Opting out of Medicare is causing therapists to be disenrolled from commercial payer panels. It’s illogical, and has all the makings of a perfect storm. Why would a therapist’s decision about Medicare affect clients without Medicare in any way?
I’ve had a lot of inquiries from panicked clinicians ever since Barbara Griswold, LMFT, broke the news on May 11th that insurance payers are removing, or threatening to remove, therapists who opt out of Medicare.
Why is this happening? What does it mean for you? And … is there anything that can be done?
Why is this happening? A Three-Word Answer!
Money.
Medicare Advantage.
What is Medicare “Advantage” (MA)?
When people turn 65 and are eligible for Medicare, they can choose whether to enroll in the original Medicare Parts A (hospital) & B (professional), or a private “Advantage” plan.
The private plans combine Medicare A & B, along with prescriptions (Part D) and whatever extra benefits the private payer offers as inducement to sign up. The extras aren’t offered by Original Medicare and are attractive: dental/vision coverage, gym memberships, coupons for free over-the-counter drugs, and a lot more.
There are many reasons for the growth of Medicare “Advantage.” The reason that primarily traps therapists considering opting out is:
Insurance companies make vastly more money per enrollee in Medicare “Advantage” plans than from any other type of policy they sell / manage.
The statistics are well-documented every year by KFF.org, in their yearly health benefits surveys.
Consider this analysis for the years between 2018 and 2021:
Read the source study here.
What does this perfect storm mean for therapists?
The outrageous profitability of Medicare “Advantage” combines with the following facts to form the perfect storm now breaking over the heads of mental health therapists and their clients.
- Medicare “Advantage” plans cannot legally pay providers (of any specialty) more than 100% of the CMS Physician Fee Schedule – what Original Medicare would pay.
- Many “Advantage” plans pay their participating network clinicians significantly less than Original Medicare. I’ve seen rates as low as 60% of Medicare.
- What happens to the rest of that fee? HMMM…
- Fact: legally, the medical-loss ratio in Medicare “Advantage” needs to be at least 85%. (A medical-loss ratio is the percentage of the premiums used to actually PAY claims or other direct healthcare costs, thus capping administration & profit at 15% or less. In theory…)
- When a Medicare-eligible provider opts out of Medicare, this means that, legally, they can no longer be paid by an “Advantage” plan, either.
- Chapter 15, Section 40.5 of the Medicare Benefit Policy Manual: “when a physician/practitioner opts-out of Medicare … no Medicare payment can be made to that physician/practitioner directly or on a capitated basis.” (MA plans are capitated).
- Read any opt-out affidavit form offered by a Medicare contractor. They all state: During the opt-out period, I understand that I may receive no direct or indirect Medicare payment for services that I furnish to Medicare beneficiaries with whom I have privately contracted, whether as an individual, an employee of an organization, a partner in a partnership, under a reassignment of benefits, or as payment for a service furnished to a Medicare beneficiary under Medicare Advantage.
- It’s a well-known fact that there are significant mental health access issues and ghost networks. These problems are exacerbated by the low reimbursement rates of Medicare “Advantage.” To the extent that even the government is concerned about it.
So, in their infinite wisdom, the government did what the government does: they attempted to regulate. Specifically, they adopted more stringent “network adequacy” requirements for Medicare “Advantage” plans.
In response, the MA payers could have improved their networks by offering mental health clinicians a larger share of what CMS states they should receive per CPT code.
HORRORS! Cut into their profits?!?!
As you probably guessed, THAT certainly didn’t happen!
Instead, insurers decided to use the stick, not the carrot. They made, or are making, participation in all of their plans contingent on participating in their Medicare Advantage plan. So if you opt out of Medicare and therefore can’t take Advantage, you’re out! Blanket disenrollment (or the threat of it).
Why can’t therapists stay in-network for employer-based or individual non-Medicare plans?
There’s no law or government policy saying you can’t. I’m sure that when the government passed regulations pertaining to Medicare “Advantage,” they weren’t considering a perfect storm of unintended consequences to non-Medicare plans. In fact, this response by the “Advantage” payers might even constitute a violation of the Mental Health Parity Act. I’m not aware of any pending litigation on the issue, yet, as this is such a new development.
Terminating opted-out therapists from insurance panels is strictly a strategy of the payers to get mental health clinicians to comply with their agenda. To protect their profits.
In this toxic American health system, non-Medicare clients (people covered under individual or employer-sponsored plans) might lose an in-network therapist just to ensure maximum profitability by the insurer.
Is there anything that can be done?
Barbara Griswold’s article outlined ten useful suggestions – I recommend engaging in as many of them as you can. Definitely, wherever possible, work as an ally with your affected clients.
After working with several affected therapists, I’ll highlight a few more suggestions for courses of action.
Individually
- Therapists do have obligations to clients in treatment, and they should do everything in their power to help their clients. That said, your power may be limited.
- Existing affected clients would almost certainly qualify for a single case agreement. An insurer who denied a client’s request for a single case agreement could find themselves in more trouble than they bargained for, if the client knew how to protest effectively. (I can help with that…)
- Opting out of Medicare, even if you knew that your insurance contract might be cancelled as a result, seems unconvincing (to me) as grounds for “client abandonment.” But as always, clinicians should consult an attorney and/or their malpractice carrier.
- A business decision made by you (opting out) is NOT a clinical act against clients. Especially where it’s not logical that these clients should be affected by your decision!
- Recognize what is (and isn’t) under your individual control. Give yourself the gift of the same mental health strategies you teach clients.
- That said, engaging in collective action can feel empowering.
Collectively
- NAMI has a list of all bills pending in Congress that concern mental health in some fashion. A couple are particularly relevant here. Write to your legislators and to the sponsors of these bills, requesting that this issue be added as a new threat to Mental Health Parity.
- Suggest that your colleagues and clients do the same.
- If possible, make the same request on social media accounts. Share and repost.
- Ask your professional association to contact the media to raise awareness among the general public.
- The US Department of Labor has been charged with investigating parity violations. Encourage your client to make a complaint.
- It may not help the client’s immediate situation, but it’s positive action that can be taken.
- Complaints are free – and enough of them could lead to unwelcome expenses and inconvenience to the insurance payers!
If you need guidance on a specific situation, feel free to reach out to me to schedule an individual consultation.
