Nursing Homes Selling Insurance - What Could Go Wrong?

According to an article by Jordan Rau, writing for Kaiser Health News ("KHN"),nursing home companies have begun selling their own private Medicare insurance policies. Pledging close coordination between caregivers and institutions, and promising to give clinicians more authority to decide what treatments they will cover for each patient, these plans are marketed to seniors likely to or already requiring long term care.  These plans are recent additions to the Medicare Advantage market, where private plans have become an increasingly popular alternative to traditional fee-for-service coverage. There are currently nearly 18 million enrollees in the overall Medicare Advantage market. 

Medicare pays private insurers a set amount to care for each beneficiary. In theory, this payment method gives the insurers motivation to keep patients from needing costly medical services such as hospitalizations.Unlike other plans, these alternate policies offered by long-term care companies often place a nurse in the skilled nursing facility or retirement village, where they can talk directly to staff and assess patients’ conditions. Some provide primary care doctors and nurses to residents in the homes or in affiliated assisted living facilities or retirement villages with the aim of staving off hospitalizations. According to Advantage proponents, this model offers patients a more individualized approach to their care. 

Supporting the use of Advantage plans sold by nursing homes, Angie Tolbert, a vice president of quality at PruittHealth, which began offering its plan to residents in 10 of its nursing homes in Georgia last year, told KHN that:

“[t]he traditional model is making decisions based on paper, and in our model, these decisions are being made by clinicians who are really talking to the staff and seeing the patient. It’s a big shift in mindset.”

“There’s a conflict there,” Toby Edelman, a senior attorney with the Center for Medicare Advocacy told KHN.  Attorney Edelman should know; she has spent a career advocating on behalf of the elderly.  

An insurance agent represents the insurance company.  When disputes arise between the insurance company, the health care provider, and the insured, the agent is typically in the corner of the insured.  At a minimum, the agent's duty is to the insured vis-à-vis the health care provider.  In this most recent development in the insurance market, the agent works for both the insurance company and the health care provider. Where do the loyalties and duties of an agent employed by the health care provider lie in payment and coverage disputes? 

In addition, given that both insurance companies and health care providers may support low cost modalities offered by the provider rather than those offered by others, will these cheap substitutes be provided when they do not necessarily serve the interest of the insured patient?  Collusion between insurance company and health care provider regarding cost can impact quality of care.  If anything, health care providers are accused of recommending expensive unnecessary tests and treatments, but what if they are necessary and unavailable through the provider; will they still be recommended?  Might both collude to provide less expensive alternatives offered by the provider rather than better, more expensive services offered by third parties?    

In the real world, these complexities are causing some to doubt the advantages of the arrangement.  KHN reported regarding some patients who are in disputes with the insurers who have faulted the nursing home staff — who work for the same company — for not helping challenge decisions about coverage:

They complain that the company holds an unfair advantage over Medicare beneficiaries.

In an Erickson Living retirement village in Silver Spring, Md., Faith Daiak signed up for an Erickson Advantage plan sold by a nurse whose office was in the main village building, according to her son, J.J. Daiak. After a bout with the flu last February weakened her enough to need a 10-day hospitalization, she was sent to her village’s skilled nursing facility. There, the insurer repeatedly tried to cut short her stay.

Erickson Advantage first said it would stop paying for Daiak, 88, because she wasn’t getting healthier in the nursing facility. Her son appealed by pointing out that Medicare explicitly said as part of the 2014 settlement of a class-action lawsuit that patients do not have to be improving to qualify for skilled nursing care.

Daiak’s appeal was denied, but the issue was sidelined in March when her rapid weight loss in the nursing home sent her back to the hospital, he said.

After Daiak returned to the nursing home with a feeding tube in her stomach, the insurer again tried to curtail her time there, saying she did not need that level of care. The family successfully appealed that decision after noting that Medicare’s manual said feeding-tube maintenance required the skilled care of a nursing facility.

In April, Erickson Advantage again said it would not continue paying for Daiak’s stay. It reversed that decision after Kaiser Health News asked the company about the case, J.J. Daiak said. He said the plan did not explain its turnaround.

