TOPIC Have Medicare Advantage plans overcharged the federal government?
https://khn.org/news/medicare-advantage-overbills-taxpayers-by-billions-a- year-as-feds-struggle-to-stop-it/
You can submit an individual paper or group paper. You can work with any or all members of
your assigned group. You cannot work with another class member who is not in your assigned
group. If a group paper is submitted, every person in the group will receive the same grade. If an
individual paper is submitted, the individual will receive a separate grade, specific to their
individual paper.
Format of Research Paper: 5-7 pages
1. Introduction: 1-2 pages
2. Analysis: Explore your assigned topic and how it relates to issues we have discussed in
class this semester. 2-3 pages
3. Discussion: 2 pages
4. References: no limit.
Guidelines
Introduction: State your assigned topic. Provide a brief introduction of the topic and its
relevance to managed care or managed care organizations.
Analysis: Please address all of the following elements, not necessarily in this order:
· Explore the assigned topic in detail. Build an argument/analysis using specific
references that are sourced.
· Make explicit reference to managed care and/or managed care organizations, and the
principles that guide them, based on what you’ve learned in the course.
· Explore sources of information in addition to the “suggested starting reference”
provided along with your assigned topic.
Discussion: Overall evaluation and interpretation of the ideas presented in your paper.
Grading Criteria (75 points):
1. Introduction [15 points]
2. Analysis, including the use of sources to support specific claims. [35 points]
3. Discussion and Summary/Conclusion. [15 points]
4. Grammar, spelling, subtitles, APA format, and other format considerations [10 points]
Introduction
On July 30, 1965, Medicare was enacted by President Lyndon B. Johnson (History,
2019). It is a federal program in the United States designed to provide health insurance coverage
to Americans 65 years old and older. Seven years later, the program expanded to Americans
under 65 years old to those who with disabilities and anyone with permanent kidney failure
requiring dialysis or transplant. There are four parts to Medicare: A, B, C, and D. Part A covers
hospital insurance and Part B covers medical services. These two parts are referred to as the
Original Medicare. Part C, also known as Medicare Advantage (MA), includes Original
Medicare and additional benefits. Lastly, Part D covers prescription drugs. Medicare Part A is
mandatory for beneficiaries, and the rest of the parts are voluntary.
MA was created when the Balanced Budget Act was passed in 1997 (Mcguire,
Newhouse, & Sinaiko, 2011). The purpose of the BBA was to expand managed care
organizations under Medicare and reduce Medicare spending. This allowed Medicare
beneficiaries to have the option to enroll in a health plan that is managed by private insurance
companies and also controlled by the government. The Original Medicare is a covered benefit
for MA plans. In addition, some MA plans offer benefits that are not included in the Original
Medicare, such as prescription drugs, vision care, and dental care (Mcguire, Newhouse, &
Sinaiko, 2011). Last year, there were 22 million Medicare beneficiaries who registered for MA
plans (Jacobson, Freed, Damico, & Neuman, 2019).
Recently, there has been an occurring problem of Medicare fraud and abuse in the United
States. Medicare fraud is an illegal act when health insurers knowingly submit false statements in
order to receive personal benefits from the federal government (Centers for Medicare &
Medicaid Services, 2019). This includes billing services that the beneficiary did not receive or
billing their diagnosis at a higher level. Medicare abuse can also occur, which is an unethical
practice that involves billing unnecessary services. Health insurers may abuse billing codes on
claims by upcoding a medical procedure or treatment.
In the MA plans, the federal government pays health insurers based on the patient’s
health status, which is calculated by using the “risk score” formula (Schulte & Weber, 2019).
Health insurers will receive higher payments from the federal government for sicker patients
compared to those who are healthy. However, health insurers had taken advantage of this to
submit false billing claims. As a result, health insurers found a strategy to increase the patient’s
risk score by exaggerating the patient’s sickness and condition, which led to the federal
government overpaying MA plans.
Analysis: W.I.P
The conversation behind MA plans are complex. In order to begin the conversation about
MA plans, we must first understand that Medicare Part A, B, and D and their coverages. Part A
covers hospitalization. Part B covers physician services, hospital care, mental healthcare, home
health services, diagnostic procedures and durable medical equipment. Medicare Part D coverage
is referring to Drug Benefits and Prescription Drug Plans. To be eligible for Part D you must first
be enrolled in Part A and B due to Part B being private prescription drug plans and Medicare
Advantage prescription drug plans.
There are four types of MA plans that are approved for beneficiaries which are;
Coordinated care plans (CCPs), Private fee for service plans (PFFS), Medical Savings Account
plans (MSAs), and Group Retiree Plans. MA plans are quite complex as they are paid by the
Centers for Medicare and Medicaid Services (CMS) through a process called bidding
(Kongstvedt, 2016).
