Health insurers offering Medicare Advantage plans may soon be feeling the effects of a court case in Connecticut.
Next week, the Centers for Medicare & Medicaid Services (CMS) will make final new proposed rules and payment rates for Medicare Advantage plans. In the proposal, CMS asked for comment on the possibility of the agency requiring Medicare Advantage organizations to provide more than 30 days' advance notice of provider contract terminations to beneficiaries and no less than 90 days' advance notice to the agency. CMS also said it was considering broadening its authority to limit Medicare Advantage organizations' ability to terminate provider contracts without cause at any time during the year.
The proposed changes, CMS said, were influenced by "Recent significant mid-year changes to (Medicare Advantage organizations') provider networks … ."
While CMS did not single out any health insurer, when UnitedHealthcare, one of the nation's largest Medicare Advantage providers, decided to drop thousands of doctors last year, it caused alarm, outrage and a lawsuit.
In November 2013, the Fairfield County and Hartford County medical associations in Connecticut filed a suit claiming the insurer broke its contractual obligation to the physicians by terminating them from the network without cause and proper written notice.
Mark Thompson, executive director of the Fairfield County Medical Society, said UnitedHealthcare was using adverse selection to save money.
"They have figured it out," he said. "United can't drop the patients; that would clearly be discriminatory and illegal. And what they have done is the next best thing – they have tried to terminate physicians that are costing them the most money."
UnitedHealthcare could not be reached for comment for this story and did not publicly supply the number of physicians removed from the plans. However, it wrote about its decision to terminate physicians in a public response, saying it was "necessary to meet rising quality standards, slow the increase in health costs and sustain our plans in an era of Medicare Advantage funding cuts."
Clare Krusing, a spokesperson for America's Health Insurance Plans, estimates payments will be cut by 6 percent in 2015. This is on top of a 6 percent cut in 2013, she noted.
"You can't continue to cut a program this much and not expect seniors to be impacted," Krusing said. "That is why we are seeing a lot of insurers adjusting, ending up with seniors with higher premiums and cuts to their choice of providers."
And as the amount of money from CMS drops, said William MacBain, senior vice president at Gorman Health Group, all insurers will look to reduce costs by doing things like increasing premiums, using more efficient providers and improving management of chronic illnesses.
"If we are going to use market forces to improve efficiency, this is what it looks like," MacBain said. "There is a sense that an insurance company should be fulfilling a social mission. But we shouldn't be surprised they are going to make some business decisions."
In briefs it filed on behalf of the medical associations that filed suit, the Connecticut Attorney General's Office and Office of the Healthcare Advocate estimated that more than 2,200 doctors were terminated from UnitedHealthcare's Medicare Advantage plans – a business decision potentially affecting nearly 10,000 patients.
Given the magnitude of UnitedHealthcare's decision, the attorney general's office also contacted CMS, requesting the agency look into the situation. In December, CMS responded, saying it felt UnitedHealthcare's Medicare Advantage network was sufficient. CMS did ask the insurer to describe whether or not the new network would impact groups with specific needs, such as disabled, low-income, elderly and non-English speaking populations.
"What this largely demonstrated was the adequacy of these networks is ultimately going to be determined by CMS," said Robert Clark, special council to the Connecticut attorney general. "CMS is going to make its own decision in any given instance and there is not a lot state regulators or physicians can do about it."
While Clark may have believed CMS was disconnected from the situation, the agency's rule change proposals suggest its administrators were paying attention. Whether the proposed changes will become final – and what impact they will have on Medicare Advantage providers – will be learned next week.
As for the lawsuit, in early December of last year, a judge granted an injunction allowing the nearly 300 physicians named in the lawsuit to remain on the plans pending arbitration.
UnitedHealthcare appealed the decision but a federal appeals court in New York rejected their appeal in February. Physicians were allowed to stay on the plans for 30 days while they filed for arbitration disputing their removal.