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Thursday, December 9, 2021

Insurance companies on search for the most lucrative and riskier patients

For insurance companies, such as CVS Health’s Aetna unit, UnitedHealth Group, and Humana, Medicare is a big business. One of the most profitable markets in the healthcare sector is to sell the private versions of the government healthcare plans for seniors, which is known as the Medicare Advantage plan

Bloomberg News reports that 26 million that constitute 42% of the Medicare beneficiaries prefer to get their Medicare benefits through private plans, thereby adding more than $300 billion annually to the insurers’ coffers. 

However, now there have been raising alarms by the federal authorities citing the program’s cost. Private Medicare plans are aimed at delivering better care at affordable costs, have never been able to save the money of the government says Medicare Payment Advisory Commission (MedPAC) as noted by a panel comprising independent advisers to Congress.

The same advisers also noted that there are flaws in the policies and the same requires an immediate facelift. These private plans collect 4% more than what the government would have collected from the same enrollees from traditional programs. 

The higher costs can be attributed to the costs incurred on dental and vision care, those that are not covered by the conventional Medicare plans, one of the key attractions for members for administrative and marketing expenses for the private insurers. 

The Department of Health and Human Services Office of Inspector General has urged to look into the matter so that these practices will ensure that there is better healthcare offered and not just higher profits. 

According to Bloomberg News, conventional Medicare programs, pay directly to the hospitals and doctors for every procedure, a system that is known by the name fee-for-service. In Medicare Advantage, a per-member fee is paid by the government to take the risk for the members’ total medical care cost. 

As of 2019, the per member fee was $12,000 annually for each member. However, for sicker enrollees, health care plans can get higher payments. Known as risk adjustment, the policy is aimed at compensating plans for the additional costs. 

The risk-adjustment system drives the Medicare Advantage business model and according to the federal agencies, such a system is vulnerable to manipulation and fraud. 

For higher-risk patients, plans get more paid higher after calculating the risk-score of patients. The few conditions that qualify for higher risk scores include pulmonary ailments, depression, vascular and diabetes disorders.

MedPAC says that the cost usually ranges between $1000 and $5000 every year for every diagnosis, however, some ailments can add an extra of $10,000 and more. 

Such a system creates space for the Medicare Advantage plans so that the diagnostic codes can be added to the records of patients, that the doctors may not include in the conventional Medicare programs. 

In the programs offered by the government, the payment is based on the services provided ad the doctors just document the diagnosis to show why the patient required a test, a procedure, or a visit to the clinic. As compared to the same, in Medicare Advantage, if an additional diagnosis is submitted implies that the plan will get paid more. 

This incentive that collects the diagnostic codes leads to practices as authorities may say might magnify payments without offering any benefit to the patients. 

Insurers tend to mine the medical records of the patients and look for diagnoses that were not even submitted by the doctors. They do so by reviewing medical records regularly. 

Insurers send their panel of clinicians to the patients’ homes so that the health risk assessment can be carried out. Under such instances, it is quite likely that additional ailments might surface, which will add to the reimbursement value of Medicare. If found, the same is added to the record of the patients. 

As of 2017, the HHS Office of Inspector General Report found out $2.6 billion in payments just for the diagnoses that were documented and reported based on health risk assessments and not linked to any other care beneficiary. 

Medicare plan’ earnings were in millions of dollars in the payments obtained from thousands of people from in-home health assessments and those that did not receive any other Medicare services. UnitedHealth Group Inc. and Humana Inc. together cover more than 11 million members availing the Medicare Advantage.


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Josie Patra
Josie Patra is a veteran writer with 21 years of experience. She comes with multiple degrees in literature, computer applications, multimedia design, and management. She delves into a plethora of niches and offers expert guidance on finances, stock market, budgeting, marketing strategies, and such other domains. Josie has also authored books on management, productivity, and digital marketing strategies.

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