Defrauding Medicare

Many insurance companies make most of their money administering Medicare and Medicare Advantage plans. Many also defraud the government by scamming the system. Between 2008 and 2013, insurance companies received nearly seventy billion dollars in undeserved Medicare Advantage payments.

Traditional Medicare is a fee-for-service program: the government pays fixed amounts to doctors and other health-care providers for each service. The more health care you provide, the more money you are paid—an easy system to abuse. Medicare Advantage was supposed to mitigate abuse by harnessing the prudent management of the private sector. In this system, the government pays health-insurance companies, such as Aetna, Blue Cross Blue Shield, and United Health Group, to provide the insurance coverage.

 It’s no surprise that private companies routinely overbill Medicare. Bigger bills make for bigger government reimbursement. A whistleblower at one company documented the following strategies for increasing the profitability of health insurance businesses:

• Get rid of the sickest seniors (“lemon drop”) and recruit healthy ones (“cherry pick”).
• Misrepresent the number of health-care providers in your network to expand your service area.
• Select the most profitable diagnosis and treatment codes. (In this whistleblower’s company, eighty percent of the diagnosis codes were unjustified).
• Pressure doctors to schedule unnecessary appointments and assign additional codes.

As some analyists have determined, unchecked fraud could lead to the destruction of government health-care programs. The increased costs that result by theft creates cost inflation, which increases political pressure to make cuts. As one analyst said, fraud “will grow like a cancer and destroy your program.”As it is, health-care spending increases every year. Now it represents about eighteen percent of our GDP. If we want "medicare for all," it better be an improvement over this!

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