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Joe MacFarland has relied on Independence Blue Cross insurance for more than 50 years, first through his employer and now in retirement through a Medicare Advantage plan. He likes the coverage and has no interest in changing.
But to keep seeing his doctors at Jefferson Health, the 74-year-old Philadelphia resident might have to switch to a different company, given the uncertain outcome of contentious contract talks between Jefferson Health, the Philadelphia region’s largest health system, and Independence, its biggest insurer.
“I’d like to be able to stay with the [doctors] I’ve had for decades,” he said.
Many Jefferson patients with IBX Medicare plans are now faced with the choice: change insurers during the Medicare open enrollment period that started Thursday and runs through Dec. 7, or risk losing access to their Jefferson doctors next year.
Independence and Jefferson have declined to say how many Medicare Advantage patients are affected by their negotiations. Under the program, the federal government pays insurers a fixed monthly amount per member to coordinate and cover all of the person’s medical costs. They have become popular for convenience and sometimes added benefits compared to traditional Medicare, where patients navigate their medical care on their own, and the government pays the bills directly to providers.
Jefferson, which has been losing money for years, says Independence pays 40% below national commercial averages and needs to get closer to what other insurers pay around the country.
The insurer says it already pays Jefferson competitive rates for the region and has offered a significant increase to the nonprofit health system with 33 hospitals from South Jersey to Scranton.
Independence has 126,000 Medicare Advantage members in its core Southeastern Pennsylvania market, according to an Inquirer analysis of the latest federal data. It has about 6,200 Medicare Advantage members in South Jersey, where Jefferson has three hospitals.
Jefferson competes with Independence in the private Medicare market. Its insurance arm has 31,500 Medicare Advantage members, with a concentration in Philadelphia.
When to make a decision?
MacFarland and other Jefferson patients with IBX Medicare plans face the question of when to jump to a new insurer. MacFarland said he’s going to take his time.
Center City resident Ann Lesch, 82, said she plans to plans to leave IBX and select a new plan early next month if she hasn’t heard anything about a contract renewal. Her primary care doctor is at Penn Medicine, but she has several specialists at Jefferson.
“I don’t want to do anything that’s stressful at the last minute,” she said.
Lesch has used IBX’s Keystone 65 Medicare Advantage since 2013, when she returned from her position abroad as dean of the American University in Cairo. “It’s been very steady, and I’ve had a couple of procedures during that time, so it’s been good and hasn’t been excessively expensive,” she said.
Then she received a letter from Jefferson Sept. 23 announcing the possibility that Jefferson might no longer take her insurance next year.
“It basically said the fault is all on Blue Cross, and what we want you to do is contact them, protest to them, and get them to do a better deal with us,” she said.
Her reaction was: “How do I know that Blue Cross was offering bad terms? You haven’t told me anything.”
Insurance showdowns are not unusual and usually end with a deal at the last minute, as happened between Main Line Health and UnitedHealthcare last summer.
When Jefferson’s Lehigh Valley Health Network stopped accepting UnitedHealthcare’s Medicare plans last January, federal regulators, encouraged by state insurance and aging officials, implemented a special open enrollment period to allow people who had lost access to their Lehigh Valley doctors to switch plans.
The added enrollment period was a reprieve for people who weren’t paying attention to the possibility of losing access to their doctors. Patients in the middle of cancer treatment or other serious medical conditions can apply for “continuity of care,” which means they can continue to receive in-network services for a limited amount of time if their doctors go out of network.
“In the event Jefferson and Independence Blue Cross do not come to terms on a new contract for their Medicare Advantage business, [the insurance department] anticipates engaging in a similar conversation with CMS, however that decision would ultimately be made by CMS,” the Pennsylvania Insurance Department said in an email.
The context: contentious negotiations
Medicare Advantage payment rates are among the several insurance products caught up in the Jefferson and Independence contact dispute.
Independence said that early in negotiations with Jefferson it suggested segregating Medicare from the negotiations over rates paid primarily by employers through commercial insurance plans. That contract expires Dec. 31, and both sides have provided early warnings to patients that Jefferson may no longer be in Independence’s network next year.
“We wanted to protect our Medicare Advantage members from the impact of these negotiations, particularly because they are our most vulnerable members. Jefferson was not willing to do that,” Independence said in a statement.
Jefferson said the medical vulnerability of Medicare Advantage patients is not the key issue.
“When IBX says Medicare Advantage members are the most vulnerable, what they really mean is those members have the option to leave IBX. That’s not a vulnerability for patients, it’s a vulnerability for IBX’s bottom line. Patients have choices and can select other coverage options while continuing to receive care from the doctors they trust,” Jefferson’s chief financial officer Michael Harrington said in an email Thursday.
Medicare Advantage patients could struggle to swap plans in some parts of the United States, where insurers have reduced the number of plans they are offering during the current open enrollment period. But in Philadelphia the offerings are more or less stable, falling to 63 options for the coming year from 66 currently, according to Medicare.gov. However, costs for enrollees are rising, as in all areas of healthcare.
Switching to traditional Medicare with Medigap to help with out-of-pocket costs after having Medicare Advantage is not a good option for many, because the supplemental plans can charge people with preexisting conditions more money or deny them coverage. Three-quarters of Medicare Advantage customers have such a condition, according to KFF, a nonprofit focused on health policy issues.
Jefferson is also negotiating a new Medicaid contract with Independence subsidiary AmeriHealth Caritas — and wants to negotiate on all forms of insurance at the same time. Combining everything could give Jefferson more leverage on the rates that employers pay. Keystone First, AmeriHealth Caritas’s Medicaid plan in Southeastern Pennsylvania, covered 426,000 people in August. Medicaid is insurance for low-income people and many with disabilities funded by federal and state governments. Private companies manage the benefits.
“Jefferson offered to have a third party evaluate our proposals and made efforts to prioritize the most vulnerable Medicaid patients in our negotiations. IBX flatly refused both,” Jefferson said.
Medicaid coverage is provided under a separate contract through AmeriHealth Caritas, Independence said. Historically, health systems have negotiated Keystone First contracts separately.
“Independence Blue Cross does not have Medicaid members or hold a Medicaid contract in the Commonwealth, and we directed Jefferson to the appropriate organization,” the company said.
Using a third party to look at what providers are paid outside the Philadelphia region doesn’t make sense, Independence said: “Our members and Jefferson’s patients are here, and the Philadelphia region is the relevant market.”
In addition to negotiating on commercial rates, Medicare Advantage, and Medicaid, Jefferson is also suing Independence over policy changes.
“IBX is currently failing to uphold important contractual obligations affecting Medicare Advantage patients, including issues related to the CMS mandated two-midnight rule,” the health system’s statement said, summarizing its legal claims.
A federal judge on Friday rejected Independence’s motion to dismiss the complaint in U.S. District Court for the Eastern District of Pennsylvania, only rejecting Jefferson’s request for attorney’s fees.