--:-- Jessica Mendoza: Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Saturday, June 7th.
--:-- Tatiana Facio: Mom was an independent woman. That's me talking about my mom, Agnes. Mom right now is 99 years old. Longevity! Oh my goodness. Longevity!
--:-- Jessica Mendoza: Tatiana says that her mom has always cherished her independence. She didn't even use a walker. She did have a cane, but living in an apartment, which was about 12 to 14 steps from the street level, without an elevator, there was only one rail up the steps. So she arranged with the landowner to install a rail on the other side of the steps.
--:-- Tatiana Facio: I love that she was still advocating for herself. Absolutely. She's in her 90s at this point. That's amazing.
--:-- Jessica Mendoza: Agnes was living in Los Angeles with her boyfriend, and they had a careful routine. Thank God for her partner. They would go out to dinner. She would very carefully maneuver the steps out of the apartment into the car. But then, one night in 2022, just as they were heading into dinner...
--:-- Tatiana Facio: She tripped and fell as she walked into the restaurant. Of course, the ambulance was called because she had to go to the hospital and they discovered that she broke her femur, her left femur. They had to do surgery, insert a rod.
--:-- Jessica Mendoza: Tatiana knew that falls are common and often dangerous for older people. So even though Agnes was cautious, Tatiana had made sure her mom's health insurance would cover the treatment for an emergency like this one. At the time of her fall, Tatiana's mom was enrolled in Medicare, and specifically a Medicare Advantage plan.
--:-- Tatiana Facio: And what were you expecting from the program when you got her enrolled? That there would be no problem, it would be seamless. And the Medicare Advantage plan seemed to work fine until she became expensive.
--:-- Jessica Mendoza: Insurance companies denied coverage to the sickest people on Medicare. And now, the pressure is on. The Medicare Advantage program is a part of Medicare, which is funded by taxpayers. Both are available to seniors and some people with disabilities. But with Medicare Advantage, it's not the government that runs the program. It's private insurance companies.
--:-- Anna Matthews: That setup can come with some nice benefits. Medicare Advantage plans can have lower out-of-pocket costs than traditional Medicare, and there can be perks, like free glasses and hearing aids. Today, more than half of the people on Medicare are enrolled in a Medicare Advantage plan. And regardless of the plan, they're supposed to have access to the same basic medical services. All the benefits that you get in traditional Medicare are supposed to be covered if you're enrolled in a private plan in Medicare Advantage.
--:-- Jessica Mendoza: As the team analyzed the data, she noticed a pattern. When people in Medicare Advantage reached the last year of their lives, they were twice as likely as others in the program to leave and switch to traditional Medicare. This was at a point in their lives that often involved a lot of expensive medical care. It raises the question of whether these people who are very sick and have very intense and expensive health needs were running into barriers in accessing the care that they felt they needed.
--:-- Anna Matthews: Why would people in that last year of life leave Medicare Advantage? Like, if they were getting the care, why would they drop out?
--:-- Jessica Mendoza: Exactly. It just begs the question of whether it had something to do with their need or their want to access certain kinds of care that they perhaps weren't getting.
--:-- Anna Matthews: Private insurance companies have tools to control what coverage patients can get. So when someone with a Medicare Advantage plan wants to see a doctor or go to a hospital they may have to get what known as prior authorization from their insurance company.
--:-- Jessica Mendoza: All of us have probably had insurance through an American insurer and that what Medicare Advantage is right The Medicare Advantage plans have a network of doctors and hospitals that is their authorized network, and that's who you go to. They have practices like requiring approval for certain kinds of care. They might sometimes require that if you want to go to a specialist, you go to your primary care physician first. So they have certain limits and practices that we're all used to from private health insurance, but that really in the traditional Medicare program aren't so much of a thing.
--:-- Anna Matthews: That prior authorization practice means that insurers can refuse treatment. Insurers say they use prior authorization to make sure patients are getting care that is appropriate or necessary.
--:-- Jessica Mendoza: Anna started talking to family members of people who dropped out of Medicare Advantage. Many of them said they'd had problems getting coverage for something that's particularly common at the end of life, nursing home care. They were being told, you can't stay in this nursing home, you need to go home. They were being denied coverage by the Medicare Advantage plan, in other words?
--:-- Anna Matthews: Yes. One of the people Ana talked to about this was Tatiana Facio. When her mom, Agnes, at 96, fell and broke her femur, she needed to spend time in a nursing home facility while her leg was healing. It was not safe for her to go from the hospital to the apartment and get home therapy. It was just not safe enough for her. Because of the steps. Because of the steps, exactly.
--:-- Jessica Mendoza: And the level of therapy that she would need would have to be daily. Tatiana expected that care to be fully covered by Agnes' Medicare Advantage plan, which was run by the insurance company Blue Shield of California. But they were in for surprise.
