Advantage Plans and Diagnoses Shopping:
Costly and Disgusting

Today’s video reports on a Wall Street Journal Article published in July entitled, Insurers Pocketed $50 Billion from Medicare for Diseases No Doctor Treated. Here is the link but you have to be a Wall Street Journal subscriber to access the article.

It is an extremely important article and suggests that some insurers are engaging in very questionable coding practices to inflate their Medicare Advantage Plan reimbursement. The fifty billion dollar figure is associated with three years of claims but even if it’s off a bit, that is so much money and so much money from our healthcare system that could be put to better use.

It is apparently very easy for insurers to add diagnoses beyond what a medical provider has documented to inflate reimbursement from Medicare. The original purpose for this was to provide additional payment to plans for individuals who are more costly to treat. It seems clear, however, that some plans have been unusually aggressive in seeking out and documenting questionable diagnoses. In fact, the article states that some of the coding was demonstrably false because it was associated with a condition that had already been cured.

Of course, the insurers dispute these results but according to the article, a dozen experts from different fields including academics, actuaries, and policy analysts, were asked to review the authors’ analytic methods and found them to be valid. Just the spread among insurers is quite damning. In estimating the additional reimbursement associated with this coding creativity per member per year, the five largest Medicare Advantage insurers had a tenfold spread. Kaiser Permanente came in with a low of $131 per member per year in additional payments and United Healthcare had a high of $1434 in additional payments per member per year. That makes no sense.

Americans have great tolerance with for-profit companies being profitable but healthcare is highly regulated and we have a right to expect more from the regulators. It does seem that too frequently investigative journalists are ahead of them.

As we reported earlier, a number of lawsuits have been filed against the Medicare Advantage Plans and we’ll be eager to learn the results of that litigation. Ironically, support for Advantage Plans stemmed from the notion that private companies can do a better job at managing care than original Medicare, and original Medicare with its fee-for-service reimbursement presents another set of headaches. However, there is no justification for receiving payment for a condition that wasn’t treated.

Unfortunately, our tax dollars are hard at work with a number of companies that don’t deserve the income they’ve received. If you are a member of an Advantage Plan you might monitor your explanation of benefit to see if you’ve been the victim of these practices.

Thanks for reading.