It’s Open Enrollment Season for Medicare Advantage Which Means It’s Open Hunting Season on Senior Citizens
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Don Akchin recently published an article discussing the Medicare Advantage boondoggle:
A few sections of his article especially caught my eye, including this one:
An analysis in 2021 found that Medicare overpaid the Medicare Advantage plans more than $106 billion from 2010 to 2019. To put it another way, Medicare paid private insurers $106 billion more than it would have spent had everyone eligible been covered by original Medicare. The outflow continues to increase annually.
And this is not because Medicare Advantage plans pay out greater amounts for medical expenses. In general, they don’t. It is because the insurers have been playing games at the government’s expense. One is called upcoding. When a new person enrolls in a Medicare Advantage plan and reports a pre-existing condition, the insurers frequently “up code” the enrollee’s current condition as more serious than it is. This triggers more Medicare revenue.
….
Medicare is doing its best to claw back some of the money it has paid out through deceit. In late September, for example, Cigna Group agreed to pay $172 million to resolve allegations that it illegally submitted untruthful diagnosis codes for Medicare Advantage enrollees and failed to withdraw coding that was inaccurate.
Below is my reply to the above paragraph from Don’s article and summary of the situation along with a few additional thoughts.
Yeah, ok, Cigna paid a relatively small fine — $172 million — that is literally less than 1/10th of 1% of Cigna Group’s 2022 annual revenue of $180.5 billion.
Relative to the annual revenues of the company, this one-time $172 million settlement is literally so small that (1) the CEO and CFO and board directors probably spent virtually no time thinking about that $172 million, and (2) it will change no one’s behavior in the company.
And remember — this was a one-time settlement cost. Cigna will be seeing billions of dollars of revenue (actually, probably tens of billions of dollars of revenue) annually in the years to come.
That $172 million settlement could not have been more insignificant to the corporate leadership.
To put these numbers in “regular-person” perspective, imagine that you had a side business that was going to generate $100,000 in revenues this year.
Throughout the year, you were doing things that were (1) at least wrong and corrupt, and (2) possibly/probably illegal according to existing law…
…but these things were generating thousands of dollars for your business this year — and perhaps $10,000 or more. Even better, this will be ongoing revenue, so you can count on at least thousands of dollars of extra revenue each year…but again, this will probably grow to $10,000 in size (if it’s not there already), and it will likely continue to grow year after year. But you got caught redhanded. And yet — for multiple reasons — you’re getting off easy. Your “fine” for this corrupt — and probably illegal — behavior is going to be about $90.
$90 to make this go away. That’s it. And after you generated thousands of dollars for your business. A one-time fine of $90, and any criminal liability goes away. You get to keep the thousands of dollars of revenue from this year, and you’ll just be more careful going forward to not push the envelope quite as far as you did this year. You would happily pay that $90 in a heartbeat, right? And that’s exactly why Cigna paid that $172 million — it meant as little to them under the circumstances as a $90 fine would mean to a small business with $100,000 in annual revenue.
You know how this changes? 2 easy ways to start with.
- Make the fines or settlements big enough to hurt. Make them billions or tens of billions. And if the company does it again, double or triple the previous fines. Press where it hurts, and make it really hurt.
- Set up legal penalties for the individual actors. Give the people who are committing these corrupt acts consequences for their actions — make it personal for them. In particular, start with the CEO and the CFO of each of these companies. Then also make sure that the board directors are not exempt from criminal liability — no more hiding behind D&O (Directors and Officers) insurance polici. Make sure that none of these so-called leaders of the health insurance companies can hide behind the corporate veil.
And if anyone says that “oh, this is too tough, nobody would want to be in this business and providing these kinds of products and services if the risks are this high,” I say, fine.
If the business is “too hard” to do legally and without screwing your customers and the government, then either the business shouldn’t exist, or you — the current CEO, CFO, COO, the rest of the C-Suite, the board directors — just suck at your jobs.
Bottom line, every other developed, modern country in the world provides good enough healthcare at far more reasonable prices than the U.S. does. There’s no reason other than greed and corruption why we can’t do the same.
See the article below for a stark contrast between the U.S. and virtually every other developed country on the two healthcare metrics that probably matter the most.
The two biggest things that differentiate the U.S. from those other countries are the facts that (1) our healthcare system is for-profit and greedy for that money (obscenely, rapaciously so), and (2) political and governmental bribery and corruption are generally legal here.
Until we deal head-on with both of these root causes, our healthcare system isn’t going to get better in ways that matter or make a difference.
Again, this was a great article, Don — really solid work.
Jeff
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