Members of an Anti-Obamacare Coalition Are Starting to Turn on Each Other

One of the health care law’s biggest cost-cutting efforts is under fire.

US President Barack Obama greets a member of the audience as he leaves after attending the Affordable Care Act town hall meeting at the Holiday Park Multipurpose Senior Center in Wheaton, Maryland on June 8, 2010. AFP PHOTO/YURI GRIPAS (Photo credit should read YURI GRIPAS/AFP/Getty Images)
National Journal
Sam Baker and Clara Ritger
Jan. 28, 2014, 5:21 a.m.

Doc­tors and in­sur­ance com­pan­ies are scram­bling for a way to in­su­late them­selves from Obama­care’s cost-cut­ting.

In­surers are in the midst of a ma­jor ad­vert­ising blitz that they hope will con­vince Con­gress and the fed­er­al Medi­care agency to scale back ma­jor cuts to privately ad­min­istered Medi­care plans known as Medi­care Ad­vant­age.

But even as the co­ali­tion cru­sades against Obama­care, its mem­bers are also turn­ing on each oth­er.

In Con­necti­c­ut, doc­tors are su­ing an in­sur­ance com­pany for the way it has handled the cuts.

It’s a battle that will spread na­tion­wide, in­surers say, as the bil­lions of dol­lars in Medi­care Ad­vant­age cuts put pres­sure on plans’ abil­ity to of­fer the same be­ne­fits at the same cost to seni­ors.

The Af­ford­able Care Act in­cludes some $150 bil­lion in cuts to Medi­care Ad­vant­age, a pro­gram that crit­ics have of­ten seen as a handout to in­surers since its in­cep­tion in 2003. The real-world ef­fects of those cuts are now start­ing to take shape — and in­surers and doc­tors want to stop them.

They have had suc­cess be­fore. Last year, the Cen­ters for Medi­care and Medi­caid Ser­vices backed down from a pro­posed cut of 2.3 per­cent, re­pla­cing it with a 3.3 per­cent pay in­crease, after 160 mem­bers of Con­gress joined in­dustry as­so­ci­ation Amer­ica’s Health In­sur­ance Plans to lobby against the cut.

The dead­line for CMS to an­nounce its pro­posed 2015 pay­ment rates is fast ap­proach­ing (the pro­pos­al is ex­pec­ted mid-Feb­ru­ary), and in­surers are launch­ing an all-out ad cam­paign aimed at block­ing any fur­ther cuts. The re­duc­tion that CMS re­versed last year was just one in a series of cuts, and in­surers say the bal­ance is still against them.

“The pro­gram was cut 6.5 per­cent in 2014,” AHIP spokes­man Robert Zirkel­bach said. “An­oth­er round of cuts would be dev­ast­at­ing for seni­ors.”

A group of Con­necti­c­ut doc­tors ap­pears to agree with the in­sur­ance in­dustry — al­though they’re ex­press­ing it by su­ing a ma­jor in­surer.

United­Health­care, the na­tion’s largest Medi­care Ad­vant­age in­surer, no­ti­fied 2,200 Con­necti­c­ut phys­i­cians that they would be dropped from the com­pany’s plans as of Feb. 1. The com­pany said it was lim­it­ing the num­ber of pro­viders it worked with to “en­cour­age bet­ter health out­comes and ul­ti­mately lower costs” in re­sponse to the “severe gov­ern­ment fund­ing cuts” to the pro­gram.

AHIP and United­Health­care have said that the smal­ler net­works drive down the cost of care for both the in­surer and the pa­tient. United­Health­care has also jus­ti­fied the move, say­ing it “ab­sorbs the cuts to Medi­care Ad­vant­age plans in a way that is least harm­ful to mem­bers’ pock­et­books.”

The Fair­field County Med­ic­al As­so­ci­ation and Hart­ford County Med­ic­al As­so­ci­ation took United­Health­care to court, were gran­ted a pre­lim­in­ary in­junc­tion to keep phys­i­cians on the Medi­care Ad­vant­age plans un­til a judge had de­lib­er­ated, and last week re­ceived a court or­der to come to a set­tle­ment with the in­sur­ance com­pany.

