JustCare

Tag: Sutter Health

  • Congress must overhaul the way it pays Medicare Advantage plans

    Congress must overhaul the way it pays Medicare Advantage plans

    For years, government and independent analysts have shown that the Centers for Medicare and Medicaid Services (CMS) is overpaying Medicare Advantage (MA) plans–the corporate health plans that cover Medicare benefits–billions of dollars each year. The government’s payment model increases the amount it pays MA plans when they add diagnoses codes to a patient’s profile, regardless of whether they provide more services to the patient. Christopher Rowland reports on incidents of fraudulent billing in Medicare Advantage for the Washington Post.

    The problem with “risk-adjusted” capitated payments–fixed monthly payments based on the diagnoses codes in a patient’s chart–is that they incentivize insurers to add irrelevant or even inappropriate diagnoses codes to a patient’s profile in order to get paid more, driving up Medicare spending. In an ideal world, there would be the ability to monitor the problems and correct the overpayments. But, CMS does not begin to have the resources to do so.

    Kathy Ormsby worked for  the Palo Alto Medical Foundation, a subsidiary of Sutter Health in California, which was looking at patients’ health histories as a way to get doctors to add diagnoses codes to their records. Sutter dismissed Ormsby’s concerns about upcoding. Ormsby found a lot of mistakes, and Sutter had no interest in refunding the government. Medicare Advantage plans appear focused on a ‘dash for cash,” first and foremost.

    Ormsby filed a whistleblower lawsuit against Sutter Health because its practice of adding diagnosis codes. The upcoding was not designed to improve patient care, but rather to increase payments for that patient.

    Sutter health ended up paying $90 million to the government to settle the lawsuit filed by Ormsby last August. It was a clear case since Ormsby found that nine in ten cancer and stroke diagnoses were false. More than six in ten fracture diagnoses were also false.

    Sutter is hardly the only bad actor. Abusive billing practices appear to have become the norm in Medicare Advantage. Many Medicare Advantage plans see no reason not to give patients as many diagnoses as possible in order to increase their revenues. The government does not pay Medicare Advantage plans, or even adjust payments, based on the cost of services they deliver. Medicare Advantage plan incentives are perverse thanks to this payment model, and the proof is in the pudding,

    The Justice Department has filed lawsuits against several Medicare Advantage companies for fraudulent billing. Rowland writes: “Justice Department whistleblower allegations and similar lawsuits also are playing out in federal courts against UnitedHealth Group, Cigna and Anthem. The government’s Office of Inspector General has audited Humana and found it overbilled the government. United Healthcare, which is under the umbrella of UnitedHealth Group, and Kaiser Permanente denied any improper conduct. Cigna, Anthem and Humana did not respond to requests for comment.”

    Richard Kronick, a health economist, projects that if not stopped, overpayments to Medicare Advantage will amount to more than $600 billion in the next nine years. Putting aside the propriety of Medicare Advantage plan behavior to generate more revenue, what’s clear is that the risk-adjusted capitated payment system is fraught, leaving insurers holding the bag if they attract too many cancer and stroke patients and profiting wildly if they have disproportionate numbers of people who are relatively healthy.

    The problem in a nutshell: The government pays Medicare Advantage plans way too much for people who use relatively little care and too little for people who need a lot of care. That payment model needs overhauling. Like large employers, the government should pay health plans a management fee for coordinating care, on top of the cost of covering medically necessary services for their enrollees. Medicare Advantage plans should not profit more the less care they provide.

    Rowland spoke with a number of doctors who all confirmed that Medicare Advantage plans are mining data to add codes to patient records. They are expected to add these codes and pressured in various ways to do so.

    Kaiser Permanente was giving so many of its patients diagnoses for  aortic atherosclerosis that it was overloading its cardiovascular disease management program. Instead of eliminating the diagnosis code and losing revenue, it stopped referring all of these patients to the cardiovascular disease program. Pressure was on to include that diagnosis in patient medical records because it generated an extra $40 million a year for one physician group.

    The HHS Office of the Inspector General has issued reports on the cost of upcoding. Donald Berwick and Richard Gilfillan, the former heads of CMS and the Centers for Medicare and Medicaid Innovation, respectively, just published an article in Health Affairs in which they take the available evidence to show that Medicare Advantage not only costs a lot more than traditional Medicare, but it delivers care of questionable quality and promotes health inequities. (Here’s the Just Care post I wrote on topic.)

    Berwick and Gilfillan dismiss patient satisfaction with Medicare Advantage as a table rabbit. People choose it to save money, as the upfront costs of Medicare Advantage are less than traditional Medicare; But, out-of-pocket costs in Medicare Advantage are generally much higher than traditional Medicare with supplemental insurance for people with costly health care needs.

