Discover more from Fred Klonsky in Retirement
Medicare Advantage commits the perfect crime.
Florida is the destination for thousands of college kids and other young people during Spring break.
But in late January the restaurants and rentals along the Gulf Coast where we are for just a few more days are filled with older folks like us.
They call us snow birds.
Most here now are on Medicare for which we have paid for over a life-time of work.
Many are enrolled in one or another Medicare Advantage private, for-profit insurance plan that has come to dominate the industry and threatens the government retiree healthcare safety net.
It now appears that these for-profit MA plans have committed the perfect crime. They’ve been caught stealing millions of taxpayer dollars but may never have to pay it back.
In 2018, Central Management Services, the federal agency that is supposed to have oversight of MA plans, said it paid $54 million annually to conduct 30 MA plan audits.
The audits uncovered systematic over-billing of the government for services never provided or provided at costs way below what they were charging.
What commonly happens with a government audit is that they extrapolate from a smaller number of cases.
The cost of looking into each and every case is financially and logistically unsustainable.
According to Kaiser Health News:
The estimate for the 2011-13 audits was based on an extrapolation of overpayments found in a sampling of patients at each health plan. In these reviews, auditors examine medical records to confirm whether patients had the diseases for which the government reimbursed health plans to treat.
Through the years, those audits — and others conducted by government watchdogs — have found that health plans often cannot document that they deserved extra payments for patients they said were sicker than average.
The decision to take earlier audit findings off the table means that CMS has spent tens of millions of dollars conducting audits as far back as 2011 — much more than the government will be able to recoup.
Instead, CMS announced it would require next to nothing from insurers for any excess payments they received from 2011 through 2017.
CMS will not impose major penalties until audits for payment years 2018 and beyond are conducted.
Who knows when that will be?
While the decision could cost Medicare plans billions of dollars at some unknown time in the future, it will take years before any penalty comes due.
Health plans will be allowed to pocket hundreds of millions of dollars in overcharges and possibly much more for audits before 2018.
Exactly how much is not clear because audits as far back as 2011 have yet to be completed.
Without extrapolation for years 2011-17, CMS won’t every retrieve the costs of MA over-billing.
The perfect crime.
Private healthcare sucks.
Fred Klonsky in Retirement is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.