Category Archives: Health Maintenance Organization (HMO)

‘Deny. Defend. Depose’: The Chilling Legacy of Managed Care and the American Health Care Crisis

Posted on by • Posted in ACA, Health Insurance Coverage Adequacy, Health Insurance Denial, Health Insurance Industry, Health Maintenance Organization (HMO), Health Plan, Health Policy, Managed Care, Out of Pocket Expenses, Outcomes, Profit, Profit Motive, Underinsured, Uninsured, Wall Street • Leave a comment
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To understand the fatal attack on UnitedHealthcare CEO Brian Thompson and the unexpected reaction on social media, you have to go back to the 1990s when managed care was in its infancy. As a consumer representative, I attended meetings of a group associated with the health care system–doctors, academics, hospital executives, business leaders who bought insurance, and a few consumer representatives like me.

It was the dawn of the age of managed care with its promise to lower the cost and improve the quality of care, at least for those who were insured.

New perils came with that new age of health coverage.

In the quest to save money while ostensibly improving quality, there was always a chance that the managed care entities and the doctors they employed or contracted with – by then called managed care providers – could clamp down too hard and refuse to pay for treatments, leaving some people to suffer medically. Groups associated with the health care industry tried to set standards to guard against that, but as the industry consolidated and competition among the big players in the new managed care system consolidated, such worries grew.

Over the years the squeeze on care got tighter and tighter as the giants like UnitedHealthcare–which grew initially by buying other insurance companies such as Travelers and Golden Rule–and Elevance, which gobbled up previously nonprofit Blue Cross plans in the 1990s, starting with Blue Cross of California, needed to please the gods of the bottom line. Shareholders became all important. Paying less for care meant more profits and return to investors, so it is no wonder that the alleged killer of the UnitedHealthcare chief executive reportedly left the chilling message: 

‘‘DENY. DEFEND. DEPOSE,” words associated with insurance company strategies for denying claims. 

The American health care system was far from perfect even in the days when more employers offered good coverage for their workers and often paid much or all of the cost to attract workers. Not-for-profit Blue Cross Blue Shield plans in many states provided most of the coverage, and by all accounts, they paid claims promptly. In my now very long career of covering insurance, I cannot recall anyone in the old days complaining that their local Blue Cross Blue Shield organization was withholding payment for care.

Today Americans, even those who thought they had “good” coverage, are now finding themselves underinsured, as a 2024 Commonwealth Fund study so clearly shows. Nearly one-quarter of adults in the U.S. are underinsured meaning that although they have health insurance, high deductibles, copayments and coinsurance make it difficult or impossible for them to pay for needed care. As many as one-third of people with chronic conditions such as diabetes said they don’t take their medications or even fill prescriptions because they cost too much.

Before he passed away last year, one of our colleagues, Marshall Allen, had made recommendations to his followers on how to deal with medical bills they could not pay. KFF reporters also investigated the problems families face with super-high bills. In 2022 KFF reporters offered readers a thorough look at medical debt in the U.S. and reported alarming findings.

In 2019, U.S. medical debt totaled $195 billion, a sum larger than the economy of Greece. Half of adults don’t have enough cash to cover an unexpected medical bill while 50 million adults – one in five in the entire country – are paying off bills on an installment plan for their or a family member’s care.

One would think that such grim statistics might prompt political action to help ease the debt burden on American families. But a look at the health proposals from the Republican Study Committee suggest that likely won’t happen. The committee’s proposed budget would cut $4.5 trillion dollars from the Affordable Care Act, Medicaid, and the Children’s Health Insurance Program leaving millions of Americans without health care.

From the Democrats, there appear to be no earth-shaking proposals in their immediate future, either. Late last summer STAT News reported, “With the notable exception of calling to erase medical debt by working with the states, Democrats are largely eyeing marginal extensions or reinstatements of their prior policy achievements.” Goals of the Democratic National Committee were shoring up the Affordable Care Act, reproductive rights, and addressing ambulance surprise bills. 

A few years ago when I was traveling in Berlin, our guide paused by a statue of Otto von Bismarck, Germany’s chancellor in the late 1800s, who is credited with establishing the German health system. The guide explained to his American travelers how and why Bismarck founded the German system, pointing out that Germany got its national health system more than a hundred years before Obamacare. Whether the Americans got the point he was making, I could not tell for no one in the group appeared interested in Germany’s health care system. Today, though, they might pay more attention.

In the coming months, I will write about health systems in Germany and other developed countries that, as The Commonwealth Fund’s research over many years has shown, do a much better job than ours at delivering high quality care – for all of their citizens – and at much lower costs.

Do Medicare Advantage Networks Vary by Plan within Contract?

Posted on by • Posted in Center for Medicare and Medicaid Services (CMS), Health Insurance Benefit Design, Health Insurance Industry, Health Maintenance Organization (HMO), Health Maintenance Organization Point-of-Service (HMO-POS), Medicare Advantage, Medicare Advantage Contract Terms, Out of Network, Out-of-Network, Preferred Provider Organization (PPO), Provider Specific Plan (PSPs), Service Area, Special Needs Plans (SNPs) • Leave a comment
Do Medicare Advantage Networks Vary by Plan within Contract?

