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Medicare Advantage Plans are Scamming Patients and Taxpayers While Racking Up Huge Profits for Insurers

By March 16, 2023No Comments

Medicare Advantage plans are private insurance plans in Medicare that have become increasingly popular for enrollees, largely due to aggressive marketing. Currently, about half the Medicare population–30 million people–are covered by private Medicare Advantage plans, most associated with  the nation’s biggest insurance companies like Humana, Aetna and UnitedHealthCare.

Most people who sign up for Medicare Advantage are seeking specific benefits not currently offered in traditional Medicare, including dental, vision and hearing coverage.  Although Medicare Advantage plans often claim to provide superior coverage for patients, research shows there is no substantive difference in patients’ savings, access to treatments and health outcomes across both Advantage plans and traditional Medicare. Yet Medicare Advantage costs taxpayers more than traditional Medicare. 

There have been numerous reports about these companies overcharging for coverage and trying to cover up their profiteering by refusing to disclose information about payments. Studies and audits have identified billions of dollars of excess payments to health plans that weren’t supported by patients’ medical records. Earlier this year, the Centers for Medicare & Medicaid Services (CMS) announced a rule that will collect over $4 billion in overcharges to Medicare from Medicare Advantage plans. 

Although we’re paying more for Advantage than regular Medicare, there’s growing evidence that tens of thousands of people in Medicare Advantage are actually getting less coverage because of denials, caps, and limits that are arbitrarily imposed by the private insurance corporations. 

Federal investigators from the Office of Inspector General (OIG) released a report that found “widespread and persistent problems related to inappropriate denials of services and payment,” resulting in millions of people going without treatments or paying out of pocket because their Advantage plans denied the service. These findings are supported in previous reports and by doctors and hospitals that have long been raising the issue of denials and delays by Medicare Advantage private plans. 

Even  as we learn more about the ways that Medicare Advantage plans are scamming both patients and the government, many lawmakers are reluctant to speak out against the programs. In fact, on the same day that CMS announced its new rule to claw back overpayments in MA programs, a bipartisan letter circulated in the Senate praising Medicare Advantage and the “high-quality care” it provides to seniors and people with disabilities.

This is an unexpected reaction given that Republicans in Congress have renewed attacks on traditional Medicare, that there’s growing and widespread concern about waste, abuse and solvency in the program, and that insurers are making bigger profit margins from Medicare Advantage than other products they sell.  

KFF’s new analysis of health insurers’ 2021 financial data shows that insurers continue to report much higher gross margins per enrollee in the Medicare Advantage market than in other health insurance markets. Thanks to the lack of oversight and taxpayer subsidized advertising, Medicare Advantage plans have become a lucrative business for the nation’s biggest insurers. UnitedHealth Group posted profits of $14.4 billion, up 20% over the prior year, propelling largely by increased enrollment in private Medicare plans. UnitedHealth increased its Medicare Advantage enrollment by 9%, from 6.5 million members to 7.1 million last year. It plans to add almost a million new members this year. 

Last year, Congress took on prescription drug corporations’ price gouging in Medicare by passing the Inflation Reduction Act that will require negotiated prices in Medicare for the first time and that penalizes drug corporations for raising their rates faster than inflation. The recent Medicare Advantage scandals show that much more action is needed to curb profiteering in Medicare and ensure the long-term health of the program. 

In addition to increased oversight and accountability, lawmakers need to curtail the incentives for Medicare Advantage to game the system by leveling  the playing field between the private plans and traditional Medicare and by stopping spurious Medicare Advantage advertising that promises enrollees better coverage while delivering denials and delays.

As the population continues to age, more and more people will need Medicare coverage. They deserve to have access to quality care that they can count on. The best way to protect and improve Medicare is to stop the rampant price-gouging by private insurance corporations that puts profit ahead of patient care.