While this Medicare Advantage plan touts its “team that knows you personally and wants to help,” J.J. Daiak said he found the registered nurse at Erickson’s Silver Spring community not helpful. “All I see is her trying to get Erickson out of having to pay for the nursing home,” he said. He subsequently switched his mother to traditional Medicare coverage with a supplemental Medigap policy, which she had until this year.

Erickson Living, the parent company of the nursing home and insurer, declined to discuss individual cases but noted that Medicare has given its insurance plans the best quality rating of five stars. In a written statement, the company said that “medical service determinations for Erickson Advantage members are based on reviews by licensed clinical staff and clinical guideline criteria. Our primary focus is always on ensuring that the healthcare being provided for our residents matches a patient’s needs and established clinical treatment protocols.”

Edelman said the dispute was particularly troubling because Erickson’s retirement villages are marketed on the promise that the company will care for seniors in all stages of aging. “They don’t tell you what they won’t pay for,” she said.

Will nursing homes be able to evaluate properly the competence of  a consumer, or will they sell policies to those too diminished to understand fully the policies or their implications? Will consumers feel pressure to purchase policies, worried that nursing homes mght dump them as residents if the policies are rejected?  Will nursing home agents dissuade patients from superior alternatives that may separate the patient from the nursing home, or from the insurance company?  Will nursing homes seek reimbursement for services based upon profitability rather than necessity?  Why can't nursing homes work with insurance companies for better quality care without demanding the additional compensation that comes from sale of the policies?  

This writer would take more seriously pledges and promises if they were not ransomed for additional profit.  Why should consumers pay nursing homes more for care that they should already be receiving?

Conflicts of interest may not always be improper, and may not lead to improper decisions, but always have at least the appearance of impropriety. Consumers deserve better than the "appearance of impropriety" at the inception of a relationship.   This writer recommends that every consumer reject these arrangements.   

Preparing for Medicare Open Enrollment

Oct. 15 marks the start of Medicare's seven-week annual election period, when current beneficiaries can add, drop or switch prescription-drug plans and make other coverage changes.

In Medicare, individuals must choose one of two paths: original fee-for-service Medicare, or a federally subsidized Medicare Advantage plan, which typically operates like a health-maintenance or preferred-provider organization. Many who opt for traditional Medicare also purchase a private "Medigap" policy, as well as a separate prescription-drug policy, to patch holes in their coverage.

In recent years, Medicare Advantage plans have gained in popularity, in part because, when compared with a Medigap policy, they generally cover a wider array of benefits, often including prescription drugs and dental care. Many also charge lower premiums, but require members to use the plan's network of providers.

The Affordable Care Act has sparked fears that Medicare Advantage plans, which cover about 30% of Medicare beneficiaries, will raise premiums, reduce benefits and pare their networks of doctors and hospitals. The reason: Under the law, Medicare will reduce payments to Medicare Advantage plans by some $156 billion by 2022, to bring per-person payments in line with those of traditional Medicare.

Citing the ACA, the nation's largest Medicare Advantage insurer, UnitedHealth Group, has cut an estimated 10% to 15% of the doctors and hospitals from its nationwide network. Consumer advocates say the insurer targeted providers with the sickest and most expensive patients, leaving patients in the middle of treatments in the lurch. The company says the changes enable it to better coordinate care and denies that patients in the middle of treatments are adversely affected, extending exceptions to members in active treatment.

Because some of the cuts occurred at times of the year when patients are unable to switch plans, Sen. Sherrod Brown (D., Ohio) and Rep. Rosa DeLauro (D., Conn.) recently introduced legislation that would bar insurers from dropping providers outside of Medicare's annual open-enrollment period.

Because Medicare Advantage can change annually, it's important to examine your options during open enrollment, from Oct. 15 to Dec. 7.  You should call your providers to make sure they still participate in your plan.  You can also use the "Plan Finder" tool at medicare.gov to compare premiums, copayments and deductibles for Part D prescription-drug plans in your area.

