After Charges of Fraud, Insurance Companies Push Back

After Charges of Fraud, Insurance Companies Push Back

Cutting “waste, fraud, and abuse” is always part of the solution politicians bring up when they discuss how to reduce government spending.  But there’s a debate about just what “waste, fraud, and abuse” really is.

A classic example is what’s happening with Medicare Advantage plans.

According to federal audits, eight of the ten biggest Medicare Advantage insurers — representing more than two-thirds of the market — have deliberately overcharged Medicare for the services they have provided.

What is more, four of the five largest players — UnitedHealth, Humana, Elevance, and Kaiser — have faced federal lawsuits alleging that efforts to over-diagnose their customers crossed the line into fraud.

Now, the insurance industry and Republicans are using the debt ceiling fight and President Biden’s vows not to cut Medicare to fend off changes to private Medicare Advantage plans, which are popular among the public but have faced criticism about their costs to the government.

So far this year, the Centers for Medicare and Medicaid Services has released two rules aimed at reducing overpayments to Advantage plans while increasing oversight — moves long recommended by nonpartisan government watchdogs and economists.

But insurance companies that sell Medicare Advantage plans are running ads accusing the White House of cutting seniors’ benefits — a tactic the industry has used before to avoid changes to the program.

According to one estimate, an organization representing the insurance companies has spent $10.5 million on television ads in 2023, more than twice the next highest spending advertiser in the country, with Washington, D.C., Phoenix, and Las Vegas the most targeted markets.

But those attacks are misleading, experts and advocates say, pointing to long-standing recommendations from government watchdogs that Congress and CMS rein in over payments to Advantage plans, which have enjoyed increased enrollment and profits over the past decade.

The government pays Medicare Advantage insurers a set amount for each person who enrolls, with higher rates for sicker patients. And the insurers, among the largest and most prosperous American companies, have developed elaborate systems to make their patients appear as sick as possible, often without providing additional treatment, according to the lawsuits.

As a result, a program devised to help lower healthcare spending has instead become substantially more costly than the traditional government program it was meant to improve.

In statements, most of the insurers disputed the allegations in the lawsuits and said the federal audits were flawed. They said their aim in documenting more conditions was to improve care by accurately describing their patients’ health.

But at least one Republican Senator agrees with the Biden Administration. “Medicare Advantage is an important option for America’s seniors, but as Medicare Advantage adds more patients and spends billions of dollars of taxpayer money, aggressive oversight is needed,” said Senator Charles Grassley of Iowa, who has investigated the industry. The efforts to make patients look sicker and other abuses of the program have “resulted in billions of dollars in improper payments,” he said.’

A long-awaited rule finalized last month would seek to recover more than $4 billion in over payments to plans over 10 years, enhance future audits, and make it easier for the government to recoup over payments.

As part of its annual payment updates to Medicare Advantage plans, CMS proposed earlier this month a 1 percent increase for 2024 — a smaller increase than proposed in past years that is being framed as a cut by the industry.

The irony is that Medicare Advantage, which allows private insurers to manage federally funded health care plans for those 65 and older, was created to reduce costs, under the assumption that private industry is more efficient than government. But the evidence suggests that insurers have exploited the Medicare Advantage system to inflate their profits, using techniques that include making their patients appear sicker than they are, thereby inflating their bills.