AARP Healthcare Insurance Plan, Just Another Corporate Profit Center?

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I am a member of AARP. I am also a part of its MediGap Plan N Program, and Part D Pharmaceutical. Just like to shop at one store. Some do not believe in MediGap. If you are healthy and do not think you will have to pay the Part A $1600(?) deductible and the 20% of costs. Then skip MediGap. Do you feel Lucky? Then toss the dice. You may be lucky, I am not.

With Part D, I use Walgreens and we are having a faceoff. Everything was fine until they started pushing their pharmaceutical mail service. I do not mind calling my release in to the Walgreen’s store and picking up. For some reason they are sizing the containers incorrectly. For a 90-day supply of a 5-mg tablet they are giving me a bottle which can handle 1800 tablets. The store attendant slipped and told me they deliver it this way. In other words my prescription s being filled elsewhere and shipped into the store.

Letter to corporate detailing the issue.

This Kaiser Health Report is from 2022. I do not feel bad about posting it. The content poses quite a few questions about the healthcare industry and AARP.

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“AARP’s Billion-Dollar Bounty,” Kaiser Health News khn.org, Fred Schulte

In September, AARP, the giant organization for older Americans, agreed to promote a burgeoning chain of medical clinics called Oak Street Health, which has opened more than 100 primary care outlets in nearly two dozen states.

The deal gave Oak Street exclusive rights to use the trusted AARP brand in its marketing — for which the company pays AARP an undisclosed fee.

AARP doesn’t detail how this business relationship works or how companies are vetted to determine they are worthy of the group’s coveted seal of approval. But its financial reports to the IRS show that AARP collects a total of about $1 billion annually in these fees. Mostly the fees come from health care-related businesses eager to sell their wares to the group’s nearly 38 million dues-paying members.

Paid AARP partnerships comes with a lot. AARP promotes its partners in mailings and on its website. Plus, partners can use the familiar AARP logo for advertisements in magazines, online, or on television. AARP classifies the payments as “royalties.”

AARP’s 2020 financial statement, the latest available, reports just over $1 billion in royalties. This is more than three times what it collected in member dues or just over $300 million. Of the royalties, $752 million were from unnamed “health products and services.”

Controversy has long dogged these sorts of alliances, which have multiplied over the years, and the latest is no exception. Are the chosen partners actually a good choice for AARP’s members? Or are they buying the endorsement of one of the country’s most respected organizations with lavish payments?

Health policy analyst who worked for the group in the 1980s, Marilyn Moon:

“I don’t have a problem with AARP endorsing travel packages. But when AARP lobbies on Medicare issues while profiting off partnerships with those who are marketing to Medicare patients, that certainly is a problem.

Oak Street Partnership

There are reasons for concern about the latest partnership. Less than two months after announcing the AARP deal, Oak Street revealed it was the subject of a Justice Department civil investigation into its marketing tactics. Question arose of whether it violated a federal law that imposes penalties for filing false claims for payment to the government. Oak Street has denied wrongdoing and says it is cooperating with the investigation.

Companies like Oak Street, whose funders have included private equity investors, have alarmed progressive Democrats. Some health policy analysts worry the companies may try to squeeze excessive profits from Medicare with the services they market mainly to people 65 or older. Oak Street hopes it can cut costs by keeping patients healthy and in the process turn a profit, though it has yet to show it can do so.

AB: This typically comes in the form of denials of services and payment. Lesser care may be proposed. Few people appeal and MA plans profit.¹

AARP has stood for decades as the dominant voice for older Americans. Even so, people of any age can join. Members pay $16 a year or less and enjoy discounts on hundreds of items, from cellphones to groceries to hotels. AARP also staffs a busy lobbying shop that influences government policy on a plethora of issues affecting older people, including the future and solvency of Medicare.

Jason Young, a former AARP senior vice president;

Perhaps not as well known, AARP depends on royalty income to help “serve the needs of those 50-plus through education, programs and advocacy.

“Since our founding, AARP has engaged with the private sector to help advance our nonprofit social mission, including by licensing our brand to vetted companies meeting the needs of people as they age.”

Young told KHN in an email before leaving his AARP position last month 2022.

For years, AARP has drawn intermittent scrutiny for its longtime partnership with UnitedHealthcare. The large-scale healthcare Insurance company uses the AARP seal of approval to market products filling the gaps in the traditional Medicare program, gaps which can be filled by private insurers.

The arrangement has brought in hundreds of millions of dollars in annual royalties, according to court records.

Young:

“AARP advocates for policies that are in the best interests of seniors without regard to how it may impact revenue or any licensing agreements. AARP has taken many strong stands against the insurance industry.”

Young cites opposition in 2017 to proposed legislation AARP said could have hiked seniors’ premiums by as much as $3,000 a year.

John Rother, who left AARP in 2011 after more than two decades as its policy chief, said

“business interests were never a consideration in these decisions. I can absolutely say that was never the case. We separated those operations.”

