Already sick, injured, and debilitated by age and other circumstance, U.S. patient-consumers get battered with misleading information from shady firms about insurance coverage under the Medicare program and with too little word from hospitals about too spare charitable care that could help the beleaguered with bankrupting medical bills.
Democratic investigators for the U.S. Senate Finance Committee have ripped outfits hustling private Medicare plans to seniors, saying that companies have, among other sketchy practices uncovered, “posed as the Internal Revenue Service and other government agencies, misled customers about the size of their networks, and preyed on vulnerable people with dementia and cognitive impairment,” the New York Times reported.
The investigators said they have cataloged dubious behaviors by vendors in 14 states of Medicare Advantage programs. The newspaper earlier has reported those health plans have become a highly lucrative line of business for insurers. They overstate how sick their patients are to put a bigger bite on taxpayers’ financial support of health coverage for those 65 and older, with Advantage plans enrolling a huge chunk of seniors now.
The program was supposed to save money for taxpayers and those it insures. But the newspaper has reported, separately, that the Advantage program is becoming a huge drain on Medicare’s funding, even as regulators are taking a wave of complaints about restricted or denied services.
Senate investigators targeted what they described as unscrupulous marketing, advertising, and sales of Advantage plans, especially by brokers and third-party, retained marketing companies — not insurers themselves. The investigators did not identify individuals or single out firms but said the unsavory practices discovered were widespread enough to indicate wider problems. As the New York Times reported, investigators — and industry groups, too — denounced specific approaches discovered:
“The Senate report pointed to several aggressive practices that it said amounted to fraud. Five states said they were aware of brokers that had targeted people with cognitive impairment, and six states indicated people were signed up for a Medicare Advantage plan without even knowing it. Marketing firms in several states sent mailers to Medicare beneficiaries made to look like correspondence from the Internal Revenue Service, the Social Security Administration, or Medicare itself, the report said.
“The mailings are designed to generate leads for insurance brokers. Federal rules prevent cold calling of Medicare beneficiaries. But once respondents call, click or mail back a form, the companies are allowed to call them repeatedly. The investigation found similar forms from several states that looked like tax documents, using the font and layouts of an IRS Form … The report also said that a frequent refrain in television commercials and mailings was the idea that switching to Medicare Advantage would increase beneficiaries’ Social Security benefits. Some plans do charge lower premiums than traditional Medicare, but not most. Only 7% of beneficiaries this year were enrolled in a plan that offered such a premium discount, according to research from the Medicare Payment Advisory Committee.”
Ploys are proliferating as insurers and others in the field see the financial allure of Advantage programs, the newspaper reported:
“Medicare Advantage plans have become increasingly popular. They are required to offer similar benefits to traditional Medicare, and many include extras like dental benefits, gym memberships, or lower premiums. But the plans typically come with limited provider networks, which means that switching plans could mean losing access to doctors or coverage for certain prescriptions. Most Medicare beneficiaries are allowed to switch plans once a year, during a period known as open enrollment, which this year started Oct. 15 and ends Dec. 7. That’s the time of year when the advertisements, mailers and telemarketers are most pervasive. Medicare has recently promised to increase its oversight this year and next, but the increasing popularity of the program and looser regulation under the Trump administration appear to have led to an increase in complaints to Medicare. The report says that complaints to the Centers for Medicare and Medicaid Services more than doubled, from 15,497 complaints in 2020 to 39,617 in 2021. Several state insurance regulators have also seen an increase.”
Nonprofit breaks down benefits and flaws of hospital charity care
While seniors struggle with deceptive insurance information, poor and uninsured patients wrestle with a dearth of charitable care when hospitalized. And they may not even know they legally must be told about financial breaks they may qualify for due to their impoverishment.
The nonpartisan, independent Kaiser Family Foundation, to its credit, has posted a detailed look at hospital charity care, with an explanation of why it exists, and how it benefits institutions and individuals. The balance, alas, tilts toward hospitals, KFF has found, noting that they get billions of dollars in tax breaks for purportedly providing scant financial help to those in big need:
“According to our analysis of hospital cost reports, charity care costs represented 1.4% or less of operating expenses at half of all hospitals in 2020, though the level of charity care varied substantially across facilities … For example, while charity care costs represented 0.1% of operating expenses or less on the lower end of the spectrum (for 8% of hospitals), they represented 7% of operating expenses or more among a similar share of hospitals (9%). The variation in charity care costs as a percent of operating expenses likely reflects differences in hospitals’ missions and business practices; the need for charity care among patients; and federal, state, and local policy and regulation. Federal, state, and local governments provide funding in a variety of ways — including through tax benefits for nonprofit hospitals — to support hospital charity care, which may in part motivate efforts to increase the regulation of these programs. Although charity care programs are an important source of relief for uninsured and underinsured patients, many Americans continue to have difficulty affording hospital care. In 2022, about one in seven adults (14%) reported delaying hospital services in the past year due to cost.”
