Summary: The New York Times published a well-researched, clearly-presented, and hard-hitting article about the Medicare Advantage diagnostic upcoding money machine. This superb reporting translates for the public what analysts and reform advocates have warned about for years.
‘The Cash Monster Was Insatiable’: How Insurers Exploited Medicare for Billions, New York Times, October 8, 2022, by Reed Abelson and Margot Sanger-Katz
(bolding by HJM)
The health system Kaiser Permanente called doctors in during lunch and after work and urged them to add additional illnesses to the medical records of patients they hadn’t seen in weeks. Doctors who found enough new diagnoses could earn bottles of Champagne, or a bonus in their paycheck.
Anthem, a large insurer now called Elevance Health, paid more to doctors who said their patients were sicker. And executives at UnitedHealth Group, the country’s largest insurer, told their workers to mine old medical records for more illnesses — and when they couldn’t find enough, sent them back to try again.
Each of the strategies — which were described by the Justice Department in lawsuits against the companies — led to diagnoses of serious diseases that might have never existed. But the diagnoses had a lucrative side effect: They let the insurers collect more money from the federal government’s Medicare Advantage program….
[A] New York Times review of dozens of fraud lawsuits, inspector general audits and investigations by watchdogs shows how major health insurers exploited the program to inflate their profits by billions of dollars….
Eight 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 — UnitedHealth, Humana, Elevance 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 additional diagnoses led to $12 billion in overpayments in 2020, according to an estimate from the group that advises Medicare on payment policies — enough to cover hearing and vision care for every American over 65.
Another estimate, from a former top government health official, suggested the overpayments in 2020 were double that, more than $25 billion.
The increased privatization has come as Medicare’s finances have been strained by the aging of baby boomers. But for insurers that already dominate health care for workers, the program is strikingly lucrative: A study from the Kaiser Family Foundation, a research group unaffiliated with the insurer Kaiser, found the companies typically earn twice as much gross profit from their Medicare Advantage plans as from other types of insurance. …
[R]egulators overseeing the plans at the Centers for Medicare and Medicaid Services, or C.M.S., have been less aggressive, even as the overpayments have been described in inspector general investigations, academic research, Government Accountability Office studies, MedPAC reports and numerous news articles, over the course of four presidential administrations.
Congress gave the agency the power to reduce the insurers’ rates in response to evidence of systematic overbilling, but C.M.S. has never chosen to do so. A regulation proposed in the Trump administration to force the plans to refund the government for more of the incorrect payments has not been finalized four years later. Several top officials have swapped jobs between the industry and the agency.
Comment:
By Jim Kahn, M.D., M.P.H.
This is remarkable reporting. The NYT nailed it: Medicare Advantage is a cash monster focused on maximizing revenue and profits regardless of the impact on beneficiary access to care. See our bolding for key points. A few elaborations:
- The problem is partly fraud. There’s plenty of that.
- The full extent of the cash extraction from Medicare is due to both legal and fraudulent diagnostic upcoding, and critically the failure of CMS to exercise its regulatory authority to correct for this upcoding.
- The projected excess payments to Medicare Advantage is $600 billion over ten years.
- This doesn’t even include cherry picking and lemon dropping, which contribute substantially to the differences in risk and money extraction.
- As noted in the article, private insurer profits are much higher with Medicare than in the private sector. And, as shown in HJM, the actual (de-facto) profit returns are obscenely high, 30% or more.
What’s most remarkable about this reporting isn’t the content. That’s terrific, accurate and powerful. What’s most remarkable is the placement: on the front page of the New York Times (for NYT old-timers, “above the fold”). Premier attention to this critical issue. As I can tell from my email and twitter traffic, rapid widespread sharing.
Let’s hope this represents a sea change in how the public understands and reacts to the private insurance takeover of Medicare Advantage, of Medicaid, and – with ACO REACH – traditional Medicare.
We need a health care financing system that elevates patients over profits. Single payer.
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