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When “Paying Correctly” Means Paying Nothing: How to Make Medicare Advantage Accountable

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By FRANK LEAHY

This is the second of two pieces. The first told the story of “Rick,” a 77-year-old Humana Medicare Advantage member who nearly lost his sight in a months-long runaround over a retinal detachment. This one asks what his case reveals, and what would help fix it.

The runaround was exhausting – the hold times, the repetition, the new voice on every call. But the most disturbing moment wasn’t any of that, and it wasn’t a denial. It was a justification. The claims that paid his surgeon $0.00, a Humana representative explained, were “paying correctly based on the contract loaded.”

Hold onto that sentence, because it reframes everything. What nearly cost Rick his sight was not one careless adjuster or one unlucky claim. The system did what it was built to do. It was designed so that a 77-year-old losing sight in one eye, and the surgeon who saved it, could end up with nothing – and no understandable way to make it right.

No understandable way is the heart of the problem. When a privately insured patient gets an unfair out-of-network bill, federal law hands their doctor a referee: the No Surprises Act, which lets a provider force a fair payment through arbitration. But that law was written for commercial insurance and never reached Medicare Advantage. On paper, Rick’s surgeon was already owed at least the standard Medicare rate; Medicare Advantage’s own rules say so. But he was paid nothing – and unlike a commercial patient’s doctor, he had no arbitration, no referee, no way to force the issue. What finally worked was a letter to Humana’s CEO and board of directors – a lever that shouldn’t have been needed.

Not an Outlier

Rick’s is just one case among a very large number. In 2023, Medicare Advantage insurers reviewed roughly 50 million prior-authorization requests and denied about 6.4% of them. Only 11.7% of those denials were ever appealed – and of the ones that were, more than 80% were partly or fully overturned. When four of five challenged denials get reversed, the obvious question is how many of the unchallenged ones were wrong too. (Source: KFF, 2025.) The federal Office of Inspector General has repeatedly found Medicare Advantage plans denying or delaying care that traditional Medicare would have covered.

What Rick’s case adds to those numbers is texture. His problem was never that his care was judged unnecessary – it was eventually authorized. His problem was that the rules were invisible and the process had no owner. No one told him a referral was required until he’d already failed to get one. The primary care doctor who was listed on his Humana Medicare Advantage card was a stranger in another state. The insurer’s own directory listed specialists who didn’t take the plan. Every answer contradicted the last, and nothing was ever put in writing. He was expected to navigate a maze whose walls appeared only after he’d walked into them. And when the maze finally produced a number, the number was $0.00 – for a surgeon the same insurer confirmed, on a recorded line, was in network.

Three Fixes That Can Help

There are many big proposals about how to fix health care in America, but I’m going to propose three narrow, unglamorous fixes that answer the simple question: Would it have helped Rick at the time of his accident?

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“We’re Sorry, That’s the Policy”: How a Medicare Advantage Runaround Nearly Cost a Senior His Sight

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By FRANK LEAHY

On a gray February morning, I sat in my office in Inverness, in rural northern California, with the phone pressed to my ear, jotting down notes and Humana reference numbers. Across the table, my new friend Rick, 77, waited anxiously, struggling to follow the conversation. Nearly deaf and now partially blind, Rick had lived with a detached retina for weeks. Time was running out to save his vision.

I was determined to get Rick the surgery he needed. But as hours turned into days and days into weeks, I found myself ensnared in the kind of bureaucratic maze familiar to millions of Americans with Medicare Advantage plans.

This is the story of a vulnerable senior and his advocate, caught between doctors, clinics, and insurers at the hard edge of Medicare Advantage – America’s privatized Medicare system. It is a story of denials, delays, and a rulebook no one would explain – and of the human cost when a system is built to save money, not sight. It is also a story about how and why it took seven months, and a letter to a Fortune 500 CEO, to get one surgeon paid.

“I Just Want to See Again”

Rick’s world had been shrinking for years. Hard of hearing and living on less than $1,200 a month in Social Security and SSI, he split his time between Colorado and a friend’s spare room in rural California. With no family nearby, no internet, and only a battered flip phone, he relied on friends for help.

In mid-November 2024, Rick fell out of bed, striking his head and injuring the left side of his face. He shrugged off the pain, but over the following weeks his vision blurred, then faded. “I thought it would get better,” he said. “But it just kept getting worse.”

