The Center for Economic and Policy Research (CEPR) has released a new report on how financialization has adversely impacted home health care for seniors, and how the Centers for Medicare and Medicaid Services (CMS) have allowed this to happen. In recent years, “Wall Street and insurance conglomerates have increasingly extracted large profits in home health services at the expense of Medicare, patients, and taxpayers as a whole,” explains a CEPR press release.
EILEEN APPELBAUM; for interviews contact Kelsey Moore at moore@cepr.net, @EileenAppelbaum
Appelbaum is the co-director of CEPR and a co-author on the report.
CEPR writes that “financial actors have seized Medicare Advantage as their point of entry [into the home health care sector], a form of insurance that, despite its name, is private. When the big insurance companies gobble up Medicare Advantage plans, they drain the Medicare trust fund and increase costs for taxpayers by driving up Medicare premiums.”
Appelbaum told the Institute for Public Accuracy that the financialization of home health care shares various features with other sectors––including hospice, where Appelbaum and her co-authors have previously found that private equity firms dominate the sector. “Private equity is a relatively small share of the home health industry, however. It’s there, but what is really important are the major transfers of money from taxpayers to wealthy individuals at these corporations. The methods of payment are so opaque and convoluted and complex that it’s difficult for anybody to unpack it and see what’s going on.
“It’s all about how CMS pays for Medicare Advantage (MA). CMS uses claims data from traditional fee-for-service Medicare to establish a benchmark of what it should cover for an average MA patient.”
Because patients with traditional Medicare generally have supplemental plans that pick up whatever Medicare doesn’t cover, Medicare patients don’t hesitate to get whatever services they might need. That “exaggerates how much MA patients might need.” MA also uses a patient risk-assessment to determine “how likely it is that the patient will be sicker than average.” That process results in another extra payment for the MA plan, because they are able to use risk assessments to upcode patients. “The conflicts of interest are rampant. It’s not an outside risk assessment, because the largest of the risk assessment companies are owned by the insurance companies.”
Further, because “sicker people choose regular Medicare,” which gives them more flexibility in their care choices, MA ends up with an even larger overpayment. “MA, which was touted as saving money because it’s value-, not volume-based, turns out to be much more expensive than regular Medicare. There’s no year in which MA costs less than fee-for-service Medicare. This is taxpayer money that is just lining the pockets of the MA plans and is not going to services. This is a drain on [Medicare’s] trust fund, which is scheduled to be empty by 2031. The fund would last longer if we didn’t have this drain on it.”
Appelbaum noted that some advocates have begun to propose the creation of a Medicare Part E, which would work to create a “free or low-cost wraparound plan available for everyone,” ensuring that no one can be bankrupted by the 15 percent of costs that traditional Medicare does not cover. “If CMS claws back some money from MA,” Appelbaum added, “they could use that money to make fee-for-service [Medicare] competitive so that people have a real choice. Right now, if you’re low income, you have no choice, and you need to go into low-premium MA plans.”