Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: If you qualify for Medicare, you might actually be covered
Speaker 2: by a private insurer. Here's how that works. Medicare Advantage
Speaker 2: is the US government's way of offering Americans who are
Speaker 2: sixty five and older more options when it comes to
Speaker 2: health insurance. People who opt into the program are covered
Speaker 2: by private insurers like United Health Group. Those insurers get
Speaker 2: a monthly payment from the government to provide coverage for
Speaker 2: the people enrolled in their plans. Today, more than half
Speaker 2: of the people enrolled in Medicare use a private Medicare
Speaker 2: Advantage plan. But last week, a source familiar with the
Speaker 2: matter told Bloomberg News that the US Justice Department has
Speaker 2: a civil investigation into Medicare billing practices at United Health Group,
Speaker 2: one of those participating private insurers. The question at the
Speaker 2: center of that investigation, which was first reported by The
Speaker 2: Wall Street Journal, is are insurers working the system to
Speaker 2: get higher payments from the government.
Speaker 1: Companies invest a tremendous amount of time, effort, money resources
Speaker 1: into documenting the illnesses that their members have because it
Speaker 1: means money coming in the door, right.
Speaker 2: That's Bloomberg Healthcare reporter John Tazzi.
Speaker 1: But the issue that has emerged is there's some ambiguity
Speaker 1: in the rules and in litigation. In cases whistleblowers have
Speaker 1: brought to light in audits by federal watchdogs, We've seen
Speaker 1: instances of plans pushing or breaking the rules to maximize
Speaker 1: the amount they can get paid through the system.
Speaker 2: United Health pushed back in a statement saying the company
Speaker 2: wasn't aware of the launch of any new activity and
Speaker 2: called suggestions of fraud quote outrageous and falls but the
Speaker 2: investigation highlights in ongoing behind the scenes fight between private
Speaker 2: insurers and the US government. John spoke with a woman
Speaker 2: named Teresa Ross, who worked for another insurer offering Medicare
Speaker 2: advantage coverage, a company called Group Health Cooperative in Seattle.
Speaker 3: I joined Group Health Cooperative in May of ninety eight
Speaker 3: and loved that organization. I still love a lot of
Speaker 3: what it stands for. But I saw my organization that
Speaker 3: I loved so much do some things that I wasn't
Speaker 3: comfortable with.
Speaker 2: Teresa ultimately reported her concerns to the Department of Justice,
Speaker 2: and the practices she blew the whistle on could point
Speaker 2: to a major flaw in the Medicare advantage system. One
Speaker 2: that might be costing American taxpayers billions of dollars. This
Speaker 2: is the big take from Bloomberg News. I'm David Gura
Speaker 2: today on the show. Every year more and more Americans
Speaker 2: enroll in Medicare advantage plans, but the private company companies
Speaker 2: who offer those plans are now under scrutiny, raising questions
Speaker 2: about how hundreds of billions of taxpayer dollars are spent.
Speaker 2: Every month, part of your paycheck goes directly to a
Speaker 2: fund that pays for Medicare, the government health insurance option
Speaker 2: for Americans sixty five and older and for some younger
Speaker 2: Americans with disabilities. When you enroll in Medicare, you have
Speaker 2: two options, a traditional public option where the government pays
Speaker 2: doctors directly for tests and services, and something called Medicare advantage.
Speaker 2: Here's Bloomberg healthcare reporter John Tazzi.
Speaker 1: Medicare advantage is a privately managed version of Medicare, and
Speaker 1: it means you basically get your Medicare benefits through a
Speaker 1: private insurance company.
Speaker 2: How long has it been around?
Speaker 1: So it's been around in some form, gosh, probably going
Speaker 1: back to the nineteen eighties. Not called Medicare advantage, but
Speaker 1: some form of private contract in its current format really
Speaker 1: started in the two thousands and has taken off significantly
Speaker 1: in the last ten or twelve years. Who've just seen
Speaker 1: like rapid growth into this program.