I met Rick in late December 2024. He told me about his fall, the injury, and that he could no longer see out of his left eye. It was clear how serious his situation was, and how much support he needed, so having recently retired I had the time to help him. But it was nearly too late. After weeks of back-and-forth with Humana, I finally got him in front of an ophthalmologist, who diagnosed a retinal detachment – a medical emergency where prompt treatment is essential to prevent permanent blindness.

Getting that treatment would prove far harder than I could have imagined.

The Medicare Advantage Trap

Rick was enrolled in a Humana Gold Plus HMO, a Medicare Advantage plan based in Colorado. Why Humana? Pure happenstance. He had been shopping at a Walmart in Colorado when a man “who seemed nice” signed him up. Like a lot of older people, Rick didn’t know the difference between Medicare Advantage and Original Medicare with a Medigap supplement – or why that difference would come to matter so much.

Like more than half of all Medicare beneficiaries, Rick had been drawn to a private plan by the promise of extra benefits and lower costs. The catch is that Medicare Advantage plans are built on narrow provider networks and strict rules about where and how you get care. For snowbirds, part-time residents, or anyone who lives in more than one state, those rules can become a trap.

My first call to Humana set the tone:

“I searched for a doctor on your website. I found one and called them. They say they don’t take Humana, even though your website says they do,” I told a representative, reading from my notes. “Can you find one for me?”

“You can, but I need Rick on the line.”

“He’s right here.”

“Okay, but I also need additional documentation…”

The runaround had begun.

The Rules No One Explained

To get surgery, Rick needed a referral to a retina specialist. No one at Humana told us that at the start. We learned it the way we learned every rule in this process – by hitting a wall, calling back, and being told, after the fact, that we had failed to do something no one had mentioned.

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When Star Ratings Backfire: How CMS Could Better Support Health In Medicare Advantage

By EMMANUEL ANIMASHAUN

The Centers for Medicare & Medicaid Services (CMS) Star Ratings system represents a cornerstone of quality assessment in Medicare Advantage (MA), designed to empower consumers with transparent information while rewarding plans that deliver superior care. Yet recent developments, particularly the seismic downgrading of Humana’s ratings reveal an unintended consequence: a system created to measure and incentivize quality may now be actively undermining it.

The Humana Case: Symptom of a Broader Problem

In 2025, Humana’s Medicare Advantage star ratings collapsed, with only 25% of members remaining in four-star or higher plans, down from 94%. This wasn’t due to declining clinical performance but resulted from CMS’s “Tukey outlier deletion” statistical adjustment implemented with minimal industry consultation. The change raised performance thresholds, causing Humana to lose billions in Quality Bonus Payments and $4 billion in market value. Humana’s legal challenge, arguing that CMS violated the Administrative Procedure Act through non-transparent processes, was denied. Other insurers including UnitedHealthcare and Centene also share concerns about methodological rigidity and that the rating system may have diverged from its purpose of improving patient care.

Perhaps more striking are the cases of Elevance and SCAN, which further illustrate how rigid metrics can distort assessments of actual care quality. In March 2023, both insurers were penalized after allegedly missing a single CMS “secret shopper” phone call, a call they claim was never received. The downgrade cost them tens of millions in Quality Bonus Payments and triggered legal challenges. As SCAN’s CEO wrote, the sanction came despite strong clinical performance and patient outcomes. A federal judge later ruled in favor of SCAN in June 2024, prompting CMS to recalculate the Star Ratings across all Medicare Advantage plans. This episode underscores a key concern: when measurement hinges on unverifiable administrative moments, it may end up punishing rather than promoting quality.

How Quality Measurement Can Undermine Actual Quality

The Star Ratings system aggregates over 40 metrics across preventive care, medication adherence, member experience, and customer service. However, it disproportionately rewards process compliance and documentation over health outcomes. Plans can excel by optimizing coding, maximizing documentation, or boosting survey participation without delivering better care. This misalignment diverts resources from genuine health innovations. Research from an NBER working paper even found that better-rated plans aren’t statistically better at keeping patients alive than lower-rated ones, raising fundamental questions about whether the system measures what truly matters for patient health.

Even more concerning is that MA contracts with higher proportions of dually eligible, disabled, or racially diverse members consistently score lower, not because they provide inferior care, but because the scoring system inadequately adjusts for social risk factors. A JAMA Health Forum study highlighted how plans serving more Black beneficiaries had lower star ratings even when controlling for other factors. This structural bias effectively penalizes plans doing the challenging work of serving populations with complex needs, creating a perverse disincentive to focus on health equity.

