Past government audits reveal that Medicare Advantage plans have overcharged the federal government tens of billions of dollars since their inception. Recent government data show that Medicare Advantage plans have overcharged the federal government an average of $10 billion a year for the last three years. What’s worse, they have been unaccountable for these overcharges.
Medicare Advantage plans have served a healthier population than traditional Medicare but have billed the federal government as if they were serving a less healthy population. They have pocketed tens of billions of dollars they were not due. And, they have not returned almost any of the money.
The Kaiser Family Foundation reports that the federal government will try to recoup a tiny fraction of those overpayments. In the past, it has not been successful. For reasons that are inexplicable the Center for Medicare and Medicaid Services (CMS) has gotten only about $14 million of more than $100 billion in overpayments returned. The $14 million is less than it costs to perform the audits.
The federal government pays Medicare Advantage plans based on the health status of their enrollees, their “risk score.” As a result, Medicare Advantage plans have found a variety of ways to increase their enrollees’ risk scores. The government overpays Medicare Advantage plans whenever they claim that their enrollees are less healthy than they in fact are, or when they charge the federal government for treating more serious conditions than they can demonstrate their enrollees have. Then, these health plans claim that any attempts to reclaim these overpayments will hurt their enrollees.
For years, CMS trusted the Medicare Advantage plans to provide accurate information about their enrollees’ health under an “honor system.” Then, when it saw that it was overpaying them, it instituted a system for validating these risk scores. Still, CMS appears either unable or unwilling to hold Medicare Advantage plans accountable.
In the past, CMS has only audited a handful of Medicare Advantage plans in a given year. And, it has asked for refunds only for particular patients. So, it has recouped meaningless sums. Until recently, CMS did not disclose much of this information to the public. Fortunately, the Center for Public Integrity sued CMS under the Freedom of Information Act for the information, and it was made public.
Now, CMS proposes to extrapolate from a random sample of 200 patients to the full number of enrollees in a Medicare Advantage plan. That could lead to refunds of tens of millions of dollars from a single Medicare Advantage plan. This is a controversial but common technique when investigating medical fraud. But, Medicare Advantage plans have challenged it successfully, avoiding accountability for systematic overcharges.
This year, CMS is starting audits for 2014 and 2015, 30 per year, targeting about 5% of the 600 Medicare Advantage plans annually. But, it is unclear whether it will back down from requiring refunds under health insurance industry pressure. If it does so for the 2011-13 period, taxpayers would lose more than $500,000,000 in overpayments. And, Congress should have even more reason to question the value of Medicare Advantage plans.
Here’s more from Just Care:
- Most people choose traditional Medicare over Medicare Advantage
- Congress should level the playing field between traditional Medicare and Medicare Advantage
- Inappropriate Medicare Advantage care denials appear widespread
- Ten ways Medicare Advantage plans differ from traditional Medicare
- New study finds Medicare Advantage plan enrollees end up in lower quality nursing homes than people in traditional Medicare