Lambert here: Wait, what? That’s the privatized part of Medicare!
By Fred Schulte, an investigative reporter, who has worked at The Baltimore Sun, the South Florida Sun Sentinel, and the Center for Public Integrity, and Holly Hacker, KHN Data Editor, previously an investigative reporter at The Dallas Morning News. Originally published at Kaiser Health News.
Newly released federal audits reveal widespread overcharges and other errors in payments to Medicare Advantage health plans for seniors, with some plans overbilling the government more than $1,000 per patient a year on average.
Summaries of the 90 audits, which examined billings from 2011 through 2013 and are the most recent reviews completed, were obtained exclusively by KHN through a three-year Freedom of Information Act lawsuit, which was settled in late September.
The government’s audits uncovered about $12 million in net overpayments for the care of 18,090 patients sampled, though the actual losses to taxpayers are likely much higher. Medicare Advantage, a fast-growing alternative to original Medicare, is run primarily by major insurance companies.
Officials at the Centers for Medicare & Medicaid Services have said they intend to extrapolate the payment error rates from those samples across the total membership of each plan — and recoup an estimated $650 million as a result.
But after nearly a decade, that has yet to happen. CMS was set to unveil a final extrapolation rule Nov. 1 but put that decision off until February.
Ted Doolittle, a former deputy director of CMS’ Center for Program Integrity, which oversees Medicare’s efforts to fight fraud and billing abuse, said the agency has failed to hold Medicare Advantage plans accountable. “I think CMS fell down on the job on this,” said Doolittle, now the health care advocate for the state of Connecticut.
Doolittle said CMS appears to be “carrying water” for the insurance industry, which is “making money hand over fist” off Medicare Advantage. “From the outside, it seems pretty smelly,” he said.
In an email response to written questions posed by KHN, Dara Corrigan, a CMS deputy administrator, said the agency hasn’t told health plans how much they owe because the calculations “have not been finalized.”
Corrigan declined to say when the agency would finish its work. “We have a fiduciary and statutory duty to address improper payments in all of our programs,” she said.
The 90 audits are the only ones CMS has completed over the past decade, a time when Medicare Advantage has grown explosively. Enrollment in the plans more than doubled during that period, passing 28 million in 2022, at a cost to the government of $427 billion.
Seventy-one of the 90 audits uncovered net overpayments, which topped $1,000 per patient on average in 23 audits, according to the government’s records. Humana, one of the largest Medicare Advantage sponsors, had overpayments exceeding that $1,000 average in 10 of 11 audits, according to the records.
CMS paid the remaining plans too little on average, anywhere from $8 to $773 per patient.
Auditors flag overpayments when a patient’s records fail to document that the person had the medical condition the government paid the health plan to treat, or if medical reviewers judge the illness is less severe than claimed.
That happened on average for just over 20% of medical conditions examined over the three-year period; rates of unconfirmed diseases were higher in some plans.
As Medicare Advantage’s popularity among seniors has grown, CMS has fought to keep its audit procedures, and the mounting losses to the government, largely under wraps.
That approach has frustrated both the industry, which has blasted the audit process as “fatally flawed” and hopes to torpedo it, and Medicare advocates, who worry some insurers are getting away with ripping off the government.
“At the end of the day, it’s taxpayer dollars that were spent,” said David Lipschutz, a senior policy attorney with the Center for Medicare Advocacy. “The public deserves more information about that.”
At least three parties, including KHN, have sued CMS under the Freedom of Information Act to shake loose details about the overpayment audits, which CMS calls Risk Adjustment Data Validation, or RADV.
In one case, CMS charged a law firm an advance search fee of $120,000 and then provided next to nothing in return, according to court filings. The law firm filed suit last year, and the case is pending in federal court in Washington, D.C.
KHN sued CMS in September 2019 after the agency failed to respond to a FOIA request for the audits. Under the settlement, CMS agreed to hand over the audit summaries and other documents and pay $63,000 in legal fees to Davis Wright Tremaine, the law firm that represented KHN. CMS did not admit to wrongfully withholding the records.
High Coders
Most of the audited plans fell into what CMS calls a “high coding intensity group.” That means they were among the most aggressive in seeking extra payments for patients they claimed were sicker than average. The government pays the health plans using a formula called a “risk score” that is supposed to render higher rates for sicker patients and lower ones for healthier ones.
But often medical records supplied by the health plans failed to support those claims. Unsupported conditions ranged from diabetes to congestive heart failure.
Overall, average overpayments to health plans ranged from a low of $10 to a high of $5,888 per patient collected by Touchstone Health HMO, a New York health plan whose contract was terminated “by mutual consent” in 2015, according to CMS records.
Most of the audited health plans had 10,000 members or more, which sharply boosts the overpayment amount when the rates are extrapolated.
In all, the plans received $22.5 million in overpayments, though these were offset by underpayments of $10.5 million.
Auditors scrutinize 30 contracts a year, a small sample of about 1,000 Medicare Advantage contracts nationwide.
UnitedHealthcare and Humana, the two biggest Medicare Advantage insurers, accounted for 26 of the 90 contract audits over the three years.
Eight audits of UnitedHealthcare plans found overpayments, while seven others found the government had underpaid.
UnitedHealthcare spokesperson Heather Soule said the company welcomes “the program oversight that RADV audits provide.” But she said the audit process needs to compare Medicare Advantage to original Medicare to provide a “complete picture” of overpayments. “Three years ago we made a recommendation to CMS suggesting that they conduct RADV audits on every plan, every year,” Soule said.
Humana’s 11 audits with overpayments included plans in Florida and Puerto Rico that CMS had audited twice in three years.
The Florida Humana plan also was the target of an unrelated audit in April 2021 by the Health and Human Services inspector general. That audit, which covered billings in 2015, concluded Humana improperly collected nearly $200 million that year by overstating how sick some patients were. Officials have yet to recoup any of that money, either.
In an email, Humana spokesperson Jahna Lindsay-Jones called the CMS audit findings “preliminary” and noted they were based on a sampling of years-old claims.
“While we continue to have substantive concerns with how CMS audits are conducted, Humana remains committed to working closely with regulators to improve the Medicare Advantage program in ways that increase seniors’ access to high-quality, lower cost care,” she wrote.
Billing Showdown
Results of the 90 audits, though years old, mirror more recent findings of a slew of other government reports and whistleblower lawsuits alleging that Medicare Advantage plans routinely have inflated patient risk scores to overcharge the government by billions of dollars.
Brian Murphy, an expert in medical record documentation, said collectively the reviews show that the problem is “absolutely endemic” in the industry.
Auditors are finding the same inflated charges “over and over again,” he said, adding: “I don’t think there is enough oversight.”
When it comes to getting money back from the health plans, extrapolation is the big sticking point.
Although extrapolation is routinely used as a tool in most Medicare audits, CMS officials have never applied it to Medicare Advantage audits because of fierce opposition from the insurance industry.
“While this data is more than a decade old, more recent research demonstrates Medicare Advantage’s affordability and responsible stewardship of Medicare dollars,” said Mary Beth Donahue, president of the Better Medicare Alliance, a group that advocates for Medicare Advantage. She said the industry “delivers better care and better outcomes” for patients.
But critics argue that CMS audits only a tiny percentage of Medicare Advantage contracts nationwide and should do more to protect tax dollars.
Doolittle, the former CMS official, said the agency needs to “start keeping up with the times and doing these audits on an annual basis and extrapolating the results.”
But Kathy Poppitt, a Texas health care attorney, questioned the fairness of demanding huge refunds from insurers so many years later. “The health plans are going to fight tooth and nail and not make this easy for CMS,” she said.
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Greed, consolidation and monopolization, regulatory capture, unlimited money in politics… the frozen pendulum cannot swing back to re-imagine CARE as a heavily regulated Monopoly Utility with NO insurance component.
All ‘we’ would need to agree on is that health care is a right, is a Utility –cradle to grave.
De-link from the employment relationship.
Eliminate Insurance as a legitimate notion to apply to a mortal life
Deep six the opaque private dark negotiated pricing/ rebate/ discount billing systems. Get rid of the 35%-40% of pointless administration. Byzantium in our times.
I can’t think of an existing Federal program as an analogy of a national all-in Utility?
Unamerican, and not likely at all in my remaining years. A nation of businesspeople? Exceptional? Exceptionally stoopit. Freedumb bootstrappin’!
We disrespect limited resources and conservation. Reaping what we sow.
We are in the target demographic for these “Medicare Advantage” plans and receive numerous snail mail importunings each year during the Medicare “Plan Switch” window.
We stick with Original Medicare. It is, on paper, better for us, defects and all.
One major consideration to take notice of is that the entities that ‘run’ the Medicare Advantage plans are for profit capitalist enterprises. They should be expected to attempt to overcharge. This is basic Capitalist dogma; “Whatever price the market will bear.” This is the basic reason why Medicare was enacted in the first place. If the ‘Private’ entities are to be expected to overcharge, then let the entire function become a public service and “eliminate the middlebeing.”
The very fact that CMS is dragging it’s feet in responding to FOIA requests is prima facie evidence of wrongdoing on the part of CMS. Allowing CMS to “investigate” the plans it is tasked with co-operating with is a conflict of interests. CMS is exhibiting characteristics of a “captured regulator.” Let the auditing of the Medicare Advantage plans and their enablers become a function of the GAO.
Yep, me too (it could become a movement!). Recently joined Medicare and the choice was easy, Traditional Medicare. Shout out to NC, comentariat and staff for keeping on top of these articles and this subject. I share these analysis with friends and have learned a lot in preparing my choices. The more people who stick with Original Medicare, the better. Power in numbers. Take note that many if not most regions of the US have insurance specialists, who are paid by the feds (not an insurance co.) to council people and help them navigate the maze of choices in M’care. Look them up before you make a final choice of plans.
I’m curious…was MA pushed hard, or did you simply get asked for a choice?
I cannot answer for Bsn, but it depends on when during the “Purchasing Window” one counts. From the beginning of the “Switch time” the advertising for Medicare Advantage plans is fairly constant. We get one or two a week. The missives are addressed to both of us individually. There is a slight surge at the end of the “Window.” Luckily, we do not seem to be on the “radar” as far as telephonic communications are concerned. Most of the “spam calla” we check out are having to do with various and sundry pharmacological or medical procedure pitches. [We guess that this is a function of our ages. We are both well into Medicare Age territory.] As with most “spam calls,” we are very selective about which ‘unknown’ calls we reply to. [I always try to look up unknown callers on the internet. {Even this task has been financialized over time.}]
What is troubling to me concerning this subject is the fact that Medicare dot Gov sends out e-mails during “Switch Time” ‘alerting’ us to the fact that we “have the opportunity” to cut our own throats every fall. This is the essence of regulatory capture. The very Government agency one is aiming to kill off is shilling for you.
As the pseudonymous Lambert Strether is prone to say: “They really are trying to kill us.”
Only one or two a week? Starting about six months before my 65th birthday earlier this year, I was getting two or three every day. I joked that I could have wallpapered my entire apartment with them. And they can’t go into the recycle bins, since many of them contain pre-filled out applications with personal info, and I don’t have time to open every one. The worst are from United Healthcare, which makes the front outside of the envelope look like official Medicare correspondence. The sender is marked on the back, in a smaller font.
Fortunately the (very trustworthy) landlord has a burn pit on their rural property and gladly adds my burn bags full of this junk to their pile.
And here’s another newly minted 65-year-old who’s grateful for Naked Capitalism. Thanks to this site, I am staying the [family blog] away from Medicare Advantage.
It’s classic rock traditional Medicare for me, baby! Can I do a drum solo now?
I for one got way more MA solicitations and was also nudged in that direction online and on the phone–they make it so much easier to get info about MA than traditional. But I knew what I wanted.
Just got my Medicare and Plan G and D cards in the mail today–woohoo! Effective Dec 1 no more Obamacare with its ungodly premiums and hefty cost sharing on top of that.
Under the Direct Contracting during the Trump administration and now under Biden, the renamed REACH program Traditional Medicare is being privatized . The goal is to convert everybody in traditional Medicare into the privatized plan by 2030 where private equity and health insurers will become the middle man to distribute Medicare funds to beneficiaries for up to 40% of the Medicare budget. Wall Street is salivating. There is no choice. This is a radical change. Why is it that the knowledge about this fundamental change to the structure of Medicare is not recognized? PNHP ( physicians for a national health policy) has the information. Elizabeth Warren, has publicly appealed to Biden to reverse his decision. Yet people are still uninformed or apathetic. NC has run an article on this yet it hasn’t seemed to have developed much traction.
Telee
thanks for raising this issue – i had no idea this nasty plan is underway. After finding out more about this, i plan to write Elizabeth Warren and all my Senate and Congressional representatives, about how wrong-headed this direction is. Instead, [ at the very least] we should be demanding complete transparency by the insurance companies, and regular audits of all Supplemental and Advantage companies – since one company often offers both.
and demand caps on profits from these activities – until we can replace it with a system that largely cuts out the ‘for-profit’ health insurance companies. maybe ‘Medicare for All’
thank you.
This is the basic reason why Medicare was enacted in the first place. If the ‘Private’ entities are to be expected to overcharge, then let the entire function become a public service
>”This is the basic reason why Medicare was enacted in the first place. If the ‘Private’ entities are to be expected to overcharge, then let the entire function become a public service…”
Exactly. Keep the private operators out. Leave them to sink or swim in their “venerated” free-enterprise market, scrounge for their profits there, and hope that their patients will pay their inflated fees or even pay them at all. Stop their dipping into public funds while pretending to be private and therefore better.
I am adamantly opposed to any commingling of public and private sectors. One or the other. No in-between.
And while I’m at it, note that Medicare Advantage is heavily advertised on TV. Now why would that be? Why would the insurance companies be willing to spend tens (hundreds?) of millions on advertising? The article seems to suggest, the more sign-ups, the more grift.
Well, let’s not forget that most hospitals and clinics these days are “private entities,” many of the hospitals being part of large, PE-financed chains that routinely upcode claims, whether to Medicare Advantage plans or original Medicare. In other words, traditional Medicare is not without its own waste, fraud, and abuse.
As for the incentive to pay for all those ads: Among the bennies for MA is they get the recipients’ monthly Medicare Part B premiums. I enrolled in a MA plan in Feb 2020, the sole purpose of which was to pay for a crown. Nearly three years later, I still have a hole in my mouth (long story). Being a veteran, I get nearly all of my healthcare through the VA, so the plan got 36 months’ worth of premiums and paid out very little for claims — mostly by providers who didn’t follow my instructions to bill the VA first, another long story. Fortunately, I qualified for a county program that pays Part B premiums for low-income seniors, so it didn’t cost me anything to stay enrolled in that plan — that is, until an ER visit last October, when I ran into what for all practical purposes is a “secret” VA policy regarding claims for outside (i.e., non-VA) treatment of veterans with “private health insurance.” VERY long and very convoluted story about which I’m hoping to send a detailed report at some point.
In any case, just wanted to reply to your public-private comment with the observation that nearly all services covered by Medicare are “public-private,” since, other than the VA, there are not many government-run hospitals in this country.
Yeah, I should have pointed out that I’m Canadian and our medical system is, for the most part, public (although private entities are starting to make their destructive inroads). I tend to see things from a Canadian perspective.
Well, political bribery in the US is legal so, one form of push-back is in political contributions. And in after service job opportunities for captured regulators.
. . . at least one variant of revelatory experience involves fasting in a desert for long periods of time, leading to hallucinations which then are socially-processed to become the basis of a religion.
