One Reason Why Medicare Costs So Much




 Keiser Health News





Sen. Chuck Grassley (R-Iowa) wants federal health officials to tighten scrutiny of private Medicare Advantage health plans amid ongoing concern that insurers overbill the government by billions of dollars every year.

Grassley, the influential chairman of the Senate Judiciary Committee, has asked Centers for Medicare and Medicaid Services (CMS) officials to explain why they failed to collect nearly $125 million in potential overcharges identified at five Medicare Advantage plans audited in a single year.

In an April 17 letter to CMS Administrator Seema Verma, Grassley cited an article on alleged overcharges published in January by Kaiser Health News. The article said that Medicare had potentially overpaid five health plans $128 million in 2007, but under pressure from the insurance industry collected just $3.4 million and settled the cases.

“The difference in the assessment and the actual recovery is striking and demands an explanation,” Grassley wrote.

Medicare Advantage is a popular alternative to traditional Medicare. The privately run health plans have enrolled more than 18 million elderly and disabled people — about a third of those eligible for Medicare — at a cost to taxpayers approaching $200 billion a year. The plans also enjoy strong support in Congress.

Medicare is supposed to pay the health plans higher rates for sicker patients and less for people in good health using a formula called a risk score.

Yet CMS records reveal that billions of tax dollars are wasted annually partly because some health plans exaggerate how sick their patients are by inflating risk scores and boosting their payments improperly.

Grassley asked in his letter what steps CMS is taking “to ensure that insurance companies are not fraudulently altering risk scores” and how many audits are now being conducted.

“By all accounts, risk score gaming is not going to go away. Therefore, CMS must aggressively use the tools at its disposal to ensure that it is efficiently identifying fraud and subsequently implementing timely and fair remedies,” he wrote.

Grassley also noted that CMS needs to step up oversight audits because Medicare Advantage plans are expected to grow substantially in coming years.

“The use of these tools is all the more important as Medicare Advantage adds more patients and billions of dollars of taxpayer money is at stake,” Grassley’s letter said.

The Government Accountability Office, the watchdog arm of Congress, has sharply criticized CMS for its failure to ferret out overcharges and in April 2016 called for “fundamental improvements” in audits of Medicare Advantage plans. GAO also found that CMS has spent about $117 million on Medicare Advantage audits, but recouped just under $14 million in total.

Medicare Advantage plans have been the target of at least a half-dozen whistleblower lawsuits alleging patterns of overbilling and fraud. In March, the Justice Department joined one such suit against insurance giant UnitedHealth Group. The suit alleges that the health plan submitted claims for underpayments to the government, but ignored examples in which it had received too much money.

The audits disclosing the $128 million in overpayments to health plans were part of a cache of confidential CMS documents released through a Freedom of Information Act lawsuit filed by the Center for Public Integrity.

The CMS records identify the companies chosen for the initial Medicare Advantage audits as a Florida Humana plan, a Washington state subsidiary of United Healthcare called PacifiCare, an Aetna plan in New Jersey and an Independence Blue Cross plan in the Philadelphia area. The fifth one focused on a Lovelace Medicare plan in New Mexico, which has since been acquired by Blue Cross.

In the audits, CMS repeatedly found that the health plans couldn’t document their patients were as sick as the insurer had claimed.

For example, auditors couldn’t confirm that one-third of the diseases the health plans had been paid to treat actually existed, mostly because patient records lacked “sufficient documentation of a diagnosis.”

Overall, Medicare paid the wrong amount for nearly two-thirds of patients whose records were examined; all five plans were far more likely to charge too much than too little. For 1 in 5 patients, the overcharges were $5,000 or more for the year, according to the audits.

America’s Health Insurance Plans, an industry trade group, has denied that Medicare Advantage plans overcharge. The group argued in a June 2016 position paper that the auditing method used by CMS was “not yet stable and reliable.” The group also said that conducting audits “could disrupt the care being provided by plans that are working hard to meet the needs of their enrollees.”

Grassley cited reports by the Center for Public Integrity that improper payments to Medicare Advantage plans cost taxpayers as much as $70 billion from 2008 to 2013. He said that CMS’ estimate that it had overpaid the five health plans $128 million “appears low and could very well be just the tip of the iceberg.”

KHN’s coverage related to aging & improving care of older adults is supported by The John A. Hartford Foundation.

9 Responses to “One Reason Why Medicare Costs So Much”

  1. GLS says:

    The most prevalent misconception throughout the country is that Federal government must collect taxes to obtain revenues to pay for government programs. This misconception leads to articles such as this, which discuss issues related to the funding or “costs” of government programs. In fact, the process is the complete opposite. The federal government spends dollars to provision itself or provide services for citizens and, after having so provisioned itself or provided these services, taxes the population after the fact in order to control aggregate demand and to drive demand for the U.S. dollar (after all, paper money is worthless but for the fact that the government requires you to pay taxes in dollars). The concept of the Federal government having or not having money is the silliest thing. Saying the federal government doesn’t have the money for something is similar to saying the University of Florida doesn’t have enough points to put up on the scoreboard after the team scores a touchdown. Of course, there is an arbitrary self-imposed debt limit that factors in to constrain federal spending, but in reality its an artificial measure that provides little or no value to anyone (wouldn’t it be crazy if college football had a point limit? You’re only allowed to score 49 points in a game, no more!).

