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New York City Retirees Refusing to Eat the Medicare Advantage Dogfood

Yves here. Even though many people look forward to getting on Medicare as an improvement over having no insurance or high-cost, high deductible Obamacare plans, don’t talk yourself into thinking it is good. It is an unduly complex, partly privatized system that still costs too much compared to government health care programs in pretty much any other advanced economy. Even Thailand has high quality medical care that is free to patients (citizens can pay more for “private” hospitals, which are more plush but the MD training and care standards are the same as for regular care; Thailand makes a point about uniformity of education and treatment).

And Medicare Advantage is worse. It lures customers in with one-stop shopping and apparent lower costs, which it delivers only via having higher deductibles and co-pays plus narrow networks. My mother, who is basically very healthy (on only one prescription at 93) has had over $30,000 of not covered expenses in her Medicare Advantage plan this year.

Put it another way: if you watch old people’s TV, you’ll see almost as many Medicare Advantage plan commercials as you do for prescription drugs. That should give you an idea of the profit margin.

One reader has been in an uproar about New York City’s plan to force retired workers into Medicare Advantage plans. It turns out he is far from alone. Not only are many retired union members opting out, even mayoral nominee Eric Adams has said he’s opposed and seeking to extend the deadline. Two suits are also challenging the scheme, one by union members. The sponsors aren’t helping themselves with help lines that are regularly dispensing vague, contradictory, and flat out wrong information.

Frankly, the “partial” list of Medicare Advantage services that require prior authorizations is enough to ring alarm bells. Hospital admissions? Really? You are hit by a bus or have appendicitis but you are supposed to get wait to get approval before going to the ER, since that might (probably!) will lead to an admission? MRIs? Who has MRIs for fun? Physical therapy? This level of insurer gatekeeping is likely to ensure that this network stays small (doctors get standard Medicare reimbursements but face more admin costs dealing with this pre-approval nonsense) and is likely to get smaller (doctors who signed up will drop out).

And kudos to THE CITY, which played a big role in breaking and covering this story.

By Sam Mellins. Originally published at THE CITY on October 20, 2021

Droves of city government retirees are preparing to pay thousands annually to keep their existing health insurance rather than taking a chance on a new cost-cutting plan.

All of the city’s quarter-million retirees and their dependents will be automatically enrolled in the new health insurance program, known as the Retiree Health Alliance, unless they opt out by the end of October, under a deal struck by Mayor Bill de Blasio and municipal labor unions to save on spiraling health care costs.

Two lawsuits to be heard in court Wednesday — one filed by frustrated city government retirees — seek to block the move.

The switch to the Alliance, a partnership created by EmblemHealth and Empire Blue Cross Blue Shield, is set to take effect Jan. 1. It moves retirees from traditional government-administered Medicare into a privately run system known as Medicare Advantage.

For the first time, retired city workers will have to obtain prior authorization from their insurer for a host of procedures and equipment, instead of getting coverage automatically.

Since New York Focus and THE CITY broke the news of the planned shift in April, retirees have voiced concerns that the new plan will saddle them with barriers to care, smaller networks and higher out-of-pocket costs.

They say they haven’t received assurances that all aspects of their care will be covered under the new plan — even after repeated calls to a hotline set up by the Alliance. Those with health problems that require expensive treatments are especially worried.

In an online survey conducted by the Organization of Public Service Retirees, a group formed in opposition to the Medicare Advantage proposal, 226 of 880 respondents said that they had called the hotline and been given incomplete or inaccurate information. Some 148 said they had called multiple times and been given contradictory information. Only 30 respondents said that they had been given clear and accurate information.

“I’ve called at least five to ten times and nobody knew what to tell me,” said Lainie Kitt, who worked for the New York City Housing Authority for 30 years, and is currently being treated for mycosis fungoides, a form of lymphoma.

“I get a different answer every time.”

‘Bait and Switch’

Municipal retirees are currently insured by Medicare, the federal government’s program for people who are over 65 or disabled. The city also provides a premium-free “Medigap” plan that pays for additional costs that would otherwise be billed to patients.

The planned switch is the result of a 2014 agreement between de Blasio and the Municipal Labor Committee, a group of unions that represent city employees and retirees. The unions committed to $1.3 billion in annual health care savings in exchange for pay raises for members.

City officials contend moving retirees’ health care to Medicare Advantage plans managed by private insurers will save over $600 million annually, while preserving equally good care. While the cost of retirees’ current care is split between the city and the federal government, the new plan will be paid for by the federal government alone.

On Friday, Democratic mayoral nominee Eric Adams — a former NYPD officer who will see his own current health insurance impacted by the shift — called the move a “bait and switch,” and wants to extend the deadline for retirees to opt out, the Daily News reported.

“We’re going to take a close examination of this because it’s going to traumatize our retirees,” Adams promised.

Asked about Adams’ comments at a news conference on Monday, de Blasio responded that the plan is “very good and smart and fair.”

“The goal of this plan was very simple: provide as good or even better benefits, and protect the long term health of the health plan so our retirees would know it is there for them reliably for decades to come,” de Blasio said.

Opting Out

Retirees have two alternatives if they do not want to join the Alliance Medicare Advantage plan: They can pay to keep an existing supplemental Medigap program known as Senior Care, or they can drop out of the city’s program entirely.

Senior Care, provided by EmblemHealth, has been free until now but will cost $191 a month for individuals, and twice that for couples, starting Jan. 1.

“It’s going to drain my husband’s pension,” said Tina Shapiro, whose spouse, a retired public school teacher, taught special needs physical education for 19 years. “It’s not going to be so easy for me to visit my children and my family,” she added.

Still, some retirees believe Senior Care could be cheaper than the free Medicare Advantage, if the new Advantage plan leaves them paying for treatment out of pocket.