Vedas in a nutshell. My former atheist self is all “Yeah! Take that, Brahma!”
Then my fast-induced, meditative hallucination (who unfortunately looks more like a data-scroll than a Vedic video game) is all “Do you really think consciousness doesn’t happen in the 90% of the universe that physics tells us is invisible?”
I realize that life has turned, that I’m drifting away from reduction and towards expansion. Better or worse.
i’m very glad to see this activity. the mba-ification and craven hollowing out of the university was ramping up to full bore when i was working on my m.a. and phd. i hated it then and i hate it now. it was the only traditional institution for which i had any feeling, any sense of reverence or gratitude, the only one to which i felt like i belonged. that’s all dead.
all the best to the strikers. be smart. squeeze these cowards at every opportunity.
Is the Medicare business one of those newfangled public-private ventures, where public money flows to private coffers?
Sure seems to be. Nothing draws the vermin out of the woodwork like slop and cash hitting the federal trough. Heck, it even provides enough extra to pay for those old actors and athletes. Do they get scale and benefits?
Silver lining is the end of the marketing period.
These Medicare Advantage peddlers are slowly eroding MA. Firstly, they purport to offer health club membership and small fringe benefits but like the airlines these will be slowly taken away after they have completed getting rid of Original Medicare. Prices will then go up in the same fashion as the Airlines have manipulated ticket prices. The Fed Govt. is actively engaged in this effort by forcing an additional drug policy (private insurance) on these folks or else making them pay penalties. Original Medicare also requires additional insurance in the form of Medigap conveniently created by our Congress crooks.
In the last few days (thanks to NC) I read about the wastage in the bloated Department of Homeland Security and the corruption in the DEA. Billions of $$$$$ are flushed into the private industry hands this way.
I heard from a friend of mine about a medical billing company that takes hospital bills and reworks them to “gain” additional $$$$ for the hospitals (and gets a cut). I wonder how this company can outdo the hospitals crooks. Something smells rotten here. I wish we had a company that does the reverse (where it finds flaws in the bills and claws back the extra dollars)
This story is largely irrelevant, IMO. It’s news, of course, that KHN had to sue to get what should be public information, and that they had to wait three years for a partial response over audits from 2011-2013. However, they’ve already reported that (links in article), and the data are incomplete, as they exclude some classes of Medicare patients. Meanwhile, as the writers point out, Medicare Advantage enrollment has more than doubled in that period — during which, one might add, what few checks there might have been on graft and corruption in public service programs have been extinguished.
Then there’s the apparent outrage over all that wasted taxpayer money. We’ve dispensed with that fiction, have we not? I’d gladly let the piggies feed at the trough if they were using even half of that “public money” to actually serve the public by, I dunno, paying claims on time, keeping copays low, including comprehensive dental coverage and other benefits that original Medicare should but doesn’t offer. The suggestion that CMS is asleep at the wheel, doesn’t have the means to track the leviathan they’ve unleashed, etc., is utter hogwash, and I’d reckon that most of this commentariat knows it.
The above notwithstanding, there is some useful information here, so merci milles fois to Lambert for the standalone post. One fact in particular provides a huge piece of a puzzle in my own line of inquiry into how the VA works with Medicare — a major story going largely unreported, likely because few even know about it, including VA staff whose jobs are to know this stuff. Oversimplified version: The VA is pushing veterans (of which I’m one) into Medicare Advantage plans and then denying them certain benefits on the grounds that they have “private insurance,” leaving them on the hook for exorbitant copays and deductibles. I’ve been putting together a dossier for my Congress critter’s office and intend to send info to NC as soon as I’ve got a coherent draft, but keep getting delayed by other stuff — the latest being that the agent who three years ago advised me on a Medicare Advantage plan (to get a crown for a broken molar) has gone MIA, and I’m on my own under a looming deadline. Help does appear to be on the way next week, keeping fingers crossed that it comes through.
