{"id":1245993,"date":"2023-10-04T14:46:40","date_gmt":"2023-10-04T14:46:40","guid":{"rendered":"https:\/\/jacobin.com\/2023\/10\/medicare-advantage-140-billion-scam-senior-health-care\/"},"modified":"2023-10-04T14:46:40","modified_gmt":"2023-10-04T14:46:40","slug":"medicare-advantage-is-a-140-billion-scam","status":"publish","type":"post","link":"https:\/\/radiofree.asia\/2023\/10\/04\/medicare-advantage-is-a-140-billion-scam\/","title":{"rendered":"Medicare Advantage Is a $140 Billion Scam"},"content":{"rendered":"\n \n\n\n\n

According to a bombshell new report, the federal government is losing as much as $140 billion per year by subsidizing Medicare Advantage, the privatized insurance scheme managing health care for seniors.<\/h3>\n\n\n
\n \n
\n An advocate holds a sign during a news conference on Medicare Advantage plans in front of the US Capitol on July 25, 2023 in Washington, DC. (Alex Wong \/ Getty Images)\n <\/figcaption> \n<\/figure>\n\n\n\n\n \n

The federal government is losing as much as $140 billion per year by subsidizing private Medicare Advantage plans, according to a bombshell new report. In the groundbreaking investigation, health care researchers identified the four major ways that private insurers systematically exploit the publicly funded national health insurance program while denying care to the nation\u2019s most vulnerable patients.<\/p>\n

The researchers additionally found that seniors could save over $1,800 in annual fees taken from their Social Security checks if the government redirected what it spends subsidizing Medicare Advantage plans to instead reduce premium costs. Under the current\u00a0arrangement<\/a>, \u201ctraditional\u201d Medicare pays about $12,000 a year to private Medicare Advantage insurers for every patient whose care they \u201cmanage.\u201d<\/p>\n

Medicare Advantage insurers \u2014\u00a0which include UnitedHealth Group, Humana, Cigna, and Blue Cross Blue Shield \u2014 are profiting at the expense of ordinary seniors,\u00a040 percent<\/a>\u00a0of whom are completely dependent on their Social Security benefits, which average about\u00a0$1,600<\/a>\u00a0per month after Medicare premiums are taken out.<\/p>\n

\u201cInsurers are quietly plundering the Medicare trust fund for their own profits and compromising the health of senior citizens and [people with] disabilities,\u201d said Ed Weisbart, a family medicine physician who is the secretary of Physicians for a National Healthcare Program (PNHP), a single-payer advocacy group that produced the report.<\/p>\n

Medicare, the public health insurance for seniors and people with disabilities, is one of the most popular and effective social programs in the country. The program is publicly funded<\/a>\u00a0and keeps costs low by setting fixed prices with health care providers.<\/p>\n

Medicare Advantage lets private insurance plans step in as a middle man. When the program was established in its current form in 2003, its proponents argued it would help save the government money on Medicare spending. However, research<\/a>\u00a0from the Medicare Payment Advisory Commission (MedPAC), an independent agency that advises Congress on Medicare, shows that the program has not yielded savings in the two decades since it was established.<\/p>\n

Medicare Advantage plans receive a flat payment for the care they provide, strongly incentivizing the insurers sponsoring the plans to\u00a0ration care<\/a>\u00a0\u2014 leading to high rates of wrongful claim denials, worse health outcomes, and costly administrative headaches for providers.<\/p>\n

These private plans have been under fire for the rate at which they deny patient care. As the\u00a0Lever<\/em>\u00a0reported<\/a>, these claims have a devastating cost to health outcomes but frequently save insurance companies money as patients forgo treatments they cannot afford.<\/p>\n

Since then, claim denials have only increased. A report from the KFF (formerly known as the Kaiser Family Foundation), a major foundation that studies health policy issues, found that\u00a0two million<\/a>\u00a0prior authorization requests were denied by Medicare Advantage in 2021 \u2014\u00a0significantly higher than the rates for traditional Medicare.<\/p>\n

Since 2007, the share of beneficiaries enrolled in Medicare Advantage plans has tripled, far outpacing the growth of traditional Medicare enrollment.<\/p>\n

Many people leave traditional Medicare for private plans, and once they do, an\u00a0administrative barrier<\/a>\u00a0makes it difficult to return. That\u2019s because while Medicare covers 80 percent of patients\u2019 health care costs, the last 20 percent are usually covered by the individual or a supplementary plan called Medigap. But in most states, when someone leaves Medicare Advantage, often due to illness necessitating broader coverage networks, Medigap insurers can deny future coverage \u2014 effectively making their return to traditional Medicare impossible.<\/p>\n

