In past blog postings, we have noted that UC retirees are being offered a Medicare Advantage plan as one of the options for retiree health and added a cautionary note.* Most retirees and emeriti are eligible for Medicare, typically at age 65 but also based on disability. UC has offered various traditional Medicare supplement plans that essentially cover some or all expenses not paid for by Medicare. These supplements are offered by private insurance carriers, but traditional Medicare is a government-run insurance program.
Years ago, Medicare allowed private carriers to offer Medicare Advantage plans. These plans essentially replace both traditional Medicare and supplements with one program - run by the carrier - but paid for, or partially paid for, by Medicare. The private carrier is given a risk-adjusted premium to take over the coverage. There is a growing body of evidence that the carriers are being overpaid. They advertise on late-night TV, send out advertising mailers to individuals over 65, and - in short - aggressively compete for business. They sometimes add extra features such as gym memberships to entice subscribers. Essentially, traditional Medicare is being rapidly privatized; soon more than half of all Medicare retirees will be under Medicare Advantage programs. It is thus ironic that advocates for government-run single-payer insurance for everyone refer to it as "Medicare for All."
NPR had a recent piece on these developments:
Newly released federal audits reveal widespread overcharges and other errors in payments to Medicare Advantage health plans, with some plans overbilling the government more than $1,000 per patient a year on average. Summaries of the 90 audits, which examined billings from 2011 through 2013 and are the most recent reviews completed, were obtained exclusively by [Kaiser Health News] through a three-year Freedom of Information Act lawsuit, which was settled in late September. The government's audits uncovered about $12 million in net overpayments for the care of 18,090 patients sampled, though the actual losses to taxpayers are likely much higher. Medicare Advantage, a fast-growing alternative to original Medicare, is run primarily by major insurance companies.
Officials at the Centers for Medicare & Medicaid Services have said they intend to extrapolate the payment error rates from those samples across the total membership of each plan — and recoup an estimated $650 million from insurers as a result. But after nearly a decade, that has yet to happen. CMS was set to unveil a final extrapolation rule Nov. 1 but recently put that decision off until February. Ted Doolittle, a former deputy director of CMS' Center for Program Integrity, which oversees Medicare's efforts to fight fraud and billing abuse, said the agency has failed to hold Medicare Advantage plans accountable. "I think CMS fell down on the job on this," said Doolittle, now the health care advocate for the state of Connecticut.
Doolittle said CMS appears to be "carrying water" for the insurance industry, which is "making money hand over fist" off Medicare Advantage plans. "From the outside, it seems pretty smelly," he said...
Full story at https://www.npr.org/sections/health-shots/2022/11/21/1137500875/audit-medicare-advantage-overcharged-medicare.
The question now is what happens if and when Congress takes note of the increasing evidence. With Congress likely to be paralyzed due to the Republican takeover of the House and Democrats in control of the Senate, such note taking may not occur in the next couple of years. However, at some point, a future Congress may take away the overpayments. UC's low cost Medicare Advantage option - which has gained subscribers at the expense of traditional Medicare+supplement plans - could then lose its current cost advantage for retirees. But what will be available to them at that point?
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*http://uclafacultyassociation.blogspot.com/2022/10/medicare-advantage-uh-oh.html.
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