Six times Medicare caved

A pattern for reporters to dig in to

Reporters don’t often cover the rule-making process that goes on at government agencies. If they do, they typically borrow from a press release announcing the agency has proposed this or that new regulation, and then the story dies a quiet death. Rarely is there any follow-up when regulated industries howl, or when successful lobbying results in the agency cancelling its proposed regulations.

There should be more of that coverage—and the Centers for Medicare and Medicaid Services (CMS) is a juicy target for it. “When federal officials adjust payments to Medicare Advantage plans, they spend billions of tax dollars. Yet CMS officials seldom explain these decisions to the pubic,” says Fred Schulte, the lead writer on the Center for Public Integrity’s expose of Medicare Advantage plans, which we’ve just praised here. Schulte helped me develop this list of recent examples of Medicare cave-ins to industry pressure. It’s a good place to start.

Medicare Advantage plan rate cut turns into an increase, April 2013. Early in 2013, CMS announced planned payment cuts of 2.2 percent amounting to more than $2 billion a year. The industry’s trade group, America’s Health Insurance Plans, (AHIP) mobilized its “consumer group,” the Coalition for Medicare Choices, which swamped Congress with letters, emails, and phone calls urging members to stop the cuts. TV commercials, studies paid for by AHIP, and fly-ins—ordinary folks brought to Washington to talk about their Medicare Advantage plan—helped CMS change its mind. By April the proposed cut had turned into a 3 percent rate hike. The regulator said higher rates would give patients “more value in the care they receive.”

Medicare Advantage plan rate cut turns into an increase, April 2014. Sound familiar? Same crew, same cast of “grassroots” characters lobbied hard to turn a proposed 2 percent payment reduction into a small increase. The precise rate adjustment has been disputed by insurers, Schulte says, but “the rate setting system is so complex, it’s difficult to tell who is right.”

CMS cancels Part D changes, March 2014. America’s high health spending is driven in part by the high cost of prescription drugs here, and CMS thought it had identified ways to improve Part D, the Medicare drug benefit, that would save a billion dollars or so over five years. Administrators wanted to eliminate some drugs from insurers’ formularies while still assuring sufficient choice, and hoped to limit the number of stand-alone drug plans (there are way too many in some areas) and ensure that patients really do get the lowest prices for their medications when they use so-called “preferred networks.” But the proposed rules were abruptly cancelled after insurers, drug companies, and the “consumer advocacy” groups they fund used their muscle in Congress to get the agency to back off.

CMS scraps rule to restrict home care visits, April 2014. In 2013 administrators were troubled by signs that sellers of some Medicare Advantage plans were arranging home care visits to patients, and that in some cases those visits did little but drive up costs. They proposed restricting those visits. The industry didn’t like that and fought back, arguing such limits would cut their payments by as much as $3 billion a year. By early April those visits didn’t seem to trouble CMS. It announced it was not “finalizing the policy,” but “may reconsider” in the future.

CMS curbs the number of Medicare Advantage audits, 2012. In 2009, shortly after taking office, President Obama seemed eager to make good on his campaign
promise to cut payments to Medicare Advantage plans. CMS said it would conduct 90 confidential audits of health plans each year. By 2012, the number of actual audits each year had shrunk to 30. CMS won’t release any of the audits, the names of health plans that may have overbilled the government, and the amounts of the overcharge.

CMS decides not to pursue overpayments, 2012. In February 2012 CMS decided to forgive overpayments to Medicare Advantage plans made from 2008 through 2010 even though the agency’s own estimate showed they had made more than $32 billion in “improper” payments over those three years. The agency didn’t say why it made this decision, Schulte reported.

Related content:

Medicare Uncovered: the insurers’ latest campaign

What do you mean, control drug prices? We can’t do that

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Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR's healthcare desk, which is part of our United States Project on the coverage of politics and policy. She also blogs for Health News Review. Follow her on Twitter @Trudy_Lieberman. Tags: , , ,