As of this year, Medicare has reached a turning point: Medicare Advantage now\u00a0manages<\/a>\u00a0care for over half of all eligible beneficiaries.<\/p>\n

As patients are joining these for-profit plans, providers are leaving. Scripps Health, a major health care provider in San Diego, announced in late September that it would decline most Medicare Advantage plans moving forward, because of their practices.<\/p>\n

Scripps CEO Chris Van Gorder\u00a0told<\/a>\u00a0MedPage Today<\/em>,\u00a0\u201cWe are a patient care organization and not a patient denial organization and, in many ways, the model of managed care has always been about denying or delaying care \u2014 at least economically.\u201d<\/p>\n

Van Gorder explained that the private plans\u2019 routine denials forced Scripps\u2019 medical groups to operate at a $75 million annual loss, adding: \u201cThat is why denials, [prior] authorizations, and administrative processes have become a very big issue for physicians and hospitals.\u201d<\/p>\n

Scripps is one of\u00a0many<\/a>\u00a0health care groups around the country dropping Medicare Advantage plans. In the last month, medical groups in Ohio, Virginia, Oregon, Missouri, Oklahoma, and South Dakota have all terminated or partially terminated their contracts with Medicare Advantage plans, citing delayed reimbursements and administrative conflicts.<\/p>\n

In August, Humana, which controls 18 percent of the Medicare Advantage market,\u00a0posted<\/a>\u00a0a 38 percent increase in its profit from the same quarter in 2022, earning $957 million in one quarter alone. UnitedHealth \u2014 the largest Medicare Advantage insurer,\u00a0controlling<\/a>\u00a029 percent of the market \u2014\u00a0posted<\/a>\u00a0$8.1 billion in profits, up $1 billion, or 14 percent, from the same period the prior year. The enormous profits are driven by the substantial subsidies that Medicare Advantage offers the insurers.<\/p>\n\n \n\n \n \n \n

Taking Advantage<\/h2>\n \n

The\u00a0report<\/u><\/a>\u00a0from PNHP is among the first to fully categorize the predatory costs that the private insurance plans impose on Medicare. It spells out four key ways that Medicare Advantage games the Medicare system for profit.<\/p>\n

1) Favorable selection and deselection<\/em><\/p>\n

Researchers found that Medicare Advantage plans actively seek out healthier patients, targeting their marketing toward a healthier demographic in a process called \u201cfavorable selection\u201d and \u201cfavorable deselection.\u201d<\/p>\n

While traditional Medicare accepts anyone who is eligible, private plans aggressively market to a healthier population \u2014\u00a0and when high-need patients find that their Medicare Advantage plans won\u2019t cover their health care costs, they often try to return to traditional Medicare.<\/p>\n

This means that low-needs patients turn to Medicare Advantage, taking Medicare funding with them, while high-needs patients further strain the traditional Medicare system with elevated care costs.<\/p>\n

The flat rates that the government pays to Medicare Advantage insurers is based on the costs of traditional Medicare participants, but traditional Medicare participants tend to be sicker. Research\u00a0shows<\/u><\/a>\u00a0that patients tend to switch to traditional Medicare as they get sicker due to Medicare Advantage plans\u2019\u00a0narrow<\/u><\/a>\u00a0provider networks and\u00a0restrictions<\/u><\/a>\u00a0on care.<\/p>\n

The PNHP report\u00a0cites<\/u><\/a>\u00a0a 2019 study from KFF, finding that similarly situated seniors who switched to Medicare Advantage plans received $1,253 in less care in a given year than those who had stayed in traditional Medicare.<\/p>\n

MedPAC\u00a0found<\/u><\/a>\u00a0in June that favorable selection for a healthier Medicare Advantage population resulted in 11 percent lower costs for Medicare Advantage plans, even as insurers get paid on the basis of the traditional, higher-need Medicare population. The\u00a0report<\/u><\/a> estimates that these overpayments cost Medicare $44 to 56 billion annually.<\/p>\n

2) Upcoding<\/em><\/p>\n

Even though beneficiaries enrolled in Medicare Advantage plans tend to be healthier, the private plans systematically make their patients appear sicker to juice more profits out of Medicare.<\/p>\n

As part of a complex formula, Medicare Advantage insurers receive \u201crisk adjustment\u201d payments when their patients have more severe conditions, strongly incentivizing the private plans to create records that indicate having sicker patients, a practice known as \u201cupcoding.\u201d<\/p>\n

