Sens. Ron Wyden (D-OR)—the Senate Finance Committee Ranking Member—and Elizabeth Warren (D-MA) sent a letter to UnitedHealth Group (UHG) CEO Stephen Hemsley on August 7 launching an investigation into UHG’s “cost reduction tactics in nursing homes” following reporting earlier this year in The Guardian that LeadingAge summarized in this article.

The Guardian found that UHG incentivized and pressured nursing homes and their staff to reduce hospital transfers. Optum, a UHG division that delivers its Institutional Special Needs Plan (I-SNP) product, was also found to bully staff into identifying residents eligible for the Optum I-SNP and/or sharing patient health information with Optum representatives so they could market their I-SNP to the nursing home’s current residents. Some LeadingAge members were subject to these pressure tactics, including threats that their lack of cooperation might lead to their contract being discontinued. Given Optum dominates the I-SNP market, families or local media may ask LeadingAge nursing home members about these practices and the “secret bonuses,” and whether they are also participating in these arrangements. It is important to remember:

• Providers are typically prohibited by the terms of their Medicare Advantage/SNP contracts from divulging contract details, including how they are paid. Therefore, these incentives are “secret” because it is mandated.
• CMS also provides incentives for nursing homes to reduce unnecessary hospitalizations under the Skilled Nursing Facility Value-Based Payment program. The goals UHG/Optum seek to achieve are not the problem; but the tactics they use to pressure nursing home staff into inaction or ask them to divulge information that is HIPAA-protected IS the problem.
• The laws that established the Medicare Advantage (MA) program give plans, like UHG, unchecked authority to structure provider payments any way they choose. CMS is explicitly prohibited under law from “mandating a particular price structure for payment” that an MA plan must use in contracting with providers. Therefore, CMS is also prevented from setting a rate floor that plans must pay providers to ensure their costs of care are covered or establishing acceptable value-based models to be used by the plans. Nonetheless, incentives should never be used to encourage providers to not act in the best interest of a patient or nursing home resident, or to ignore Medicare rules.

LeadingAge agrees that patient safety and privacy must be protected. We share the senators’ concerns about the harmful practices being deployed by UHG and other large MA organizations with a focus on saving money or plan financial gain, often to the detriment of the older adults enrolled in their plans. We also feel strongly that MA plans should not be permitted to use their market power to pressure nursing homes into actions that result in poor or harmful outcomes for the older adults we serve. This is just another example that underscores why we believe MA reform is so critically needed. We need policymakers to pursue policies that examine the negative effects of market concentration, ensure the financial viability of providers and provide greater plan accountability, oversight, and enforcement by CMS to protect beneficiaries.

The senators asked for additional information in the letter they sent to CEO Stephen Hemsley, which also included an extensive list of questions to help them better understand UHG’s I-SNP protocols and practices. They have requested a response from UHG by September 8. LeadingAge will be meeting with Sen. Warren’s staff in the coming weeks on this issue and MA reform needs.

Please email Nicole Fallon if your organization has had any experience with the Optum I-SNP bonuses for reduced hospitalizations, plans encouraging I-SNP enrollees to sign advanced health care directives, increasing I-SNP enrollment, or other related issues that you are able or willing to share.