On Medical Insurance Greed
Terry H. Schwadron
Oct. 11, 2022
The brazenness of greed and apparently legal theft on display in a recent New York Times look at Medicare Advantage programs was numbing.
For openers, the story detailed how a set of public-private programs developed to help seniors who keep as healthy as possible was turned around completely into an industry-wide net to fleece taxpayers for coverage of illnesses never even claimed by individual patients — all for corporate greed.
The news investigation shows that billions of dollars are being overcharged to government coffers, an amount in a single year that easily would simply pay for every American over 65 to have full hearing and vision care.
It’s the kind of news break that should have our attention, particularly in an election year, and particularly as health costs and access continue to be important issues. But it won’t, because it is about the details of putting programs into effect rather than about yelling into a megaphone about some tangential culture clash.
And it drew my attention because the lone Republican senator who’s upset and suddenly calling for vast new governmental regulation is Sen. Chuck Grassley, R-Iowa, who routinely insists that the private marketplace can police itself without unnecessary government enforcers.
It’s quite a tale, and I suggest you take the time to read it because it is a careful look, based on court documents, at how things meant to help have been turned into a new source of irritation and rip-off. The individual patient here is in the dark, and the worst is that we’re squandering loads of tax money for corporate gain, not denying people benefits for health needs.
But the schemes’ very pervasiveness is what hits hardest; this has been going on and reported over four presidential administrations. As with money set aside to keep workers on the payroll through covid or programs for veterans, there always seem to be sticky hands around looking to divert taxpayer dollars for personal or corporate favor.
Major Exploitation
The article by Reed Abelson and Margot Sanger-Katz, Times health industry reporters, reviewed dozens of fraud lawsuits, inspector general audits and investigations by watchdogs to show how major health insurers have exploited the program to inflate their profits by billions of dollars.
“The government pays Medicare Advantage insurers a set amount for each person who enrolls, with higher rates for sicker patients. And the insurers, among the largest and most prosperous American companies, have developed elaborate systems to make their patients appear as sick as possible, often without providing additional treatment, according to the lawsuits, the reporters summarize. “As a result, a program devised to help lower health care spending has instead become substantially more costly than the traditional government program it was meant to improve.”
It’s not just one company. According to federal audits — which themselves only look at a portion of billing — eight of the 10 biggest Medicare Advantage insurers routines are submitting inflated bills.
At least four have faced federal lawsuits alleging fraud, and more are pending. It is unclear whether there are criminal charges that also could result.
The best that industry spokesmen could come up with was a generic denial based on incomplete or missing documentation to explain a shift that is nationwide among all the companies that apparently have become addicted to a profit-fattening scheme.
A study cited by The Times from the Kaiser Family Foundation, a research group unaffiliated with the insurer Kaiser Permanente, found the companies typically earn twice as much gross profit from their Medicare Advantage plans as from other types of insurance.
This story arises at a time when Republican politicians are renewing efforts to cancel automatic renewal of benefit programs like Medicare and Social Security.
Profit Over Health
Here’s the hitch: When Medicare came along it covered only hospitalization and some medical bills, and the Medicare Advantage program was devised to offer seniors an alternative way to cover more — at their own and subsidized expense, depending on location, income and circumstances. As devised, it was meant to keep healthy patients well.
We have heard endless discussion of doughnut holes for uncovered prescription drugs and the unfairness of Medicare and Medicaid enforcements. There are various trade-offs for these Medicare Advantage plans, including the lure of dental or vision coverage, and limitations on doctors. The annual election of medical benefits can be a time-consuming and often confusing set of choices.
But over time, the companies offering the Medicare Advantage alternatives saw that they could get more taxpayer-paid return by overstating just how sick an individual patient might be. What followed were campaigns to reward individual physicians for overreporting on various possible illnesses might be diagnosed — even though nothing was ever prescribed or addressed about those extra ailments.
The insurers say these were efforts to better describe patient medical conditions. Whistleblowers and now the Justice Department say it was fraud. Whatever you call it, it turned out that the sicker the paperwork makes the patient seem, the better the government return to the insurance company.
The billing practices apparently are too difficult to monitor or the governing body, the regulators at the Centers for Medicare and Medicaid Services, has been less than aggressive.
Yet, over nearly two decades, overpayments have been described in inspector general investigations, academic research, Government Accountability Office studies, MedPAC reports and numerous news articles. Congress gave CMS the power to reduce the insurers’ rates in response to evidence of systematic overbilling, but the agency has never chosen to do so. A regulation proposed in the Trump administration to force the plans to refund the government for more of the incorrect payments has not been finalized, and top officials have swapped jobs between the industry and the agency.
As a medical consumer and taxpayer, this stinks.
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