Modern Healthcare reports on a letter from late last week asking for a new regulation that allows for third party payment of premiums:
A group of 184 lawmakers want HHS to rescind an Obama-era policy that discouraged insurance companies from accepting payments from hospitals or other entities to buy insurance on the exchange for their patients…
“This practice essentially allows insurers to steer patients to the government or to other plans to avoid providing coverage.”
This is an attempt to get a higher level of payment for the same services that are delivered to Medicare and Medicaid patients. We looked at this last summer:
A provider could see twenty or more unique prices for a given service depending on what program their patient is in and what carrier covered them. Using Medicare Fee for Service (traditional Medicare) as a benchmark of 100%, Medicaid could pay 70% of Medicare, and the most expensive Exchange plans could pay 220% of Medicare. This is….a massive arbitrage opportunity. The rule on Exchange is that a person is not eligible for subsidies if they are eligible for Medicaid. However, no one is forced to use Medicaid as their primary coverage if they are able to get covered elsewhere.
So how does this work?
A provider group that performs very high cost procedures identifies a segment of their patient population that is either uninsured or on Medicaid. They tell these patients to apply for insurance assistance help from a foundation that the provider group providers 99% of the funds. That “independent” foundation awards premium assistance and their case workers help people sign up for brand name insurance…that coincidentally pays the provider group 220% of the Medicare rate instead of the 70% Medicare rate that they would have gotten for Medicaid patients. The provider group sees a massive revenue boost for the same services that would have been rendered anyways….
Adrianna MacIntyre raised a good point last year in that the Exchange plans provide financial protections that are not in traditional Medicare. There is a limit to out of pocket costs in an Exchange plan but not in Medicare.
the cost of Medicare coverage for ESRD enrollees. The Kaiser Family Foundation estimates that these individuals face annual out-of-pocket costs of $6,918 in 2010, on average (that’s $7,622 in today’s dollars). People forget that traditional Medicare doesn’t have an out-of-pocket maximum like the $6,550 cap for private insurance under the Affordable Care Act. Medicare Advantage plans have a cap, but ESRD patients generally aren’t eligible for MA plans, unless they were already enrolled prior to developing their disease. Medigap plans are another way to shield against catastrophic costs—but in many states, Medigap plans can refuse to enroll ESRD beneficiaries.
Moving these folks into private plans that help pad dialysis companies’ bottom lines might not be the ideal policy solution. But leaving some of Medicare’s most vulnerable patients exposed to these kinds of out-of-pocket burdens doesn’t seem ideal, either.
From an insurance side, I don’t like concentrating risk on a single high reimbursing plan. That creates a very strong self-protection incentive to narrow networks and race to the bottom on pragmatic access to care. The cap on exposure though is a very attractive consumer pull factor towards jumping from a societal low cost plan to a societal high cost plan.