‘The Cash Monster Was Insatiable’: How Insurers Exploited Medicare for Billions

Two decades ago, Congress designed Medicare Advantage to be a private-sector alternative to traditional Medicare in an effort to encourage health insurers to find innovative ways to provide better care at lower cost. The government pays Medicare Advantage insurers to set an amount for each person who enrolls, with higher rates applying to “sicker” patients, which was an attempt to prevent companies from only offering the service to the healthiest patients. The New York Times has reviewed dozens of lawsuits, audits, and investigations which shows that many health insurers exploited the program to inflate profits.

Federal audits show that eight out of the ten largest Medicate Advantage insurers have submitted inflated bills, with more being investigated by the Department of Justice. Allegations include mining old medical records for patients that had not seen in weeks to find more illnesses so insurers could collect more money. The most common allegation is not correcting potentially invalid diagnoses after becoming aware of the mistake, resulting in a similar outcome.

Many of the fraud lawsuits were brought by former employees who were acting as whistle-blowers. The Justice Department has brought or joined 12 of the 21 cases that have been made public while whistle-blower cases remain secret until the department has an opportunity to fully review them. 

Companies continue to vigorously defend their compliance with Medicare Advantage requirements.

For more information see Reed Abelson and Margot Sanger-Katz “The Cash Monster Was Insatiable’: How Insurers Explored Medicare for Billions,” The New York Times, October 8, 2022.

Special thanks to Lewis Saret (Attorney, Washington, D.C.) for bringing this article to my attention.