The out­come could have na­tion­al rami­fic­a­tions for net­work size in the Medi­care Ad­vant­age pro­gram as in­sur­ance com­pan­ies look for ways to cut costs. Like the private in­sur­ance plans sold through Obama­care’s ex­changes, in­surers are look­ing to nar­row­er pro­vider net­works in their Medi­care Ad­vant­age plans as a way to lim­it spend­ing.

“It’s one of the un­in­ten­ded con­sequences of Obama­care,” said Mark Thompson, ex­ec­ut­ive dir­ect­or of the Fair­field County Med­ic­al As­so­ci­ation. “For-profit in­sur­ance com­pan­ies re­spond to things that fin­an­cially im­pact them. They want to be as prof­it­able as they pos­sibly can. You can’t let the pa­tients go, but you can let the doc­tors go that take care of the most dif­fi­cult, com­plic­ated pa­tients.”

Yet en­roll­ment in the pro­gram con­tin­ues to grow. The per­cent­age of Medi­care be­ne­fi­ciar­ies en­rolled in private plans has stead­ily in­creased over the last dec­ade, ac­cord­ing to a Kais­er Fam­ily Found­a­tion re­port, from 13 per­cent in 2003 to 28 per­cent in 2013.

Since 2009, when the health law and its Medi­care Ad­vant­age cuts passed, en­roll­ment has grown roughly 10 per­cent an­nu­ally, Kais­er’s data say, even though the Con­gres­sion­al Budget Of­fice had pro­jec­ted a de­cline.

Obama­care cut Medi­care Ad­vant­age be­cause of years of over­pay­ments, a re­sponse to re­ports that said Medi­care Ad­vant­age cov­er­age came at about 114 per­cent of tra­di­tion­al Medi­care’s costs.

“From a budget­ary point of view, poli­cy­makers felt it hard to jus­ti­fy pay­ing more for be­ne­fi­ciar­ies choos­ing Medi­care Ad­vant­age than for be­ne­fi­ciar­ies choos­ing tra­di­tion­al Medi­care,” said Tri­cia Neu­man, a seni­or vice pres­id­ent at the Kais­er Fam­ily Found­a­tion who spe­cial­izes in Medi­care re­search.

Obama­care’s cuts were sure to trans­late in­to plan changes, she said.

“Re­duc­tions in over­pay­ments would lead plans to cut be­ne­fits like eye­glasses and health club mem­ber­ships that were val­ued by their con­stitu­ents. No doubt these ex­tra be­ne­fits are val­ued… The di­lemma here is wheth­er Con­gress should pay more for Medi­care Ad­vant­age plans than for people in tra­di­tion­al Medi­care,” Neu­man said.

The cuts were de­signed to get in­surers and pro­viders to re­duce costs without im­pact­ing be­ne­fi­ciar­ies’ ac­cess to care, she ad­ded. But, in­stead, doc­tors and in­surers say, those cuts are be­ing passed down to seni­ors.

“Wash­ing­ton can’t cut and tax a pro­gram this large without af­fect­ing seni­ors’ be­ne­fits,” Zirkel­bach said. “To sug­gest that cut­ting $200 bil­lion from Medi­care Ad­vant­age can be done without im­pact­ing seni­ors’ be­ne­fits is just wrong.”

In Con­necti­c­ut, the clock is tick­ing for a set­tle­ment in the doc­tors’ suit against United­Health­care. Seni­ors have un­til Feb. 15 to switch from a United­Health­care Medi­care Ad­vant­age plan back in­to tra­di­tion­al Medi­care. But be­cause open en­roll­ment ended in Decem­ber, they’ve got to stick with United­Health­care if they want a private Medi­care plan. And if United­Health­care suc­cess­fully nar­rows the net­works it could mean this year is the year they get a new doc­tor.

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