Medicare Advantage Plans - Waste, Abuse, and Artificial Intelligence Making Decisions
by Don Drake, Connelly Law Offices, Ltd.
"In late December of 2022, the Atlantic ran an article about the concerns with Medicare Advantage Plans, first created in the 1990s that allowed seniors to obtain insurance coverage through several private companies that receive payments to offer services that are comparable to Medicare," said professional fiduciary and certified elder law Attorney RJ Connelly III. "This program was implemented with bi-partisan support to allow retirees more flexibility in managing their medical choices. It was also supposed to save money for taxpayers, but according to those in the industry, Medicare Advantage is now loaded with waste and abuse, with private insurers taking full advantage of the wide-open loopholes in the program that allows them to overcharge the government."
Rife with Waste and Abuse
The Atlantic also stated that in 2022, government reports documented how Medicare Advantage plans to rake in billions of extra dollars from the federal government by describing their patients as sicker than they are and classifying certain conditions and treatments as more serious. The reports concluded that Medicaid Advantage plans cost three percent more per recipient than traditional Medicare. "And that cost was after the Affordable Care Act reduced the amount of annual overpayment to insurers," said Attorney Connelly.
But they have provided significant benefits before we try to flush Medicare Advantage plans down the proverbial commode. "The numbers show that seniors enrolled in these plans are more engaged in preventive healthcare," stated Attorney Connelly. "For instance, they are more consistent in seeing their primary care provider and actively seek prevention services like flu vaccines and cancer screenings and pay attention to their physician's suggestions around diet and exercise. They also have lower rates of hospital readmissions and face less difficulty obtaining prescription medication."
However, those who study government waste say these advantages do not justify the federal government overpaying Medicaid Advantage providers, especially given that the senior population entering Medicare will rise dramatically by 2030. "Making matters worse, the growth predicted will also correspond to the continued increases in the cost of healthcare and Medicaid Advantage spending, further compounding the waste," said Attorney Connelly.
But there are other ways that Medicaid Advantage Plans "game the Medicare system," according to The Atlantic. They explain:
"Medicare Advantage also has a serious design flaw that prevents the government from saving money. To determine how much to pay an insurer through Medicare Advantage, the federal government establishes a “benchmark” premium in every participating county based on the average spending per senior for traditional Medicare in that county. Medicare Advantage insurers then bid against the benchmark. If an insurer’s proposed premium is less than the Medicare benchmark, the insurer gets a rebate from the government—money that can be used to lower premiums and co-pays, or to offer benefits not available in traditional Medicare, such as hearing, vision, and dental services. This rebate arrangement prevents the government from reaping the savings from MA plans’ lower costs and premiums. MA plans then can attract additional seniors with hearing, vision, and dental benefits, which in turn increases private insurers’ revenue and profits. This bidding arrangement also prevents price competition among the MA plans, which would add to government savings.
MA plans get extra government payments if they enroll patients who are sicker than the average Medicare beneficiary. This “risk adjustment” payment makes sense; sicker patients generally cost more to treat than healthier ones. But this structure also creates perverse incentives for insurers to make their enrollees look sicker than they really are."
Artificial Intelligence Making Healthcare Decisions
"We discussed the history of Medicare Advantage and the financial waste associated with these plans," said Attorney Connelly. "But a recent article in STAT News reports that companies are looking to line their pockets even more by using Artificial Intelligence (AI) to deny life-saving services to their enrollees. It is a problem that will continue to grow."
Attorney Connelly is speaking about a story written by Bob Herman and Casey Ross of STAT News that highlights this issue. Our last two blogs covered what could happen when we remove the human touch from care. Now, we see this in action as AI makes decisions without considering the human being presenting with the health issue.
The STAT News article was clear: Medicare Advantage companies are now taking the human process out of the healthcare coverage decision-making process by allowing a computer, specifically Artificial Intelligence, to decide who and what is covered.
Medicare Advantage companies use Artificial Intelligence (AI) to deny lifesaving and quality-improving services to their enrollees needing costly care. Without appropriately considering the patient’s health status, these plans restrict nursing home care and physical therapy, delaying critical cancer care and more. The more they do, the more they profit. Consider this case cited by STAT News:
Security Health, a Medicare Advantage plan, refused to cover more than 17 days of nursing home care for an 85-year-old woman with a fractured shoulder and uncontrolled severe pain. The Medicare Advantage plan said she could go home, even though it was unsafe for her to do so. She could not perform any activities of daily living without assistance, and she lived alone.
"In the end, a federal court found that Security Health was financially responsible for the weeks of care the woman had to pay out of her pocket," said Attorney Connelly. "Thankfully, this woman had people in her corner who helped her appeal the decision made by Security Health, but few people take this action and end up spending what little money they have for such care."
In their article, STAT found that denials like this are growing due to the use of AI. And Medicare Advantage plans face no penalty for these horrific inappropriate denials. Instead, the enrollee faces severe penalties and is forced to pay for life-sustaining care out of pocket or to go without medical services.
"The Center for Medicare and Medicaid Services is not currently overseeing the algorithms the AI uses to deny and delay care without considering the needs of the individual who is very sick," stated Attorney Connelly. "Yes, the patient has the right to appeal denials, which can often take years. Once it is resolved, the patients have died or are gravely ill."
With the companies programming their own algorithms designed to make maximum profit, and because they lack federal oversight, the problem will continue to worsen. The MA plans want as many denials and delays as possible to continue lining their pockets. "Enrollees are seen as tokens on a board to be moved in ways that enrich these providers," said Attorney Connelly. "They do not consider the human toll AI takes on the patient and their families."
The Stat reporters point out that the FDA must approve AI products designed to detect cancer or recommend treatments. But Medicare Advantage plans can use AI tools to decide whether care is warranted and to pay for a procedure. Not surprisingly, MA plans deny care covered in traditional Medicare–which they are required to cover–often without speaking with the patient’s treating physicians.
The Centers for Medicare and Medicaid Services, which oversees Medicare, has proposed new rules to prevent Medicare Advantage plans from denying coverage “based on internal, proprietary, or external clinical criteria not found in traditional Medicare coverage policies.” If those rules are finalized, it’s unclear whether the Medicare Advantage plans could use AI tools to deny care.
"I have had one client tell me that they were happy with their Medicaid Advantage plan, stating that they were receiving free over-the-counter health and wellness supplies monthly," said Attorney Connelly. "But, when she really needed coverage for a severely broken arm that needed a surgical procedure because it was not healing appropriately, she was denied some testing procedures that took months to wind through the appeal process. Her words were me were, 'I got the freebies but when I really needed them, I got nothing but a run-around.' Let's hope that federal oversight of AI programs in healthcare insurance comes quickly so our seniors can get the care they rightfully deserve."
