out-of-pocket limits often are the biggest draws for people who choose Medicare Advantage over traditional Medicare.

Financial analysts started sifting through the spreadsheets and found insurers remained hesitant to raise premiums on a group that is very sensitive to price increases. TD Cowen estimated roughly 75% of people enrolled in individual MA plans would fall into a $0 premium plan next year, up a little bit from this year.

The government just updated its MA plan finder tool yesterday, on Sunday, which will give us more details on whether companies cut back on other benefits like gym memberships. The next date to watch: Oct. 11, when 2024 star ratings are released. If you want a reminder of how that went last year, you can read this.

Cost-shifting debunked, again

Since the dawn of time, hospitals have pushed the “cost-shifting” theory that says hospitals charge commercial health insurers a lot more to make up for lower Medicare and Medicaid payments. Researchers have long said that’s not the case — instead, hospitals don’t have an incentive to lower their costs — and here’s a new two-act combo that further refutes that theory.

First act: Longtime health policy researcher Paul Ginsburg penned a new article in Health Affairs that explained what actually happens when hospitals face lower rates from government payers: “They reduce their costs to protect their profit margins for Medicare patients and may cut their rates to private insurers to be included in more networks so that they can attract more privately insured patients,” Ginsburg wrote.

Second act: The chart above, which came from a recent report from the Massachusetts Health Policy Commission. In Massachusetts, hospital revenue and costs have increased full steam ahead over the past decade. But in the neighboring state of Rhode Island, which instituted hospital price controls in 2010, hospital revenue increased a lot more slowly — and so did hospital costs. “Providers are able to achieve slower cost growth if they must, in response to financial or regulatory pressure,” the report said.

Medicare’s innovation center = money pit?

The Affordable Care Act created a new federal apparatus to test and design health care models that improve quality, and at the very least not increase spending. The Congressional Budget Office now believes the government has failed on the spending goal, my colleague John Wilkerson reports.

A new CBO report found the Center for Medicare & Medicaid Innovation increased federal spending by more than $5 billion over the first decade of its existence and won’t save any money in the next decade, either. The CBO originally forecast CMMI would decrease federal spending by almost $3 billion in the first 10 years and by $78 billion in the next 10 years. (Worth noting the CBO’s analysis did not include the government’s main “accountable care organization” program because that program is a permanent part of Medicare and not a CMMI model, although ACOs have only led to modest savings, at best.)

So what gives? CMMI’s care experiments have always been limited in nature — some, like a highly regarded diabetes prevention program, have enrolled hardly anybody, and others relied on voluntary participation from providers. Other more aggressive models that would have saved Medicare a lot of money hit the grave due to vehement industry opposition. And a lot of the experiments, like ACOs, really haven’t caught on among employers and commercial insurers.

Penultimate item: Industry odds and ends

• Mass General Brigham CEO Anne Klibanski finally spoke out on the cancer care split initiated by Dana-Farber. My colleague Allison DeAngelis has the string.
• Elevance is pulling back on its acquisition of Blue Cross Blue Shield of Louisiana. In case you hadn’t noticed, these types of big Blues acquisitions don’t happen a lot anymore. Newsletter pal Tara Bannow laid it all out.
• Two big health systems made the front pages last year for how they used the 340B drug discount program: Cleveland Clinic (spotlighted by the Wall Street Journal) and Bon Secours Mercy Health (probed by the New York Times). Now, the top-ranking Republican on the Senate health committee is investigating those systems, my colleague John Wilkerson reports.
• A federal court handed a loss to the Federal Trade Commission, saying that hospitals in Louisiana could move forward with their transaction because Louisiana’s “certificate of public advantage” exempts them from having to fill out federal merger paperwork. Read the decision and our previous coverage.
• Humana acquired Cano Health’s medical clinics in Nevada and Texas, a deal that will further expand Humana’s foray into owning providers and will provide some essential cash to Cano, a company that has been toeing the line of insolvency.
• A new investigation from ProPublica and the Pittsburgh Post-Gazette found “Philips suppressed mounting evidence that its profitable breathing machines threatened the health of the people relying on them.” Brittany wrote last year how the Philips debacle underscores the deep flaws of medical device oversight.
• The federal committee that is studying ground ambulance surprise billing will meet and officially offer recommendations Oct. 31 and Nov. 1.

The Meme Ward