Medicare Advantage (MA) is the private insurance alternative to traditional Medicare. MA organizations contract with Centers for Medicare and Medicaid Services (CMS) to offer eligible beneficiaries residing in a defined geographic service area (a collection of counties) a selection of private plans. Insurers may offer multiple plans across different plan types under one contract. The service area is defined at the contract-level, and for most MA plans, service areas can include a single county or a collection of multiple counties. (There are other types of plans for which there are constraints on the boundaries of the service area, but these don’t account for very much of MA enrollment.)

As MA-offering insurers contract with CMS, they establish networks that govern patient liability for seeing in- and out-of-network providers. Consequently, plans will vary in their cost-sharing structures and benefit designs as they assume different levels of liability for the cost of out-of-network providers. Overall, plans will cover the cost of care (less copays and deductibles) for patients seeing providers in-network, and certain plan types may require that patients pay more for out-of-network services or receive referrals/prior authorization from primary care providers (PCP) to see specialists.

The most common plan types offered by MA insurers include the following:

  • Preferred Provider Organizations (PPOs) are considered the most flexible type of plan in providing access to care and covering it out-of-network. PPO enrollees can use out-of-network providers for covered services without a referral from a PCP, albeit at greater cost to them than in-network providers.
  • Health Maintenance Organizations (HMOs), in comparison to PPOs, are more restrictive plans that provide less access to care and less coverage for out-of-network providers, with the exception of emergency, urgent, and dialysis care. HMO members are required to select a PCP and must get authorization for most specialty services. For any out-of-network services received, the patient bears the full cost, up to the traditional Medicare rate.
  • Health Maintenance Organization Point-of- Service (HMO-POS) are a hybrid plan between PPOs and HMOs. Like an HMO, members must select a PCP for care coordination, but they do not need a referral for specialty services. (However, some services may require prior authorization for coverage.) Like a PPO, this plan does provide some coverage for out-of-network providers.

The differences across plan types in access to and cost sharing for out-of-network providers leads to the important question, do MA networks vary by plan within contract? For example, in Figure 1 below, do the beneficiaries enrolled in Plan 1 or 2 under Contract A have the same set of in- and out-of-network providers (likewise for the beneficiaries in Plans 1-3 under contract B)? More specifically, what if Plan 1 is an HMO and Plan 2 is a HMO-POS plan, do they share the same network?

Figure 1: CMS Medicare Advantage and Part D Contract and Plan Enumeration (2010). Source: https://ncvhs.hhs.gov/wp-content/uploads/2014/05/100719p08.pdf

The simple answer seems to be: not necessarily, though more recent regulations attempt to push insurers toward having the same networks across plans within contracts.

For instance, prior to 2019, CMS only reviewed the adequacy of an MA organization’s contracted network under a “triggering event,” like if an organization were to operate a new plan, expand coverage to additional service areas, or in a response to inadequate network complaints. The scope of CMS’ review varied depending on the triggering event that occurred. In some cases, CMS could only conduct partial reviews of a contract’s network, looking at a select set of specialties or counties. A study by the US Government Accountability Office found that between 2013 and 2015, CMS had reviewed less than 1% of all networks. Without regular scrutiny by regulators, it seems likely that networks varied across plans within contracts.

Under the current MA Network Adequacy Criteria Guidance, CMS assesses network adequacy requirements both under triggering events (as explained above) and, separate from that, on a triennial-basis at the contract-level. CMS has previously commented in the 2021 Final Rule that this approach allows them to assess the adequacy of organizations’ networks across all of their plan types (HMOs, PPOs, SNPs) and consider the broadest availability of providers and facilities for an organization. Again, this suggests that insurers may vary networks across plans within contracts.

There are at least two scenarios for which we know certain plans can and likely do have different networks compared with other plans in the contract.

  • Special Needs Plans (SNPs) are plans designed for individuals with specific diseases or characteristics, such as those who are dual-eligible, have institutional care needs, or have a chronic condition. SNPs can be allowed by regulators to augment the contract’s network to integrate care management teams and specialty providers to accommodate beneficiaries’ complex care needs under the plan’s Model of Care. While SNPs may be granted additional flexibility to alter the contract-level networks established, CMS does not allow SNPs to narrow or shrink that network. They can only expand it.
  • Provider Specific Plan (PSPs) are plans often found under large, integrated medical groups or provider groups that are the primary bearers of risk. PSP enrollees have access to a smaller subset of in-network providers. Since this plan type has a network of fewer providers than the overall contracted network, organizations must request to offer a PSP from CMS and attest that these plans are in compliance with network adequacy requirements.

Future work with Vericred provider-network data could be one approach to exploring variations in networks among plans under the same contract and service area, beyond the cases listed above. If networks are varying across HMO, PPO, and HMO-POS plans within contracts, it would be interesting to explore just how different they are from one another. Moreover, as CMS reviews continues to review network adequacy requirements at the contract-level (and if networks do differ by plan), one should consider the breadth of the network that organizations are submitting for evaluation. To what extent all plans in a contract are in compliance with network adequacy rules warrants future investigation.