During open enrollment, you can switch to either a Medicare Advantage plan or to traditional Medicare, which allows you to see any doctor who takes Medicare. From Jan. 1 to Feb. 14, Medicare Advantage participants may switch to traditional Medicare.

Medicare beneficiaries whose claims are denied should also know that, despite rising backlogs in Medicare's appeals system, two recent lawsuits indicate that those who press their cases have a good chance of success. The procedure differs depending on whether you're in traditional Medicare, a Medicare Advantage plan or a Part D prescription-drug plan. Typically, each appeal can be heard five times, the last time in a federal court.

Since 2010, success rates in the first two rounds of appeals of denied claims for home health-care coverage have plunged to 5% or less, according to a class-action lawsuit the nonprofit Center for Medicare Advocacy in Willimantic, Conn., filed on June 4 in the U.S. District Court in Connecticut against the Department of Health and Human Services, which oversees the agency that administers Medicare.

The center's director of litigation, Gill Deford, told the Wall Street Journal that consumers who want a "meaningful review of their Medicare claims" should continue to the third round of appeal—before an administrative law judge—where odds of success jump to 40% or more.

The average wait for a decision from an administrative law judge is 398 days, up from 95 days in 2009, according to HHS. In a federal lawsuit filed Aug. 26, also in Connecticut, the Center for Medicare Advocacy seeks to force the government to take steps so that appeals can be decided within the 90 days the Medicare statute requires.

When appealing, ask your doctor for a letter explaining why you need the treatment in question. Those who go before an administrative law judge may benefit from retaining a medical or legal advocate. Most State Health Insurance Assistance Programs provide free counseling.

This post is based upon a Wall Street Journal article which can be read here.

California Doctor Shortage Frustrates Affordable Care Act

According to the Los Angeles Times, as California moves to expand healthcare coverage to millions of Californians under the Affordable Care Act, it faces a major obstacle: There simply aren't enough doctors to treat a crush of newly insured patients.

The obstacle, while acute in California, is not unusual.  There exist regional doctor shortages throughout the United States (see map), and these are likely to worsen.  The Association of American Medical Colleges estimates that there will be a shortage of 63,000 doctors by 2015 and 130,600 by 2025. The tidal wave of newly insured patients has to be served somehow and US Medical Schools and Residency Programs cannot supply anywhere near these numbers of new physicians in such a short time frame.

Some lawmakers want to fill the gap by redefining who can provide healthcare.  They are working on proposals that would allow physician assistants to treat more patients and nurse practitioners to set up independent practices. Pharmacists and optometrists could act as primary care providers, diagnosing and managing some chronic illnesses, such as diabetes and high-blood pressure.

For the complete article, click here.

Gifting to Avoid Nursing Home Costs- Too Many Planning Intentional Impoverishment

Health care costs continue to be a top retirement concern, yet few Americans know about their options or the potential dangers of improper planning. More importantly, the most common "simple" plans compromise, unnecessarily, important goals and objectives due to misconceptions. 

Gifting Assets May Risk Home Health Care 

For example, according to a recent survey of financial advisers by Nationwide Financial, 42% of financial advisers say their clients are currently considering giving away their assets to their children so they can qualify for Medicaid to avoid paying for a nursing home.  There are obviously some circumstances making such gifting appropriate.  But, many Americans do not understand the adverse consequences of relying on Medicaid to pay for their long-term care costs.  

Perhaps the most important of these is that the senior abandons control over their long term care and short term health care planning.  Such a result flies in the face of one of the most important objectives most senior's claim to have, and that is to maintain control of their care.  In fact, according to the  Nationwide Financial survey, maintaining control is the most important aspect of retirement health care planning to most seniors.

Many seniors also underestimate the risks of gifting.  Knowing their children to be responsible and loving, they assume the assets will remain as a safety net for their later needs.  But, what if a child is unfortunate, and suffers economic catastrophe through no fault of their own?  Gifting subjects assets to numerous other risks, such as the claims of creditors of children, loss through divorce or disability, and additional long-term care risks.  Moreover, most seniors have no idea what happens if their children predecease them.  Simply, gifting means, for all intents and purposes, that the senior may never see those assets again, regardless of need. 