    So all of this talk about federal programs costs and controlling federal government expense is somewhat of a red herring . This is also why the government doesn’t care so much about excess billing and other forms of fraud in its programs like Medicare. People wonder why the feds don’t do more to detect and control fraud on the front-end and instead make payments and try to recover from fraudsters after the fact. Well this is exactly why.

    Remember the true costs of goods and services are not measured in dollars, but in terms of labor. Dollars are just pieces of paper that facilitate the economy and the federal government. Dollar supplies are unlimited, but labor supply is not.

  2. Don't Worry says:

    If Paul Ryan has his way, nobody will have Medicare. He and his fellow-deluded Republican believers have embraced in the Ayn Rand libertarian fantasy that government should not help anybody and that only the strong should survive. The GOP opposed Medicare when is was passed in the 1960s and many of these want to destroy it today.

  3. Sober as a Judge says:

    I long for a day when we can turn down the screeching political clamor surrounding healthcare and have a common sense, practical discussion about the issue.

    Our bodies fail us. For some it happens early, others late, some frequent some not. Sooner or later, almost all of us will need to turn to the health care system and when we do we want good care provided. Nobody disagrees.

    The question is how best to pay for it and that’s what sets the right tone for the discussion. We need to go back and revisit that base reality. If you pay for your healthcare in cash, it is super expensive, you likely will avoid getting care, and evidence shows your conditions get worse until you must go to a hospital at which point the expense turns from high to huge. Sometimes unbelievably huge.

    So the smarter approach is to get everyone in a system where they live healthier lives and have access to primary care that helps them avoid, to the extent possible, the super high costs and suffering associated with untreated advanced disease. There’s so much more that can be said about that point, but let’s just leave it there for the moment.

    Paying cash is not the smart way. The smart way is a system of insurance. For those who work at jobs that offer health insurance, you’re covered. Historically, the retired have a combination of Medicare — which like Social Security is a pension program they paid for while they were working — it is not a “gift” it is insurance they paid for and collect in retirement — and some combination of private coverage, if they have it.

    If you qualify by way of some disability, you may be able to access Medicaid, VA medical benefits or others. There is some coverage for children who are at risk for various reasons.

    Who is missing?

    Working or unemployed persons who do not get health coverage either through their jobs or at all.

    Here’s where it gets slippery. When someone without insurance cannot pay for the care they must have, that care is still by law provided to them. We would be animals not to have such laws. They may not be able to pay but the cost of their care must be paid. And who pays that cost? We do. Those who have insurance. How? Through the inflation of costs in health care.

    I recall once someone complaining because they saw that a Tylenol during a hospital stay cost $50 and the question was how can a pill cost that much when I can buy it at the pharmacy at a fraction of that cost. Forget that it’s not the same Tylenol. The reason it’s at $50 includes the fact that so many are dispensed and not paid for, that those who can pay, must cover both costs. This is an economic reality nobody can dispute.

    Now, if you understand those facts, that puts you ahead of about 90% of Americans who just do not get it.

    It is a relatively simple concept to master.

    Children can get their heads organized to understand it, so how is that that most grown American adults cannot?

    We cannot take the rational steps to solve the health care or any problem until we first understand the problem. Or appreciate that it is in our own personal interest to resolve this problem or we pay the price of not doing so. Forget that solving the health care problem will help many others. It helps us first by reducing the costs we pay for.

    No wonder we can’t agree on anything.

  4. Chaz Stevens, Genius says:

    Those of you who are upset a sexual harasser like O’Reilly is off TV, you still have Trump.

  5. City Activist Robert Walsh says:

    The power of Medicare. Its an entitlement for working all your life. You paid into it all th e yrs. you work. Don’t get it confused w/ Medicaid. People on medicare should always examine your statement every month. If service is lousy or you are waiting in doctors offices for hours make a complaint. Call the center in Jacksonville(CMS). Don’t let any medical office ,provider rip the gov’t and you (your policy)off. I can remember when my late mother was treated like a dog at this particular hosp. floor. I notified CMS and they got not one dime. If alot of you question your statements and service Medicare will be around for a lot longer and service will improve. This is your medicare you deserve the best possible care.(i also want to thank Sen.Susan Collins(maine) for her hearing on Alzheimer’s on March 29(thank you). Fund NIH Pres.Trump…Ps, get shitty service, get some snot nose aide or staff etc. demand Medicare don’t pay out(it works trust me,..)

  6. M. T. Moody says:

    Good article
    Medicare is an out-of-control entitlement not for seniors, but for doctors. Before Medicare, doctors were well paid but not known as among the richest in each community. Now many doctors are 1%ers because they have been enriched by Medicare.
    Some have been enriched by fraud and others just be knowing how to squeeze through legal loopholes.

  7. The Big Fib says:

    the idea that people are owed Medicare because they contributed is ridiculous. Nobody contributes enough working to pay for what most take out in the end if they live to their 80s and 90s. Just ask anybody who had cancer operations, diabetes or a heart condition.

  8. Chaz Stevens, Still Retired says:

    This is rich: House GOP exempt themselves, their health insurance from their latest ACA repeal plan.

  9. JF says:

    The objective of medicare providers is to make patients appear on paper sicker then they really are. To be able to do this employees are pressured to lie