(October 7, 2024) - "Medicare Advantage (MA) plans, also known as Medicare Part C, are health insurance alternatives offered by private companies authorized by Medicare and distributed through independent insurance brokers," stated professional fiduciary and certified elder law Attorney RJ Connelly III. "These plans present seniors with a substitute for traditional Medicare by integrating coverage for hospital stays (Part A), medical services (Part B), and often prescription drug coverage (Part D) into a single plan."
This approach enables beneficiaries to access their Medicare benefits through a private insurer, providing supplemental benefits and potential cost-saving features compared to traditional Medicare. In addition to the coverage provided by traditional Medicare, Medicare Advantage plans frequently offer reduced out-of-pocket expenses and extended coverage for services such as vision, hearing, and dental care -- but there is a significant downside. Medicare Advantage plans typically necessitate using in-network providers and acquiring a referral to consult with specialists. In contrast, the original Medicare system allows more flexibility in selecting healthcare providers.
"Independent health insurers offering Medicare Advantage plans have the potential to yield substantial profits from these plans, which has led to accusations of fraud and waste," said Attorney Connelly. "And in pursuing these profits, some unscrupulous brokers and their employing companies have engaged in unethical and fraudulent practices to enroll patients in private Medicare plans."
The prevalence of press coverage highlights the growing concern of Medicare Advantage companies and their agents misleading seniors. Some marketers of Medicare Advantage plans have been found to disseminate inaccurate information through television advertisements and mailings. Specifically, some providers have made misleading claims, such as promising an increase in Social Security benefits upon transitioning to a Medicare Advantage plan, without offering a clear explanation.
At this time every year, Connelly Law has in-depth conversations with seniors about their Medicare Advantage plans, the overwhelming amount of information they receive, and the potential unexpected expenses if they choose the wrong plan. This is often in response to seniors receiving promotional materials from companies that contain misleading or contradictory information.
Howard's Story
Howard, a retired insurance professional from the Cape region of Massachusetts, told us of his frustration with insurers constantly bombarding him with advertisements promoting Medicare Advantage plans. Despite his preference for traditional Medicare, which grants seniors the freedom to choose their healthcare providers and receive care without interference from large insurance companies, his mailbox is full of solicitations beginning in late September from Medicare Advantage plans.
His primary concern regarding the deluge of advertisements is their misleading information. "Many of the ads fail to disclose the limitations of coverage under Medicare Advantage plans or the potential downsides of switching from traditional Medicare," Howard told us. "I firmly believe that insurance companies are intentionally misleading and manipulating seniors with their Medicare Advantage marketing strategies to gain control over the healthcare system, rather than treating us with the respect and transparency we deserve."
In 2023, a significant milestone was reached as more than 50% of senior citizens were enrolled in privatized Medicare Advantage plans. It's important to note that the marketing strategies for these plans often minimize the challenges associated with transitioning back to traditional Medicare after enrolling in Medicare Advantage. Additionally, the marketing materials may not always clearly communicate the closed provider networks and the requirement for prior authorization for medical procedures. Instead, the focus tends to be on the supplementary benefits of Medicare Advantage plans, such as gym memberships, discount cards, free groceries, and free over-the-counter pharmaceutical supplies. These benefits are especially attractive to seniors facing financial difficulties and coping with high living costs, including increased property tax rates, high energy costs, and soaring food expenses.
Howard strongly believes that the incessant advertisements for Medicare Advantage plans are driven solely by the insurance industry's pursuit of profits. "In my opinion, as a former insurance professional, these ads focus on enriching the companies' top executives rather than genuinely serving the needs of individuals," he said. "Whenever I get this mail or see the ads on television, I see them as intentionally deceptive and designed to exploit seniors for financial gain. I'm convinced that the insurers behind Medicare Advantage plans actively attempt to deceive individuals in pursuit of their financial interests."
Howard's viewpoint resonates with numerous professionals who work closely with seniors and individuals with disabilities. These professionals have accumulated substantial experience helping seniors navigate enrollment periods, and they have observed that seniors are frequently exposed to deceptive advertisements and misleading promises. Moreover, the recent legal settlement with the Cigna Group validates these concerns, providing concrete evidence that these issues are prevalent and impactful.
A Case of Abuse
In July of this year, the Cigna Group was found to have exaggerated its members' health conditions to receive higher government payments through the Medicare Advantage program. This was achieved through in-home health risk assessments and chart reviews, leading to the submission of unsupported diagnoses and increased Medicare payments.
The Department of Health and Human Services' Office of Inspector General (HHS-OIG) discovered that these practices could result in billions of dollars in annual improper payments by Medicare Advantage Organizations. In the case of Cigna, 70% of the reviewed diagnosis codes lacked proper support from medical records.
In response, Cigna settled with the government, agreeing to pay $172 million to reimburse overcharged Medicare payments and settle fraud allegations. Additionally, a recent report highlighted that the federal government may lose as much as $140 billion annually by subsidizing private Medicare Advantage plans. The report emphasized the exploitation of the publicly funded national health insurance program by private insurers, leading to increased costs for seniors and potential denial of care for vulnerable patients.
The report suggested that redirecting the funds to subsidize Medicare Advantage plans could save seniors' costs. By revising the current payment structure, seniors could potentially save over $1,800 annually in fees deducted from their Social Security checks. The report brought attention to the fact that private Medicare Advantage insurers are profiting at the expense of seniors, many of whom heavily rely on their Social Security benefits.
Further, research from the Medicare Payment Advisory Commission (MedPAC) indicates that Medicare Advantage programs have not resulted in savings since its establishment in 2003. Medicare Advantage plans receive a flat payment for their care, incentivizing insurers to limit care, leading to high rates of claim denials, worse health outcomes, and administrative burdens for providers.
Getting Help
"I highly recommended seeking assistance from your local State Health Insurance Assistance Programs (SHIPs) to ensure that you are making the most suitable choice for your specific situation," stated Attorney Connelly. "These programs provide free and impartial health insurance counseling and support to individuals eligible for Medicare, as well as their families and caregivers."
SHIP counselors are extensively trained and certified to guide comprehension of Medicare, Medicare Advantage, Medicare prescription drug coverage, supplemental insurance options (Medigap), and long-term care insurance. Additionally, they can facilitate referrals to agencies such as the Social Security Administration and State Medicaid offices for further assistance when necessary.
A Final Word
"The substantial financial gains from Medicare Advantage plans have resulted in the federal government overpaying private companies by as much as $140 billion annually," stated Attorney Connelly. "This has driven the adoption of aggressive and, at times, unethical marketing strategies. The preferential treatment and higher per-beneficiary compensation provided to Medicare Advantage, as opposed to traditional Medicare, create favorable conditions for fraud. Coupled with the significant profits realized by insurance companies, this incentivizes these entities to employ all available avenues to maximize enrollment. Our next blog will explore the profits insurers accrue when enrolling new customers in Medicare Advantage plans."
Please note that the information provided in this blog is not intended to and should not be construed as legal, financial, or medical advice. The content, materials, and information presented in this blog are solely for general informational purposes and may not be the most up-to-date information available regarding legal, financial, or medical matters. This blog may also contain links to other third-party websites that are included for the convenience of the reader or user. Please note that Connelly Law Offices, Ltd. does not necessarily recommend or endorse the contents of such third-party sites. If you have any particular legal matters, financial concerns, or medical issues, we strongly advise you to consult your attorney, professional fiduciary advisor, or medical provider.
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