--:-- Tatiana Facio: After just a few weeks in the nursing home... The facility said, oh, Blue Shield is not going to cover her anymore. And then that's when the denial started coming. Blue Shield said it would no longer cover Agnes' full-time treatment at the nursing home facility.
--:-- Jessica Mendoza: Tatiana says she spoke to a representative from the company over the phone. And what was Blue Shield's reason for the denial?
--:-- Tatiana Facio: Not medically necessary, which was ludicrous.
--:-- Jessica Mendoza: Tatiana appealed the insurance company's decision and was able to extend nursing home coverage for Agnes. After that, there was another denial and another appeal. In the end, Blue Shield covered about a month and a half of nursing home care for Tatiana's mom. But she lost her fourth appeal. Her family wound up paying $14,000 out of pocket to keep her mom in the nursing home.
--:-- Anna Matthews: A Blue Shield spokesman said, quote, we recognize that many end-of-life cases are extremely complex, adding that the company is committed to providing seniors with access to care.
--:-- Jessica Mendoza: Tatiana ultimately changed Agnes' insurance. She switched from Medicare Advantage to traditional Medicare. That traditional Medicare plan covered the rest of Agnes' care, including two more months of rehabilitation.
--:-- Tatiana Facio: Today, I am so pleased. The nursing home is giving her good quality care. When I go and visit her, she's excited to see me. Her memory is challenged, definitely. But, you know, she's fit. She has an appetite, unbelievable appetite. She loves the cocktail hour. Okay. I go to a little store and I buy a wine in a can. So cute. We'll have a little tiny charcuterie tray.
--:-- Jessica Mendoza: Even though it all worked out for her mom, Tatiana says it was still frustrating to have to appeal and pay out of pocket for care she felt should have been covered by Medicare Advantage.
--:-- Anna Matthews: They are supposed to cover the same benefits. And in the case of Tatiana's mom, you really saw that that's maybe not always the case. So she was told no by her Medicare Advantage insurer, that she couldn't stay in the nursing home. And then once she switched to traditional Medicare, she was able to stay for several more weeks and Medicare covered it. And that's a very striking dichotomy that really is not supposed to occur.
--:-- Jessica Mendoza: The data Ana and the team analyzed showed tens of thousands of people were doing what Tatiana had done, switching from a Medicare Advantage plan to traditional Medicare. According to Ana reporting these patients often had long hospital and nursing home stays after they left And when they switched to traditional Medicare their care cost an average of per day That twice the cost of other Medicare recipients in the last year of their lives.
--:-- Anna Matthews: Ana says by not having to pay for these people, insurers collectively avoided billions of dollars in costs, which were paid by the federal government. In other words, the taxpayer. It gets moved to the taxpayer because the insurer is no longer covering the person as their expenses get bigger and bigger.
--:-- Jessica Mendoza: What is the latest that insurers have said about your reporting?
--:-- Anna Matthews: The insurers really defend the Medicare Advantage program broadly and their practices within it. Insurers said the journal's analysis focused on a fraction of Medicare recipients and that it's not clear that denials lead to patients switching their coverage, which can happen for many reasons.
--:-- Jessica Mendoza: In our last episode, we talked about how private insurers cost the taxpayer billions by adding seemingly unnecessary diagnoses to their records. Meanwhile, patients like Agnes, who actually needed care, faced challenges trying to get it. Taxpayers ended up paying for that care, too.
--:-- Anna Matthews: All of this led Ana and her team to wonder if Medicare Advantage was doing what it was meant to do. You know, Medicare Advantage is not new. It's grown a lot recently, but it has been around for a long time. And the idea behind it was a belief that private insurers could bring more efficiency, perhaps, you know, with their practices. And perhaps that they could coordinate care for people better, that it would be more efficient than the federal government.
--:-- Jessica Mendoza: The point of Medicare Advantage was to put, you know, the program on a budget. That's our colleague Chris Weaver, who we heard from in part one.
--:-- Chris Weaver: Well, it didn't work out that way. And, you know, I think Congress has woken up to that reality. And now, a crackdown on insurers is here.
--:-- Jessica Mendoza: Last year, more than 32 million people were enrolled in a Medicare Advantage plan. The total cost for their care was more than $460 billion, money that was paid to private insurers by the federal government. Now, the government is starting to ask questions about the ways in which private insurers got those payments.
--:-- Chris Weaver: One person who's promised to take a closer look at Medicare Advantage is Dr. Mehmet Oz, the new Trump-appointed head of the Medicare agency. Dr. Oz, when he was going through his confirmation hearing, senators actually asked him about our stories and about our findings.
--:-- Jessica Mendoza: Last year, the Wall Street Journal identified 66,000 Medicare Advantage patients diagnosed with diabetic cataracts who had already gotten cataract surgery. Now, that is, as you know, anatomically impossible. So Dr. Oz insurers pocketed an extra $178 million in taxpayer money last year thanks to just this one fake diagnosis. Does that sound like Medicare fraud to you?
