Insurance companies that run Medicare Advantage plans were overpaid by as much as $3.1 billion in 2010, according to a report by the Government Accountability Office.

Medicare Advantage plans receive payments from Medicare for each person enrolled with them.  In Arizona, the payments start at around $800 per month per person. Medicare Advantage plans also receive additional payments for members who have health problems and cost the plan more money.  This is called “risk adjustment”.  Apparently there were some miscalculations (by the government or by the plans?) and so Medicare paid out billions of dollars in overpayments to Advantage plans in 2010.

A Bloomberg news report on the overpayments included the following paragraph:

Medicare Advantage patients often receive superior care to those in traditional Medicare, so “conclusions about whether the MA payment system appropriately pays plans should therefore not be based on GAO’s analysis,” said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, a Washington trade group, in an e-mail.

A false statement:

“Medicare Advantage patients often receive superior care to those in traditional Medicare, ….”

Where did that line originate? Was it the reporter or the spokesperson for the insurance trade group? There may be a few Advantage plans that provide “superior care”, but not many – and that statement is false and misleading.

Most Medicare Advantage plans are just insurance companies that pay bills.  They don’t offer any “superior care”, they just pay the doctors, hospitals, labs and other providers.  Advantage plans are known as “coordinated care plans”, but this is mainly because they have a defined network of providers and their members must get a referral from their primary care physician.  In fact, Advantage plans routinely refuse tests and services ordered by doctors because a panel of experts employed by the plan have deemed the service to be unnecessary – decisions doctors can and do dispute.

According to the Bloomberg article:

Enrollment in Advantage plans was about 11 million people in 2010, or about 24 percent of total Medicare beneficiaries, according to the Kaiser Family Foundation, a nonprofit research group in Menlo Park, California. The U.S. paid about $114 billion to Advantage plans in 2010, according to the GAO. Medicare cost an estimated $525 billion, according to the Centers for Medicare and Medicaid Services.

In Arizona, enrollment in Medicare Advantage is quite high among people covered by Medicare:  Maricopa County: 44%; Pima County: 45; Pinal county: 49%

If a person is unhappy with their Medicare Advantage plan, there is a way to get out of it, and that is called the Medicare Advantage Disenrollment Period (MADP). The MADP runs from January 1 through February 14th. After that, most people are “locked into” their Advantage plan for the rest of the year. (See the exceptions to this rule below.)

During the MADP, a person enrolled in a Medicare Advantage plan (MA) may disenroll from that MA plan and return to Original Medicare.

During the MADP, people cannot switch to another MA plan. Their only option during this period is to go back to Original Medicare. Then they are eligible for a Special Election Period (SEP) to enroll in a stand-alone Part D plan (PDP).

Most people enrolled in Medicare Advantage plans are locked into their plans for the rest of 2012 – unless they take advantage of the MADP. But some people can change their Medicare Advantage plan – if they have certain chronic illnesses, or if they get help with their drug costs.

When someone who is already in a Medicare Advantage plan calls me for help, I ask if they have Diabetes, heart disease, or chronic breathing disorders such as asthma, COPD, and a few other conditions.  If they say “yes”, then they can take a look at one of the chronic illness plans.

I also ask people what they pay for their prescriptions. If they pay $2.60 for generics or $6.50 for brand drugs, I know they have the “LIS” (low income subsidy), and I know they have the option to change their Advantage plan at any time during the year.

Advice for people who are thinking about using the Medicare Advantage Disenrollment Period:  Make sure you can get a Medicare supplement when you drop your Medicare Advantage plan.  If you have health problems, you can be refused a Medicare supplement policy, and then you will have only Medicare. Medicare alone is not very good coverage – especially if you have a chronic illness, are diagnosed with cancer, or have a serious illness that requires surgery and/or a lengthy hospital stay. You will be responsible for 20% of your medical bills (beyond what Part A of Medicare covers) and that can add up to thousands of dollars with no end in sight.

According to a press release from Medicare today:

The Centers for Medicare & Medicaid Services (CMS) is investigating an alleged fraudulent scheme to enroll about 900 Arizona Medicare beneficiaries in different Medicare Advantage health plans without their consent.

Under the scheme, Medicare beneficiaries enrolled in Medicare Advantage health plans sponsored by Health Net and two other companies were switched without their consent to Medicare Advantage plans sponsored by United HealthCare. Most, if not all, of the switches are alleged to have been made by the same sales agent. Agents typically receive commissions of about $200 for every new member they enroll in a Medicare Advantage plan. Most of the affected beneficiaries were enrolled with Health Net during 2011, although some were members of Humana and CareMore plans.

CMS advises Medicare beneficiaries who suspect they may have been switched without their permission to call 1-800-MEDICARE (1-800-633-4227) and report their concerns. All affected beneficiaries will be re-enrolled in the plan of their choice with no interruption in medical coverage.

Word on the street is that an independent agent, who previously worked for Health Net, allegedly enrolled 900 current and former clients in the AARP Medicare Complete Medicare Advantage plan.  Allegedly, this agent was able to make these 900 enrollments online using a UnitedHealthcare website.  The website allows Medicare beneficiaries to fill out an application online and put in their insurance agent’s id number so the agent gets credit for the enrollment. But this is only supposed to be done after a meeting with the agent to review the details of the plan, including drug coverage.

I have heard from one insurance broker who got calls from several clients asking why they had received an id card from the AARP Medicare Complete plan when they had no desire to change from Health Net. The broker contacted Health Net and was told there was an ongoing investigation.

It looks like they didn’t have to look very far to find a hot trail of 900 online enrollments, each with one agent’s id number (allegedly).

One has to wonder how a person in their right mind could think they would get away with changing 900 people to another Medicare Advantage plan without their consent!!  Insurance agents and brokers are required to take annual training classes during which they are warned about the seriousness of Medicare fraud and the penalties involved, which include $25,000 fines for each incident as well as jail time.

Medicare already hates insurance agents and thinks they are all out to take advantage of seniors. Certainly there are some bad apples among insurance agents/brokers, but most are ethical and very helpful to their clients. This is one rotten apple (allegedly) who could spoil the Medicare barrel for everyone.

UPDATE as of January 10:  I have heard through the grapevine that United noticed the high enrollment numbers by one independent agent.  United supposedly confronted the independent agent who denied any wrongdoing. When the high numbers continued, United stopped commission payments and alerted Medicare about the problem.  But because the enrollments were done electronically/on-line, they went right to Medicare, and United couldn’t stop them.

I also got a call yesterday from KVOA channel 4, and it looks like they are starting their own investigation into this news story.  Apparently, a person who was a victim of this plan change fraud called KVOA around Christmas to ask that a news story been done about this incident. KVOA now has the time to investigate this, so we may see this story get some air time soon.

UNITEDHEALTHCARE  has asked that I include the following statement in this post:

Immediately upon being alerted to this third party agent’s conduct, we notified the appropriate authorities, investigated the matter and then terminated the agent.   Such conduct is not acceptable.   As importantly, all affected beneficiaries will be re-enrolled in the plan of their choice with no interruption in their medical coverage and we apologize for any inconvenience that may have occurred. Any  Medicare beneficiary who suspects they may have been switched without their permission should call 1-800-MEDICARE (1-800-633-4227) and report their concerns.

Thank you.

Matt Burns

Spokesman for UnitedHealthcare’s Medicare business