I have written often about the flaws in the Medicare Advantage program. It seemed a good idea when it was conceived. Pay private insurance companies a fixed amount to provide necessary medical care to a Medicare enrollee. If it costs less than the fixed amount to care for the beneficiary, the company gets to keep the difference. If it costs more, the company has to pay the extra. The taxpayers get certainty and the expected advantage of a private company that can provide health care efficiently. Medicare Advantage was touted as a win-win that would save the taxpayers money. Except that it didn’t turn out that way. The big insurance companies that run the Medicare Advantage plans wasted little time in gaming the system.
There were always some exceptions built into the Medicare Advantage framework. Not every Medicare beneficiary was equally healthy. It would be unfair to require Medicare Advantage plans to enroll all applicants, even if they were very sick and likely to cost the plan a lot of money. Plans should get more money for taking a sicker enrollee. Fair is fair so that is the way it was set up.
Medical care does not cost the same everywhere. There should be some sort of a cost-of-care allowance for plans that insure people in areas where care is more expensive. Fair is fair so that is the way it was set up.
Let the gaming begin.
Since sicker enrollees earned the plans a higher payment from Medicare, they looked for ways to make their enrollees look sicker than they actually were. Some plans offered to send a nurse “to your home and conduct a physical examination absolutely free.” Some plans hired workers to conduct “medical chart reviews” to look for health problems that had not been formally diagnosed. Some plans pressured their doctor employees to diagnose their patients with medical conditions that would allow the plan to collect more from the federal government.
These tactics often resulted in enrollees being diagnosed with non-existent conditions or conditions so low in acuity that they would never receive treatment for them. In some cases, patients were diagnosed with impossible conditions, such as chronic tonsillitis in patients who had had their tonsils removed years before. The plan gets paid extra and doesn’t have to provide any additional care to the patient.
The plans also used marketing to identify healthier candidates and to encourage them to enroll while at the same time discouraging those in poorer health. Instead of taking their share of the sicker Medicare beneficiaries, they took more healthy ones and left the sicker ones for traditional Medicare. Some plans targeted veterans and then encouraged them to receive most of their care at the VA, while still collecting full payment from Medicare for the veteran to whom they were supplying little or no care.
As a result of these and other questionable practices, Medicare Advantage enrollees cost Medicare about 20% more than an enrollee in traditional Medicare. These extra charges are euphemistically referred to as “overpayments.” Some of that cost is paid by taxpayers as a whole but most of it is paid by Medicare enrollees themselves, including those enrolled in traditional Medicare. Medicare raises the premiums it charges enrollees to cover much of the cost of care. Premiums are raised for those in traditional Medicare as well as those enrolled in the plans that are driving the premium increases.
According to a bipartisan Congressional committee that advises Congress on financial matters, “overpayments” to Medicare Advantage plans added an average of $212 to the annual Medicare premiums of all Medicare enrollees. Since these premiums are scaled according to the income of the beneficiary, some are paying a lot more than an extra $212 for the year. For those with higher incomes, the extra annual premium needed to pay for the Medicare Advantage overpayments can be as high as $682. The overall estimate is that Medicare beneficiaries are paying billions of extra dollars in the aggregate to cover the cost of these “overpayments.”
It is long past time to rein in the giant insurance companies that run these Medicare Advantage plans. They are taking a lot of money out of the pockets of seniors with their gaming tactics. It might not be so bad, if they would play fair, but that is probably asking too much.
On a related note, Aetna, one of the largest insurance companies in America and the sponsor of a number of Medicare Advantage plans, has agreed to pay $118 million in fines to satisfy allegations that its plans improperly overcharged Medicare. Compare this amount with the billions received by Aetna and others in overcharges. While this settlement is a start, Aetna is getting off far too easy.
The post We All Pay For Medicare Advantage Abuses appeared first on Sandweg & Ager PC.