Medicare Advantage Giants Over-coding, Stock Buy Backs, and Salaries
I have been hitting the issues with FFS Medicare vs Medicare Advantage hard. Primarily, Medicare Advantage is draining Medicare funding due to the $billions being spent due to over-coding. Twelve $billion of over-coding charges in 2020. Another $15 billion of over-coding charges in 2021. CEOs are raking in higher salaries due to the preferential treatment the Medicare Advantage plans receive from Congress and CMS. Over-coding is just one of the issues.
Senate Dems Blast Medicare Advantage Giants Over ‘Exorbitant’ CEO Pay, (commondreams.org), Jake Johnson
Sens. Elizabeth Warren and Jeff Merkley are calling attention to the massive profits and “exorbitant” executive salaries of top Medicare Advantage insurers such as UnitedHealthcare and Humana, which are leading a lobbying blitz against efforts to combat widespread fraud in the privately run healthcare program. It is an easy read, not to complex, and it gets to the point.
“In 2022, the seven major Medicare Advantage health care insurers, United Healthcare, CVS/Aetna, Cigna, Elevance Health, Humana, Centene, and Molina brought in revenues of $1.25 trillion. Equally impressive is their reporting total profits of $69.3 billion, a 287% increase in profits since 2012.”
Democratic senators wrote the details in recent letters to the companies’ CEOs, citing an analysis by Wendell Potter of the Center for Health and Democracy.
“But rather than investing in benefits for patients,” they added, “these seven health insurers instead spent $26.2 billion on stock buybacks.”
AB: To put this into perspective. In 2020 and reported in Chapter 12, page 439 of the 2022 MedPac report. “Coding differences increased payments to MA plans by $12 billion in 2020.” And this is just one year. I am sure all the big-wig CEOs and Board Chair People were trembling in their chairs. They were scared so much Congress gave them three years to adjust to Congressional demands. Meanwhile, we are footing the bill.
Warren (D-Mass.) and Merkley (D-Ore.) also highlighted the “extraordinary salaries” of the insurance giants’ CEOs and other top executives. Brian Thompson, who became UnitedHealthcare’s CEO in 2021, brought home nearly $10 million in total compensation that year, according to SEC filings.
Humana chief executive Bruce Broussard raked in more than $17 million in 2021.
The letters were sent Wednesday as the insurance industry continues to ramp up its attacks on Biden administration proposals aimed at reining in upcoding and other tactics that Medicare Advantage plans use to reap larger payments from the federal government, which funds the program.
Critics of Medicare Advantage argue such overpayments, topping $15 billion in fiscal year 2021 alone, are “depleting the Medicare Trust Fund” at the expense of patients. The same patients who are frequently denied medically necessary care.
AB: Hmmm, Twelve $billion of over-payments in 2020 and $15 billion in 2021. Approximately half of Medicare is funded by taxes outside of the Medicare tax.
“MA plans are consistently paid more for seniors’ care,” Warren and Merkley noted, “and MedPAC projects that total Medicare payments to MA plans in 2023 will be $27 billion higher than if MA beneficiaries were enrolled in traditional Medicare.”
“Rather than investing in benefits for patients, these seven health insurers instead spent $26.2 billion on stock buybacks.”
Even though the Biden administration’s proposed reforms would still leave Medicare Advantage plans with payments that are around 1% higher per enrollee in 2024 compared to this year, the insurance industry has characterized the changes as a cut and warned that their implementation would lead to higher premiums and worse care for beneficiaries.
AB: Higher premiums and worse care for beneficiaries? I am hoping someone got this wrong and they really did not say this.
In their letters, Warren and Merkley accused the for-profit insurance industry of attempting “to scare seniors and people with disabilities into opposing changes that will reduce waste, fraud, and abuse” in Medicare Advantage.
As The New York Times reported earlier this week, “Medicare officials have been inundated with more than 15,000 comment letters for and against the policies, and roughly two-thirds included identical phrases from form letters.”
“Insurers used television commercials and other strategies to urge Medicare Advantage customers to contact their lawmakers,” the Times added. “The effort generated about 142,000 calls or letters to protest the changes, according to the Better Medicare Alliance, one of the lobbying groups involved.”
That group—which counts Aetna, Humana, and other insurance giants as “ally organizations“—purchased a Super Bowl ad urging the White House not to “cut” Medicare Advantage:
Warren and Merkley voiced outrage that Medicare Advantage insurers would respond to the Biden administration’s proposed policy changes by threatening “actions that hurt seniors“—such as premium hikes—”instead of reducing exorbitant salaries or the massive payouts to your shareholders and executives.”
