Medicare Advantage’s Cost to Taxpayers Has Soared in Recent Years

Posted in RESOURCES

Mary Madison, RN, RAC-CT, CDP
Clinical Consultant – Briggs Healthcare

I happened upon this article over the weekend that’s well worth the read – Medicare Advantage’s cost to taxpayers has soared in recent years, research finds.  It’s from NPR’s – National Public Radio – Shots Health News.

“Switching seniors to Medicare Advantage plans has cost taxpayers tens of billions of dollars more than keeping them in original Medicare, a cost that has exploded since 2018 and is likely to rise even higher, new research has found.  (An) analysis of newly released Medicare Advantage billing data estimates that Medicare overpaid the private health plans by more than $106 billion from 2010 through 2019 because of the way the private plans charge for sicker patients.

Nearly $34 billion of that new spending came during 2018 and 2019, the latest payment period available, according to Kronick. The Centers for Medicare & Medicaid Services made the 2019 billing data public for the first time in late September.

“They are paying [Medicare Advantage plans] way more than they should,” says Kronick, who served as deputy assistant secretary for health policy in the Department of Health and Human Services during the Obama administration.

Medicare Advantage, a fast-growing alternative to original Medicare, is run primarily by major insurance companies. The health plans have enrolled nearly 27 million members, or about 45% of people eligible for Medicare, according to AHIP, an industry trade group formerly known as America’s Health Insurance Plans.

The industry argues that the plans generally offer extra benefits, such as eyeglasses and dental care, not available under original Medicare and that most seniors who join the health plans are happy they did so.

Yet critics have argued for years that Medicare Advantage costs taxpayers too much. The industry also has been the target of multiple government investigations and Department of Justice lawsuits that allege widespread billing abuse by some plans.

“It’s hard to miss the big red flag that Medicare is grossly overpaying these plans when you see that beneficiaries have more than 30 plans available in their area and are being bombarded daily by TV, magazine and billboard ads,” says Cristina Boccuti, director of health policy at West Health, a group that seeks to cut health care costs and has supported Kronick’s research.

Kronick called the growth in Medicare Advantage costs a “systemic problem across the industry,” which CMS has failed to rein in. He says some plans saw “eye-popping” revenue gains, while others had more modest increases. Giant insurer UnitedHealthcare, which in 2019 had about 6 million Medicare Advantage members, received excess payments of some $6 billion, according to Kronick. The company had no comment.

“This is not small change,” says Joshua Gordon, director of health policy for the Committee for a Responsible Federal Budget, a nonpartisan group. “The problem is just getting worse and worse.”

Responding to written questions, a CMS spokesperson says the agency “is committed to ensuring that payments to Medicare Advantage plans are appropriate. It is CMS’s responsibility to make sure that Medicare Advantage plans are living up to their role, and the agency will certainly hold the plans to the standards that they should meet.” I encourage you to read the entire article as well as explore the hyperlinks.  Certainly food for thought and discussion!