Medicare Advantage spending needs a closer look

Medicare Advantage plans are popular, convenient and fast-growing — and a rising drain on taxpayers, new research has found. A former federal health official said his analysis showed that Medicare overpaid these private plans by more than $106 billion in recent years, costs that are only expected to soar. Federal regulators and Congress need to get a grip on this spending, where every dollar on needless services and unearned profit robs enrollees and taxpayers alike.

Richard Kronick, who served as deputy assistant secretary for health policy in the Department of Health and Human Services during the Obama administration, said new billing data showed that switching seniors to Medicare Advantage plans had cost taxpayers tens of billions of dollars more than keeping them in original Medicare. Medicare Advantage, an alternative to original Medicare, is run primarily by major insurance companies, and the plans generally offer extra benefits, such as eyeglasses and dental care. But Kronick said the overpayments from 2010 through 2019 reflect the way the private plans charge for sicker patients. And critics are calling on Congress to quit interfering on behalf of these politically connected companies so that federal regulators can do more to end abusive billing practices.

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An industry spokesperson told Kaiser Health News that seniors who join the plans are pleased, crediting them with offering high-quality health coverage. And there’s no doubt the plans are wildly popular, with enrollment growing steadily over the past several years, increasing from 11 million (24% of all Medicare beneficiaries) in 2010 to nearly 27 million members, or about 45% of those eligible for Medicare.

Still, there’s a big difference between finding these options valuable and funneling billions of dollars intended for patient care to a company’s bottom line. In traditional Medicare, providers bill for each service.

By contrast, Medicare Advantage plans use a coding formula that pays higher rates for patients deemed sicker. Critics say those scoring methods are abused, and that companies are inflating risk scores to deliver unneeded services and generate higher payments, with little monitoring by the government.

“They are paying (Medicare Advantage plans) way more than they should,” Kronick told Kaiser Health News, adding there is “little evidence” that Medicare Advantage enrollees are sicker than the average senior, or that their higher payments are justified.

Medicare’s history of overpayments, which reached an estimated $43 billion in fiscal year 2020, and the repeated concerns about excess payments to Medicare Advantage, are nothing new.

But with enrollment in these plans swelling, it’s beyond time for federal regulators to crack down on abusive billing practices. Kronick estimates that based on current models, spending on Medicare Advantage will increase by $600 billion from 2023 through 2031.

Though the program’s supporters in Congress like to focus on the premiums and care offerings that participants enjoy, there is a separate issue of ensuring that any billings are legitimate. Federal officials need to review Kronick’s findings.

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And a hearing or two in Congress wouldn’t hurt.

— Tampa Bay Times

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