The organization’s information brief also reported this:
“[F]ederal law requires that nonprofit hospitals — which account for nearly three-fifths (58%) of community hospitals — provide some level of charity care as a condition of receiving tax-exempt status, and many state governments require all or a subset of hospitals to extend eligibility for charity care to certain groups of patients. Within the broad parameters set by government regulation, hospitals establish their own charity care policies, which vary in terms of eligibility criteria, application procedures, and the levels of charity care provided. While hospitals bear the direct costs of providing charity care, support from donors and federal, state, and local governments may cover some or all of these expenses. Estimates from one recent study suggest that the value of the tax exemption alone covered about half (50%) of the cost of charity care and other community benefits provided by nonprofit hospitals from 2011 to 2018.”
Though hospitals may not bear much actual financial burden for providing help to the poor and uninsured, they don’t go out of their way, apparently, to let the vulnerable know enough about potential help, KFF reported:
“It is unclear what share of low-income patients are eligible for hospital charity care, let alone what share of eligible patients end up benefiting from these programs, or what share of their costs are covered. Eligible patients may not receive charity care because they are unaware that charity care is available, do not know that they are eligible, have difficulty completing an application, are improperly denied charity care by the hospital, or choose not to apply. Some evidence suggests that many eligible patients may not be benefiting from charity care. For example, nonprofit hospitals have estimated that, of the bad debt that they reported in 2019 (reflecting expenses in 2017 or an earlier year), about $2.7 billion came from patients who were likely eligible for charity care but did not receive it. This amount is a rough estimate, as it comes from unaudited hospital reports, is restricted to nonprofit facilities, and does not account for instances where eligible patients paid bills that would have been reduced under a given hospital’s charity care program.”
Health policy researchers, regulators, and politicians have made clear that medical costs, though disrupted due to the coronavirus pandemic, are likely to spike soon for all consumers and that hospitals will be a big focus of patient advocates scrutinizing soaring expenses. That’s because hospitals typically account for a third of the more than $3 trillion annually spent in this country on health care. As the KFF examination of institutions’ charitable care reported:
“In the context of ongoing concerns about the affordability of hospital care and the growing burden of medical debt, several policy ideas have been floated at the federal and state level to strengthen hospital charity care programs. These include changes that would strengthen the requirements for nonprofit hospitals to qualify for tax-exempt status, as well as broader reforms that would apply to all hospitals. Specific proposals include creating or expanding requirements that hospitals provide charity care to patients below a specified income threshold, mandating that nonprofit hospitals provide a minimum amount of community benefits, establishing a floor-and-trade system where hospitals would be required to either provide a minimum amount of charity care or subsidize other hospitals that do so, introducing policies to increase the uptake of charity care, expanding oversight and enforcement of community benefit requirements, and restructuring the tax exemption for nonprofit hospitals to more closely tie government subsidies to the value of charity care and other community benefits provided by a given facility. A related set of proposals are intended to better align community benefits with local or regional needs and may therefore also affect the provision of charity care.”
Reforms are clearly needed in this area. In my practice, I see not only the harms that patients suffer while seeking medical services, but also their struggles to access and afford safe, efficient, and excellent health care. This has become an ordeal due to the skyrocketing cost, complexity, and uncertainty of treatments and prescription medications, too many of which turn out to be dangerous drugs.
Health care in the richest nation in the world cannot be a privilege for the wealthy few. It must be a right for all. We can do this, in part, by battling nihilistic of cynical takes on what this country can or cannot do for its people. We can practice a reciprocal altruism, particularly with health coverage that shares the bankrupting burdens of ungodly expensive expansive and expensive medical services among a larger group of folks, rather than crushing individuals or families. We all have seen how Medicare has benefited older Americans — enough so that many speak of expanding it to many more folks besides seniors.
The Biden Administration and Congress should delve into Medicare Advantage and determine what needs to be remedied with it and whether it is a reasonable, fair, and equitable coverage option — or whether its popularity is just so much economic froth, whipped up by profiteers and hucksters to benefit themselves and not vulnerable elders on fixed incomes.
Federal regulators and Congress also need to dig deep into hospitals’ tax breaks — through community benefit and charitable care programs that give institutions lucrative returns while not helping the poor and uninsured in ways policy makers intended.
We have much work to do to be vigilant that our health care system works in optimal fashion for all, especially where vital dollars, cents, and common sense should rule.
