How Insurance Companies Cheat Medicare

September 17, 2018     About this blog:  click here

How Insurance Companies Cheat Medicare

Medicare Advantage plans are a type of Medicare insurance policy, which is growing in use.  Currently, about one-third of all people on Medicare have this kind of policy.

The insurance companies are pushing very hard to get many more people onto Medicare Advantage.

There’s a good reason for that:  They make more profit, in general, from these policies than other kinds, like Medicare Supplement policies.

In theory, Medicare Advantage policies are a risky business for insurance companies.  That’s because they are not guaranteed to earn a profit.  And, they’re not allowed to exclude people with expensive health problems.

They are paid a fixed amount of money from Medicare (roughly $800) each month for each enrollee.  If, at the end of a year, the insurance company’s expenses exceed what they were paid by the government, along with the monthly premiums paid by the enrollee, then they lose money.

On the other hand, if the expenses are less than the money they took in, then the make a profit.

As it turns out, some of these policies lose money for the insurance companies some of the time, but most of the time the policies make money for most of the companies – a lot of money.

So, this looks like a pretty good “gamble” for the insurance companies.  That explains why they keep trying, very hard, to sell more and more of these policies.   Just look at all their ads!

When this type of Medicare “risk” contract first got going in the 1980’s, Congress set it up so that they would get paid 95% of the average amount Medicare was paying for people in each area.

The idea was:  The insurance companies, by controlling what care people got, would surely spend less and save the government money.

As time went on, however, the insurance companies successfully lobbied to keep getting paid more and more for their enrollees.

In 2003, the current “Medicare Advantage” system was enacted.  It soon became clear that Medicare Advantage was costing the government more per person compared to original Medicare, not less.

Fast forward to the Affordable Care Act (aka ObamaCare), and Congress decided to start ratcheting back a little how much they were paying the insurance companies.

This was done in clear recognition of the fact that the government was overpaying them.

How to Cheat the Government:

But, the insurance companies figured out how they could keep getting more profits, by ripping off the government. How?

The key is that with Medicare Advantage, the government pays the insurance company a flat amount of money per month for each enrollee – but not the same amount.

The amount for each individual enrollee is adjusted according to how healthy or sick the person is. That makes perfect sense:  A healthy person will have less medical expense, while an unhealthy one will have much higher expense.

The problem is that this is done basically on an honor system.  The insurance companies tell the government how sick each of their enrollees are (what their medical diagnoses are), and government DOES NOT CHECK.  The government trusts, but does not verify.

So, it’s easy for the insurance companies to pretend that their enrollees are sicker and more expensive than they really are.  The extra cash goes right into the companies’ pockets.

How much cheating?

Centers for Medicare and Medicaid Services (CMS) is the federal agency that runs Medicare.  CMS’ own estimate is that about $16 billion a year is being stolen by the insurance companies, by this method.

That would pay for a lot of health care, for a lot of people.

Is CMS doing anything about this?  Sort of.   They do perform some after-the –fact audits, and they have recovered some of this overpaid money.   They collect about $15 million a year.

Note that is only one-thousandth of the $16 billion of cheating.  Not very effective, right?

The interesting thing is that CMS concentrates its auditing on some of the smaller companies, who don’t have that big a chunk of all the Medicare Advantage enrollees.

So what about the big fish – United Health Care, the Blue Cross Companies, Aetna, Humana and Kaiser?  For some strange reason, CMS does not try to audit the big guys.

Note that these giant companies, who have two-thirds of the enrollments, have huge financial and political power.  They’re what you call “well-connected,” and quite able to pull some strings to protect themselves.

There have been some lawsuits about this Medicare cheating, but not much has resulted so far from that.

Secret profits

Also noteworthy is that the government does not even ask the Medicare Advantage companies to report how much profit they claim they are making on these policies. So, the public does not know.

If you think this system needs reforming, contact your Congress members and Senators and ask them to change the Medicare Advantage law.

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Medicare Cost Plan Confusion for NE MN

September 10, 2018     About this blog:  click here

Medicare Cost Plan Confusion for NE MN

Medicare Cost Plans are a specific type of insurance to supplement Medicare, which is very popular in Minnesota.

However, the Cost Plans are being eliminated in many, but not most, parts of the state.

There has been great confusion for people in Northeastern Minnesota.

First, earlier this year they were told that their Cost Plans would end on Dec. 31, and they would have to pick something else for 2019.

Then, this summer, they were told they have a reprieve.   The Cost Plans were not ending, in fact, for 21 counties in Minnesota, including all of the Northeastern Minnesota counties.

But now – most of them, who have Blue Cross Platinum Blue Cost Plan policies — just got an official letter from the federal government.  The letter is from CMS, which stands for Centers for Medicare and Medicaid Services.

The letter says that their Cost Plans ARE ending this year!!  About 38,700 people received this letter from CMS.

