["The move to privatize Medicare," said one expert, has "been very
profitable, in part because insurers are good at making their patients
seem sicker." ]
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‘STRAIGHT UP FRAUD’: DATA CONFIRMS PRIVATE INSURERS USE MEDICARE
ADVANTAGE TO STEAL BILLIONS  
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Kenny Stancil
October 9, 2022
Common Dreams
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_ "The move to privatize Medicare," said one expert, has "been very
profitable, in part because insurers are good at making their patients
seem sicker." _

A woman is treated at Mercy Hospital in Portland, Maine on August 16,
2017. , (Photo: Carl D. Walsh/Portland Portland Press Herald via Getty
Images)

 

INSURANCE GIANTS ARE EXPLOITING Medicare Advantage—a
corporate-managed program that threatens to result in the complete
privatization of traditional Medicare—to capture billions of dollars
in extra profits, Saturday reporting
[[link removed]] by _The
New York Times _confirmed.

The newspaper's analysis of dozens of lawsuits, inspector general
reports, and watchdog investigations found that overbilling by
Medicare Advantage (MA) providers is so pervasive it exceeds the
budgets of entire federal agencies, prompting journalist Ryan Cooper
to call
[[link removed]] the
program "a straight up fraud scheme."

Nearly half of Medicare's 60 million beneficiaries are now enrolled in
MA plans managed by for-profit insurance companies, and it is expected
that most of the nation's seniors will be ensnared in the
private-sector alternative to traditional Medicare by next year. Six
weeks ago, Sen. Ron Wyden (D-Ore.) launched
[[link removed]] an
inquiry into "potentially deceptive" marketing tactics used by MA
providers to "take advantage" of vulnerable individuals.

As the table below shows, almost every major player in the industry
has been accused of fraud by a whistleblower or the U.S. government.
In addition, the vast majority are engaged in rampant upcoding, or
exaggerating patients' illnesses in order to reap more money from
taxpayers—something they do while refusing
[[link removed]] to
provide necessary care for tens of thousands each year.

Larry Levitt, executive vice president for health policy at Kaiser
Family Foundation (KFF), which has has no connection with Kaiser
Permanente, wrote
[[link removed]] on
social media that "the move to privatize Medicare" has "been very
profitable, in part because insurers are good at making their patients
seem sicker."

Journalist Natalie Shure concurred, tweeting
[[link removed]]:
"Privatized Medicare plans cherry pick healthier enrollees, fudge
medical records to make them look as sick as possible, coax doctors
into tacking on extra sham diagnoses to bill for, and pay themselves a
profit on top of it. Medicare Advantage shouldn't exist."

"For all its faults, Medicare is a (nearly) universal program for 65+,
with overhead hovering around 2%—far lower than its private
counterparts," Shure added. "What inefficiencies did anyone think MA
would be solving exactly[?]" she asked.

According to the _Times_, MA was created by congressional Republicans
"two decades ago to encourage health insurers to find innovative ways
to provide better care at lower cost."

Matt Bruenig, founder of the People's Policy Project, a left-wing
think tank, argued
[[link removed]] that the
notion that private insurers would "provide more benefit for less
money" than traditional Medicare "while taking a profit" is insane on
its face.

"They innovate on other margins, namely by bending and breaking rules
that determine how much money Medicare gives them, as such things are
hard to detect," said Bruenig, "and we are now stuck in an endless cat
and mouse enforcement game with them."

As the _Times _reported:

The government pays Medicare Advantage insurers a set amount for each
person who enrolls, with higher rates for sicker patients. And the
insurers, among the largest and most prosperous American companies,
have developed elaborate systems to make their patients appear as sick
as possible, often without providing additional treatment, according
to the lawsuits.

As a result, a program devised to help lower health care spending has
instead become substantially more costly than the traditional
government program it was meant to improve.

[...]

The government now spends nearly as much on Medicare Advantage's 29
million beneficiaries
[[link removed]] as
on the Army and Navy
[[link removed]] combined.
It's enough money that even a small increase in the average patient's
bill adds up: The additional diagnoses led to $12 billion in
overpayments in 2020, according to an estimate
[[link removed]] from
the group that advises Medicare on payment policies—enough to
cover hearing and vision care
[[link removed]] for every
American over 65.

Another estimate
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from a former top government health official, suggested the
overpayments in 2020 were double that, more than $25 billion.

Citing a KFF study which found
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companies typically rake in twice as much gross profit from MA plans
as from other types of insurance, the _Times_ pointed out that the
growing privatization of Medicare is "strikingly lucrative."