    Here’s more from Just Care:

  • Medicare Advantage gold mine puts traditional Medicare at grave risk

    Medicare Advantage gold mine puts traditional Medicare at grave risk

    Beware of corporate health insurers with eyes on Medicare. To date, these insurers have been taking our money in exchange for offering people benefits through Medicare Advantage plans and then running back to their shareholders with a fat share of their revenue. Healthcare Dive reports that these corporate health insurers have eyes on every Medicare dollar they can get their hands on; they are lobbying heavily for taking over traditional Medicare’s book of business.

    Medicare Advantage plans continue to reap huge profits, so they are expanding into more areas and offering lots of goodies to lure people to enroll. But, what matters most is the quality of the care they are delivering, the costs they are imposing on people with serious health conditions, and the legitimacy of what they are charging for their services. On those issues, we know precious little. What we do know is that government audits over and over again indicate big problems. 

    For sure, these corporate health plans are not competing to deliver high value care to older adults and people with disabilities. They are doing their best to enroll people who are healthy, who don’t use a lot of services, and then claim that some of these people are in need of care coordination in order to reap greater revenue from the Centers for Medicare and Medicaid Services.

    Medicare Advantage plans must have one of the best business models going. They say they are offering people Medicare health care benefits but no one has a clue what that means. We don’t know the extent to which they are pocketing money that should be going towards the health and well-being of people with Medicare or how to hold them to account when they are violating their contracts. What we do know is that many of these plans have high denial rates, some have high mortality rates and others have been found to deliver poor quality care. They are contracting with poorer quality nursing homes and home care agencies to provide services to their members.

    Why Congress would consider giving these corporate health insurers more business is hard to understand if our representatives are putting the interests of their constituents and the national treasury first. Yes, some Medicare Advantage plans are helping people who cannot afford supplemental coverage in traditional Medicare. But, the answer should be to strengthen and improve traditional Medicare, which is far more cost effective and allows people unfettered access to the care they want and need, not to hand more business to corporate health insurers who by at least one recent account are responsible for not meeting their members’ care needs, leading them to die.

    Medicare Advantage plans have a huge bag of tricks to seduce more people to enroll with them in 2021. But, even the Trump administration’s Department of Justice recognizes that at least some of these health insurers are engaging in massive fraud. HealthCare Dive reports a recent DOJ suit against Cigna alleging $1.4 billion in overcharges. There was a suit against Anthem in March and Sutter Health settled a similar fraud suit for $30 million.

    Some might think that these insurers only commit fraud against the government. Keep in mind that these insurers also can profit handsomely by delaying and denying care and creating other administrative and financial barriers to keep people from receiving needed services that Medicare covers. Whether the Medicare Advantage plan you are enrolled in or might be considering switching to does or does not do so is a gamble you should not take lightly.

    Here’s more from Just Care:

  • Medicare Advantage plan “honor system” can breed fraud

    Medicare Advantage plan “honor system” can breed fraud

    The federal government today pays commercial health insurance companies nearly $200 billion a year to provide Medicare benefits to the 20 million people now enrolled in Medicare Advantage plans.  How these commercial health plans spend that money is largely hidden from public view. An opinion piece in StatNews makes the case that the “honor system” in which Medicare Advantage plans operate is one that can breed fraud.

    Medicare Advantage plans, which are in the business of maximizing profits, have an incentive to spend as little as possible on patient care. The federal government pays them not based on the number of services they cover but rather a fixed or capitated rate per enrollee. What the Medicare Advantage plans don’t spend on patient care they get to keep. Not surprisingly, in 2018, the US Department of Health and Human Services Office of the Inspector General found widespread delays and denials of care in the Medicare Advantage program.

    To maximize profits, Medicare Advantage plans also have an incentive to claim that their patients are in poorer health than they in fact are. That drives up health care spending and hurts taxpayers. Several False Claims suits have been filed against insurers for doing just that. Recently, HealthCare Partners Holdings LLC settled a lawsuit and paid $270 million. It had been charged with overstating the health needs of its Medicare Advantage enrollees.  Another recent False Claims suit was filed against Sutter Health, a hospital system in California. It too was charged with overstating the health needs of its enrollees in order to generate higher government revenues and increase its profits.

    The Centers for Medicare and Medicaid Services (CMS) estimates that as much as 10 percent of the money it pays Medicare Advantage plans–$16 billion in FY 2016–is improper. The Government Accountability Office reports that CMS is not using the appropriate tools to detect these improper payments, suggesting that overpayments to Medicare Advantage plans could be far higher.

    The challenge is that CMS cannot easily detect fraud in these Medicare Advantage plans given the cloud of secrecy in which they operate. Usually, it takes a False Claims Act lawsuit by a whistleblower working at one of these companies to expose the fraud and lead the government to take action.

    Here’s more from Just Care: