Earlier this year, Massachusetts state Attorney General Andrea Joy Campbell sued UnitedHealthcare for allegedly defrauding the state’s Medicaid program of $100 million. It’s a great start to tackling healthcare fraud in the Bay State, but policymakers ought to continue the trend by looking at Medicare Advantage, the privately run version of traditional Medicare.
As Charles Sauer, founder and president of the Market Institute, writes in his op-ed in the Boston Herald, lawmakers in the Bay State must pay attention to how Medicare Advantage’s fraud problem is growing out of control. “But the program’s long-term financial sustainability could be compromised by major Medicare Advantage insurers that follow bad government incentives to rate their patients as sicker than they are and collect higher government reimbursement rates. Massachusetts Senator Elizabeth Warren projected these “upcoding” practices to cost around $54 billion annually.”
Medicare Advantage’s reimbursement is based on a patient’s “risk score,” a metric based on a patient’s medical history and lifestyle factors. The higher the risk score, the higher the reimbursement. Insurers like UnitedHealthcare regularly doctor these risk scores to gain larger reimbursements from the federal government. According to an analysis from Senator Chuck Grassley’s office, insurers like UnitedHealthcare use tactics such as sending nurses to patients' homes to conduct “health risk assessments,” or patient surveys designed to gather information that boosts a patient’s risk score.
Sauer explains that insurer malpractice doesn’t stop at health risk assessments. “For example, investigators found that UnitedHealth encouraged providers to diagnose opioid dependence in patients who simply took prescribed opioids as directed, diagnose dementia without a full dementia evaluation, and diagnose chronic obstructive pulmonary disease without the standard lung-function testing typically used to confirm the condition.”
Insurers also regularly inflate patient diagnoses to secure higher reimbursements. The practice, dubbed “upcoding” by policymakers, happens when insurers upgrade common ailments like a cold to conditions like chronic bronchitis with little supporting evidence from doctors. All of the tactics above waste billions in taxpayer dollars that pay for Medicare Advantage care.
But, as Sauer expounds, “Bad Medicare Advantage incentives do more than waste taxpayer dollars. They distort competition by rewarding insurers that maximize coding intensity rather than those that deliver better care. They also undermine confidence in the healthcare system by allowing insurers to generate diagnoses that treating physicians may never have documented or acted on.”
It’s undoubtedly good that officials like Attorney General Campbell are taking on insurers for alleged fraud. But lawmakers must implement solutions to prevent Medicare Advantage fraud before it occurs. Federal legislation like the No UPCODE Act would do just that, by removing outdated billing codes and making patient risk scores less sensitive to stray diagnoses. These reforms are critical to restoring trust in the Medicare Advantage program.
“According to a J.D. Power report, trust in Medicare Advantage plans fell by 39 points last year, a troubling sign for a program built on consumer choice. Medicare Advantage’s promise of more options and better care remains achievable, but it is being undermined by incentives that reward aggressive coding practices rather than better outcomes for patients.”
Massachusetts lawmakers have a unique opportunity to lead on Medicare Advantage reform. By supporting bills like the No UPCODE Act, lawmakers will show that fraud is not only fixable in the short term, but preventable in the long term.
You can read the full op-ed in the Boston Herald here.