MA plans "can limit patients' choice of doctors, and sometimes
require jumping through more hoops
[[link removed]] before
getting certain types of expensive care," the newspaper noted. "But
they often have lower premiums or perks like dental benefits—extras
that draw beneficiaries to the programs. The more the plans are
overpaid by Medicare,

The MA program has grown in popularity, including in Democratic
strongholds, over the course of four presidential administrations.
Meanwhile, regulatory and legislative efforts to rein in abuses have
failed to gain traction.

Officials at the Centers for Medicare and Medicaid Services (CMS),
some of whom move between the agency and industry, have not been
aggressive "even as the overpayments have been described in inspector
general investigations, academic research
[[link removed]],
Government Accountability Office studies
[[link removed]], MedPAC reports
[[link removed]],
and numerous
[[link removed]] news
[[link removed]] articles
[[link removed]],"
the _Times_ reported. "Congress gave the agency the power to reduce
the insurers' rates in response to evidence of systematic overbilling,
but CMS has never chosen to do so."

Ted Doolittle, who served as a senior official for CMS' Center for
Program Integrity from 2011 to 2014, said that "it was clear that
there was some resistance coming from inside" the agency. "There was
foot dragging."

Almost 80% percent
[[link removed]] of
U.S. House members, many of whom are bankrolled by the insurance
industry, signed a letter
[[link removed]] earlier
this year indicating their readiness "to protect the program from
policies that would undermine" its stability.

David Moore, co-founder of _Sludge_, an independent news outlet
focused on the corrupting influence of corporate cash on
politics, observed
[[link removed]] on social
media that "members of the health subcommittee of the House Ways and
Means Committee could publicly on whether they think oversight of the
insurance industry has been adequate."

However, Moore pointed out, committee Chair Richard Neal (D-Mass.)
"has received $3.1 million from the insurance industry, the most in
the House."

As the _Times_ noted, "Some critics say the lack of oversight has
encouraged the industry to compete over who can most effectively game
the system rather than who can provide the best care."

"Medicare Advantage overpayments are a political third rail," Richard
Gilfillan, a former hospital and insurance executive and a former top
regulator at Medicare, told the newspaper. "The big healthcare plans
know it's wrong, and they know how to fix it, but they're making too
much money to stop."

"There's a risk" that the increased scrutiny of MA providers "blows
over because the program's beneficiaries continue to have access to
doctors and hospitals," Joseph Ross, a primary care physician and
health policy researcher at the Yale School of Medicine, wrote
[[link removed]] on
Twitter. "But by exploiting and overbilling Medicare, these companies
profit off the public."

"Think of how this money could have been better spent," said Ross.
"The overbilling alone could have provided hearing and vision care to
ALL Medicare beneficiaries, or been used to fund any of these agency's
budgets."

Despite mounting evidence of widespread fraud in MA plans, the Biden
administration announced
[[link removed]] in
April that MA insurers will receive one of the largest payment
increases in the program's history in 2023, eliciting pushback
[[link removed]] from
several congressional Democrats led by Rep. Katie Porter of
California.

Progressives argue
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MA is part of a broader effort to privatize Medicare and must be
resisted.

Another major culprit is ACO REACH, a pilot program that critics
have described
[[link removed]] as
"Medicare Advantage on steroids."

The pilot—an updated version of Direct Contracting launched
[[link removed]] by
the Trump administration and continued by the Biden
administration—invites MA insurers and Wall Street firms to "manage"
care for Medicare beneficiaries and allows the profit-maximizing
middlemen to pocket as much as 40% of what they don't spend on
patients, all but ensuring deadly cost-cutting.

Physicians and healthcare advocates have warned
[[link removed]] that
failing to stop ACO REACH could result in the total privatization of
traditional Medicare in a matter of years.

"Even though Medicare is relied on by millions of seniors across the
country, and precisely because it is so necessary and cost-effective,
it is under threat today from the constant efforts of private
insurance companies and for-profit investors who want to privatize it
and turn it into yet another shameful opportunity to make money off of
peoples' health problems," Rep. Pramila Jayapal (D-Wash.) said
[[link removed]] in
May.

Jayapal, chair of the Congressional Progressive Caucus, has called on
the Biden administration to "fully end" ACO REACH and other
privatization schemes and urged lawmakers to enact the Medicare for
All Act, of which she is lead sponsor in the House.

Numerous studies have found
[[link removed]] that
implementing a single-payer health insurance program would guarantee
the provision of lifesaving
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for every person in the country while reducing overall spending by as
much as $650 billion per year.

_Kenny Stancil is a staff writer for Common Dreams._

* Medicare
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* Medicare Advantage
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* fraud
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