Why You Should Be Worried
By Mary Johnson, editor
Medicare Advantage plans are booming in popularity with retirees, as a low-cost health coverage alternative. In 2016, the plans cover more than 18 million people, but troubling audits indicate that many plans are overbilling the government for many, if not the majority, of the patients treated. Because overcharges drive up Medicare program spending, the higher costs are shifted to all people enrolled in Medicare through rising Part B premiums— even to people who never enrolled in a Medicare Advantage plan.
Medicare Advantage plans offer comprehensive hospitalization, doctor, and outpatient services through selected network providers, and most also include coverage of prescription drugs. Typically, premiums for Medicare Advantage plans can be 60% less than premiums for a Medigap supplement and a prescription drug plan. Many also offer extra benefits that are not covered by Medicare, like vision or dental benefits.
Medicare pays the plans a pre-determined monthly amount for each enrollee. Higher rates are paid for sicker patients, and lower amounts for people in good health. The “risk adjustment” policy is intended to avoid the problem of plans cutting corners on healthcare to boost profits. But the audits found pervasive problems with many plans overstating the severity of enrollees’ medical conditions, with little documentation of the medical conditions being claimed.
The Centers for Medicare and Medicaid Services (CMS) has estimated that it improperly paid $14.1 billion to Medicare Advantage plans in 2013 alone. Yet the plans are rarely forced to repay the money they have overcharged, or face closer government scrutiny after the audits, according to the Government Accountability Office (GAO). The GAO report said that CMS has failed to target health plans with “known improper payment risk”, allowing the worst abusers to avoid scrutiny.
According to the report, CMS has not expanded the recovery audit program to Medicare Advantage by the end of 2010 as was required by the Patient Protection Act. Recovery audits have been used for years in other Medicare programs to recover improper payments. TSCL believes Congress must provide stronger oversight to ensure that scarce Medicare dollars are spent appropriately and to prevent private insurers from boosting profits by gauging both taxpayers and older Americans.
Source: “Audits Of Some Medicare Advantage Plans Reveal Pervasive Overcharging,” Fred Schulte, Center For Public Integrity,” NPR, August 29, 2016. “Medicare Advantage: Fundamental Improvements Needed in CMS’s Effort to Recover Substantial Amounts of Improper Payments, Government Accountability Office, April 2016.