Talk about an emotional roller coaster!   What gives?

Good news –  that letter from the government to people with Blue Cross Cost Plans in those 21 counties, which sated that these Cost Plans will end, was a MISTAKE.    False alarm.    “Never mind…”

The Cost Plans in these counties will actually continue for next year, 2019:

Aitkin, Cook, Carlton, Goodhue, Itasca, Kanabec, Koochiching, Lake,  LaSueur, McLeod, Meeker, Mille Lacs, Pine, Pipestone, Rice, Rock, Sibley, St. Louis, Stevens, Traverse, and Yellow Medicine.

However, 2019 is very like to be the last year, for real.  That’s a topic for another day, a year from now.

Did the Government really make a mistake with those letters?

A Minneapolis Star Tribune article states that the mistake was caused by Blue Cross Blue Shield of Minnesota, which goofed up and sent these people’s names to CMS, along with all of the names of people elsewhere in the state who ARE in fact losing their Cost Plans.

Most of the people who are losing their Cost Plans at the end of this year are in the Twin Cities area – over 200,000 of them.

All of them have to pick something different, either a Medicare Supplement policy or a Medicare Advantage policy.   Many of these people, especially snowbirds and others who spend a lot of time out of state, will likely want the Medicare Supplement policies, which give them good coverage across the country.

The Medicare Advantage Plans do not have good coverage out of state.

Normally, you can only get on a Medicare Supplement policy when you first turn 65;  or later on, only if you are in very good health and pass the insurance company’s medical screening.

However, for the people losing their Cost Plans, an exception is being made and they will be allowed to choose a Medicare Supplement policy if they wish.

To learn more about the differences between Medicare Supplement and Medicare Advantage policies, see our Medicare Consumer Blog post of May 7.

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Medicare and Dental, Eye, and Hearing Care

September 3, 2018     About this blog:  click here

Medicare and Dental, Eye, and Hearing Care

Everyone knows that Medicare pays towards doctor and hospital bills, but what about some of the other kinds of care most people need?  Let’s talk about Dental, Eye, and Hearing care.

You might be used to getting these things covered by health insurance before you get on Medicare, but things are different once you are on Medicare.

First we’ll look at what things are required by federal Medicare coverage, and then we’ll talk about what things you might get as part of an insurance policy you buy to go along with your Medicare.

  1. Benefits covered by the government’s Medicare program:

The general rule is that Medicare will pay for things that are deemed “medically necessary,” and will not pay for things which aren’t deemed as such.

Dental Care

Medicare does not pay anything for routine dental care, exams, cleanings, repairs, or dentures.

Medicare Part A does pay for some dental work in a few special circumstances which are treated in a hospital, such as emergency teeth reconstruction from an accident, or extraction of teeth that is needed due to medical disease.

Eye Care

Medicare pays for treatment of medical conditions and diseases of the eye, such as glaucoma, cataracts, macular degeneration, and others.  These medical eye problems are treated by an MD ophthalmologist, in a clinic or hospital.

However, Medicare does not pay anything towards the “routine” eye care of getting your vision checked (refraction) for corrective lenses.  It also will not pay anything towards the frame and lenses.

There are a couple of exceptions to this:  Medicare Part B will cover an annual eye exam once a year, if you have diabetes or are at high risk for glaucoma.  That’s in order to monitor a potential disease that can easily occur.

Also, if you have cataract surgery, Medicare will pay for one set of eyeglasses (standard frame) and the corrective lenses to restore your sight to normal.

Hearing Care

This one is simple.  Medicare does not pay anything towards getting your hearing checked, or for hearing aids.  These services are usually provided by audiologists.

The exception is that if your medical doctor thinks there could be something medically wrong with your ear, she/he can authorize a medical exam of your ear, and Medicare will pay towards it.  This can include checking the condition of your inner ear which can cause problems with balance.

  1. Benefits you can get with an insurance policy to supplement your Medicare:

Even though there are big gaps in what your government Medicare benefits are for teeth, eyes and ears, you can find some coverage for these things in an insurance policy you buy to supplement your Medicare.

The two main kinds of policies are Medicare Supplement policies, and Medicare Advantage policies.

Depending on where you live, there will be varying choices of different policies.  There is no requirement that any of them provide routine dental, eye or hearing care.  But, some do.

All of this means that you need to look closely when you shop for a policy.  Each policy you consider  might cover none of these three areas;  or one of them;  or two of them; or all three of them.

Medicare has a web site, www.medicare.gov   You can go to the section to compare Medicare insurance policies.  Enter your zipcode, and you’ll get information on what is available where you live.

In Minnesota, the Board on Aging has an on-line booklet, which you can reach here:

The booklet is called “Health Care Choices for Minnesotans on Medicare,” and for each policy listed, it tells which Minnesota counties it available in.

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