Medicare is one of the core social programs in the United States of America. Introduced by President Lyndon B. Johnson in 1965, Medicare provides health insurance to all U.S. citizens age 65 and above, plus a few other groups of people. At $944 billion in 2022, Medicare is the second-largest item in the U.S. federal budget, behind only Social Security. That’s a huge sum; divided by the 165 million taxpayers in the U.S., Medicare costs $5,721 per taxpayer.
Given how important Medicare is to U.S. healthcare, people should be alarmed by how often we see Medicare fraud in the news.
In July 2023, Martin’s Point Health Care Inc. settled Medicare Advantage fraud allegations for $22 million. In October 2023, health insurer Cigna settled Medicare Advantage fraud allegations for $172 million. In November 2023, insurers were accused of using AI to automate coverage denials.
Later in November, the Biden administration announced a crackdown on deceptive advertising of Medicare Advantage plans, but problems continued. In February 2024, Medicare suspended seven high-volume suppliers for billing for “phantom catheters” that didn’t exist. In March 2024, a whistleblower accused Aledade, the largest U.S. independent primary care network, of Medicare fraud. And in July 2024, the Wall Street Journal reported that insurers pocketed $50 billion From Medicare for diseases no doctor treated.
One common factor in many of these allegations is that they involve the Medicare Advantage (MA) program, also known as Medicare Part C. First established in 1997, this program has grown from a niche option to the majority of Medicare enrollment in 2023.
Medicare Advantage plans can appear more attractive than traditional Medicare due to lower out-of-pocket costs and extra benefits like vision, dental, or gym memberships. However, these plans come with several huge drawbacks.
Unlike traditional Medicare, MA plans can impose state limitations, restrict provider/facility networks, and dictate prior authorization rules just like any other private insurance plan. Getting sick while traveling may saddle you with high out-of-network fees. Provider network changes can force patients to stop seeing a doctor that they know and trust. And most importantly, prior authorization can be an onerous barrier to care.
As a practicing oncologist, I’ve felt the frustration of cancer patients and caregivers who are forced to spend hours on the phone with insurance when they’re already going through the worst time of their lives. Some of my patients have faced insurance denials of life-saving cancer drugs, forcing them into the terrible choice between paying a ruinously high cash price, facing the uncertain appeals process, applying for charitable aid, or just skipping treatment and hoping the cancer doesn’t spread.
Compared to traditional Medicare, MA insurers are allowed to use much stricter eligibility criteria for diagnostic procedures. This means that patients enrolled on MA may be denied diagnostic studies like MRI, PET/CT, and molecular lab tests that would otherwise be routinely ordered.
And we haven’t even gotten to the root cause of Medicare Advantage waste and fraud. Traditional Medicare doesn’t allow “risk adjustment” – you’re neither penalized nor rewarded for being sicker than the average patient. Medicare Advantage does. The government pays each MA insurer based on how sick their patient population is, creating a perverse incentive for them to add diagnosis codes to your chart. The more diagnoses they give you, the more they’re paid.
This “up-coding” practice has drastically increased the taxpayer costs of Medicare Advantage, and it’s also stuck some patients with fake diagnosis codes that make them look very sick on paper. You might not think that’s a big deal. After all, the vast majority of U.S. health insurance plans are forbidden from denying coverage or increasing premiums based on “pre-existing conditions,” real or fake.
But many seniors rely on “Medigap” insurance plans to handle the costs that aren’t included in their Medicare coverage. And Medigap is the one U.S. insurance market that, in many cases, is allowed to consider pre-existing conditions. If your insurance chart has been “up-coded” with fake diagnoses, you may be stuck paying far higher Medigap premiums for the rest of your life.
There’s an ongoing crackdown on Medicare Advantage fraud, and many of us are hoping that the federal government can eliminate as much misconduct as possible. But that still doesn’t touch the practices of narrow networks and prior authorization. MA puts middlemen in between yourself and the healthcare coverage that you’ve already paid for with your tax dollars. And when you get seriously ill, you’re stuck arguing with bureaucrats in order to get the care that you deserve.
I strongly recommend all of my friends, family, and patients to avoid Medicare Advantage. Traditional Medicare may be more expensive, but you get what you pay for. There are a number of federal, state, and private charity programs to help poor senior citizens pay for Medicare costs.
Medicare enrollees can change plans once a year. Open enrollment occurs October 15 – December 7.
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Comments
Great article by David S Chang ! MA plans are managed health care plans which pay doctors money for each patient they accept. These (incentives) are given to doctors who agree to participate in the program, and also agree not to treat traditional Medicare patients. I personally was dropped by my doctor of approximately 25 years because I refused the MA plan and decided the benefits are better with traditional Medicare, a government program – rather than an MA plan owned by an insurance company. I know many other senior patients treated the same way, we were all forced to find new doctors who accept Medicare patients! Since insurance companies exist only for profit, there is little or no incentive for doctors to recommend sick patients see a specialist out of Network. However, traditional Medicare has no such restrictions… Those who have MA insurance better hope and pray they do not get really ill….
I appreciate the article and subsequent comments. I am not yet 65 but God-willing will be in 2026. I am retired already drawing a pension and working part time, so I’m doing ok in that respect. I could draw my social security but don’t need it. What I am planning on is to begin drawing it when I turn 65 and go on Medicare, because I know there is a cost from the MA plans.
MA has worked well for my spouse and myself. We pay separately for dental coverage. The FL state senator and former governor was administrator of a health care company in FL that defrauded the federal gov’t. Yet, no responsibility and he continues to be elected. How unaware Floridians are of their surroundings.
For me the Medicare Advantage option has worked well. I subscribe to Ohio Anthem BCBS HMO MA and have for the past 9 years. I have never been denighed any medical coverage. My diagnostic tests are reasonably priced, my five prescriptions are all no charge, my provider network extensive. and customer service second to none. I think the negativity of the article paints all the MA’s as unethical and that’s unfair. Everyone on Medicare needs to do their homework before enrolling in any program. I do thinks it’s novel to believe the government will do much to crack down on those providers thet cheat. Government programs go hand in hand with corruption and personal gain. If you want to effectively decrease cheating than take the monitoring out go government hands.