This bidding process determines the amount enrollees pay in premiums and how much
cost sharing for Part A and Part B covered enrollees. The structure of these calculations is based
on five categories. Which is Benchmark or base payment, Risk adjustments based on individual
conditions (risk scores), the quality bonus payment, rebates, and premiums charged to enrollees.
(Kongstvedt, 2016). Through this bidding process Medicare Advantage plans were able to
overcharge Medicare by $30 billion in the past three years Schulte, F., & Weber, L. (2019). This
bidding has allowed Medicare Advantage plans to exaggerate how ill their patients are in order
to overcharge the government. This was to signify to Medicare that the Medicare Advantage
insurance plan was treating patients with serious medical conditions.
This evaluation of risk scoring was approved by congress in 2003. This was approved to
incentivize insurance organizations to cover patients who would require more utilization for cost
of services than usual. Today Medicare Advantage plans cover more than 22 million seniors
(Schulte, F., & Weber, L. (2019). For example, Essence Healthcare Inc. was one of the culprits
in exaggerating patients’ medical conditions. Even though this was a small bump in the road of
exploiting the government for insurance claims seeing how Essence had to refund $158,904 in
overcharges that were administered to its patients Schulte, F., & Weber, L. (2019).
Managed care under MA essentially offloads work that traditionally would be fulfilled by
Medicare. This means that the non-profit focus of Medicare is lost as MA plans are allowed to be
marketed and sold to individual Medicare beneficiaries. Health insurers seek to recuperate these
marketing funds by utilizing billing abuses and mistakes under MA which have gone without
audit. Recently the Centers for Medicare & Medicaid (CMS) are proposing a series of audits to
return $1 billion of MA overpayments by 2020 at the same time as the Department of Health and
Human Services (HHS) Inspector General’s Office launching a separate nationwide audit of MA
(Schulte & Weber, 2019). With so much money tied up in this debacle, CMS is investigating the
abuse of risk scores which are used to formulate the paid rate. CMS has already conducted 90
enhanced audits for payments made in 2011, 2012, and 2013; these audits are expected to collect
$650 million in extrapolated penalties which is a huge escalation from previous audits collecting
about $14 million (Schulte & Weber, 2019). Saving taxpayer money is a crucial aspect of this
issue as MA plans are entrusted with the care of millions of adults. Payments for MA plans have
increased between 2008 and 2018, from 21% ($99 billion) to 32% ($232 billion) and according
to recent analysis; administrative expenses, including profits, accounted for 14% of MA plans
(Cubanski, Neuman, & Free, 2019). Risk scores for MA patients have been rising without reason
soon after its creation. Between 2007 and 2011, taxpayer costs have risen by more than $36
billion than standard Medicare, with more than 200 counties MA plans at least 25% higher than
the costs of standard Medicare coverage (Schulte, Donald, & Durkin, 2015).
Discussion and Summary
References
Centers for Medicare & Medicaid Services. (2019). Medicare fraud and abuse: Prevent, detect,
report [PDF]. Retrieved from
https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLN
Products/Downloads/Fraud-Abuse-MLN4649244.pdf
Cubanski, J., Neuman, T., & Freed, M. (2019, August 20). The facts on Medicare spending and
financing. Retrieved from
https://www.kff.org/medicare/issue-brief/the-facts-on-medicare-spending-and-financing/
History. (2019, July 30). President Johnson signs Medicare into law. Retrieved from
https://www.history.com/this-day-in-history/johnson-signs-medicare-into-law
Jacobson, G., Freed, M., Damico, A., & Neuman, T. (2019, June 6). A dozen facts about
Medicare Advantage in 2019. Retrieved from
https://www.kff.org/medicare/issue-brief/a-dozen-facts-about-medicare-advantage-in-201
9/
Kongstvedt, P. (2016). Health insurance and managed care: What they are and how they work
(Fourth ed.). Burlington, MA: Jones & Bartlett Learning.
Mcguire, T. G., Newhouse, J. P., & Sinaiko, A. (2011). An economic history of Medicare Part C.
Milbank Quarterly, 89(2), 289-331. https:/doi.org/10.1111/j.1468-0009.2011.00629.x
Schulte, F., Donald, D., & Durking, E. (2015, January 14). Why Medicare advantage costs
taxpayers billions more than it should. R
etrieved from
https://publicintegrity.org/health/why-medicare-advantage-costs-taxpayers-billions-morethan-it-should/
Schulte, F., & Weber, L. (2019). Insurers running Medicare Advantage plans overbill taxpayers
by billions as feds struggle to stop it. Retrieved from
https://khn.org/news/medicare-advantage-overbills-taxpayers-by-billions-a-year-as-feds-s
truggle-to-stop-it/
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