Private Nurses for Home Care

Patricia B. Gray, contributing writer for Money Magazine has written an excellent article regarding private nursing for home care.  She introduces this increasingly common alternative to institutional care for seniors:

You may think of private nurses as a luxury for the ultra-rich, like a butler or personal chauffeur. But hiring in-house medical care has become an increasingly viable option for regular folks too.

You can use a nurse to ease the transition from hospital to home after surgery or a major illness, or even to administer chemotherapy if you want to stay out of a clinic or hospital. Visits from a private nurse can help your elderly parent remain in his or her own house safely.

Care at home can be a less expensive option than an extended stay in a nursing facility, says Kathleen Kelly, executive director of the Family Caregiver Alliance, a San Francisco nonprofit. Still, the cost can add up quickly, and you may have to cover most of it yourself. So it pays to know whether you need a nurse and how to pick one.

Low Cost Medicare Supplement Available in Ohio

A new low-cost Medicare Supplement insurance policy is now approved for sale to seniors in Ohio. The Ohio Department of Insurance has approved a very low-cost Medicare Supplement insurance plan for seniors and Ohio is among the first states in the nation to allow this supplemental insurance plan to be offered to its citizens. The State of Arizona, too, recently approved a policy for sale there.  The availability of this low-cost supplemental plan for Ohio seniors was announced by State Mutual Insurance Company of Rome, GA, and reported by Business Wire Inc.

State Mutual President and CEO, Dee Yancey III, characterize the policy as one of the lowest cost Medicare supplement insurance plans available anywhere in the nation.  State Mutual Insurance Company allows Medicare-age consumers to apply for the supplemental Medicare insurance policy online without having to talk with an insurance agent.

According to Business Wire, Inc., a quick random comparison of Medicare supplement policies available in a number of states shows that the State Mutual policy is generally the lowest-cost in most categories, and in some cases, costing less than half the price of the most expensive policies for the same coverage. 

The online program allows an interested customer to review and select a policy, see a price quote, submit an application, receive confirmation of coverage and receive his or her policy in a few minutes of online time. 

According to the company's website, the the low cost of the State Mutual Insurance Company policy is achieved by empowering the customer to go online for most, if not all, of the information and application phase of obtaining Medicare supplement insurance:

Our products are low-priced because we have eliminated much of the marketing costs by not having an agent come to your home.  We have reduced our operating expenses by making policy issuance and administration more efficient.  

The website promises the consumer:

• Low Premiums on All Plans.

• Anonymous Rate Quotes.

• No Waiting Periods.

• No Agent Calls.

• Online Approval and Immediate Policy Access.

It is welcome news that Ohio seniors are getting a lower cost alternative.  Of course, reliance on an online solution may not be in your best interest.  Medicare Supplement policies, are, however, fairly standardized, and comparison of policies is, as a result, easier than comparison of other types of insurance policies.    Nonetheless, if you have a trusted adviser, it merits discussion before blindly accepting online comparisons and representations.  

Young Adults to Have Expanded Health Insurance Access

An Ohio law that allows unmarried children or stepchildren up to age twenty-eight (28) to remain or be added to their parent’s insurance coverage becomes effective July 1, 2010.   As a result of the new law, parents should evaluate the opportunity and the cost of this new coverage.  The Director of the Ohio Department of Insurance, Mary Jo Hudson, wrote in a release that [a]n estimated 20,000 additional young adults, who are more likely than any other age group to be uninsured, will now be eligible for coverage."  The statement continued: “These changes, combined with our work to implement the recently passed federal reforms, are granting more Ohioans access to coverage and decreasing the number of uninsured Ohioans." The state reform will work in tandem with the federal law dependent age change that becomes effective September 23, 2010. Previously, only dependents up to age 19, or up to 23 years old if they were still in school, were eligible to receive coverage under their parents’ policies.