How health insurers profited billions from Medicare Advantage
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Health insurers have significantly profited from Medicare Advantage, which is the private sector alternative to traditional Medicare, by securing billions in extra payments. These substantial earnings primarily arise from the practice of upcoding, where insurers report patients as sicker than they actually are to receive higher reimbursements from Medicare. Additionally, the complex payment formulas and risk scores used in Medicare Advantage often favor insurers, allowing them to maximize their profits. Many major insurers participating in this program have also been accused of fraud in court. This situation has sparked widespread debate concerning the efficiency and fairness of the Medicare Advantage system.
Source
Aaron, D.G., Cohen, I.G. & Adashi, E.Y. Medicare Advantage Under Fire: Public Criticism and Implications. J GEN INTERN MED 39, 2849–2852 (2024). https://doi.org/10.1007/s11606-024-08876-7
Additional Reading
https://www.nytimes.com/2022/10/08/upshot/medicare-advantage-fraud-allegations.html