Trump’s Sneak Attack on Medicare
Traditional Medicare has been an oasis of freedom for clinicians and patients alike from the plague of “pre-authorizations” required by private insurance plans and especially by so-called Medicare Advantage plans. Pre-authorization requires advance approval for medical procedures, except in emergencies. Insurers even sometimes challenge after the fact whether an event was a true emergency and withhold payments or bill subscribers.
Medicare Advantage, first authorized in 1997, is not really Medicare at all. It is private insurance using Medicare branding and Medicare financing, and the program is a classic bait-and-switch.
Subscribers to Medicare Advantage, now more than half of all seniors, are led to believe that they are getting a more comprehensive package of covered benefits than under traditional public Medicare. But in practice, Medicare Advantage policies make their money by denying a great deal of care as supposedly medically unnecessary—and the rules make it very difficult for frustrated consumers to switch back to traditional public Medicare.
Now the Trump administration proposes to extend pre-authorizations to traditional Medicare as well. With all the other assaults on health care in the budget bill, this maneuver has gotten little attention.
On June 27, the Department of Health and Human Services’s Centers for Medicare and Medicaid Services (CMS) announced a pilot project in six states, which will require pre-authorization for 17 kinds of services that HHS says are sometimes overused and subject to abuse. The six states are New Jersey, Ohio, Oklahoma, Texas, Arizona, and Washington, and the pilot program will run for six years. The services include “skin substitutes,” deep brain stimulation for Parkinson’s disease, some treatments for sexual impotence, and arthroscopy for knee osteoarthritis.
The idea of cracking down on abuses is not crazy. Under the Biden administration, on January 1 Medicare began requiring pre-authorization for several unproven treatments for spinal conditions that are often overused. Medicare payments for “skin substitutes,” which are really fancy bandages made of dried placenta, doubled in one year to more than $10 billion in 2024, with some doctors getting kickbacks for prescribing them.
What’s perverse is the way Medicare is going about limiting abuses. It has long been well-documented that some doctors, especially in states such as Florida, run Medicare mills and profit from unnecessary treatments and costly surgeries. By requiring pre-approvals for procedures rather than cracking down on unethical doctors, Medicare creates bureaucratic hassles for patients and ethical doctors alike. One of the truly insidious aspects of the pilot program is that it encourages the use of AI and machine learning in pre-authorization decisions, which further removes medical decisions from doctors and is a gift to the AI industry.
The only good news here, sort of, is that the idea of expanding required Medicare pre-approvals is not a scheme by MAGA. It originated with the CMS career staff as a way of restraining costs. But the private insurance industry, long an inside player at CMS, has been a cheerleader for these policies. And as Trump’s policies target Medicaid, NIH, CDC, and the Civil Service, and HHS Secretary Robert F. Kennedy Jr. and CMS Administrator Mehmet Oz increasingly have their way with these agencies, competent career professionals will keep exiting.
Meanwhile, CMS has simultaneously announced a voluntary program with major insurers that sponsor Medicare Advantage to reduce excessive rejections of pre-approvals. Participating insurers include Aetna, AHIP, Blue Cross Blue Shield, Cigna, Humana, Kaiser Permanente, and UnitedHealthcare, which pledged to work with HHS to streamline pre-approvals and “reduce the volume of medical services subject to prior authorization.”
This timing is no coincidence. As the difference between traditional Medicare and privatized Medicare Advantage narrows, the insurance industry will gain one more marketing pitch.
Unlike in the case of Medicaid, a means-tested program for the poor, Trump lacks the nerve to assault the universal Medicare program directly. So HHS and the insurance industry are trying to weaken it by stealth.
[Robert Kuttner is co-founder and co-editor of The American Prospect, and professor at Brandeis University’s Heller School.]
Read the original article at Prospect.org.
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