What a Surprise
It appears that the for profit Medicare Advantage insurance companies are systematically defrauding customers and the government.
This is business as usual when for profit companies are given a role in running basic government services. It’s also why for profit companies should never be given a role in running basic government services.
Kathy Ormsby’s work auditing medical case files uncovered an alleged scheme to defraud the federal government: The California health system that employed her was scouring health histories of thousands of elderly Medicare patients, then pressuring doctors to add false diagnoses it found to their current medical records.
The point of larding the medical records with outdated and irrelevant diagnoses such as cancer and stroke — often without the knowledge of the patients themselves — was not providing better care, according to a lawsuit from the Justice Department, which investigated a whistleblower complaint Ormsby filed. It was to make patients appear sicker than they were.
The maneuver translated into millions of dollars in inflated bills to the federal Medicare Advantage insurance program, the government alleged in its false-claims lawsuit filed in U.S. District Court in California.
Ormsby’s former employer, the Palo Alto Medical Foundation, which has 1,600 doctors, and its parent affiliate, Sutter Health, which runs 24 hospitals in Northern California, settled the case with the government in August 2021 for $90 million. It admitted no wrongdoing or liability.
A quick wiki reveals that it had over 2 million visits in 2008. If you figure that the fraud was going on for 5 years, that fine comes down to just a cost of doing business.
The government said its investigation confirmed that Palo Alto Medical and Sutter systematically added false diagnoses to patient records. In a sample of hundreds of cases Ormsby audited, the government’s lawsuit said, she discovered 90 percent of diagnoses for cancer were invalid, as were 96 percent for stroke and 66 percent for fractures.
Those numbers are truly staggering.
Medicare Advantage, which is run by outside companies under contract with the government, was added to traditional Medicare in 2003 with the support of Republicans in an effort to improve care and lower costs through privatization. But it is costing taxpayers increasingly more money to run than traditional fee-for-service Medicare, according to MedPAC, a government watchdog panel. The higher cost, what MedPAC labels “excess payments,” reached $12 billion in 2020 out of total program costs of $350 billion and are projected to top $16 billion next year, MedPAC said in March.
The aggressive billing tactics stem from incentives built into Medicare Advantage. Under the program, companies are paid a flat fee per month to provide whatever care is required for a patient based on age, gender, geography and health risk factors. To compensate plans and providers for potential costs of care for individual patients with conditions such as diabetes, heart disease or cancer, Medicare boosts the monthly payment to Medicare Advantage plans under a “risk adjustment” for each additional condition. The system differs from the traditional “fee for service” payment, in which Medicare pays hospitals and doctors directly each time they provide a service.
Of course Republicans adopted this idea. It increases the opportunity for fraud, and the fraudsters will favor Republicans with campaign donations, and it makes Medicare increasingly untenable from a financial perspective.
For-profit insurance companies have typically been the primary target of these probes. More recently, unsealed whistleblower cases such as Ormsby’s against Sutter Health, and a pending case against Kaiser Permanente, reveal how such investigations have spread to prestigious, nonprofit physician and hospital groups.
This is why single payer is simply not enough, we need to go with government owned healthcare, and not just single. The profit motive has so completely distorted the practice of medicine that it is a petri dish for fraud. (Pun not intended)