--:-- Dr. Mehmet Oz: Senator Warren, I appreciated you spending time with me in your office. The answer is yes.
--:-- Jessica Mendoza: Oz has pledged to go after Medicare Advantage insurers. A spokesperson for the Medicare agency told us that, quote, beneficiaries deserve a system that delivers high-quality, transparent, accountable care. It also said that the agency is expanding its auditing of Medicare Advantage plans.
--:-- Chris Weaver: And with wasteful government spending top of mind for many lawmakers, members on both sides of the aisle have also been raising the alarm about the program. Medicare disadvantage, that's what I call it. Reform Medicare so that benefits stay the same, but that is less expensive, more efficient. We cannot afford to have the health care system be taken over for private profit.
--:-- Jessica Mendoza: It's not just lawmakers. The Justice Department has also been investigating some of the Medicare Advantage insurers that the journal reported on. Last month, the DOJ filed a complaint against several of them. The department alleged that Aetna, Elevance Health, and Humana paid hundreds of millions of dollars to third parties to steer customers into their Medicare Advantage plans.
--:-- Spokesman for Elevance: The company is confident it complies with the Medicare agency rules.
--:-- Jessica Mendoza: Representatives from Humana and Aetna disputed the DOJ allegations and said the companies will defend themselves vigorously.
--:-- Spokesman for Aetna: We are committed to providing high health care
--:-- Jessica Mendoza: The Medicare Advantage insurer that's faced the most scrutiny is also the biggest one, UnitedHealth Group. That's the same company that was in the news last year after one of its executives was killed in Manhattan. The Department of Justice has launched multiple investigations into the company. One is a civil fraud probe into UnitedHealth's practices for recording diagnoses that trigger extra payments.
--:-- Jessica Mendoza: What did you learn about what the DOJ was concerned about? They were asking questions of doctors we'd featured in some of our articles last year about insurers' practices for encouraging doctors to record diagnoses that trigger extra payments. For instance, they were asking about potential financial incentives for documenting more diagnoses for the doctors.
--:-- Spokesman for UnitedHealth: We stand by the integrity of our Medicare Advantage program.
--:-- Jessica Mendoza: The DOJ is also investigating the company at the criminal level. But details about that haven't been made public.
--:-- Jessica Mendoza: UnitedHealth's business has also been under pressure. In April, the company announced that it had missed its earnings mark. And then just weeks later, they came back and said, actually, it's even worse than we thought. They removed their now lower guidance around earnings for 2025. And they announced that Andrew Witte, who was the CEO, would be stepping down. And Stephen Hemsley, who is a former CEO and chairman, would return to run the company again.
--:-- Jessica Mendoza: After the CEO shakeup, the company's stock plummeted. And I think when you add on top of that mounting attention and concern in Washington, I think that's the feeling that this is not going to let up and possibly things might get worse in Washington for the company.
--:-- Spokesman for Humana: Another Medicare Advantage insurer, Humana, has told congressional staffers that it'll support moves to curtail billing practices that lead to extra payments, according to a document viewed by the Journal.
--:-- Jessica Mendoza: A spokesman said the company had been working on proposed reforms for six months.
--:-- Jessica Mendoza: So now that you guys have done all this reporting, what do you think about the Medicare Advantage program?
--:-- Anna Matthews: On some level, a lot of the practices that we've written about indeed do generate revenue, some of which insurers may funnel back into enhanced benefits for their patients. But the question is sort of like, at what cost?
--:-- Jessica Mendoza: One thing that was a takeaway was just how the Medicare Advantage machine works and how much there is dedicated to activities that are revenue generating and how successful those activities are. And maybe not all of those activities have directly to do with the care that people receive, which is kind of what you think would be at the heart of the Medicare program.
--:-- Anna Matthews: And I think that the recourse is not to, like, abandon the program, which we've now invested a huge amount of resources into, but to, you know, kind of reconfigure it such that it gets the result that it was originally intended to deliver.
--:-- Jessica Mendoza: Ana and Chris say they're waiting to see what happens next when it comes to all of the government actions around Medicare Advantage. In the meantime, they'll keep reporting on the relationship between private insurers and Medicare. Will these insurers wind up changing their practices? Are there other ways that private companies are gaming the system? And what will all this mean for patients and the U.S. healthcare industry?
--:-- Jessica Mendoza: For now, what we do know is that insurers have cost the taxpayer billions. And that's the business of Medicare Advantage. That's all for today, Saturday, June 7th. The Journal is a co-production of Spotify and The Wall Street Journal. This episode was produced by Jeeva Kavirma and edited by Laura Morris. I'm Jessica Mendoza. Additional reporting by Mark Maramont, Tom McGinty, and Andrew Mollica. Sound design and mixing by Nathan Singapok. Our theme music is by So Wiley. Music in this episode by Emma Munger, Peter Leonard, Bobby Lord, and Nathan Singapok. Fact checking by Mary Mathis. Thanks for listening. See you Monday.
