Experts warn against choosing Medicare Advantage

  • Medicare Advantage is an increasingly popular way for adults age 65 and older to get health insurance.
  • Recently reported audits revealed $12 million in overpayments to these plans between 2011 and 2013.
  • But it’s likely to cost taxpayers a lot more than that, other studies have found.

The Medicare enrollment deadline is December 7, and some older-advocates want you to think twice about which plan you choose.

They point to newly unveiled federal government audits that have found millions of dollars in overcharging and other errors in payments to Medicare Advantage health plans sold by private insurance companies that affiliate with Medicare, the federally funded health care program for people aged over 10 65 years, work together and on. The original Medicare program is offered directly by the federal government.

The audits, first reported by Kaiser Health News’ Fred Schulte and Holly Hacker, found that among the approximately 18,000 patients sampled between 2011 and 2013, there were approximately $12 million in net government overpayments, costs, carried by US taxpayers’ pockets.

Although the audited data is nearly a decade old, Tricia Neuman, the executive director of the Kaiser Family Foundation’s Medicare Policy Program, told Insider that there’s reason to believe the inflated charges persist, based on research by MedPAC, a nonpartisan, independent legislative agency that provides policy advice to Congress on the Medicare program, has since conducted.

Now, as the deadline for enrolling in Medicare plans approaches, advocates for older Americans want them to be careful. Selling Medicare Advantage plans has been a lucrative business for health insurers, and in addition to the additional costs found during audits, the actual losses to the taxpayers who fund Medicare are likely much greater. According to officials at the Centers for Medicare & Medicaid Services, the U.S. government is estimating a total of about $650 million, Kaiser Health News reported.

“There wasn’t enough prosecution against Medicare Advantage plans,” Mary Johnson, a Social Security and Medicare policy analyst at the Senior Citizens League, told Insider. “There have been clear cases of overpayments and improper billing with US taxpayers.”

“The sicker the patient, the more he is worth”

More and more people are using Medicare Advantage.

Between 2021 and 2022, enrollment increased by about 2.2 million beneficiaries, the Kaiser Family Foundation found. The Congressional Budget Office estimates that the proportion of all Medicare beneficiaries participating in Medicare Advantage plans will increase to 61% by 2032.

One of its key benefits is that it typically offers more coverage options than the original Medicare plans, according to a 2021 study by the Journal of the American Medical Association.

But Medicare Advantage plans also typically require participants to be cared for by a smaller list of providers, and it’s harder to get treatment for chronic conditions or significant health problems.

“These plans can, and often do, result in high out-of-pocket expenses, especially later in life when older beneficiaries are least able to afford the costs,” Johnson said. She added that Medicare doesn’t have a “strong track record” of implementing policies to reduce improper billing, adding that it has “a collections problem.”

Additionally, MedPAC recently found that Medicare Advantage diagnostic procedures resulted in $12 billion in improper payments for patients in 2020.

“The plans have an incentive to find ways to increase risk scores in order to get higher payments from the government,” Johnson said. “The sicker the patient, the more they are worth.”

She added, “But Congress may need to pass legislation that defines how reimbursement adjustments work, rather than relying on reclaiming them.”

Medicare Advantage policy

Politicians, mostly Republicans, have played their part in promoting Medicare Advantage over the original Medicare plans since President George W. Bush revised the program in 2003. Cutting Medicare has been a rallying cry for Republicans for decades, with Democrats usually portraying themselves as protectors of Medicare and other entitlement programs like Social Security.

But members of the GOP are all pro Medicare Advantage. Rep. Kevin Brady, the leading Republican on the House Appropriations Committee, told Insider that Medicare Advantage is still preferable to original Medicare, even given Medicare Advantage’s inflated fees.

“There’s room for reform and solid accountability,” he said, adding that original Medicare “results in poorer patient care.” He also criticized Democrats for not trying to strengthen Medicare Advantage.

Johnson said Medicare Advantage is popular with conservatives because it shifts financial responsibility from government to patients.

“It’s important to understand why conservatives are pushing Medicare Advantage,” she said. “It has the support of those who want smaller government and more personal responsibility for costs.”

Neuman said more Democrats came to the program, however.

“Initially, the push to expand options for private plans under Medicare came from Republicans rather than Democrats, but in recent years Medicare Advantage has had advocates on both sides of the aisle,” she said. “Members of Congress may be reluctant to reform payments to plans that could rightly or wrongly be characterized as cutting benefits to their constituents.”

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