Latest News on the Medicare Advantage Program

The cost of Medicare Advantage plans is skyrocketing

Medicare Advantage health plans have enrolled nearly 27 million members, or about 45% of those eligible for Medicare. A recent analysis finds that Medicare overpaid private health plans by more than $ 106 billion between 2010 and 2019 because of the way plans charge sick patients.

Switching seniors to Medicare Advantage plans has cost taxpayers tens of billions of dollars more than keeping them on original Medicare, a cost that has skyrocketed since 2018 and is likely to increase further, according to new research. .

Richard Kronick, a former federal health policy researcher and professor at the University of California-San Diego, says his analysis of recently released Medicare Advantage billing data estimates that Medicare overpaid private health plans in more than $ 106 billion between 2010 and 2019 due to the way private plans charge for sick patients.

Of that new spending, about $ 34 billion came in in 2018 and 2019, the last payment period available, according to Kronick. The Medicare and Medicaid Service Centers released their 2019 billing data for the first time in late September.

“They are paying [Medicare Advantage plans] much more than they should be, “said Kronick, who served as deputy undersecretary for health policy in the Department of Health and Human Services during the Obama administration.

Medicare Advantage, a fast-growing alternative to the original Medicare, is run primarily by major insurance companies. Health plans have enrolled about 27 million members, or about 45 percent of those eligible for Medicare, according to AHIP, an industry trade group formerly known as U.S. health insurance plans.

The industry argues that plans generally offer additional benefits, such as glasses and dental care, that are not available with original Medicare, and that most seniors who join health plans are happy to have done so.

“Both the elderly and taxpayers have come to expect high-quality, high-value health coverage from MA [Medicare Advantage] plans, “said AHIP spokesman David Allen.

However, critics have argued for years that Medicare Advantage costs taxpayers too much. The industry has also been the target of multiple government investigations and Justice Department lawsuits alleging widespread abuse of billing by some plans.

Some insurers see “spectacular” earnings.

The issue of payment has been discussed more closely while some Democrats in Congress are looking for ways to fund the Biden administration’s social spending agenda. Medicare Advantage plans are also struggling to attract new members by doing great publicity during the fall open enrollment period, which ends next month.

“It’s hard to miss the big red flag that Medicare is overpaying for these plans when you see that beneficiaries have more than 30 plans available in their area and are being bombarded daily by TV ads, magazines and billboards,” says Cristina Boccuti, director of health policy at West Health, a group that seeks to reduce healthcare costs and has supported Kronick’s research.

Kronick said the growth in Medicare Advantage costs was an “industry-wide systemic problem,” which CMS has been unable to control. He says some plans saw “mind-boggling” revenue gains, while others saw more modest increases. Giant insurer UnitedHealthcare, which had about 6 million Medicare Advantage members in 2019, received overpayments of about $ 6 billion, according to Kronick. The company did not comment.

“This is not a small change,” said Joshua Gordon, director of health policy for a responsible federal budget committee, a non-partisan group. “The problem is getting bigger.”

Responding to written questions, a CMS spokesman said the agency “is committed to ensuring that payments to Medicare Advantage plans are adequate. It is CMS’s responsibility to ensure that Medicare Advantage plans play their role and, without no doubt the agency will have plans to meet the standards they should meet. ”

However, making any cuts to Medicare Advantage payments faces stiff opposition.

On October 15, 13 U.S. senators, including Sen. Kyrsten Sinema, D-Ariz., Sent a letter to CMS opposing any reduction in payments, saying that “it could lead to higher costs and premiums. , reduce vital benefits and undermine the progress made “. to improve health outcomes and health equity “for people enrolled in plans.

The formula for more benefits: Score patients as sicker than they are

Much of the debate focuses on the complex method used to pay for health plans.

In original Medicare, medical providers charge for each service they offer. In contrast, Medicare Advantage plans are paid for using a coding formula called a “risk score” that pays higher rates for sicker patients and less for those in good health.

This means that the more serious medical conditions the plans diagnose, the more money they receive, sometimes thousands of dollars more per patient over the course of a year with little follow-up by CMS to make sure the higher rates are justified. According to complainants denouncing this practice of coding, three of the conditions that typically receive a higher risk score for Medicare Advantage plans include cases of diabetes with complications, major depression, and congestive heart failure.

Congress recognized the problem in 2005 and directed CMS to establish an annual “coding intensity adjustment” to reduce Medicare Advantage risk scores and keep them more in line with original Medicare.

But since 2018, CMS has set the coding adjustment at 5.9%, the minimum amount required by law. Boccuti said the adjustment is “too low,” adding that health plans “are inventing new ways to increase their enrollees’ risk scores, earning them higher monthly Medicare payments.”

Some of these coding strategies have been the target of lawsuits and government investigations alleging that health plans illegally manipulated risk scores by making patients appear sicker than they were or billing conditions. that patients did not have. In a recent case, the Justice Department accused Kaiser Permanente’s health plans of getting about $ 1 billion by increasing risk scores. In a statement, the insurer denied the allegations.

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