Speaker 2: The number of participants enrolled has actually doubled in the
Speaker 2: past decade. Out of the sixty eight million people with
Speaker 2: Medicare coverage, over thirty four million people or on a
Speaker 2: Medicare advantage plan. John says there are reasons why someone
Speaker 2: might choose a private option for Medicare coverage. Advantage plans
Speaker 2: sometimes wind up costing participants less by capping out of
Speaker 2: pocket costs and offering lower premiums.
Speaker 1: The other thing is that they are able to offer
Speaker 1: additional benefits that aren't covered by traditional Medicare. These include
Speaker 1: things like dental care, vision, even transportation to medical appointments.
Speaker 1: Some plans can help people you know with groceries or
Speaker 1: over the counter health products.
Speaker 2: And to incentivize private insurers to cover Americans with various
Speaker 2: health conditions, the government created a system call called risk adjustment.
Speaker 1: And this is basically designed to pay plans more for
Speaker 1: signing up sicker members. Right, somebody with cancer signs up
Speaker 1: for your Medicare advantage plan, they're going to have higher
Speaker 1: medical costs than somebody without cancer. The government wants to
Speaker 1: make sure that there is money flowing into the plan
Speaker 1: to cover that person. This has led to an extremely
Speaker 1: complicated set of regulations and processes to determine how much
Speaker 1: the government should pay these plans for members with different diagnoses.
Speaker 2: Traditional medicare pays doctors and hospitals directly for a treatment
Speaker 2: or a visit, but through Medicare Advantage, the government pays
Speaker 2: the private insurer a fixed fee for each patient covered.
Speaker 2: Because it's higher risk to ensure someone with a pre
Speaker 2: existing condition, the government will pay insurers more to cover
Speaker 2: a patient with more severe illnesses. The private insurers report
Speaker 2: their patient's conditions to the government through a complicated billing
Speaker 2: system using diagnostic codes that represent different illnesses. This is
Speaker 2: where Teresa Ross comes in. She was working on risk
Speaker 2: adjustment at the private insurer. She worked for Group Health Cooperative,
Speaker 2: which means she was managing the diagnostic codes and systems
Speaker 2: her company used to track patient's health.
Speaker 3: Their risk adjustment program developed all of the systems and
Speaker 3: processes related to making sure that coding was accurate and complete.
Speaker 2: In twenty eleven, Group Health started working with an outside
Speaker 2: vendor that looked through patient's charts to identify misdiagnoses. The
Speaker 2: stated goal, Teresa said was to improve care to identify
Speaker 2: patients who had problems that hadn't been addressed. But medical
Speaker 2: coders on Teresa's team were coming to her with concerns.
Speaker 3: There were people all over the place saying, look, this
Speaker 3: isn't right. I was taking a closer look too.
Speaker 2: When Teresa looked at the quote und quote misdiagnoses, what
Speaker 2: she says she found shocked her.
Speaker 3: Anybody who has oxygen, they were coding with hypoxia, which
Speaker 3: is one of the highest payment amounts that you can get.
Speaker 2: That meant anyone getting even a small amount of supplemental
Speaker 2: oxygen as part of a treatment was being coded as
Speaker 2: having a life threatening condition where the body doesn't absorb
Speaker 2: enough oxygen, even though oxygen can be prescribed for less
Speaker 2: serious conditions like sleep apnea. And that was just one example.
Speaker 2: John Tazzi spoke with Teresa recently about her observations.
Speaker 3: I mean, when you're getting paid by the diagnoses, each
Speaker 3: time that they call somebody a diabetic, for example, that
Speaker 3: was an extra five hundred bucks in their pocket.
Speaker 1: So you found all these inaccuracies in the codes. How
Speaker 1: did you kind of come to the conclusion that this
Speaker 1: was intentional? Was there like a time that you kind
Speaker 1: of really figured out what was going on here?
Speaker 3: It wasn't, you know, an epiphany one day, More like
Speaker 3: over a couple of months of meetings and auditing this stuff.
Speaker 3: There were enough of us within the organization that at
Speaker 3: least should have known that this was wrong. And all
Speaker 3: this is of course, I'm the director of risk adjustment
Speaker 3: right at this point, all this is being done under me.
