If you’re like me and keep a close eye on all things Star Wars (or maybe even starred in a video or two), you’ve probably seen the news about the return of The Phantom Menace to theaters for its 25th anniversary. Maybe that’s not exactly cause for celebration—the critical reception to the movie wasn’t great upon release, and time hasn’t softened any of the harsh critiques. But despite the film’s numerous flaws, there are some interesting themes that George Lucas wove into the fabric of the film.     

There are a couple of things that stick out upon a rewatch of The Phantom Menace. First, a lot of the criticisms are well-founded; if I never hear about intergalactic trade disputes again, I’ll be happy. What really got my mind turning was the character of Sheev Palpatine and what he represented: a wolf in sheep’s clothing. How does this relate to rehab therapy? You might call it a stretch, but I couldn’t help but think of the once and future Emperor and not compare him to some of the Medicare Advantage (MA) providers who have been dabbling in the dark side. With that in mind, let’s take a look at this “new” phantom menace undermining our healthcare system. 

At first blush, Medicare Advantage seems like a Force for good. 

Much like the senior senator from Naboo (Palpatine), the idea behind MA appears well-intentioned. Originally part of the Tax Equity and Fiscal Responsibility Act (TEFRA) in 1982, the Medicare+Choice program (as it was then known) started with the goals of offering patients more choices in plans that offer more benefits than traditional Medicare, and to save Medicare and CMS money. (We’ll address in a bit whether the program is meeting those goals.)

The promise of Medicare Advantage’s expanded benefits and seemingly lower costs is enough to attract a growing number of seniors. According to data from CMS from December 2023, 48.8% of the nearly 67 million Medicare patients are enrolled in MA plans. Analysis from KFF found that in 2023 73% of MA beneficiaries were in plans that required no supplemental premium beyond the Part B premium. Add to that the vision, hearing, dental, and other additional benefits that MA patients are getting that they wouldn’t receive with Medicare, and the program is clearly a winner, right? Well, cue the ominous John Williams score, because we’re about to dive into some of the misdeeds of MA plan providers. 

Unfortunately, MA plan providers have fallen to the Dark Side. 

The MA program is another in a long line of great ideas tarnished by the requirement that they be carried out by people—or, in this case, corporations. Letting private insurance companies into the Medicare ecosystem is a bit like letting the fox into the henhouse (or a Sith lord into the Galactic Senate.)  I’m not against healthcare organizations making a profit; where I take issue is when those organizations start viewing actual patient care as secondary to profit—or even worse, as getting in the way of profit. 

The KFF analysis of MA also notes that 99% of MA plans have prior authorization requirements, whereas Medicare has none. If you’ve worked in healthcare over the past few years, you know just how pernicious prior authorizations have become—and yet MA plan providers have managed to take it to another level. It’s one thing to have clinicians and administrators grumbling; it’s another to have the U.S. Department of Health and Human Services Office of Inspector General come out with a report about how you’ve delayed or denied services even though they meet Medicare coverage rules and their own billing rules. And it’s not just a few cases here and there; the OIG report found that 13% of prior authorization denials and 18% of payment request denials should have been approved.       

There’s a cost to all this delay —and it’s not borne by the insurance companies. Research done by Premier found that of the $19.7 billion providers spent reviewing denied claims in 2022, $10.6 billion was wasted on claims that should have been approved in the first place. What makes it worse is that the MA claims are denied at a rate nearly double that of traditional Medicare—15.7% to 8.4%, respectively. Eventually, 54% of the denied claims are eventually overturned, but only after billers and administrators have spent precious hours fighting a battle they shouldn’t need to fight—not to mention the lapses in patient care. 

The 2024 Final Rule for MA and Part D has made some reforms to prior authorization rules, such as mandating that coordinated care plans can only use prior authorization to determine the presence of a diagnosis or to determine if a treatment is medically necessary. It’s worth wondering just how effective such a change might be or how MA plans can twist the rules to question the necessity of every treatment. 

Worse yet, they’re bilking payers out of even more credits—er, dollars. 

If all of that was the worst MA plan providers were doing, well, that’d be bad enough. But much like Darth Sidious, they’re not to be content with just a little wrongdoing. Thanks to some investigative journalism from the New York Times, we’ve learned that these insurance companies tasked or incentivized doctors to stretch existing diagnoses or fabricate new ones in order to make patients appear to have more serious conditions — and thus collect a bigger payday from Medicare.   

