Medicare Advantage plans have overcharged Medicare by almost $30 billion in recent years, but so far officials have only recovered a small fraction of that money. The federal government has announced it is stepping up efforts to recover those funds and TSCL is closely watching to see that it does.
The issue is of huge importance to every Medicare beneficiary even those who have never enrolled in a Medicare Advantage plan, because Part B premiums are determined by all program costs. When Medicare overpays the private insurers, who run Medicare Advantage plans, Part B premiums go up faster and the government wastes precious Medicare finances, which also drives up costs for taxpayers. Advisor editor Mary Johnson estimates that the overpayments cost each Medicare beneficiary roughly $3 per month more in higher Part B premiums over 2016, 2017, and 2018 — the same three years when Part B premiums took the entire COLA of most Medicare beneficiaries.
Medicare Advantage plans are a private alternative to Medicare. They cover all Medicare Part A (hospital) and Part B (doctors and outpatient services) and usually cover prescription drugs as well. The plans are popular because they typically have low premiums, and sometimes offer supplemental coverage for other benefits such as vision or dental care which are not covered by traditional Medicare. The tradeoff, however, is the requirement to use in-network providers and there are copayments for every service. The plans now cover more than 22 million older Americans.
Medicare provides a capitated or fixed payment amount to the insurers for covering each enrolled beneficiary. The amount is adjusted by the enrollee’s health status. Plans receive bigger payments for beneficiaries in poorer health, and lower payments for those who are in better health.
Officials have known for years that some Medicare Advantage plans exaggerate how sick their patients are by inflating the “risk scores” in order to collect higher payments from Medicare. Congress approved higher rates for sicker patients in 2003 to ensure that health plans didn’t try to avoid enrolling sick patients who could incur higher costs, but some insurers have found ways to boost their “risk scores.” Audits of 37 health plans by CMS revealed that, on average, auditors could only confirm 60% of the 20,000 medical conditions that CMS had paid the plans to treat. Meanwhile a 2018 report by the Inspector General of the U.S. Department of Health and Humans Services found that some private plans have an incentive to deny claims in order to boost their profits.
While CMS has conducted audits of Medicare Advantage plans in the past, officials say the agency only expects to collect $650 million in penalties — a tiny fraction of actual losses, for payments made in 2011, 2012 and 2013. Centers for Medicare and Medicaid Services recently announced a proposal that would vastly expand their audit and recovery efforts, but health insurers are challenging the new initiative.
TSCL supports strong anti-fraud and waste oversight, as well as audits in order to reduce abusive billing practices in Medicare. Because Medicare premiums are one of the fastest growing costs that older Americans face in retirement, we urge Congress to provide funding for thorough audit and recovery initiatives, in order to slow the rise of Medicare costs due to inflated billing abuse.