"Fox-Henhouse?" The Layers of Complexity Around MA Payment Discipline

So, this was interesting: KFF Health News is reporting that a plan initiated by CMS (the federal Centers for Medicare and Medicaid Services) has very quietly shelved a plan involving greater rigor around Medicare Advantage coding managemt.

This is what KFF Health News’s Fred Schulte wrote earlier this week: “A decade ago, federal officials drafted a plan to discourage Medicare Advantage health insurers from overcharging the government by billions of dollars — only to abruptly back off amid an ‘uproar’ from the industry, newly released court filings show. The Centers for Medicare & Medicaid Services published the draft regulation in January 2014. The rule would have required health plans, when examining patient’s medical records, to identify overpayments by CMS and refund them to the government. But in May 2014, CMS dropped the idea without any public explanation. Newly released court depositions show that agency officials repeatedly cited concern about pressure from the industry,” he wrote on Aug. 27.

And it gets more and more complicated, to wit: “The 2014 decision by CMS, and events related to it, are at the center of a multibillion-dollar Justice Department civil fraud case against UnitedHealth Group pending in federal court in Los Angeles. The Justice Department alleges the giant health insurer cheated Medicare out of more than $2 billion by reviewing patients’ records to find additional diagnoses, adding revenue while ignoring overcharges that might reduce bills. The company ‘buried its head in the sand and did nothing but keep the money,’ DOJ said in a court filing.”

So: I am in no position whatsoever to evaluate any assertions on any side of this. But it is fascinating how layered this is, given that Medicare Advantage involves, of course, the Medicare program, run by CMS, and many private health plans, some of them investor-owned, and all of which are committed to maximizing revenues on behalf of shareholders and boards. And at the heart of the complexity is CMS officials’ insistence to health plan executives that they cannot be engaged in “mining” patient records solely to try to identify additional diagnoses that could lead to bigger payments to them, the health plans.

Even more complicated than all of that is the fraud case against UnitedHealth Group, which is based on an assertion in a whistleblower suit filed by a former employee that accuses that health insurer of extracting $7.2 billion from 2009 through 2016 solely based on chart reviews. The Department of Justice officials assert that the company would have received $2.1 billion less had it deleted unsupported billing codes.

Again, I’m in no position to evaluate any assertions on any side of any of this. But all of this speaks to me of the layered complexity of our healthcare system. On the one hand, we’ve got the nation’s largest health insurer, the Medicare program under CMS, and the vast majority of our seniors, as well as a far smaller number of disabled individuals, receive their health insurance coverage through that public program. But a program (MA) involving the subcontracting by CMS to private health insurers, has evolved forward in order to enhance the care management of Medicare recipients, as the traditional Medicare program has no provisions for their care management.

And the health plans that are contracting with CMS under Medicare Advantage are providing a wide range of services—at relatively low cost, mind you—that involve care management that is simply not possible in traditional Medicare, at least as it’s structured now. And to restructure traditional Medicare to incorporate care management and related services into the program, would cost more than the current system of Medicare + Medicare Advantage is costing the taxpayers—and therein lies the conundrum.

So, yes, “fox guarding henhouse” metaphors spring immediately to mind here. Yet, pace those who keep asserting that all healthcare in this country must be delivered completely free of any profit motive, have those individuals ever been veterans waiting for months on end for some relatively basic healthcare services through VA Health? The folks at VA Health are doing the best they can, but that system is overwhelmed by demand and wildly underfunded relative to that demand; and that’s precisely because there is no profit incentive that would turn it around.

And while it might seem truly perverse that we are relying to a tremendous extent on for-profit health plans to provide the operational rigor needed to keep our nation’s single biggest for-profit-overall program going, that is the reality. And there’s no clear alternative to any of this; indeed, the idea that some gigantic alternative could emerge organically from within traditional Medicare is pure wishful thinking.

So let’s let the fox-guarding-henhouse metaphors flow freely, because that’s the policy bind we’re in and will presumably be in for the foreseeable future. Again, to be absolutely clear here, I have no insider insights around any of what KFF Health News has reported. It simply seems clear to me that the contradictions pointed out in that report speak to some of the fundamental contradictions present in the current healthcare delivery and payment system here in the United States. And the reality is that we’re far ahead of the western European systems in certain respects, even as they are also, arguably, far ahead of us in others.

But unless someone has some kind of beyond-brilliant idea, we’re pretty much stuck with some policy, payment, regulatory, and operational contradictions inside Medicare Advantage going forward, at least for the time being. The phrase “it goes with the territory” never seemed more apt.