Column-California healthcare provider's move shows pitfalls of Medicare Advantage

By Mark Miller

(Reuters) – Many people on Medicare look the other way when the program’s annual enrollment period rolls around, preferring simply to ignore the hassle. But for thousands of seniors in San Diego, California, Medicare enrollment this year has become a confusing scramble to find new insurance – or new health providers.

Scripps Health, a major Southern California healthcare provider, announced in September that beginning next year, its popular clinic and coastal medical groups will no longer accept patients enrolled in Medicare Advantage, the managed-care alternative to traditional Medicare offered by commercial insurance companies. That has left 32,000 San Diego seniors rushing to find either new healthcare options or new insurance for 2024.

Disabled people who qualify for Medicare before they turn 65 also are affected. And Scripps is not alone – at least a half-dozen other health systems around the U.S. are terminating Advantage contracts.

Medicare’s annual enrollment period is under way, and it ends on Dec. 7. If you are enrolled in traditional Medicare (Parts A and B) paired with a Medigap there is no need to review that coverage. But Part D prescription drug or Medicare Advantage coverage should be reviewed. This also is the time when you can move between Advantage and traditional Medicare.

Medicare Advantage enrollment has grown quickly over the past decade, partly due to its all-in-one features and lower upfront costs. Most Advantage plans include prescription drug benefits, and they are not used alongside supplemental Medigap policies, which cover out-of-pocket costs and can be expensive. Like all Medicare beneficiaries, Advantage enrollees pay their Part B premium, and they are on the hook for out-of-pocket costs up to a pre-set annual ceiling.

But the Scripps Health decision underscores an important downside to Medicare Advantage plans: there is no guarantee that you will be able to stick with your preferred doctors and hospitals. Medicare Advantage plans can drop healthcare providers from their networks – and that happens when providers and insurers cannot agree on contract terms.

The Scripps decision marks a new twist: healthcare systems deciding to drop out of Medicare Advantage. This inherent provider instability means that the choice between traditional Medicare and Advantage is not just financial – it is also a critical consideration for your health and quality of life.

When I spoke last week with Scripps Health CEO and President Chris Van Gorder, he noted that his institution is on track to lose $75 million or more on care it provides to Medicare Advantage patients this year. The two key issues that led to the decision to stop working with Advantage plans, he said, were the rates insurance companies were willing to pay, and the tendency of sicker patients to seek treatment at top-notch medical centers such as those run by Scripps.

He said that Scripps also has struggled with the administrative burden of dealing with Medicare Advantage “prior authorization” procedures – essentially, a process where an insurance company determines if it will cover a prescribed procedure, service or drug.

“This is probably the most difficult decision I have made in my role here,” he said. “I’m in the patient care business, certainly not the insurance business and not the cancellation business.”

The Scripps move has thousands of seniors scrambling, said Sophie Exdell, program manager of the San Diego area HICAP, which is California’s State Health Insurance Assistance Program (SHIP). The SHIP program is funded by the federal and state governments, and it provides free, unbiased expert help with Medicare in all 50 states.

“We’re getting lots and lots of calls from people who are trying to figure out what to do,” she said. “The most common concern is people who are in the middle of treatment and want to keep seeing their doctors.”

WEIGHING THE OPTIONS

But Scripps patients really have just two options: switch healthcare providers or insurance coverage.

During the annual enrollment period, it is possible to drop Medicare Advantage in favor of traditional, fee-for-service Medicare. But traditional Medicare has no built-in annual out-of-pocket limit. That means patients can be exposed to thousands of dollars in co-pays and deductibles. Many close these coverage gaps by purchasing a Medigap supplemental policy – but that can be a problem when you are moving to traditional Medicare from an Advantage plan.

The best time to buy a Medigap policy is when you first sign up for Medicare Part B. At that time, you have a “guaranteed issue” window, which forbids Medigap plans from rejecting you because of a pre-existing condition. (Connecticut, Maine, Massachusetts and New York provide some level of guarantee to enroll at a later time with pre-existing condition protection, and there are some other exceptions under federal law).

In California, one insurer is offering two of its plans to all comers, declaring a limited “underwriting holiday” that will not take your health into account.

Still, switching to Medigap will mean higher upfront premium costs. Medigap policies are priced according to your age; for those switching into a Medigap G plan in San Diego, the annual cost will range from roughly $2,500 at age 70 to $4,200 at age 80, according to the SHIP.

Some patients are open to switching healthcare providers, Exdell said. But even then, she notes, they face the challenge of navigating a crowded Advantage market with more than 90 plan offerings next year.

“It’s a very confusing landscape of options.”

The opinions expressed here are those of the author, a columnist for Reuters.

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