Speaker 2: Kaiser Permanente, which acquired Teresa's former company in twenty seventeen,
Speaker 2: has since denied Teresa's allegations. Teresa called her company's internal
Speaker 2: whistleblower hotline. She went to leadership and expressed her concerns.
Speaker 3: At every turn, I was overruled, and then they started
Speaker 3: excluding me from meetings. I knew I had to do something.
Speaker 3: I just knew I can't let this happen.
Speaker 2: So Teresa took another route. She filed a sealed whistleblower
Speaker 2: lawsuit against the company, which led the Department of Justice
Speaker 2: to pick up her case.
Speaker 3: I actually even wore a wire, so the FBI actually
Speaker 3: wired me up.
Speaker 2: Teresa's internal sting operation, what came of it, and what
Speaker 2: cases like hers mean for millions of Americans after the break.
Speaker 2: After Teresa Ross filed her complaint, the Justice Department started investigating.
Speaker 2: Teresa says when a meeting would come up on the
Speaker 2: topic of Medicare advantage coding, the FBI would sent her
Speaker 2: in with a wire to record what was happening.
Speaker 3: It was extraordinarily stressful. You're always wondering are you going
Speaker 3: to be found out when you're wired like that, right,
Speaker 3: I mean thinking, you know what a dead battery moment
Speaker 3: happens with the recorder, you know, starts beating or something,
Speaker 3: and of course that doesn't help your health at all.
Speaker 3: So you know, over these you know, several years, I
Speaker 3: have actually had some health issues as a result of it.
Speaker 2: It took twelve years after she filed her initial complaint
Speaker 2: and started building the case for it to reach a conclusion.
Speaker 2: The vendor that worked with Teresa's former company has since
Speaker 2: shut down, but its parent company, a New York insurer
Speaker 2: called Independent Health, settled her lawsuit for up to ninety
Speaker 2: eight million dollars this past December. Teresa will get some
Speaker 2: of that money. Independent Health didn't admit liability in the settlement.
Speaker 2: It said the agreement would avoid the further disruption, expense,
Speaker 2: an uncertainty of litigation in a matter that is lingered
Speaker 2: for over a decade. The former CEO of that vendor
Speaker 2: also agreed to pay two million dollars to resolve the allegations.
Speaker 2: Her attorney said she settled to avoid protracted litigation and
Speaker 2: didn't admit any liability. Teresa's former company also settled its
Speaker 2: portion of the lawsuit in twenty twenty for six point
Speaker 2: three million dollars without admitting liability. A spokesperson for the
Speaker 2: company told Bloomberg News in twenty twenty two that it
Speaker 2: submitted its data in good faith and relied on the
Speaker 2: recommendations of its vendor. Teresa Ross is not the only
Speaker 2: whistleblower whose raised concerns about private insurers allegedly exploiting loopholes
Speaker 2: in the Medicare advantage system.
Speaker 1: A problem that has been bubbling up for years is
Speaker 1: that this system risk adjustment system is subject to manipulation.
Speaker 2: Right, Bloomberg healthcare reporter John Tazzi, Again.
Speaker 1: This is not one anomalous thing that happened at one company.
Speaker 1: The kind of activity that she described I think it's
Speaker 1: now understood was pretty widespread in the industry.
Speaker 2: In recent years, the Department of Justice has investigated cases
Speaker 2: against many of the biggest Medicare advantage providers. The Medicare
Speaker 2: Advantage industry disputes the idea that the plans are overpaid.
Speaker 2: Industry group Better Medicare Alliance says private plans save the
Speaker 2: government money and provide more value for beneficiaries. The group
Speaker 2: also says the Medicare Advantage program requires complete and accurate
Speaker 2: diagnoses to determine government payments for senior's care. The group
Speaker 2: says plans are audited and that it supports comprehensive audits.