So how much extra were these plans pocketing? Well, according to the Medicare Payment and Advisory Committee (MedPAC), MA payments will be $88 billion more than traditional Medicare payments— again, for a program that makes up roughly 49% of Medicare patients. In their presentation on the topic, MedPAC notes that 2024 MA risk scores are 20% higher than traditional Medicare patients, and that “coding intensity” led to overpayment for 83% of enrollees in 2022 despite a coding adjustment.     

MA plans have a force choke on the marketplace—but are patients benefiting from their budding Empire?

It’s clear that MA plans are working for insurance companies, to the tune of twice the gross margins for their MA plans as their traditional commercial plans. And yet that margin doesn’t seem to be enough, though, as MA insurers ask the Biden administration for a pay bump while experts predict that MA plans will offer less benefits and therefore become less attractive to patients. Nor is it stopping some legislators to call for the expansion of MA  

But how are patients faring? The reviews are mixed, to say the least. Older patients are discovering that, while the lower initial cost of MA plans is appealing—especially for those on a tight budget, or in relatively good health—the real cost comes when they need care for serious conditions. And by then, it may be too late to switch back to traditional Medicare. 

There’s also the matter of outcomes. One study from Inovalon and Harvard Medical School suggests that MA patients may actually have better outcomes due to lower hospitalization readmissions—which only raises the question of whether fewer readmissions and lower utilization are proof of better care or just better wielding of prior authorization and denials. 

Looking at all this evidence, it’s remarkable what MA plan providers have been able to get away with—and they didn’t even need a suitable dark hooded robe and ominous apprentice to pull it off. The question is, are they also going to get away with it?    

We can’t continue to let these companies work in the shadows. 

As anyone who has watched beyond The Phantom Menace can attest, the Jedi detect the threat far too late, and the galaxy is doomed to fall into the clutches of our scenery-chewing antagonist. So how can we avoid the fate of our heroes when it comes to MA?      

Education is a start. Yet another of MA plan providers’ misdeeds is misleading marketing to seniors, such as mailers that appear to be from the government or promises of prices and benefits only available to select areas. While we as clinicians never want to wade into decisions about the types of plans or benefits a patient should choose, it’s important that trusted medical professionals speak out against statements MA plans are making that simply aren’t true. 

Fortunately, the news seems to be doing much of that work for us, as stories about hefty settlements from giants like Cigna, class action lawsuits against Humana, and reporting on MA plans putting the availability of care in doubt for rural settings seem to be shifting sentiment on the program among some seniors.     

We also need lawmakers and administrators to do their part and reign in some of the work excesses of MA plan providers. There’s already been some movement to rename MA plans entirely to prevent those plans from benefiting from Medicare’s good name and calls to increase transparency, reduce prior authorizations and overpayments, and cap out-of-pocket costs for seniors. It’s a good start—but we can continue to put pressure on policymakers to pass further laws to protect patients. 

Unfortunately, navigating healthcare law can be as tricky as, well, navigating healthcare. According to Chapter 10 of the Medicare Managed Care Manual, states have limited power to govern MA plans: 

“MA standards set forth in 42 CFR 422 supersede any State laws, regulations, contract requirements, or other standards that would otherwise apply to MA plans, with the exception of licensing laws and regulations and laws and regulations relating to plan solvency. In other words, unless they pertain to licensure and/or solvency, State laws and regulations that regulate health plans do not apply to MA plans offered by MA organizations.”

Nor can states wield their licensing power to try and extract changes from MA plan providers:  

“States may not purport to exempt a law from preemption on the grounds that it is a licensure law by imposing requirements not generally associated with obtaining a license as a condition of retaining a license. For example, a State licensing law may not be written so as to set forth ongoing marketing, quality assurance, or network adequacy requirements for MA plans by making such requirements a condition of retaining a State license.”

Fortunately, we may have an unlikely ally in this battle: hospital systems that are dropping Medicare Advantage plans over insufficient payment rates. Yes, it’s awful to think of the patients getting stuck in the middle, but we can hope that as provider choice starts to dwindle, seniors will think twice about MA as a better option than traditional Medicare.  

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Unless MA plan providers have a late redemption arc like our erstwhile podracer Anakin Skywalker, there will be plenty of providers and patients hoping for their downfall like a Death Star with an exposed exhaust port. (Sorry, I had to get back to the good movies.) For now, we can say we’ll be watching the next few years of MA developments with great interest.