In an effort to maximize government payments and minimize expenditures, attorneys David Engel, Gary Azorsky et al. write in MedPage Today that Medicare Advantage plans are engaging in billing fraud. To increase their rates, they are telling the government that their patients have multiple diagnoses. But, to keep their payments to hospitals as low as possible, they are telling hospitals that these patients have a single diagnosis. Talk about two-faced!
As the authors explain, the Medicare Advantage plans might tell the Centers for Medicare and Medicaid Services (CMS) that a patient has diabetes in order to get a higher payment from CMS for that patient. But, they might not tell the hospital about the diabetes diagnosis when the patient needs surgery to avoid having to pay the hospital cannot a higher rate for the surgery.
Medicare Advantage plans pay hospitals a fixed amount for each bundle of services they provide a patient. The fee increases when a patient has multiple diagnoses because patients in poorer health can be costlier to treat.
The HHS Office of the Inspector General found $2.6 billion in fraudulent Medicare Advantage overcharges in one year alone. The Medicare Advantage plans claimed patients had additional diagnoses for which they could provide no supporting documentation. How common are these fraudulent overcharges? It’s hard to know since they are not easy for the government to detect.
CMS pays Medicare Advantage plans a fixed fee for each member based on demographics and health status reported by the Medicare Advantage plans. But, what Medicare Advantage plans report about their members to CMS may be very different from what they tell hospitals about their members. CMS cannot see whether the Medicare Advantage plans are telling hospitals something different about patients than they are reporting to CMS. And, hospitals cannot see what Medicare Advantage plans are telling CMS about their patients.
Put differently, the Medicare Advantage plans have a financial incentive to report as many diagnoses as they can for each member to the government; that’s how they increase their revenues. At the same time, they have a financial incentive to hide patients’ secondary diagnoses from hospitals; that’s how they keep hospital charges down.
The authors argue that the government can stop this type of Medicare Advantage fraud through the federal False Claims Act, which requires Medicare Advantage plans to pay triple damages and other financial penalties for committing fraud on the government.
But, the best way to eliminate the fraud is to take the Medicare Advantage plans out of the mix and replace them with Medicare for All. Medicare Advantage plans don’t reduce fraud, they add to it. Short of that, the government should pay these private health plans on a cost-plus basis–for the services they cover and for processing claims–rather than hand them money upfront that incentivizes them to delay and deny care as much as possible in order to maximize profits.
Here’s more from Just Care:
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