“The fact that Medicare Advantage insurers routinely overcharge taxpayers by billions each year has long been known.” (Getty Images)
It is open enrollment season for Medicare Advantage insurers. However, recent headlines would suggest it is more like open season on those consumers who might choose a profit-seeking middleman over the traditional fee-for-service Medicare signed into law by President Lyndon Johnson in 1965.
A report this month by the U.S. Department of Health and Human Services Office of the Inspector General was titled, “Medicare Advantage: Questionable Use of Health Risk Assessments Continues To Drive Up Payments to Plans by Billions.” Roughly half of the $7.5 billion in unsupported payments the report identified in 2023 alone were attributable to a single company, UnitedHealth Group.
The fact that Medicare Advantage insurers routinely overcharge taxpayers by billions each year has long been known, but not acted upon by the U.S. Centers for Medicare and Medicaid Services (CMS). That is likely because CMS functions as a revolving door to insurance industry employment. Yet analysis by CMS itself found a net overpayment error of “approximately $12.75 billion” to Medicare Advantage insurers for the 2023 federal fiscal year.
The temptation from CMS regulators hoping for insurance industry jobs may be to say, “What’s several billion dollars among friends?” After all, one administrator of CMS went from running the agency to, just six months after leaving, running America’s Health Insurance Plans – the industry’s lobbying group. However, taxpayers may take a different view, especially as the Medicare Part A trust fund is projected to be tapped out by 2036.
It gets worse: On Oct. 17, a 54-page Senate report was issued titled, “Refusal of Recovery: How Medicare Advantage Insurers Have Denied Patients Access to Post-Acute Care.” It found that in 2022, the denial rate on prior authorizations for post-acute care were three times higher than normal for UnitedHealthcare and CVS, and, for Humana, a whopping “16 times higher than its overall rate of denial.”
The Senate report documented what had been reported elsewhere, chiefly that insurers use algorithms to deny needed nursing home care, most notoriously through a UnitedHealth subsidiary, naviHealth. In 2022, the first full year naviHealth handled UnitedHealth requests for admission to skilled nursing care, the Senate report found the denial rate was nine times higher than it had been in 2019.
I know we are entering a dystopian era of artificial intelligence, but there are, presumably, many of us who still trust the advice of medical professionals over computer algorithms.
It is conspicuous that some who like to pile onto nursing home care are so very silent about insurance companies looting Medicare and denying care, either because of complicit business relationships or because of campaign contributions. But you can contrast unearned billions of taxpayer dollars with another government report in October that found the average nursing home in the U.S. is paid only 82 cents on the dollar for the care it provides to those on Medicaid.
Perversely, the CMS response to government underfunding of nursing home care has been to ask even more of care providers, through an unfunded mandate the agency estimates would cost $4.4 billion its first year alone, escalating thereafter. The nursing home sector estimates the real cost is billions more, but when you’re operating in the red – as the Medicare Payment Advisory Commission that advises Congress reports most nursing homes are – even an additional penny in unfunded cost is a penny too much.
In contrast, the net profit reported for the biggest Medicare Advantage insurer in 2023 was $23 billion, an amazing figure that, for example, greatly exceeds the reported $15.2 billion cost of New Hampshire’s two-year state budget. Such juxtapositions, and I could offer so many others, show the biggest advantage with Medicare Advantage is the hold it gives insurance conglomerates upon our federal government, with the concerns of lowly consumers and struggling care providers completely ignored.