As the\u00a0Lever<\/em>\u00a0covered<\/u><\/a>\u00a0in May, this fraudulent practice leads to $20 billion in additional spending per year \u2014\u00a0and generates more profits for insurers. The PNHP report cites a 2021\u00a0study<\/u><\/a>\u00a0showing that risk adjustment payments are 20 percent higher in Medicare Advantage than traditional Medicare.<\/p>\n

3) Quality benchmarks and county bonuses<\/em><\/p>\n

Currently, Medicare provides bonuses to Medicare Advantage plans based on the locations they cover, supposedly to ensure equal geographic access to coverage. But as MedPAC\u00a0noted<\/u><\/a>\u00a0in its 2023 report, these payments \u201care not necessary for maintaining affordable supplemental coverage\u201d and \u201cfail to capture savings for the Medicare program.\u201d<\/p>\n

These payments are combined with bonuses that Medicare Advantage insurers receive for being higher \u201cquality<\/u><\/a>.\u201d Over half of all plans currently receive over four stars out of five, making them eligible for \u201cquality\u201d payments \u2014 and the rating system is plagued with limited information, making it a poor performance measure.<\/p>\n

A June 2023\u00a0report<\/u><\/a>\u00a0from the Urban Institute found that \u201cafter weighting, about two-thirds of a contract\u2019s star rating is determined by beneficiary experience and administrative effectiveness,\u201d and that \u201cmeasures of beneficiary experience do not permit meaningful distinctions across [Medicare Advantage] contracts.\u201d The report added, \u201cAdministrative effectiveness measures do not target important deficiencies regulators have identified within [Medicare Advantage] organizations.\u201d<\/p>\n

The PNHP report estimates that quality benchmarks and county bonuses may amount to $24 to 28 billion in annual overspending.<\/p>\n

4) Induced utilization<\/em><\/p>\n

In traditional Medicare plans, only 80 percent of health care costs are covered \u2014\u00a0and 86 percent of traditional Medicare beneficiaries have some type of supplemental coverage, whether from a Medigap plan, an employer-sponsored health plan for retirees, or another form of supplementary coverage to cover the last 20 percent.<\/p>\n

Medicare Advantage participants do not need supplementary coverage. This is an essential feature of the marketing of Medicare Advantage plans: seniors accept the costs of narrow networks and managed care in exchange for not needing to pay the cost of supplementary coverage.<\/p>\n

But Medicare makes spending assumptions for Medicare Advantage on the basis of significantly more comprehensive coverage than what the plans actually offer. That means that Medicare Advantage plans are paid using assumptions that they provide more care than they actually do.<\/p>\n

The report estimates that these costs amount to $36 billion per year.<\/p>\n

Experts say that the $140 billion these predatory practices are costing the government could instead go to reducing costs for seniors.<\/p>\n

\u201cMedicare Advantage overpayments could be rediverted into paying everybody\u2019s [traditional Medicare] premiums, the money they\u2019re paying every month out of Social Security,\u201d said Weisbart, from PNHP. \u201cIt\u2019s going directly into the profit lines of the Medicare Advantage companies without any additional health value.\u201d<\/p>\n

He added, \u201cIf seniors understood that the\u00a0$165<\/u><\/a>\u00a0coming out of their monthly Social Security checks was going essentially dollar for dollar into profiteering of Medicare Advantage, they would and should be angry about that. We think that we pay premiums to fund Medicare. The only reason we have to do that is because we\u2019re letting Medicare Advantage take that money from us.\u201d<\/p>\n

Analysts from Moody\u2019s Investor Service, a bond credit rating agency,\u00a0suggested<\/u><\/a>\u00a0in March that they could expect slower growth in the overall insurance industry compared to 2022, but that they \u201cexpect continued growth in Medicare Advantage.\u201d<\/p>\n\n \n \n \n\n \n \n

You can subscribe to David Sirota\u2019s investigative journalism project, the\u00a0Lever<\/i>, here<\/a>.<\/p>\n\n\n\n

This post was originally published on Jacobin<\/a>. <\/p>","protected":false},"excerpt":{"rendered":"

The federal government is losing as much as $140 billion per year by subsidizing private Medicare Advantage plans, according to a bombshell new report. In the groundbreaking investigation, health care researchers identified the four major ways that private insurers systematically exploit the publicly funded national health insurance program while denying care to the nation\u2019s most [\u2026]<\/p>\n","protected":false},"author":138,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"_links":{"self":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/1245993"}],"collection":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/users\/138"}],"replies":[{"embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/comments?post=1245993"}],"version-history":[{"count":1,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/1245993\/revisions"}],"predecessor-version":[{"id":1245994,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/1245993\/revisions\/1245994"}],"wp:attachment":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/media?parent=1245993"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/categories?post=1245993"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/tags?post=1245993"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}