Retiree advocacy group sues state officials to stop switch to Medicare Advantage plan

Delaware Public Media | by Paul Kiefer

The retiree advocacy group RiseDelaware is suing the state in state Superior Court over its decision to move retired state employees to a Medicare Advantage plan administered by Highmark Delaware.

The group, led by state Rep. John Kowalko and New Castle County Councilperson Lisa Diller, claims state officials did not adequately inform lawmakers and retirees of the decision.

In February, the state’s Pension Benefit Committee awarded a three-year contract to Highmark Delaware, longtime insurance provider for state employees, to administer the Medicare Advantage Plan for 25,000 former state employees.

DeMatteis previously told Delaware Public Media that the change in coverage plan is a means to manage rising healthcare costs that saddled the state with millions of dollars in unfunded liabilities for retiree healthcare. By adopting a Medicare Advantage Plan, the state will shift some risk or responsibility for healthier outcomes to Highmark Delaware; in return, the insurance provider will hold greater authority to impose preauthorization requirements for some medical treatments, among other rules.

Though lawmakers approved the switch as part of the 2023 state budget in June, Kowalko says they were not aware of the scope of changes they agreed to — the crux of the new lawsuit, he says, arguing that the state’s Pension Benefit Committee did not take appropriate steps to seek lawmakers’ and retirees’ input on the changes.

Former state Senator Karen Peterson, who joined the lawsuit as a plaintiff, says that as other states have shifted to Medicare Advantage Plans to manage rising healthcare costs, the model has revealed serious flaws.

“The fact that they’ve taken my Medicare — that I’ve paid for all my life – and given it to Highmark to make decisions about my Medicare is just unbelievable,” she said.

She and other plaintiffs take issue with the extensive list of new pre-authorization requirements that the Medicare Advantage Plan would introduce.

“Take getting an ambulance after a heart attack as an example,” she says. “According to the rules of this new plan, that’s covered only if the medical condition is such that other means of transportation could endanger the person’s health, or if authorized. How do you get pre-authorization for an ambulance ride if you’re having a heart attack? You can’t plan for that. We don’t have these kinds of pre-authorization requirements under our current plan.”

She added that Medicare Advantage Plans are more likely to deny coverage for medical procedures than retirees’ current Medicare plan; though the rate of denial under Medicare Advantage Plans is roughly 8 percent, the lawsuit’s plaintiffs note that coverage denials are exceedingly rare under standard Medicare plans.

Peterson and Kowalko also take issue with the limitations on mobility that the shift could create for retirees.

“If you retired and moved out of state, where are you going to find doctors who are participating in the Highmark Delaware plan?” Peterson asked. “Right now, I can go to any Medicare provider in the United States. I could go to any of them.”

Within Delaware, nearly 95 percent of Medicare providers have agreed to participate in the Medicare Advantage Plan; the state is working to secure participation from the remaining holdouts.

Beginning in August, Kowalko began rallying lawmakers and retirees to pressure Gov. John Carney to delay the change. On September 9, Senate Democrats wrote a letter to Carney asking him to at least consider modifying the terms of the agreement with Highmark Delaware, including by requiring quarterly reports on coverage denials, turn-around times and “other details of the pre-authorization process.” And on September 12, lawmakers and representatives from the state’s Pension Office and Highmark Delaware held a town hall in Wilmington to address retirees’ concerns about the plan.

Despite the pressure, Carney has resisted requests to delay the change to discuss its impact, arguing the state would be breaking contractual obligations and that it is too late to stall the implementation of the new plan. Kowalko says the Governor’s claims are false.

“The Governor and his appointees are lying about time frames,” he said, “and they continue to lie about who had knowledge of this plan.”

According to an email shared with Delaware Public Media, as of Monday, the state’s contract with Highmark had not yet been fully executed.

In a letter sent to lawmakers responding to their suggestions, however, Carney’s office noted that the agreement with Highmark Delaware will include some adjustments made in response to retirees’ concerns, including a four-month delay in implementing pre-authorization requirements and quarterly reporting on the rate of denial of benefits.

Nevertheless, opponents of the Medicare Advantage Plans maintain that the change merits reconsideration. The lawsuit, said Peterson, “is our last option. We didn’t want to have to sue, and I generally believe the state will do the right thing, but this is what it came to.”

Pending the outcome of the lawsuit, the new Medicare Advantage Plans are expected to take effect on January 1.

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