In a year-long investigation of Medicare Advantage (MA) plans, Fred Schulte, David Donald, Erin Durkin, and Chris Zubak-Skees of The Center for Public Integrity did a masterful job exposing government hypocrisy and stonewalling, regulatory neglect, insurance company greed, and corporate exploitation of a program hailed as the fiscal savior for Medicare. If you haven’t yet read their three-part series published earlier this month—with three sidebars and two interactive features—you should. It underscores the acute need for more accountability and oversight not only from the Obama administration but also from the press, which has all but abandoned reporting much of anything about Medicare (see this exception), let alone mining the depths of the $150 billion Medicare Advantage program. For its exposé, the Center deserves a CJR laurel. I talked to Schulte this week about CPI’s work and we collaborated on some tips for reporters on this beat (more on that further along).
Schulte and colleagues paint a disturbing picture of how the popular Medicare Advantage program works with the government, spreading around billions to placate insurers, consultants, home care agencies, and, most important, the managed care industry some government officials desperately want to replace traditional Medicare, historically a social insurance model with the federal government providing the benefits. While Medicare managed care has been around since the 1980s, it never quite took off until Congress passed the prescription drug benefit in 2003 and paid health plans much more than it cost the government to provide benefits under the traditional program. The industry wasted no time cashing in, and the extra money has allowed plans to provide extra benefits like eyeglasses and gym memberships and offer low or no monthly premiums in some parts of the country, which explain the program’s growing popularity.
There’s a significant downside, though. “The plans have sharply driven up costs in many parts of the United States—larding on tens of billions of dollars in overcharges and other suspect billings based in part on inflated assessments of how sick patients are,” the CPI team reported. The Center analyzed Medicare Advantage enrollment data from 2007 through 2011 and thousands of pages of government audits and other documents. Its investigation showed that billions of tax dollars are misspent every year because of billing errors linked to a payment tool called a risk score. The sicker the patient, the higher the score, the more money plans make. So there’s a big incentive for managed care plans to inflate those scores and rake in the dough. Risk score errors triggered almost $70 billion in “improper” payments to MA plans from 2008 through 2013.
What’s more, those inflated scores have contributed to a problem that just won’t disappear—the government continues to pay health plans more to provide benefits to seniors in these private arrangements than it costs to provide them under traditional Medicare. The Center found a sharp increase in risk scores in “at least 1,000 counties nationwide between 2007 and 2011” that resulted in the government paying more than $36 billion over the estimated costs of caring for patients who were getting government-provided benefits from traditional Medicare. Put another way: in many of those counties, the cost to the government is at least 25 percent higher than the cost of providing standard Medicare benefits.
With Obama’s election, those overpayments were to be a thing of the past. During the 2008 campaign, Candidate Obama vowed to cut those overpayments, but then President Obama met the power of the insurers, and cuts were turned into increases through the magic of strong-armed lobbying, which the Center dissects. A stand-out in CPI’s series was a sidebar showing the hypocrisy of Democratic lawmakers, in particular Minnesota Sen. Al Franken, who once supported cutting those overpayments but later changed his mind. While in 2012 Franken railed against insurers that were getting too much money, less than four months later he was one of some 160 lawmakers who were publicly thanked by industry surrogates for helping kill, CPI reported, “the same Medicare Advantage cuts he’d previously supported so forcefully.”