Medicare Advantage, insuring 1 million

Medicare Advantage, insuring 1 million patients in North Carolina, faces new challenges to costs, practices

The popular Medicare Advantage program, known for attractive perks — yet questioned for some policies — is facing a recent series of critiques over its practices and cost to the U.S. budget.

It’s part of what might be called a battle for Medicare’s heart and soul being fought by powerful interests in North Carolina, where hundreds of thousands have enrolled for the plan, and beyond.

The privately managed Medicare Advantage portion of Medicare is the subject of broad differences of opinion over its cost — including, regulators say, an eye-popping $15 billion in excess payments made in 2021.

Recently announcing a new set of rules that have been years in the making, the Centers for Medicare and Medicaid Services said that it would conduct audits of past payments based on questionable practices by companies that provide the popular Medicare Advantage plans.

The extra costs of Medicare Advantage to treat beneficiaries are so high, analysts say, that they threaten the financial health of the entire system.

In 2021, Medicare’s costs rose to $900 billion, and estimates are that as soon as 2028, the program’s hospital insurance fund — out of which Medicare hospital benefits are paid — could become insolvent. So, eliminating extraneous costs is becoming imperative.

Medicare pays more for patients listed with more serious conditions, but regulators say some of the additional costs aren’t warranted because the payments were based on intentionally inaccurate diagnoses reported by Medicare Advantage insurers.

Upcoded” patients bring more cash

What’s underway in Washington, D.C., is a discussion of whether insurance companies should be able to use Medicare Advantage policies to charge taxpayers more per beneficiary.

An analysis by the federal inspector general of the Centers for Medicare and Medicaid Services of payments to traditional Medicare and Medicare Advantage showed that the privately managed versions overcharged taxpayers $15 billion more in 2019 for the same level of services as those provided by fee-for-service Medicare.

First designed in the 1980s as a path to innovation in traditional fee-for-service Medicare, Medicare Advantage now serves about half of North Carolina’s 2.1 million Medicare enrollees — and about the same portion nationwide, in part with basic dental and vision care and perks such as gym memberships.

Traditional Medicare, still used by about half of North Carolina people eligible for the program, takes a fee-for-service approach to provide health care to older people, in which practitioners get paid each time they provide a service, run a lab or examine a patient.

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