America’s Health Insurance Plans (AHIP), February 7, 2019
368 bipartisan leaders in Congress signed their support for the Medicare Advantage program. On behalf of the nearly 22 million Americans who depend on Medicare Advantage, America’s Health Insurance Plans (AHIP) thanks the 66 members of the United States Senate and the 302 members of the House of Representatives who signed bipartisan letters to express their strong support for the program.
This letter was sent to Administrator Seema Verma at the Centers for Medicare and Medicaid Services (CMS).
Letter from the Senate, with 66 signatures:
Letter from the House, with 302 signatures:
‘Cloud of secrecy’ in Medicare Advantage plans can create an environment for fraud
By Jeanne A. Markey and Raymond M. Sarola
STAT, February 8, 2019
Over the last two decades, federal and state governments have dramatically increased their payments to private health care companies that manage Medicare Advantage and Medicaid managed care plans, now paying them around $400 billion a year.
Although these companies take in a tremendous amount of taxpayer money, and have immense power regarding how to distribute these funds, a cloud of secrecy shields from public view their financial operations and profitability. The unique environment in which Medicare Advantage and Medicaid Managed Care plans operate — enormous amounts of money to be spent, a thicket of government reimbursement guidelines, little transparency, typically no party with equal bargaining power, and what amounts to an honor system — can create a recipe for cooking up fraud.
Unlike the traditional Medicare fee-for-service approach, Medicare Advantage is a capitated payment system. These private companies receive from the government a fixed amount of money per patient (depending on the patient’s health), make payments to providers for that patient’s covered services, and keep the difference as their profit. Medicaid Managed Care programs operate in a similar way under state Medicaid programs.
Capitated payments provide a profit motive to Medicare Advantage and Managed Care companies to operate efficiently and rein in overall health care spending. In practice, though, this payment structure can also provide incentives for companies to unlawfully increase their profits by manipulating cash flows on both ends of the equation. At one end, they can represent to the government that their patient population is less healthy than it is, and thereby obtain artificially increased capitation payments. At the other end, they can pay providers less than they are obliged to in order to maximize the cash they retain.
Given the complexity of Medicare Advantage and Medicaid Managed Care plans, many types of fraud can occur. In addition to inflating patient diagnoses and performing one-way reviews, companies can deny covered benefits and underpay providers, lie about patient demographics, and manipulate reported administrative costs.
In September 2018, the federal government issued a report that revealed another type of fraud in this area: “widespread and persistent performance problems related to denials of care and payment.” This report found that Medicare Advantage organizations improperly denied coverage for health care services in many cases, and forced patients to endure lengthy appeals processes to obtain their proper coverage. The types of fraud that can arise are likely to increase over time.
When companies that manage Medicare Advantage and Medicaid managed care plans receive hundreds of billions of dollars from the government on what is basically an honor system without sufficient transparency into how that money is spent or retained, fraud almost always ensues.
By Don McCanne, M.D.
The next time you hear a politician claim to support Medicare for All, it might be wise to ask if that includes supporting the private Medicare Advantage plans. The insurance lobby organization, America’s Health Insurance Plans (AHIP), has collected the signatures of 368 members of Congress for letters to encourage the Centers for Medicare and Medicaid Services to further nurture the private Medicare Advantage plans that are already displacing the traditional Medicare program – now about 40 percent.
The plans are popular primarily because there is no need to purchase an additional Medigap plan. Much has been written about the perversities of these private plans, but most of the deficiencies remain out pf the view of the enrollees. Just as a reminder, excerpts from the STAT article, “Cloud of Secrecy,” explain how “fraud almost always ensues.”
The only model with Medicare for All label that achieves the goals of reform (universality, equity, efficiency, affordability) is the single payer model that eliminates private plans. Yet many politicians who professed to support single payer Medicare for All are now backtracking by stating that private health plans should remain as an option. This is a clear rejection of single payer since most of the efficiencies and the egalitarianism of single payer are lost under a multi-payer system that includes private insurers.
Of particular concern is this overwhelming endorsement by members of Congress of the private Medicare Advantage plans which automatically eliminates any consideration of a bona fide Single Payer Medicare for All program.
You might want to check the signatures on the two letters to see if the names of your members of Congress are listed. If so, you might also want to share your thoughts with them.
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