qotd: Center for Public Integrity on the Medicare Advantage Money Grab

The Center for Public Integrity
June 4, 2014
The Medicare Advantage Money Grab

Why Medicare Advantage costs taxpayers billions more than it should
By Fred Schulte, David Donald and Erin Durkin

(Medicare Advantage) plans have sharply driven up costs in many parts of
the United States — larding on tens of billions of dollars in
overcharges and other suspect billings based in part on inflated
assessments of how sick patients are, an investigation by the Center for
Public Integrity has found.

Dominated by private insurers, Medicare Advantage now covers nearly 16
million Americans at a cost expected to top $150 billion this year. Many
seniors choose the managed-care Medicare Advantage option instead of the
traditional government-run Medicare program because it fills gaps in
coverage, can cost less in out-of-pocket expenses and offers extra
benefits, such as dental and eye care.

But billions of tax dollars are misspent every year through billing
errors linked to a payment tool called a "risk score," which is supposed
to pay Medicare Advantage plans higher rates for sicker patients and
less for those in good health.

Government officials have struggled for years to halt health plans from
running up patient risk scores and, in many cases, wresting higher
Medicare payments than they deserve, records show.

The Center's findings are based on an analysis of Medicare Advantage
enrollment data from 2007 through 2011, as well as thousands of pages of
government audits, research papers and other documents.

Federal officials who run the Medicare program repeatedly refused to be
interviewed or answer written questions.

Key findings:

* Federal officials have made billions in "improper" payments to
Medicare Advantage plans traced to risk score errors.

* Medicare Advantage risk scores rose much faster than the national
average in hundreds of counties nationwide between 2007 and 2011. That
rise in risk scores cost taxpayers more than $36 billion; critics
attribute that more to aggressive billing than sicker patients.

* Though federal health officials have recently disclosed some Medicare
billing data, key financial records of Medicare Advantage plans have
been kept under wraps.

* The failure to crack down on health plans that overbill doesn't bode
well for the Affordable Care Act, which relies on a similar risk scoring
system.

Thomas Scully, who helped get the program running under President George
W. Bush, said rates were generous in hopes of enticing insurers to
expand their Medicare business and not shy away from people in poor health.

"We very intentionally tried to overpay them a little bit," said Scully,
now a Washington lobbyist with numerous health care industry clients.

http://www.publicintegrity.org/2014/06/04/14840/why-medicare-advantage-costs-taxpayers-billions-more-it-should

"The Medicare Advantage Money Grab"
http://www.publicintegrity.org/health/medicare/medicare-advantage-money-grab

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Comment by Don McCanne

Medicare Advantage is a program in which our government has conspired
with insurers to privatize Medicare, even though it costs far more when
private insurers are inserted as intermediaries than it does when
Medicare is administered as a public program. This report from The
Center for Public Integrity is just the latest that has exposed this
outrageous use of our tax funds.

The program was set up to deliberately overpay the plans so that they
could offer additional benefits that would entice Medicare beneficiaries
into the private plans (see Scully's comment above). Recognizing these
overpayments, Congress included in the Affordable Care Act gradual
reductions. Not to be outdone, the insurance industry has conspired with
the Obama administration and has enlisted individual members of Congress
to fight these reductions. In response, the Obama administration has
used dishonest budgetary manipulations to offset a portion of the
reductions for 2013, 2014 and 2015.

Even more outrageous is that the private insurance industry has used
"innovations" to selectively enroll healthier beneficiaries, yet used
"touch of illness" serious diagnostic codes to game risk adjustment,
which has rewarded the insurers handsomely for claiming that their
beneficiaries were much sicker than they really were. According to this
report, federal Medicare officials refused to answer questions about
these perverse practices.

The insurance industry has been very successful in framing this as
"cutting payments for Medicare," while mobilizing citizens to demand
that these cuts be prevented. The cuts are not in Medicare, but they are
a reduction of overpayments to private insurers. Yes, those who sign up
with the private plans often have lower out-of-pocket costs, but the
rest of us are paying for that through higher taxes and through our Part
B Medicare premiums that are partially transferred to the private insurers.

Since we are paying for it, we should be receiving in the traditional
Medicare program the same benefits of reduced out-of-pocket expenses.
Let the people enrolled in Medicare Advantage keep the same level of
benefits, but increase the benefits in the traditional Medicare program
to the same level, then fire the private insurers that have been
responsible for most of the cost overruns in the Medicare Advantage program.

The politicians seem to agree that we should be spending these excess
funds on Medicare, so let's be fair and spend them equitably on an
improved Medicare, but not on insurer profits and waste. While we're at
it, let's make that an improved Medicare for all.