Speaker 2: The Medicare Payment Advisory Commission, a legislative agency that advises Congress,
Speaker 2: says the government overpaid Medicare Advantage plans by more than
Speaker 2: five hundred billion dollars since two thousand and seven. That's
Speaker 2: compared to what traditional Medicare would have cost to cover
Speaker 2: the same people, and with the Medicare fund expected to
Speaker 2: run out by twenty thirty six, those billions in overpayments
Speaker 2: make a difference. All of this is unfolding as a
Speaker 2: contentious fight plays out in Washington over spending in recent weeks,
Speaker 2: congressional Republicans suggested cuts to Medicaid, the program that covers
Speaker 2: lower income Americans. The Trump administration hasn't threatened Medicare, but
Speaker 2: Elon Musk's Doze initiative's goal is to slash federal spending
Speaker 2: across the board. During the Biden administration, the government made
Speaker 2: an effort to crack down on Medicare advantage over payments.
Speaker 1: The agency that operates Medicare has made some changes. They've
Speaker 1: made some adjustments to what's called the risk model that
Speaker 1: sort of determines these payments to make it a little
Speaker 1: bit less subject to manipulation. They've removed some of the
Speaker 1: diagnoses that used to be associated with payment, and that's
Speaker 1: hit the companies.
Speaker 2: Some companies have responded. In twenty twenty three, one insurer, Humana,
Speaker 2: sued the government in an attempt to block a policy
Speaker 2: aimed at cracking down on billions of dollars in alleged overpayments.
Speaker 2: Theresa told John she's still adjusting to not living under
Speaker 2: constant stress, but the settlement felt good. She said, like
Speaker 2: she'd really made a difference because, at the end of
Speaker 2: the day, alleged Medicare advantage manipulation impacts any tax paying
Speaker 2: American and anyone getting coverage from the plans.
Speaker 1: People need to understand just how vast this program is
Speaker 1: and the huge amount of money at stake. The amount
Speaker 1: of money involved is hundreds of billions of dollars. It's
Speaker 1: a not insignificant portion of the us GDP that runs
Speaker 1: through Medicare and Medicare advantage, right, So if there are
Speaker 1: systemic manipulation or fraud in this program, that's a huge
Speaker 1: amount of taxpayer dollars that are potentially being wasted. I
Speaker 1: think the other thing to you know, keep in mind
Speaker 1: is it does matter for patients and individuals. If you're
Speaker 1: a patient and you know there's something in your medical
Speaker 1: chart that is not accurate, you know that could have
Speaker 1: consequences for your healthcare.
Speaker 2: I'll ask you lastly, just what do we know about
Speaker 2: the Trump administration's approach to this issue or what it
Speaker 2: might be if it's still not fully formed.
Speaker 1: I don't think we know a whole lot yet. I
Speaker 1: think in general, there's an expectation that Republican administrations in general,
Speaker 1: and that the Trump administration will be more favorable to
Speaker 1: private insurers, and Republicans have typically in defenders of the
Speaker 1: Medicare advantage program. But that said, I think you know,
Speaker 1: the attention on this issue in the last couple of
Speaker 1: years may have came to the calculus for some people,
Speaker 1: particularly when you're looking at people concerned about government spending.
Speaker 1: We have Elon Musk looking for ways to cut purportedly
Speaker 1: trillions from federal spending. I think anybody who's sort of
Speaker 1: familiar with where the federal government's money goes has to
Speaker 1: look at Medicare and Medicare advantage.
Speaker 2: John, Thank you very much.
Speaker 1: Thank you.
Speaker 2: This is The Big Take from Bloomberg News. I'm David Gura.
Speaker 2: This episode is produced by Julia Press. It was edited
Speaker 2: by Aaron Edwards and Emma Port. It was mixed and
Speaker 2: sound designed by Alex Sagura and factchecked by Andreana Tapia.
Speaker 2: Our senior producer is Naomi Shaven. Our senior editor is
Speaker 2: Elizabeth Ponso. Our executive producer is Nicole Beamster. Board Sage
Speaker 2: Bauman is Bloomberg's head of podcasts. If you liked this episode,
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Speaker 2: Thanks for listening. We'll be back tomorrow,