The uncertainty from frequent changes in star rating computation could also pose severe implications for strategic planning for companies. When a company like Humana loses billions due to a technical recalibration, it sends a troubling message: long-term investments in quality improvement may not yield returns if measurement methodologies change unpredictably. This volatility makes strategic planning difficult and discourages sustained investment in quality initiatives.

The Real-World Impact on Patients

These methodological shortcomings do not just affect health plans’ bottom lines; they have tangible consequences for Medicare beneficiaries. When plans lose Quality Bonus Payments (QBPs), they often must scale back valuable supplemental benefits like transportation assistance, dental coverage, or in-home support services, or increase plan premiums, as Avalere Health suggests. McKinsey estimates CMS rating changes could cost plans over $800 million in bonuses, reducing resources available for such benefits.

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Fee-For-Service: Predominant, Winning & Stupid

By MATTHEW HOLT

In recent days and weeks, there have been three stories that have really brought home to me the inanity of how we run our health care system. Spoiler alert, they have the commonality that they all are made problematic by payment per individual transaction—better known as fee-for-service.

First, several health insurers who sold their reputation to Wall Street as being wizards at understanding how doctors and patients behave had the curtain pulled back to reveal the man pulling the levers was missing a dashboard or dial or three. It happened to United, Humana and more, but I’ll focus on Agilon because of this lovely quote:

“During 2023, agilon health experienced an increase in medical expenses attributable to higher-than-expected specialist visits, Part B drugs, outpatient surgeries, and supplemental benefits, partially offset by lower hospital medical admissions. While a number of programs have been launched to improve visibility, balance risk-sharing and enhance predictability of results, management has assumed higher costs will continue into 2024,” the company said in a statement

Translation: we pay our providers after the fact on a per transaction basis and we have no real idea what the patients we cover are going to get. You may have thought that these sharp as tacks Medicare Advantage plans had pushed all the risk of increased utilization down to their provider groups, but as I’ve be saying for a long time, even the most advanced only have about 30% of their lives in capitation or full risk groups, and the rest of the time they are whistling it in. They don’t really know much about what is happening out in fee-for-service land. Yet it is what they have decided to deal with.

The second story is a particularly unpleasant tale of provider greed and bad behavior, which I was alerted to by the wonderful sleuthing of former New Jersey state assistant director of heath benefits Chris Deacon, who is one of the best follows there is on Linkedin.

The bad actor is quasi-state owned UCHealth, a big Colorado “non-profit” health system. They have managed to hide their 990s very well so it’s a little hard to decipher how much money they have or how many of their employees make millions a year, but it made an operating profit last year of $350m, it has $5 BILLION in its hedge fund, and its CEO (I think) made $8m. It hasn’t filed a 990 for years as far as I can tell. Which is probably illegal. The only one on Propublica is from a teeny subsidiary with $5m in revenue.

So what have they been doing? Some excellent reporting from John Ingold and Chris Vanderveen at the Colorado Sun revealed that UC has been getting collection agencies to sue patients who owe them trivial amounts of money, and hiding the fact that UC is the actor behind the suit. So they are transparent on how much very poor people allegedly owe them, and come after them very aggressively, but not too transparent on how their “charity care” works. The tales here are awful. Little old ladies being forced to sell their engagement rings, and uninsured immigrants being taken to the ER against their will and given a total runaround on costs until they end up in court. Plenty more stories like it in a Reddit group reacting to the article.

What’s the end story here? UC Health gets a measly $5m (or a share of it) a year from all these lawsuits which is less than the CEO makes (according to a Reddit group—with no 990 it’s a little hard to tell).

Yes, all these patients are being billed or misbilled for individual procedures and visits. It makes people terrified of going to the doctor or hospital, and no rational health services researcher thinks that charging people a fee to use health care encourages appropriate use of care. Last month Jeff Goldsmith had an excellent article on THCB explaining why not.

Of course it goes without saying that if these patients were covered by some kind of a capitation, subscription or annual payment none of this cruelty or waste motion would be happening.

The final example is still going on.

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THCB 20th Birthday Classic: Value-based care – no progress since 1997?

