Since its inception in 2002, Medicare Advantage, a program that allows private health insurers to contract with the government to provide Medicare benefits, has always cost the federal government more per person than fee-for-service Medicare. Over the last 15 years, not only have MedicareAdvantage plans not saved government money, but there’s strong evidence that these largely for-profit health care plans have been bilking the government of billions of dollars.
A whistleblower and former executive of UnitedHealth Group sued his former employer and 14 other Medicare Advantage plans in 2011 under the False Claims Act for playing with the health care records of their members in order to improperly inflate their Medicare payments. In an interview with the New York Times, Benjamin Poehling, a Finance Director at UnitedHealth, alleges that he made big bonuses the sicker he could paint UnitedHealth members and the more money he could bring to the company from Medicare.
The Poehling lawsuit was under seal until recently. And, it was one among many lawsuits that whistleblowers have filed alleging this type of fraud. In this case, the Justice Department has said it intends to sue UnitedHealth Group, giving the fraud claims greater weight. The Justice Department is also investigating Aetna, Humana, Health Net and Cigna.
According to the New York Times, some experts believe that the Medicare Advantage plan overcharges could amount to as much as $10 billion a year.
The government pays health plans more for sicker patients as a way to reward them for providing care to people with serious conditions. Medicare Advantage plans have always marketed their services to healthy people and never promoted their services to people with complex and costly conditions. They make more money providing little or no care to people and collecting a base fee from Medicare of around $10,000 a year per member.
That said, Medicare Advantage plans must provide care to their members in poor health. In these cases, Poehling charges, the health plans find ways to charge the government more than they should for their care. The Government Accountability Office, GAO, reports that the Centers for Medicare and Medicaid Services found that in 2013 alone, it wrongly paid Medicare Advantage plans $14.1 billion, largely because of wrongful upcharges.
Meanwhile, UnitedHealth is suing the federal government to vacate a 2014 rule that requires Medicare Advantage plans not to exaggerate the diagnoses of their members.
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