But the alliance raises alarms among critics who see a conflict of interest that undermines the group’s credibility to speak for all seniors on critical Medicare policy issues. Bruce Vladeck, who ran the Medicare program for several years during the Clinton administration . . .

“AARP is in the insurance business, There ought to be accountability and visibility about it.”

In 2020, a conservative group called American Commitment went further, concluding that AARP “has grown into a marketing and sales firm with a public policy advocacy group on the side.”

Keeping People Healthy

In a November 2021 conference call with analysts, Oak Street Health CEO Mike Pykosz said he was “thrilled” to be the first primary care medical provider endorsed by AARP, a decision he said would “enhance our ability to attract and engage patients.”

The company offers “value-based” care to more than 150,000 Medicare patients. AARP officials would not discuss why the group had picked Oak Street Health, except to say that it favors experiments that could improve the quality of medical care and hold down costs.

AB: Kip Sullivan; “’value-based payment‘ emerged in the 2000s as the label for all methods of payment that shift insurance risk from insurance companies and public programs like Medicare onto health care providers. Risk is shifted by paying providers a set fee per patient per year (usually called “capitation”) rather than a fee for each service providers render (known as “fee-for-service”), or by tying provider payment to the profits and losses of organizations they contract with. VBP advocates claim, without evidence, that fee-for-service (FFS) induces doctors to order services patients don’t need and that shifting risk to providers will induce them to improve both components of value — cost and quality.”²

Erica Frank, the company’s vice president of public relations, said in an email..

Oak Street receives a flat monthly rate from insurers for each patient. That “allows us to focus on those services that have the greatest impact on keeping people healthy, such as behavioral health and screening 100% of our patients for the social determinants of health — including food and housing insecurity,”

Frank said;

Oak Street sees patients in many places where primary care is “either hard to come by or not available.” The company’s patients are seen almost eight times a year on average, versus just three visits for the average person on Medicare.

AB; Unless this person is really ill, eight trips to a doctor is overkill and rent taking.

Many of Oak Street’s treatment centers are in communities where poverty levels exceed national norms. The centers typically feature distinctive green and white colors throughout and contain a “community room” with a big-screen television that is also used for activities such as exercise, cooking, and computer classes.

Direct Contracting

Oak Street participates in a pilot project called “direct contracting,” which Medicare advanced in the final days of the Trump administration. In direct contracting, medical providers accept a set fee to cover all of a person’s medical needs.

AB; Donald Berwick; Direct Contracting aim was to accelerate progress of Medicare coverage away from FFS payment toward value-based contracting (VBC) “alternative payment models” (APMs). The illogical hypothesis was that MA firms, so expert at driving costs up, could do a better job controlling costs than existing ACOs. While savings from ACOs have been modest (MedPAC reports 1 percent to 2 percent), accurate evaluation has been difficult, and the level of ACO success has been controversial, momentum has built every year in this voluntary program. CMS recently announced that ACOs in 2020 decreased costs by over $4 billion and saved CMS almost $2 billion. MedPAC projects that, at a minimum, MA will cost CMS $8 billion more than FFS in 2020. ³

In a Senate Finance Committee hearing on Feb. 2, Sen. Elizabeth Warren (D-Mass.) argued that direct contracting rewards “corporate vultures.” Warren said companies could pocket as much as 40% of their payments as profit.

Supporters argued these concerns were overblown, but the federal Centers for Medicare & Medicaid Services, or CMS, announced a redesign of the pilot program in late February.

The scope of the Justice Department review of Oak Street is unclear. According to the company, DOJ is investigating whether it violated the False Claims Act and is seeking documents related to “third-party marketing agents” and “provision of free transportation” to patients.

Amanda Davis, an AARP senior adviser for advocacy and external relations, said the group learned of the DOJ matter when Oak Street disclosed it publicly on Nov. 8, 2021 — less than seven weeks after their joint venture was announced (with AARP). “We are closely monitoring this issue’s development and expect all providers to fully comply with all laws and regulations,” she wrote in an email.

Likewise, AARP will not say how much Oak Street paid to become a partner, only that the fee is “for the use of its intellectual property” and that “these fees are used for the general purposes of AARP.” Some feel that’s not enough.

Dr. David Himmelstein, a physician and professor in the City University of New York’s School of Urban Public Health at Hunter College.

“I think the vast majority of people signing up for these products are not aware that AARP is paid a very large amount for use of their name. If you are making hundreds of millions selling [health] insurance, it gives you a strong interest in assuring that product remains attractive for people to buy.”

Promoting Independence

Since its founding in 1958 by a retired high school principal, AARP says it has acted “to promote independence, dignity and purpose for older persons.”

