Most of the large insurers involved in Medicare Advantage have been accused of various kinds of fraud, according to an analysis published by The New York Times, raising serious questions about the ability of the program to reduce costs and provide services more efficiently than the conventional Medicare system.
“Eight of the 10 biggest Medicare Advantage insurers — representing more than two-thirds of the market — have submitted inflated bills, according to the federal audits,” the Times Reed Abelson and Margot Sanger-Katz write. “And four of the five largest players — UnitedHealth, Humana, Elevance (formerly Anthem) and Kaiser — have faced federal lawsuits alleging that efforts to overdiagnose their customers crossed the line into fraud.”
The irony is that Medicare Advantage, which allows private insurers to manage federally funded health care plans for those 65 and older, was created to reduce costs, under the assumption that private industry is more efficient than government. But the evidence suggests that insurers have exploited the Medicare Advantage system to inflate their profits, using techniques that include making their patients appear sicker than they are, thereby inflating their bills.
“As a result,” Abelson and Sanger-Katz write, “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.”
The money involved is substantial. The government now spends more on Medicare Advantage than it does on the Army and Navy combined, Abelson and Sanger-Katz note. Overpayments within the system are estimated to total at least $12 billion and perhaps as much as $25 billion – more than the federal government spends on the Environmental Protection Agency or the FBI.
To make matters worse, it’s not clear that insurers in Medicare Advantage do a better job at providing health care, even as the program grows rapidly and is poised to account for the majority of Medicare participants as soon as next year. According to health care expert Merrill Goozner, “studies show little difference in patient satisfaction or outcomes compared to traditional fee-for-service Medicare.”
One thing is clear, though: the profits are enormous. The health insurance industry “now generates as much or more profit from Medicare Advantage than any other line of business,” Goozner writes.