Key Takeaways:
- Insurers collected $50 billion from Medicare based on dubious diagnoses.
- Diagnoses like diabetic cataracts and HIV were often unsupported by medical records.
- Medicare Advantage, intended to save costs, instead added tens of billions in expenses.
What Happened?
Insurers involved in Medicare Advantage collected around $50 billion from 2018 to 2021 by adding questionable diagnoses to patient records, according to a Wall Street Journal analysis. These diagnoses, including serious conditions like AIDS and diabetic cataracts, were often unsupported by subsequent medical treatment or contradicted by patients’ doctors.
For instance, UnitedHealth diagnosed diabetic cataracts in 631 per 10,000 patients, compared to just 43 per 10,000 in traditional Medicare. This practice resulted in significant taxpayer-funded payments to insurers, who justified these diagnoses through home visits and chart reviews, sometimes using artificial intelligence.
Why It Matters?
This issue highlights a critical flaw in the Medicare Advantage system, which was designed to be more cost-effective than traditional Medicare. Instead of reducing expenses, it has led to billions in additional costs. The extra payments are tied to diagnoses that make patients appear sicker on paper, inflating insurer profits.
Medicare Advantage now covers over half of the 67 million Medicare beneficiaries, making these findings particularly alarming for both taxpayers and patients. “If they are just making stuff up, then why do they even need or want my charts?” questioned Dr. Howard Chen, an ophthalmologist from Arizona.
What’s Next?
Expect increased scrutiny and potential policy changes aimed at curbing this practice. The Centers for Medicare and Medicaid Services (CMS) plans to revise the list of conditions eligible for extra payments by 2026. However, experts like John Gorman, a former Medicare official, believe this won’t fully resolve the issue, suggesting insurers will find new ways to exploit the system.
Investors should watch for regulatory developments and shifts in Medicare Advantage enrollment, as well as potential impacts on insurers’ financials, particularly those heavily invested in Medicare Advantage.
