Medicare Advantage plans were created to provide supplemental insurance to Medicare recipients. However, the May 15, 2017 The New York Times published an article entitled, “A Whistle-Blower Tells of Health Insurers Bilking Medicare,” that reported about an alleged Medicare Advantage scam by United Healthcare.
This is important because one-third of all Medicare recipients are enrolled in a Medicare Advantage plan. In Medicare Advantage, the Centers for Medicare and Medicaid Services (CMS) pays insurance companies a set amount per enrollee each year based on the number and severity of their medical diagnoses. For example, CMS might pay an insurance company $8,000 per year for a 67-year-old Medicare Advantage member with high blood pressure, and pay the same insurance company $12,000 per year for a 76-year-old Medicare Advantage member with diabetes and kidney failure (dollar amounts are for illustrative purposes, not actual).
If CMS pays an insurance company more money per enrollee than it spends on doctors, hospitals, etc., the insurance company makes a profit. If the insurance company collects less money per enrollee than it spends, it loses money.
The article describes how a former United Healthcare (UHC) employee brought a lawsuit against the company for ‘up coding’ the severity of diagnoses for their Medicare Advantage members. In other words, the lawsuit alleges that UHC made it appear as though its Medicare Advantage members had more severe diagnoses than they actually did so that they could be paid more by CMS.
According to the article, Medicare Advantage improprieties could amount to $10 billion per year, industry-wide.
What a Potential Medicare Advantage Scam Means for Employee Benefits Professionals:
- This incident could be an example of regulatory capture—in which the regulated industry controls the regulatory government agency. This is why the CMS overpayments were not identified by CMS itself, but by an outside whistle-blower.
- Hundreds of billions of dollars in privately-insured employer healthcare payments run through insurance carriers—both fully-insured and self-funded. If there are lapses or errors with Medicare Advantage billing, how do you know these same errors are not occurring with employer healthcare payment transactions?
- If our U.S. healthcare system were to ever move to a single payer system, there would be a ‘monopoly on payment’ or a monopsony. The single payer would have absolute power… and “absolute power corrupts absolutely”—or so the saying goes.
In summary: Caveat emptor—buyer beware. You, the employers and benefits professionals, are the buyer. Beware.
Do you have questions about navigating your employee healthcare plan? Contact Compass Professional Health Services today for more information.
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