The AARP Foundation provides services such as passing out more than 3 million meals in low-income neighborhoods during the pandemic and assisting older people with tax preparation and legal matters. AARP also awards millions of dollars in annual grants to a wide range of organizations. (KFF, which operates KHN, received a $100,000 grant from the AARP Public Policy Institute for “general support” of KFF’s work on Medicare in 2020 and a similar amount the two previous years related to Medicare policy issues.)

Last year, AARP spent more than $13.6 million on lobbying, according to Open Secrets. More than 60 AARP lobbyists opined on dozens of legislative proposals, from bills intended to protect seniors from scammers to holding nursing homes accountable, according to the campaign finance watchdog group.

Although many supporters argue that AARP pursues worthy goals, criticism of its business dealings goes back years. A 2008 media exposé reported that some AARP members had overpaid for insurance policies because they assumed AARP had the cheapest deal.

In 2011, a congressional investigation led by House Republicans found;

“it unlikely that AARP could survive financially, with its current expenses, if the hundreds of millions of dollars in annual insurance industry revenue disappeared.”⁴

Tax Exempt Status

The report also questioned whether AARP deserved its tax-exempt status as a nonprofit.

AARP’s health insurance pacts, which UnitedHealthcare refers to as a “strategic alliance,” have been challenged in nearly a dozen federal lawsuits as well — though AARP has prevailed so far.

One group of lawsuits has targeted a type of co-branded AARP-UnitedHealthcare policies called Medigap, which Medicare enrollees buy to pay for items such as copayments for hospital stays and doctor visits. These policies cover about 4.4 million people, according to the company.

AARP receives 4.95% of the premium, which it takes as its royalty, according to court filings. Several lawsuits have argued that amounts to an illegal commission because AARP is not licensed to sell insurance, court records show. The lawsuits cite AARP records showing annual income of hundreds of millions of dollars from the sales.

Federal judges have consistently dismissed such cases, however, ruling that state regulators had approved the rates or that buyers didn’t suffer any real damage.

Helen Krukas, a retiree who lives in Boca Raton, Florida, is appealing in the U.S. Court of Appeals for the District of Columbia Circuit. She claims AARP failed to disclose that it was “syphoning” 4.95% of what she paid for her policy.

In a deposition, Krukas testified that she;

“always thought of AARP as a club that negotiates on the behalf of retired people” and “it didn’t even occur to me to look anyplace else” for a policy. “Had I known that they were receiving money for it, I would have gone and shopped around with other brokers,”

Calling for Transparency

AARP has also faced challenges for another type of UnitedHealthcare Medicare policy it has promoted in recent years, called Medicare Advantage.

Critics cite a range of fault-finding government reports, audits, and whistleblower lawsuits targeting such products.

Dr. Donald Berwick, a former administrator of CMS, said Medicare Advantage plans have devised “legal ways” to game the billing system so they get paid “a lot more for writing down things that don’t have much to do with the actual needs of the patients.”³

AARP, which strongly supported the 2003 law that created Medicare Advantage, has received a fixed monthly fee from UnitedHealthcare for use of its name in marketing the health plans, according to the 2011 congressional investigation. How much AARP wouldn’t say, then or now.

Medicare pays the insurer a fixed monthly payment for each patient, which rises proportionally to each patient’s burden of illness. More than two dozen whistleblower lawsuits have accused health plans, including UnitedHealthcare, of ripping off Medicare by exaggerating how sick patients are.

Medicare Advantage

Medicare Advantage plans offer tempting extra benefits, such as eyeglasses and hearing aids, and proponents say they cost seniors less than traditional Medicare. But many policy experts argue the plans soak taxpayers for billions of dollars in overpayments every year.

UnitedHealthcare spokesperson Heather Soule told KHN via email that the company “sees incredible value in Medicare Advantage.” When compared with original Medicare, Medicare Advantage “costs less, has better quality, access, and outcomes with greater coverage and benefits and nearly 100% consumer satisfaction,” according to the company.

But the Justice Department’s civil fraud case alleges that UnitedHealthcare reaped $1 billion or more in illegal overcharges. The company has denied the allegations, and the case is set for trial late next year.

As the debate over how to contain Medicare costs intensifies, reformers say AARP should be an ally, not a beneficiary of industry largess.

Joshua Gordon, director of health policy for the Committee for a Responsible Federal Budget, a nonpartisan group;

“It’s hard to know whether they’re advocating for their business interests or for the seniors that they are supposed to represent.”

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¹ “Medicare Advantage Plans Often Deny Needed Care, Federal Report Finds,” The New York Times, Reed Abelson

² “Value-Based Payment Is the New For-Profit Health Care Industry,” Angry Bear, Kip Sullivan

³ “Medicare Advantage, Direct Contracting, And The Medicare ‘Money Machine,’” Part 2, Building On The ACO Model, Health Affairs, Donald Berwick

⁴ “Humana takes next step towards CEO’s “Medicare Advantage for All” gamble,” Angry Bear, Bill Haskell