“It is outrageous that industry groups, on your behalf, are putting your plan’s enormous profits “in their pockets” over care for seniors,” the senators wrote to the insurance company CEOs.
What is outrageous? The Medicare Advantage Corporations have been over coding for years. CMS has not had the backbone to call them to the table and force them into compliance. Each year Medicare Advantage plans underbid on the next year’s care. CMC plans a payment a percentage over their bids for each patient. When the care is administered, they over code. Or they may deny care or delay care.
Reference Material
Medicare Advantage has Overcharged FFS Medicare by Billions for Years, Angry Bear, angry bear blog
Aggregate Medicare payments to Medicare Advantage plans, Angry Bear, angry bear blog
Why is CMS Overpaying Medicare Advantage Plans? Angry Bear, angry bear blog
Medicare Advantage and Medicare Issues, Angry Bear, angry bear blog*
Medicare Part C Improper Payment Measurement (IPM), CMS
Error Rate Findings and Results, CMS
High-Priority Programs, paymentaccuracy.gov
Taking Stock of Medicare Advantage: Risk Adjustment, Commonwealth Fund
Nonprofit Hospital CEO Compensation: How Much Is Enough?
Health Affairs – February 2022
… Last year, a hospital technician whose take-home pay was $30,000 per year contracted COVID-19 on the job. Upon his return to work, he was named employee of the month and given a $6 gift voucher for the hospital cafeteria. The hospital system CEO—who was not on the frontlines of COVID-19—received a 13 percent boost in his total compensation, which was worth $30.4 million. …
(Hospital CEOs generally get extremely high salaries. CEOs generally get very high salaries.
Back when I was a school board member, we were told by the Principal/Supervisor’s Finance chief – also well paid – that her boss did not get enough respect unless she was paid -way more- than any of the teaching staff. So it goes.)
oh, heck. you’ve convinced me. i’ll only pay myself nine million next year. hmm, yeah. it’ll be tough, but i think i can get by on that.
but i may lose respect from my peers.
The previous president of my alma matter RPI was paid an enormous salary, record-setting at times. When alumni complained about this, the chairman of the Board of Trustees allowed as how she was worth it because supporting corps (IBM, GE, United Aircraft, etc) thought very highly of her. I guess she was thought to deserve what the CEOs of those corps were paid.
She presumably agreed. “All of us are equal. Some are more equal than others.”
Dobbs
i oughta stay out of this because my opinion is different from my question which i know will cause confusion. but
is your objection (are you objecting?) because she makes too much money, or because you think “inequality” is bad (bad for the country, or just an affront to cosmic justice), oor because you think she is taking money away from you or someone who needs it more.
i ask because i don’t think her high pay is hurting anyone. at some level (I think) you pay the school and the school pays her (or the corporations pay the school?). you don’thave to pay her…you could go to another school. but if for some reason you think the school is worth the price…then who is hurt by her making so much?
in general i have the same feeling about the super-rich and the less-rich who make a great deal more than i do. if a guy makes a million dollars a year selling something for a dollar profit to a million people…then who is hurt. the people want the something he is selling enough to pay for it. so who is hurt?
there are two objections to this line of reasoning. the first is that the sellers of healthcare and mortgages are crooks. they are actually stealing money from customers who have no choice. unless you think the healthcare businesses are selling you a longer life…which you may think is worth paying for…though you (and I) resent having to pay so much just so they can piss in a golden urinal. (this is price gouging and has always been considered a crime even if it isn’t against the law.
the second objection is that the price gougers and the predatory banks and corporate renters get so rich that they can buy the laws (that is, buy the Congessmen) that make them richer and us poorer, and some so miserably poor that it offends the conscience…for those of us who have such a thing.
anyway, i am wonderig how you sort it out, because i think i do see a lot of people “demanding” equality when they have no idea what they are talking about,,,it’s just the latest soundbite from the Left…an appeal to envy, which is a bad thing (for the person suffering from it)…no more, or not much more, than the soundbites from the insane and criminal Right.
i think it is also an appeal to greed, which the Left would be surprised to know it suffers from as much as “the rich.”
[on the other hand, it may be necessary for a little envy and greed on the Left to power a fight against greed if not envy (though a little fear) on the Right which would otherwise eat the poor entirely.]