OIG finds Medicare Advantage continues to overcharge government

The HHS Office of the Inspector General once again reports on huge Medicare Advantage overcharges to the federal government. It’s pretty clear at this point that Medicare Advantage plans–health plans covering people with Medicare administered by private insurers–use whatever means possible to get paid more and more money. Because the government pays them a higher rate upfront for enrollees with multiple diagnoses–“risk-adjusts” its payments–Medicare Advantage plans invest in ways to identify as many diagnoses as possible for their enrollees.

To be clear, the upfront government payments to Medicare Advantage plans intended to cover their enrollees’ care is in no one’s interest other than that of the insurers offering Medicare Advantage plans. The Medicare Advantage plans receive these payments regardless of the cost of the services they cover. There’s no one policing them from taking taxpayer money and spending as little as possible on care. The government’s “capitated” payment system helps explain why the Government Accountability Office has found high rates of inappropriate delays and denials in Medicare Advantage.

The Medicare Advantage plans receive higher fixed payments if they can show that their enrollees have multiple diagnoses. Consequently, the MA plans often hire companies or employ doctors to assess the health of their enrollees and identify as many diagnoses as possible. This practice is called “upcoding.” It is eroding the Medicare Trust Fund and driving up Medicare Part B premiums.

The HHS Office of Inspector General “OIG” found that several of the larger insurers offering Medicare Advantage plans are hiking up their government payments significantly through upcoding. It found as much as $5 billion in potentially wrongful payments to these plans. And, lord knows the extent of the wrongful payments the OIG did not find.

The Office of the Inspector General did not name the 20 insurers it identified as responsible for the majority of overpayments. But, based upon what it did say, UnitedHealth was likely responsible for a significant amount of the upcoding and overpayments. Aetna and Humana are also engaged in upcoding that results in particularly large overpayments. It appears that Medicare Advantage plans can overcharge the government with near impunity or accountability.

Not surprisingly, people enrolled in Medicare Advantage cost taxpayers significantly more than people in traditional Medicare. The question is why Congress allows them to continue when they cost more?

Will Congress put an end to the “risk-adjustment” gaming in Medicare Advantage? It would bring down the Part B premium for everyone with Medicare and strengthen the Medicare Trust Fund. It would also reduce the profits of insurers offering Medicare Advantage plans. The health insurers offering Medicare Advantage seem to think Congress will continue to condone this gaming. Their ranks are swelling.

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