“Data Mining” Scheme To Overcharge Medicare Leads to Crackdown

Data analytics firms and “data mining” are the center of a broad government crackdown on abusive Medicare Advantage overcharges according to the U.S. Department of Justice.  In California, for example, a health system scoured the health histories of thousands of Medicare patients it found through “data mining” of patients’ current medical records and then pressured doctors to add false diagnoses— often without the patients’ knowledge.

The purpose was not to provide better care, but to pad the medical records with outdated and even irrelevant diagnoses, to make patients appear sicker than they were.  The aggressive tactics stem from incentives built into Medicare Advantage plans.  The sicker the patient, the more that a plan receives for coverage.  The Justice Department says that the maneuver has resulted in millions of dollars of inflated charges by Medicare Advantage companies.  In a sample of hundreds of cases of the Palo Alto Medical Foundation and its parent affiliate, Sutter Health, the government’s lawsuit said that 90% of the diagnoses for cancer were invalid, as were 96% of those for stroke, and 66% for fractures.

Nearly half of all Medicare beneficiaries are expected to be enrolled in Medicare Advantage plans by the end of this year, according to the Medicare Trustees’ most recent annual report.  The plans are run by private insurance companies under contract with the federal government.  New enrollees are enticed to join through low premiums and some additional benefits (such as gym memberships, or pre-packaged meals when recovering from a hospital stay).  But increasingly the plans are costing the federal government and all Medicare Part B beneficiaries more in higher Part B premiums than traditional fee-for-service Medicare, according to MedPAC, a government watchdog panel.  The higher costs reached $12 billion in 2020, out of total program costs of $350 billion, and are projected to top $16 billion in 2023, MedPAC has said.

In addition to abusive billings, some plans have also denied medically necessary care.  Last month we reported that tens of thousands of Medicare beneficiaries who are enrolled in private Medicare Advantage health plans were denied care that otherwise would have been covered by traditional fee-for-service Medicare.  The Department of Health and Human Services Office of Inspector General found that Medicare Advantage plans sometimes delayed or denied beneficiaries’ access to services, even though the requests met Medicare’s coverage rules.  The plans also denied payments to providers for some services that met both Medicare coverage rules and Medicare’s billing rules.  Denials can lead to delays or even prevent many beneficiaries from receiving medically necessary care.  In addition, beneficiaries can wind up paying out-of-pocket for services that should be covered by their health plan.

TSCL supports stronger oversight and enforcement measures for Medicare to prevent abusive billing practices which not only cost the federal government more but drive up Part B premiums for each and every beneficiary, even those who aren’t enrolled in a Medicare Advantage plan.

How are rising Part B premiums affecting you?  Have increased Medicare costs caused you to take on medical debt?  Please tell us by taking TSCL’s new Retirement Survey.


Sources:  “Beat Cancer? Your Medicare Advantage Plan Might Still Be Billing For It,” Christopher Rowland, The Washington Post, June 5, 2022.