In an article headlined “How Insurance Firms Exploited Medicare Advantage for Billions,” the New York Times has exposed how Medicare Advantage plans make their patients appear sicker than they are in order to significantly increase their profits. The Medicare Advantage plans accomplish this by scouring patient medical records for additional diagnoses that they then report to the government to increase the amount the Medicare program pays them. This works because the Medicare program pays Medicare Advantage plans a set amount per patient per month, with the monthly payments determined by the patient’s demographics, risk adjusted for a patient’s diagnoses. In other words, the Medicare program pays higher monthly payments for those patients who are expected to require higher than average costs for medical care. However, the NYT article also explains that the Medicare Advantage plans frequently do not provide additional treatment to the patients to correspond to the additional diagnosis codes. Instead, based on its review of dozens of federal lawsuits and watchdog investigations, the NYT determined that the “major health insurers exploited the program to inflate their profits by billions of dollars.”
The article reported that:
[E]ight of the 10 biggest Medicare Advantage insurers – representing more than two-thirds of the market – have submitted inflated bills, according to the federal audits. And four of the five largest players – UnitedHealthcare, Humana, Elevance [formerly known as Anthem] and Kaiser – have faced federal lawsuits alleging that efforts to overdiagnose their customers crossed the line into fraud. The fifth company, CVS Health, which owns Aetna, told investors its practices were being investigated by the Department of Justice.
The article also reported that most of the insurers have disputed the allegations.
The Office of the Inspector General findings and the allegations in several lawsuits brought by whistleblowers highlighted in the article are significant because Medicare Advantage plans are projected to provide coverage for more than half of all individuals eligible for Medicare by next year. And, as reported by the article, “the government now spends nearly as much on Medicare Advantage’s 29 million beneficiaries as on the Army and Navy combined.” The result has been that “a program devised to help lower heath care spending has instead become substantially more costly than the traditional government program it was meant to improve.”
Although the article focused on the Medicare Advantage plans’ efforts to increase payments received from the Medicare program, the attorneys at Whatley Kallas, LLP have also found that the plans have decreased payments to the Firm’s hospital clients through such measures as denying inpatient admissions and downgrading DRG codes.
The NYT article is linked here. Whatley Kallas’s earlier article on HHS’s Office of the Inspector General’s report entitled “Some Medicare Advantage Companies Leveraged Chart Reviews and Health Risk Assessments to Disproportionately Drive Payments” is linked here.
Whatley Kallas’s earlier article on the OIG report entitled “Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care” is linked here.