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As the 20th Birthday rolls on I thought I’d bring out a more recent piece first published in October 2020, albeit one that relies heavily on 25 year old data to make a point. This is some evidence to back up Jeff Goldsmith’s comment on the original that for all the talk “ ‘Value based” payment is a religious movement, not a business trend’ ” By the way, Humana updated these numbers last year and there’s been basically no change — Matthew Holt

By MATTHEW HOLT

Humana is out with a report saying that its Medicare Advantage members who are covered by value-based care (VBC) arrangements do better and cost less than either their Medicare Advantage members who aren’t or people in regular Medicare FFS. To us wonks this is motherhood, apple pie, etc, particularly as proportionately Humana is the insurer that relies the most on Medicare Advantage for its business and has one of the larger publicity machines behind its innovation group. Not to mention Humana has decent slugs of ownership of at-home doctors group Heal and the now publicly-traded capitated medical group Oak Street Health.

Humana has 4m Medicare advantage members with ~2/3rds of those in value-based care arrangements. The report has lots of data about how Humana makes everything better for those Medicare Advantage members and how VBC shows slightly better outcomes at a lower cost. But that wasn’t really what caught my eye. What did was their chart about how they pay their physicians/medical group

What it says on the surface is that of their Medicare Advantage members, 67% are in VBC arrangements. But that covers a wide range of different payment schemes. The 67% VBC schemes include:

  • Global capitation for everything 19%
  • Global cap for everything but not drugs 5%
  • FFS + care coordination payment + some shared savings 7%
  • FFS + some share savings 36%
  • FFS + some bonus 19%
  • FFS only 14%

What Humana doesn’t say is how much risk the middle group is at. Those are the 7% of PCP groups being paid “FFS + care coordination payment + some shared savings” and the 36% getting “FFS + some share savings.” My guess is not much. So they could have been put in the non-VBC group. But the interesting thing is the results.

Continue reading…

Matthew’s health care tidbits: Medicare Advantage is now a provider fracking contest

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Each time I send out the THCB Reader, our newsletter that summarizes the best of THCB (Sign up here!) I include a brief tidbits section. Then I had the brainwave to add them to the blog. They’re short and usually not too sweet! –Matthew Holt

Yes it’s time to talk Medicare Advantage (MA). It’s been a huge couple of weeks for the world of MA. On the commercial side, CVS bought the biggest pure play MA provider, Oak Street Health for $10bn. This pissed me off as if they paid $2 a share more I’d have made a profit on the stock I foolishly bought “on a dip” in 2021.

But this amazed many of us on THCB Gang, as they paid a huge premium and it works out to some $60k per patient. Now health care organizations have been overpaying for patient “lives” as long as I can remember–going at least as far back as Aetna nearly going out of business when it bought US Healthcare in 1996. So why is today’s incarnation of Aetna buying providers?

Well that’s to do with the regulatory side of MA. I have been on record since the very first post of THCB that Medicare FFS is an inefficient and expensive program–even if 80% of American hospitals say they lose money on it and have to charge commercial insurers more to make up for it. But while it’s possible to agree with George Halvorson that MA delivers better care at a lower cost than FFS Medicare, it is simultaneously possible to believe that MA costs more than it should. That’s because of aggressive RAF upcoding that’s been built both into home visits from companies like Signify and also into the EMRs doctors have been using to code MA members’ health status.

There are lots of proposals on how to fix this–including this one from Chenmed on how to change MA from paying for inputs (i.e how sick people are when they join MA) to outputs (how much better they got while in MA). But it’s clear that CMS is now officially coming after upcoding including full cross plan audits back to 2018. Even if not back to 2011. The MA plans will grumble about those past audits and tie CMS up in court but they know going forward the game is up

To make more money in MA they need to get hold and shake loose or frack some of the 85% of the premium that goes to provider organizations. Hence they are all getting into bed with them or buying them outright. UHG, Humana & now Aetna/CVS have been buying physician groups that serve MA populations at a quickening rate, and their goal is to put more of the 50% of seniors already into MA into those groups.

Will this save any money?  Well probably not, at least not yet. Humana has been reporting on the costs in its full risk capitated MA groups versus its FFS ones for a couple of years, and the difference is a rounding error. But the point is that the next war in Medicare Advantage is going to be what happens inside these plan-owned medical groups. So expect a lot more scrutiny of both costs, outcomes and patient experience within MA focused medical groups starting about now. 

