For Medicare Advantage Programs, Buyer Beware – The Virginian-Pilot

Some of the major health insurance companies that offer Medicare Advantage programs are being investigated by the US Department of Justice for fraud, after multiple complaints from whistleblowers. The New York Times first reported it on October 8 in an article titled “The Cash Monster Was Insatiable: How Some Insurers Tapped Medicare for Billions.” Major insurance companies United Health (27% market share of Medicare Advantage), Humana (17%), Kaiser (6%) and Cigna (2%) have been accused of fraud by insider whistleblowers or directly by the Department of Justice. Optima Medicare Advantage was not implicated in these allegations.

That’s how Medicare Advantage programs work. Medicare pays the insurance company a fixed amount, averaging $11,500 per year, to administer and pay for all care for each person who enrolls with the company. If the company can do it for less than $11,500, they’re making money on that person. There are incentives such as free gym memberships to enroll healthy people who will not use health services much, resulting in more profits.

For sicker patients with multiple medical conditions that require more care, a complex system of medical coding has been devised to pay the insurance company extra money for each diagnosis listed. For example, if a patient has bipolar disorder (which is vastly overdiagnosed), the annual payment increases by $2,700. Physicians managing these patients receive intensive training to ensure these codes are captured in billing data to maximize payments to the insurance company. The accusations of fraud stem from insider accounts by doctors of how they were encouraged to add diagnoses that were not accurate: either old and inactive problems, or existing problems that seem more serious, a process known as up-coding. This has resulted in unusually high Medicare payments to insurance companies, with some estimates as high as $25 billion in overpayments in 2020 alone.

Why is it a problem? Nearly half of Medicare patients are now enrolled in Medicare Advantage programs following aggressive advertising of numerous alleged benefits by celebrities such as Joe Namath and William Shatner. Medicare Advantage programs were originally launched in 1997 to improve quality of care and reduce Medicare costs. The opposite actually happened; Medicare Advantage programs have increased costs over traditional Medicare without any demonstrable improvement in quality of care. Insurance companies make an average of $1,600 in benefits per year from each Medicare Advantage patient.

Medicare finances are precarious, with the Part A trust fund (which pays for hospital care) facing insolvency in 2028. Costly Medicare Advantage programs are accelerating when taxpayers will pay more to maintain the financial viability of Medicare.

There are other problems with Medicare Advantage. First, the programs restrict choice to providers under network contracts. Mayo Clinics this year, for example, opted out of most Medicare Advantage programs. This could result in unexpected out-of-network expenses for the registrant. There may be money saved at the expense of the loss of choice.

Medicare Advantage plans often deny care or testing, leading to unnecessary delays in getting essential treatment. Prior authorizations may be required by the attending physician, which increases his already heavy administrative burden. If a person enrolls in Medicare Advantage and then develops a new chronic health condition, it may be difficult to get a Medicare Part B supplement when returning to traditional Medicare.

Finally, the information a salesperson gives over the phone may be inaccurate. In a recent survey, more than 80% of “secret shoppers” received misleading and inaccurate information about the benefits of certain Medicare Advantage programs as part of aggressive efforts to gain plan membership. Some advertised benefits were really too good to be true.

Thorough research is needed before choosing a Medicare Advantage plan. There is always the option of staying with traditional health insurance.

Dr. Bob Newman, a graduate of the University of Virginia School of Medicine and a United States Navy veteran, spent more than 15 years in private practice in rural Virginia and 20 years teaching family medicine. He teaches part-time at Eastern Virginia Medical School in Norfolk.

Comments are closed.