That is the story with Medicare Advantage plans. It seemed like a good idea at the time. The concept was given birth by the ideologues who believe that private industry can always do a better and more efficient job than the government can. Medicare was spending a lot of money paying for care for its senior enrollees. What if we let private industry in on the program? Surely, private industry could provide the same or better care for less money than those wasteful bureaucrats over at the Medicare offices. It didn’t turn out that way or come even close.
In Traditional Medicare, doctors and hospitals get paid on a fee for service basis. Perform a procedure and get paid. No procedure, no payment. For Medicare Advantage, the plan was to change that dynamic so that the plan sponsor would be paid a flat yearly fee to provide all the care an enrollee needed. If it could keep the enrollee healthy or provide good, low-cost care, it could keep any leftover money. A win-win for everyone. Patients enrolled in Medicare Advantage plans get good care, and maybe even preventive care, at a cost to the government less than what Medicare was spending to care for the same patient. But, of course, there was a catch.
You couldn’t expect a Medicare Advantage plan to accept and treat sick enrollees for the same price they received for treating healthy ones. In all fairness, there had to be a different and higher price paid to the Medicare Advantage plans which accepted sicker patients. In fact, the sicker the patient, the more the Medicare Advantage plan should receive. So that was the way the program was structured.
It didn’t take long for the Medicare Advantage plans to figure out that, if they could show an enrollee was one of the sicker patients, they could receive more money. Cue our old friend Mr. Greed. It was only a small step from there to fudging patient records and claiming that enrollees were sicker than they really were.
Over the years, the Wall Street Journal has mined data from Medicare and Medicare Advantage. It has published the results of many investigations. Its most recent was on the ways in which Medicare Advantage plans have been making their enrollees look sicker than they really are in order to get more money from Medicare. There is no question that some of their tactics cross the line into fraud.
The plans use various techniques. Some ask for access to a patient’s medical records from one of the patient’s doctors. They assign a nurse or maybe even a computer program to review the chart and see if there are any undiagnosed illnesses or conditions that can be applied to the patient. Often, the enrollee’s doctor is not informed when the plan identifies a new condition or illness and, on many occasions when the doctor is informed, the doctor will disagree with the diagnosis. No matter. The diagnosis is now part of the patient’s record with the plan and is used to justify a greater annual payment from Medicare.
Another technique is to offer the patient a gift card in return for the patient agreeing to let a health care worker come to the patient’s home and conduct a free examination. These free examinations will then be used to justify a new diagnosis showing the patient is sicker than previously believed. As the Journal has discovered, some of these diagnoses are physically impossible. One of the common diagnoses “discovered” during these examinations is diabetic cataracts. This diagnosis has been used for patients who do not have diabetes or who have had cataract surgery in the past. Once cataracts have been removed, they cannot come back. The Journal’s investigation uncovered many other impossible diagnoses for which the advantage plans are receiving extra money.
According to the Journal, higher charges by Medicare Advantage plans for “sicker” patients have cost Medicare an extra $591 billion over the last 18 years compared to what it would have cost to treat the same patients under traditional Medicare. That is a lot of money. Where are the savings we were promised when Medicare Advantage was passed by a gullible Congress?
Medicare Advantage plans are like the toothpaste that has already been squeezed out of the tube. Fully half of eligible Americans are enrolled in Medicare Advantage plans. Most of them are not going to want to give them up and go over to traditional Medicare.
It is probably impossible for Medicare Advantage to ever fulfill its original promise of saving money for Medicare. The least we can do is probably clamp down on the obvious raids on the Treasury being perpetrated by some of the plans. The sight of a few executives going off to prison might encourage the others to behave more honestly.
