A missed phone call costs a Medicare Advantage plan $190 million.
When does the failure to answer a phone call in 8 seconds cost the company receiving the call $190 million?
When the caller is a spy working for the agency that runs Medicare and the receiving entity is a private insurance company.
One Missed Call
According to documents filed in a recent lawsuit, rules established by the Centers for Medicare and Medicaid Services (CMS) require Medicare Advantage (MA) plans to answer phone calls from elderly patients with hearing problems who use a computer device within 8 seconds.
To ensure compliance, CMS hires “secret shoppers” to place artificial calls. On 63 straight calls, the insurer Elevance Health (formerly Anthem) passed inspection. But the 64th call was not answered at all.
That last call is a matter of dispute. Elevance Health claims it was never received. Nonetheless, it caused the company to be given a lower “star” rating—a quality measure that affects how much MA plans get paid. That one missed call cost Elevance Health $190 million.
Government’s Double Standard
If this doesn’t strike you as a bit over the top, you need to know that the Social Security Administration takes an average of 35 minutes to answer calls. As for the IRS, it doesn’t answer the phone at all most of the time, picking up only 29 percent of its calls. What penalty do public employees suffer when they are unresponsive to customer queries? None that we know of.
What makes all this especially strange is that MA comes closer to meeting government standards than any other program in the health care system. Only in MA can a doctor who discovers a change in a patient’s health status send that information to an insurer (in this case Medicare) and receive a higher premium payment—reflecting the new expected cost of care.
Accordingly, MA plans have financial incentives to discover patient problems early and solve them. Since MA premiums are fixed, the plan makes money by catching problems early, getting patients the care they need, and keeping patients away from the emergency room and out of the hospital.
Medical Advantage Is Innovative
Unlike traditional health insurance, MA plans can specialize in such chronic conditions as diabetes, heart disease, and cancer. These MA plans seek to enroll patients other plans would like to avoid.
Nowhere else in our health care system will you find a health plan that wants to attract an enrollee with expensive medical problems. No employer. No commercial insurer. No Obamacare exchange plan. Numerous studies have found MA plans provide higher-quality care at a lower cost.
Studies have shown health care spending, hospitalizations, and trips to the emergency room are 20 to 25 percent lower in MA plans, and MA produces better outcomes for things like knee and hip replacements, strokes, and heart failure.
Financial Incentives Matter
An obvious reason for these results is financial. In traditional fee-for-service Medicare, there are 10,000 tasks doctors are paid to do. If a task is on the list, doctors get paid. If it is not on the list, they don’t get paid. For example, until the COVID pandemic, the phone was not on the list for most purposes. Nor was email, or Zoom, or Skype. So those types of interactions rarely occurred.
Most important, Medicare’s list of 10,000 does not give doctors any reward for keeping patients healthy. The reward for keeping a diabetic out of the emergency room? Zero. How about keeping a patient out of the hospital? Zilch. What about avoiding an amputation for a diabetic? Nada.
Hostile Biden Administration
So, what has been the Biden administration’s response to MA’s successes? Nothing short of outright hostility. It seems that every day there is a new attack on some aspect of Medicare Advantage from some part of the government’s health care bureaucracy.
Medicare Advantage plans are accused of overbilling Medicare, of “upcoding” to represent enrollees as sicker than they are to get higher risk-adjusted premium payments, and of unreasonably requiring prior authorization for medical procedures.
In response, the Biden administration plans to eliminate 2,000 billing codes from the MA risk-adjustment formulas (see opposite page). This will compress the coding so plans get the same risk-adjusted payments, regardless of the severity of the case.
MA plans get more money if they find more medical problems, and they make money by catching problems early and curing them. By contrast, a garden variety, fee-for-service Medicare doctor gets no extra payment for getting the coding right and gets no financial reward for keeping patients healthy.
MA Must Get It Right
Health conditions can go very wrong and when they do, the treatment costs can be expensive. An amputation, for example, costs more than $100,000.
Kaiser Permanente’s former CEO George Halvorson notes, “Diabetes is the number one cause of amputations in America. In fee-for-service Medicare, 20 percent of diabetic patients will develop foot ulcers, and 20 percent of those ulcers turn into amputations. In contrast, even the less successful [MA] programs end up with half as many ulcers and less than a third of the amputations compared to fee service. Some best-care settings get the amputation rate down to two percent.”
Payments to MA are capitated so MA must get it right out of the gate. If the Biden administration wants to fix MA, it should reduce regulatory micromanagement, like requiring insurers to answer a phone call in eight seconds.
John C. Goodman, Ph.D. (johngoodman@goodmaninstitute.org) is co-publisher of Health Care News and president and founder of the Goodman Institute for Public Policy Research. A version of this article appeared in Forbes on February 20, 2023. Reprinted with permission.
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