I very much look forward to getting further information and am sorry that you are being effectively defrauded, but I am gobsmacked that you have not connected the dots. Despite the hysteria over Social Security, it’s Medicare that’s projected to be the big budget breaker. And the shifting of costs on to you is a covert way of solving that problem. Stopping rampant cheating would help too.
This story is largely irrelevant, IMO. It’s news, of course, that KHN had to sue to get what should be public information, and that they had to wait three years for a partial response on audits from 2011-2013. However, they’ve already reported that (links in article). Meanwhile, as noted, MA enrollment has more than doubled in that period — during which, one might add, what few checks there might have been on graft and corruption have disappeared.
Then there’s the apparent outrage over all that wasted taxpayer money. That being fiction, I’d gladly let the piggies feed at the trough if they were using even half of that “public money” to actually serve the public by, I dunno, paying claims on time, keeping copays low, offering comprehensive dental coverage and other benefits that Medicare should, but doesn’t. The suggestion that CMS is asleep at the wheel, can’t control the monster they created, etc., is utter hogwash, and I’d reckon that most here know it.
Notwithstanding, the article provides some useful info, so merci milles fois to Lambert for this post. One fact in particular fills a gap in my own inquiry into how the VA works with Medicare — a big story going largely unreported. Indeed, few even know about it, including VA staff whose jobs are to know. Briefly and oversimplified: The VA is pushing veterans (of which I’m one) into MA plans and then denying them some benefits on the grounds that they have “private insurance,” leaving them on the hook for exorbitant copays and deductibles. I’ve been putting together a dossier for my Congress critter’s office and intend to send info to NC as soon as I’ve got a coherent draft, but keep getting delayed by other stuff — the latest being that the agent who three years ago advised me on a MA plan with good dental coverage (needed it for a crown) has gone MIA, and now I’m lost in the Medicare maze, under a looming deadline. Help appears to be on the way next week, fingers crossed.
Ugggh, Menlo Park, CA Based Kaiser Health Foundation’s KHN made no mention of the 07/30/21, DOJ $1B (minimum) False Claims suit ( https://www.justice.gov/opa/pr/government-intervenes-false-claims-act-lawsuits-against-kaiser-permanente-affiliates ) against Kaiser Permanente, et al’s (none legally related to KFF/KHN anymore) NON-PROFIT Medical Care Hospitals/Systems? Even the New York Times finally reported it (over a year later on 10/08/22), in an article which also highlighted some, or all, of the other perps listed above ( https://www.nytimes.com/2022/10/08/upshot/medicare-advantage-fraud-allegations.html ). The very first paragraph:
KHN is certainly aware of that suit: https://khn.org/morning-breakout/justice-department-alleges-kaiser-permanente-coerced-medicare-claim-upcoding/ ; but never front paged it.
Could Gavin Newsom (huge Kaiser Permanente, et al VIP Donee) have asked them to lay low on that, much like the CA AG didn’t take up on the 2 California QUI TAMS concurrently filed along with the 6 Federal Qui Tam cases? (the Bryant (CA. Northern District Court) and Bicocca (CA Eastern District Court) filings. (Not to say that Biden’s DOJ won’t quietly let them get away with it also, after all Biden lurves Newsom and the vile and inexplicable former CA AG, Xavier Becarra, PUBLIC HEALTH™ appointment etc)
Nothing new though, KHN frequently omits California: Government Agency; Medical Industry; and Nursing Home, et al Industry Crimes—of which there’s been a terrifying and ever increasing abundance—for decades.
Medicare Advantage is the most egregious program of corporate welfare a Republican congress and president have enacted to date. It gives the lie to conservative propaganda that private enterprise is more efficient than government. The companies under investigation must cheat and lie to make a profit. I was surprised at how efficient Social security is.
I like the idea suggested above to have the GAO do medicare audits. Better to abolish MA and let original medicare provide the bennies MA does. I’m sure the deficit hawks would agree.
Honk if you would like No cost to the patient Health Care. The taxes we would pay would be much less than health care insurance.