Medicare advantage plans rip off patients and taxpayers to the tune of $50 billion dollars. This blog post is an explanation: once you read it and understand it, I urge you to contact your federal congressman and ask them to do something about it.
Medicare advantage plans are when patients assign their Medicare benefits to a private, for profit plan such as UHC, Humana, or Aetna. The idea behind the creation of these plans was due to the efficiency of the private sector, it would save money for the government if patients enrolled in these plans rather than stay on traditional Medicare.
In the last 10 years, the percent of Medicare eligibles enrolling in these plans increased from 30 to about 50%. These plans can be PPO or HMO. PPO plans have out of network benefits, but HMO plans are narrow network. Often the network is so narrow that patients who can’t get appointments and are desperate for care come to my office with their traditional Medicare card pretending they are still enrolled in traditional Medicare- everyone should be verifying that patients aren’t in replacement plans in their practice management system. Many times, the only doctors in network are in large groups, which controls where patients are allowed to go; this has the consequence of increasing consolidation.
These plans are for profit. The less these plans pay for patient care, the more they keep for themselves. One barrier they like to throw up to delay or deny care is prior authorization, which imposes a huge administrative burden on my office. Everyone should urge their federal Congressmen to sign on to the Senior timely access to care act to alleviate the burdens of prior authorization.
These plans send lobbyists to Congress to virtue signal and convince they are good at controlling costs and keeping people healthy, but here’s the truth: the profit per Medicare advantage enrollee is double that of commercial plans. According to a KFF study of 2023 profits were $1982 per Medicare advantage member vs $910 for a commercial member.
UHC is so good at making profits ($22.3 billion in 2023) that the value of their stock smoked the SP500. Their CEO, Andrew Witty, got paid $23.5 million. (Another reason why I think ESG investing is a farce- being intimately familiar with UHC’s practices for years, if I acted on my principles I would direct index and divest from them, but someone else would just get their profits).
It is well known that these plans often provide financial incentives for patients to enroll and their advertising can be misleading. Seniors are invited to a “Medicare seminar” implying that the information is endorsed by the government, yet these are run by commissioned salespeople with a conflict of interest to obtain enrollees. Patients are promised that they can “keep their Medicare benefits” yet they are unaware that these plans limit choices and delay care. Read this article as well as this one.
Often times these plans have zero premiums and cover drugs under part D, whereas for traditional Medicare one would pay monthly premiums for both traditional Medicare and a supplement plan. Plans often use financial incentives such as dental care, gym memberships and even gift certificates for food to “give patients more choices.”
The way I explain it to patients- you get what you pay for. You can either choose to pay Medicare part B premiums and a supplement, or you can assign your benefits to a private plan that has a financial incentive to delay or deny your care for their own profits.
Medicare advantage plans get a fixed payment from CMS per enrolled beneficiary. The way they profit is to either deny care or increase the amount they get. What I didn’t know is that there is a process called risk adjustment- if insurers can “prove” that their patients have more serious health conditions, such as chest pain, stroke, obesity, kidney disease, or complications of diabetes such as cataracts, they get paid more because these conditions are more expensive to take care of.
This might sound fair- but of course, insurers game the system. There was an article that recently appeared in the Wall Street Journal: “Insurances pocketed $50 billion from diseases that no doctor treated.” The article started by describing a patient that was diagnosed with diabetic cataracts by her insurer (NOT her doctor that examined her)- yet she neither had diabetes nor had cataracts! And how did this happen? Insurance companies contact patients to ask if thy can conduct a “home assessment”, often providing a $50 gift card to entice patients, At these home visits, nurse practitioners who are directed by the insurance company add diagnoses to the patient’s chart so they can make patients appear sicker than they really are to exploit money from the government.
The analysis from the WSJ showed that 66,000 patients were diagnosed by insurance companies with diabetic cataract AFTER they had cataract surgery- which is anatomically IMPOSSIBLE! Given that they get about $2700 from the government per diagnosis of diabetic cataract, this cost taxpayers $178 million over the three year time period analyzed by the WSJ. Another 36,000 patients diagnosed with diabetic cataracts were not on diabetic medications, indicating they did NOT have diabetes (or perhaps had mild diet controlled diabetes, which would not be severe enough to cause diabetic cataracts)- this is another $97 million towards insurance profits!
To “back” this up, these plans incessantly phone my office requesting I send in my patient charts (risk adjustment charts). I, along with most of my colleagues, had no idea that this was what the charts were being used for nor that insurance companies were using my charts to diagnose patients with “diabetic cataracts” (I never use the ICD10 code). The reporter that spoke to me about this quoted me in the article as saying “if they are just making stuff up, then why do they even need or want my charts?”
When you repeat this pattern with other conditions such as hepatitis C, HIV, Parkinson’s and atrial fibrillation, it is a gold mine that adds to the profit of insurance plans and takes away money that could be used for patient care. In all of these conditions, the WSJ analysis found that not only did Medicare advantage patients have frequencies of these conditions at multiples of patients on traditional Medicare, but also receive less treatment.
A specific example the article cites is the diagnosis of HIV- patients enrolled in Medicare advantage plans were miraculously 80% less likely to receive treatment (92% got treatment in traditional Medicare, 17% received treatment in advantage plans). It is malpractice to NOT treat HIV diagnosed patients with antiretrovirals!
The article analyzed that when you add up all of these conditions, that it is costing taxpayers over $50 BILLION dollars. Of course a UHC spokesperson was quoted as saying the analysis was “flawed and misleading” and that “MA plans identify disease states earlier.”
This is along the scale of Bernie Madoff and makes Elizabeth Holmes look like she shoplifted a candy bar from the convenience store. Yet where is the oversight from CMS and the government? I hope CMS will audit these plans and claw back monies obtained from nonexistent diagnoses. It is my wish that Congress will hold a hearing deposing the insurance company CEOs to compel them to explain how this happened under their watch.
Even before the WSJ article was written, the press wrote about it (but not the the extent of the recent article) the Biden administration tried to limit the amount insurers could get from risk adjustment, but insurance companies claimed that this would make it more difficult to take care of patents (ludicrous- it just goes to their bottom line), so CMS decided to spread out the risk adjustment payment decreases over three years rather than implement them immediately. You can read the full story at this link.
It is also worth noting that Medicare part B reimbursements (physician services), which go towards the doctors that actually do the work, have failed to keep up with inflation. This has the unintended consequence of leading to health care consolidation, which drives up prices even further.
In summary: Medicare advantage plans game the system by padding nonexistent diagnoses for risk adjustments from CMS, hurting patients and taxpayers (the WSJ article noted that all this costs $4300 per tax filer). If any physician performed such egregious acts, they would be prosecuted under the False Claims Act, liable to pay the money back plus penalties and damages, and disbarred from Medicare.
Yet little is being done about these insurance companies. The only way to fix this: if WE complain. I urge everyone to write in to your federal House and Senate members (find who yours is here) and urge them to investigate this.
