GUILDERLAND — The town of Guilderland appears to have jumped out the frying pan and directly into the fire with its latest choice for retiree health care. 

The town, in a letter to retirees last month, said it would be changing their insurance provider from Humana to UnitedHealth, which recently suffered a massive data breach and has received criticism for its Medicare plan administration and business practices. 

The move came after the town earlier switched from long-time provider Capital District Physicians’ Health Plan (CDPHP) to Humana; that switch meant retirees could no longer be directly covered for treatment from Community Care Physicians-affiliated medical providers.

The switch saved the town about $110 per retiree per month.

A forum for recipients of town-provided retiree health-care benefits will be held at Town Hall on March 12. 

Community Care Physicians (CCP) in November sent a letter to patients informing them that the practice would “discontinue our participation in Humana effective March 13, 2024.” The decision was made by CCP because the “requirements imposed by Humana have become increasingly cumbersome.”

Then, in February, the town sent out a letter to its Medicare Advantage subscribers saying,  “Unfortunately, our hopes that a positive resolution to the negotiations with Humana and certain local providers has not happened,” leading the town to switch to a new plan provider: UnitedHealth.

“UHC’s benefits mirror your current plan to the best of our ability with no additional cost to retirees …,” the February letter to Guilderland retirees said. “This transition will be automatic with no paperwork required from you and no lapse in coverage and will be effective April 1, 2024.”

Dean Spadaro, a retired Guilderland Police officer whose stage 4 prostate cancer treatment was compromised by the switch to Humana, told The Enterprise this week that he thought all but one of his doctors would now be included under the town’s new plan, but thought he could “maybe work out if it’s out of network.”

Medicare is the federal health insurance program for Americans aged 65 and older. It has two main coverage options: Parts A and B and Part C.

Parts A and B make up the traditional, government-run Medicare plan. Part A covers hospital stays; Part B covers doctor visits and other medical services. 

Part C is what’s known as Medicare Advantage. These are plans offered by government-approved private insurers that provide all of the benefits included in Parts A and B in addition to coverage for things like vision and dental care.  

Approximately half of Medicare recipients are now enrolled in Medicare Advantage plans, which were introduced by Congress in 2003 under the guise of bringing greater efficiencies to the health-care market, which hasn’t turned out to be the case. 

But a number of health-care providers have been dropping Advantage plans over issues like excessive prior-authorization denials and slow payments as well as allegations of billing fraud.

Medicare Advantage

Medicare Advantage plans have become big business for health insurers and doctors’ groups. Approximately $400 billion in taxpayer money flowed to these private Medicare plans in 2022 alone. Profits on Medicare Advantage consistently dwarf earnings from other insurance policies, with one recent analysis showing they offer twice the profitability. 

While conceived as a means to reduce costs, the opposite has been true for Medicare Advantage plans, which have about 33 million enrollees. The federal government estimated for 2023 it would pay Medicare Advantage plans about $27 billion more than if it paid for the services itself through traditional Medicare Parts A and B. 

Major insurers have profited enormously from Medicare Advantage, with UnitedHealth, the nation’s largest insurance company, chief among them. 

United is also the nation’s largest Medicare Advantage provider, which according to NBC News, covers some 7.6 million Americans 65 and older, with Advantage plans generating $257 billion in premium revenues in 2022, a 13-percent increase over 2021.

Humana, the second largest Advantage plan provider, with 5.3 million customers, attributed nearly 80 percent of $51 billion in premiums during 2022 to individual Medicare Advantage plans.

Federal audits, fraud lawsuits, and other investigations have shown how major insurers are able to exploit Medicare Advantage to inflate their profits by billions of dollars. 

For example, the federal government pays higher rates for sicker enrollees, and insurers game the system by using elaborate methods to make patients seem sicker without providing additional treatment. Government audits have found eight of the 10 largest Medicare Advantage providers submit inflated billing, UnitedHealth and Humana among them. 

All the while, studies have shown that traditional Medicare quality exceeds Advantage plans. A 2022 government report said the private Medicare plans often inappropriately reject claims and medically-necessary services compared to original Medicare.

The issues surrounding Medicare Advantage plans and their providers has led a number of hospitals and health-care systems to stop accepting UnitedHealth Advantage plans, in particular some of the largest health-care providers in Tennessee, North Carolina, and Oregon.

UnitedHealth

UnitedHealth, in addition to the criticism it has received for its Medicare Advantage plans, has faced additional problems of late: a federal antitrust investigation and the continued fallout of a massive data breach among them.

At the end of last month, United said there had been a major cyberattack on its Change Healthcare division, which processes nationwide insurance claims and pharmacy requests. 

The ransomware group BlackCat claimed responsibility and said it had stolen millions of patient records; Change handles one in three United States patient records, as well as 15 billion annual transactions including prescriptions, dental, and other medical needs for over 60,000 pharmacies.

On Monday, it was reported that BlackCat had received a $22 million Bitcoin payment, suggesting United “may have paid a very large ransom,” according to Wired. 

The news of the hack came at almost the same time it was reported that the United States Department of Justice had recently opened an antitrust investigation into United, citing anti-competitive concerns over recent acquisitions, like Change Healthcare.