The Medicare Advantage program, Medicare Part C, which allows corporate health insurers to contract with the government to offer Medicare benefits, was born with the assumption that it could save Medicare money. Instead, a new report out of the mainstream USC Schaeffer Center for Health Policy and Economics estimates that Medicare Advantage plans are costing taxpayers and people with Medicare an additional $75 billion in overpayments this year alone. The report only confirms findings by University of California at San Diego professor, Richard Kronick, of massive government overpayments to Medicare Advantage, but Congress sits on its hands.
Republicans in Congress don’t seem to care about eliminating all the waste in Medicare Advantage. It’s the health insurers offering Medicare Advantage plans that will help fund their 2024 reelection campaigns. And, that’s not something they want to jeopardize. Many Democrats in Congress also appear to live in fear of losing support from the corporate health insurers and are doing little to address the massive overpayments, as they should.
How do these Medicare Advantage overpayments happen? Medicare Advantage overpayments happen for a variety of reasons, but the largest reason is that people enrolled in Medicare Advantage are considerably healthier than people in traditional Medicare. Because of a defective payment system, the government pays Medicare Advantage plans as if their enrollees are sicker than people in traditional Medicare. The high proportion of people who are healthy in Medicare Advantage cost these Medicare Advantage plans on average less than $1,000 a year as compared to the more than $12,000 a year the government typically pays Medicare Advantage plans to care for them.
MedPac, the agency overseeing these government payments, has calculated the overpayments at $27 billion this year because the Medicare Advantage plans assign multiple diagnosis codes to their enrollees in order to boost their earning and often get quality bonus payments as well. But, MedPac has not factored into its calculations the $50 billion or so a year in Medicare Advantage overpayments resulting from the Medicare Advantage population being so much healthier than the traditional Medicare population.
The researchers at USC appreciate that the Medicare payment system for Medicare Advantage plans is defective and needs an overhaul. Paying the insurers offering Medicare Advantage plans as the government currently does leads to massive overpayments. The researchers, however, do not speak to the fact that the defective payment system–upfront payments unrelated to the cost of services delivered– also leads to massive inappropriate delays and denials of care to people. People with cancer, heart disease, stroke and other costly and complex conditions are most at risk–and that’s most of us, if not now, down the road.
The USC researchers like the idea of competitive bidding among MA plans as an alternative to the current payment system, which I hear is a nonstarter from the MA plans’ perspective. That shouldn’t matter, but it does. Regardless, competitive bidding doesn’t address the need to ensure that the payment system stops creating a disincentive for the Medicare Advantage plans to withhold care from the people who most need it–the 10 percent of people with Medicare with the costliest conditions.
The government’s payment system will be right only if and when the Medicare Advantage plans are promoting their high value care for people with cancer, heart disease and stroke. Until then, consider enrolling in traditional Medicare if you can. If you enroll in Medicare Advantage, beware the Medicare Advantage plans engaged in widespread delays and denials of care. The administration is not naming them for the most part. And sometimes, it is giving them four and five-star ratings.
Here’s more from Just Care:
- Don’t assume a five-star Medicare Advantage plan will provide the care you need
- When will the Medicare Advantage scam end?
- You still can’t trust Medicare Advantage plan provider directories
- Medicare Advantage plans use AI to deny care
- Medicare Advantage enrollees face higher likelihood of hospital care denials
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