Arnie Dansky, president of the Fraternal Order of Police Lodge 3100, which represents New York law enforcement retirees living in Florida, told New York Focus that hundreds of his members and other municipal retirees in Florida are opting out.

“Even though there is going to be a monthly cost, in the end it’s going to be cheaper,” Dansky said.

Kitt, the retired NYCHA worker, agreed. “I could be bankrupt from the other plan if they don’t take everything,” she said. “I can’t go with a plan that I’m not sure about.”

Some retirees fault union leaders for agreeing to the plan.

“The president of my local was on the Municipal Labor Committee board, and he okayed this,” Kitt said. “How could you do that to your retirees?”

Several major unions, including the United Federation of Teachers, DC37, Teamsters Local 237, Local 831, and the Police Benevolent Association, could not be reached or did not respond to requests for comment.

‘Very Generous Benefits’

Ana Champeny, director of city studies at the fiscally conservative budget watchdog Citizens Budget Commission, said that the city is presenting retirees with a “set of reasonable options where they can make the choices for themselves.”

“These are very generous benefits, even compared to other municipalities.” Champeny said. “These costs need to be reined in.”

Meanwhile, the Medicare Advantage move is the subject of two lawsuits seeking to prevent its implementation, both of which are being heard Wednesday in State Supreme Court in Manhattan.

One, filed by insurance giant Aetna, which submitted a bid for the contract that was awarded to the Alliance, claims that the Office of Labor Relations violated city procurement law in awarding the contract, and that EmblemHealth and Empire Blue Cross Blue Shield misrepresented their qualifications during the bidding process.

In a brief filed in response to the lawsuit, the Alliance denied “each and every allegation, statement, and matter” in Aetna’s suit.

A spokesperson for the Alliance declined to comment on the pending litigation, and did not address New York Focus’ questions on retirees’ concerns with the plan.

The second lawsuit, filed by the Organization of Public Service Retirees, argues that the plan violates retirees’ collective bargaining agreements with the city.

Doctor Uncertainty

Beyond cost, retirees cite a smaller network of doctors and potential barriers to care as more reasons they’re wary of the new plan.

The size of the network covered under the Alliance’s plan is significantly smaller than retirees’ current offerings: the Alliance said it includes 640,000 providers nationwide, compared to the 850,000 who participate in traditional Medicare.

Several retirees told New York Focus that their providers have indicated they will avoid dealing with the new Medicare Advantage program. Alan Odze, a retired NYPD officer and 9/11 first responder, who submitted an affidavit in support of the retirees’ lawsuit, said the office of the doctor who treats his melanoma told him they will not accept the Alliance plan.

The city has disputed this claim, and said in its response to the retiree organization’s lawsuit that the doctor, Paul Finger, has contracted to be in-network under the Alliance’s plan.

Asked by phone last week whether Finger’s practice would accept the Alliance plan, a representative of the practice responded: “We don’t know enough about it right now to answer that question.”

“The one thing I can tell you is that people are nervous about it,” the representative said. “We are getting lots of calls regarding it.”

Of the 880 retirees who responded to the Organization of Public Service Retirees’ survey, 46.2% said that at least some of their doctors told them either that they will not accept the Alliance’s plan or that they had not heard of it. Just 2.5% said that their providers would accept the plan.

City officials say more providers will join the network after implementation, once they see that the Alliance reimburses providers at the same rate as Medicare. “Once out-of network doctors understand the new program, they will accept direct payment and many will join the network,” Claire Levitt, deputy commissioner of the City’s Office of Labor Relations, said in an affidavit responding to one of the lawsuits.

Brown University School of Public Health professor David Meyers said that’s not a given, since each new health plan brings new headaches for doctors’ offices. “Paperwork can be an enormous burden for providers, and the more plans a provider is in-network for, the greater that administrative burden would be,” he said.

The Alliance also claims that retirees would be able to access care at no additional cost even if their preferred providers are not in-network. That’s because, the Alliance says, it will reimburse any doctor who is a Medicare provider at the same rates as Medicare.

But in an affidavit, Kimberly Parker, an administrator of the city’s health plans, acknowledged that it’s “theoretically possible” that a provider would decline to accept payment from the Alliance. In that case, retirees would have to pay their providers out-of-pocket and submit claims for reimbursements to the Alliance.

Dianne Archer, president of informational health site Just Care, said that this process could impede retirees from getting needed care. “Health care bills can be astronomical. Members might not have the means to pay up front for their care,” she said.

‘For The Rest of Your Life’

Retirees are also concerned that the Alliance’s plan requires that doctors get case-by-case approval for the Alliance to cover various categories of treatment, a process known as prior authorization.

A partial list of services that will require prior authorization, published by the Alliance, includes knee and hip replacements, occupational therapy, pain management, physical therapy, tonsillectomies, CT scans, echocardiograms, MRI, day hospital admissions, inpatient admissions, and intensive outpatient therapy.

A document published by the Alliance says that in-network providers are required to request prior authorization in order to receive payment for some types of care, and that if they do not do so, they are not permitted to bill patients for the cost of their care.

However, out-of-network providers are not required to request prior authorization before administering treatment. If requests submitted after treatment are denied, out-of-network providers are allowed to charge patients the full cost of their treatments.

“There’s no telling how many people…will not understand that their out-of-network providers should request prior authorization and will be responsible for the full cost of their care,” Archer said.

Between the potentially smaller networks, higher costs and barriers to service, some retirees feel that their trust in the city during their careers was misplaced.

“They told me: ‘You will have your benefits for the rest of your life,’” Kitt said. “So now, I’m not happy.”

This story was originally published by THE CITY, an independent, nonprofit news organization dedicated to hard-hitting reporting that serves the people of New York.

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