The Secret Surveillance Capitalism That Suffuses Medicare

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By MICHAEL MILLENSON

Imagine a government program where private contractors boost their bottom line by secretly mining participants’ personal information, such as credit reports, shopping habits and even website logins.

It’s called Medicare.

This is open enrollment season, when 64 million elderly and disabled Americans choose between traditional fee-for-service Medicare and private Medicare Advantage (MA) health plans. MA membership is soaring; within a few years it’s expected to encompass the majority of beneficiaries. That popularity is due in no small part to the extra benefits plans can provide to promote good health, ranging from gym membership and eyeglasses to meal delivery and transportation assistance.

There is, however, an unspoken price for these enhancements that’s being paid not in dollars but in privacy. To better target outreach, some plans are routinely accessing sophisticated analytics that draw upon what’s euphemistically labeled “consumer data.” One vendor boasts of having up to 5,000 “certified variables for every adult in America,” including “clinical, social, economic, behavioral and environmental data.” 

Yet while companies like Facebook and Google have faced intense scrutiny, health care firms have remained largely under the radar. The ethical issue is obvious. Since none of this sensitive personal information is covered by the privacy and disclosure rules protecting actual medical data, it is being deliberately used without disclosure to, or explicit consent by, consumers. That’s simply wrong.

But a more fundamental concern involves the analyses themselves.

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#Healthin2Point00, Episode 166 | $100 million, scandal, & more

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Today on Health in 2 Point 00, we have scandal, drama, intrigue, $100 million and murder! Wait, no; not murder. On Episode 166, we catch up on more deals before Jess gets carried away again. The $100 million goes to Carbon Health in a Series C, which is another Bay Area-based primary care startup; they’re doing a lot of work in COVID testing and growing fast. Next we have many health plans uniting with Cigna Ventures, Humana, and Anthem all investing in Buoy Health which just raised $37.5 million in a Series C. That leads us to a scandal with the former CEO of Navigating Cancer suing Merck’s Global Health Innovation Fund. Finally, in the world of DTx, NightWare has received FDA clearance for its Apple Watch app designed to wake people with PTSD up from nightmares. —Matthew Holt

Value-based care – no progress since 1997?

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By MATTHEW HOLT

Humana is out with a report saying that its Medicare Advantage members who are covered by value-based care (VBC) arrangements do better and cost less than either their Medicare Advantage members who aren’t or people in regular Medicare FFS. To us wonks this is motherhood, apple pie, etc, particularly as proportionately Humana is the insurer that relies the most on Medicare Advantage for its business and has one of the larger publicity machines behind its innovation group. Not to mention Humana has decent slugs of ownership of at-home doctors group Heal and the now publicly-traded capitated medical group Oak Street Health.

Humana has 4m Medicare advantage members with ~2/3rds of those in value-based care arrangements. The report has lots of data about how Humana makes everything better for those Medicare Advantage members and how VBC shows slightly better outcomes at a lower cost. But that wasn’t really what caught my eye. What did was their chart about how they pay their physicians/medical group

What it says on the surface is that of their Medicare Advantage members, 67% are in VBC arrangements. But that covers a wide range of different payment schemes. The 67% VBC schemes include:

  • Global capitation for everything 19%
  • Global cap for everything but not drugs 5%
  • FFS + care coordination payment + some shared savings 7%
  • FFS + some share savings 36%
  • FFS + some bonus 19%
  • FFS only 14%

What Humana doesn’t say is how much risk the middle group is at. Those are the 7% of PCP groups being paid “FFS + care coordination payment + some shared savings” and the 36% getting “FFS + some share savings.” My guess is not much. So they could have been put in the non-VBC group. But the interesting thing is the results.

Continue reading…

Health in 2 Point 00, Episode 108 | OneMedical IPO, Hinge Health, & Humana

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Today on Health in 2 Point 00, we’re starting out with a riddle: what’s the similarity between the 49ers Super Bowl performance and digital health? Find out on Episode 108, where Jess and I discuss other news in health tech starting off with another IPO, OneMedical. Now worth more than Livongo at $2.7 billion, this went better than anyone could’ve expected. Hinge Health raises $90 million in a Series C round, offering physical therapy at home and tapping into the loads of waste that goes towards back surgeries. Finally, Humana partners with a private equity company to expand primary care centers, what is the deal with this? —Matthew Holt