What Are the Risks of Medicare Advantage Plans?

Medicare Advantage (MA), otherwise known as the “money machine,” is often the most profitable parts of many payers’ business lines. Medicare Advantage plans can make a lot of cash if they are good at what they do. Look at any of these large, consolidated carriers’ financial statements to get the magnitude of that statement.

Also, in 2022, Medicare Advantage plans have enrolled 28 million participants between them, which represents 45% of all Medicare beneficiaries. This marks a three-point improvement in penetration over 2021 and a total program enrollment growth of 9%.  

All of this is not a secret.

So, what’s happening right now is that this administration is looking carefully at Medicare Advantage plans and what they have been up to. We have had an amping up of government oversight, including regulatory actions and program audits.

In this healthcare podcast, I am speaking with Betsy Seals, who is CEO and cofounder of Rebellis Group, which is a managed care consulting firm working with Medicare Advantage plans.

Betsy says (and this is what we talk about in the interview) that there’s three main areas that the government is currently scrutinizing:

1. Sales and marketing. There have been these third parties, it seems, these field marketing organizations who were hired to do marketing and sales for some of the Medicare Advantage plans. And because they were third parties, it seems that many of them felt themselves to be excluded from CMS (Centers for Medicare & Medicaid Services) regulations and able to basically mislead prospective members with sales pitches that were highly suspect. Betsy gives some examples of these, and when you hear them, you will see why CMS is cracking down.
2. Recouping improper payments is another area that CMS is all over. Interestingly, as Betsy Seals says in this interview, this might be one area where the government is actually ahead of private sector plans from a technology and analytic standpoint.

CMS seems to have better analytics capabilities and is better at detecting fraud schemes and improper payments than the plans themselves. These plans are not sophisticated enough to notice stuff that CMS detects when it gets ahold of the plan data.

But as unusual as this situation is where the government is ahead of the business sector, I can’t say I’m shocked. We have had one guest on this show after another talking about just how far in the past some of these health plans are lagging. Dan O’Neill probably said it most eloquently and notably (EP359).  

But I digress.

So, recouping improper payments has the eye of CMS. This means two things largely. It means finding “outlier” codes that some MA plan paid for but which are clearly errors and should not have been paid.

Another improper payment is when plans themselves do a little fancy upcoding so that they make more money than they should in their risk-adjustment payments. This has gotten some major attention lately. Let me quote from an OIG (Office of Inspector General) report:  

“Our findings raise concerns about the extent to which certain MA companies may have inappropriately leveraged both chart reviews and HRAs [health risk assessments] to maximize risk-adjusted payments. We found that 20 of the 162 MA companies drove a disproportionate share of the $9.2 billion in payments from diagnoses that were reported only on chart reviews and HRAs, and on no other service records.”

The sneaky idea here to get more money than they should from taxpayers is that someone somewhere puts down that a member has major depressive disease because someone somewhere said they did. But the patient clearly doesn’t have major depressive disease because they aren’t getting any treatment for it and nothing anywhere would indicate that they are suffering from a major depressive disease.

So, the plan winds up getting more money from the government to care for a patient who is suffering from major depressive disease, but the patient doesn’t require any additional care because they don’t have major depressive disease. It’s a great way to make some dollars for shareholders that is coming right out of the pockets of taxpayers.

In sum, the #2 area of additional oversight is recouping improper payments either from paying claims that should not have been paid for or by wild upcoding.

3. This is just kinda like the general sort of compliance oversight that CMS does, meaning grievances and appeals and formulary administration and models of care for SNP plans (special needs plans), compliance program effectiveness—normal stuff like this—which will be interesting given all of the articles coming out right now about how patients on Medicare Advantage plans are less likely to get more costly diabetes treatments and how often there’s denials for cancer care or NCI cancer centers aren’t covered, etc.

One point of note here that’s kind of thought-provoking on a few levels: If you’re an MA plan, it is super important for you to get members in for their annual screenings. For one, CMS requires that you document diagnoses each year; and you need to do this to reduce the chances that CMS will question a treatment being paid for because there’s no underlying diagnosis to support it—and these diagnoses must be re-upped every year. Recall what I was just talking about re: improper payments and fraud schemes. If a patient isn’t diagnosed with something, then why are taxpayers paying for its treatment?

Also risk adjustment ... if you wanna upcode, it’s not a bad idea to have a diagnosis documented in multiple different ways so that when the OIG/CMS/DOJ comes knocking, you can have your ducks in a row. Getting patients in for their annual screenings is how you can safely upcode.

Further, one more reason why getting patients in for annual screenings matters to MA plans, member experience counts for an increasing piece of star ratings. Patients who never see their doctor and never interact with the plan don’t usually give the plan they have nothing to do with stellar marks—and besides that, these members are tough to retain.

Last big deal for an MA plan to get members in for their annual is this is when the doc gets into screening for care gaps, which is also part of star measures. All this about annual screenings is a bit of a sidebar, but it is kind of interesting to contemplate as we get into the conversation today about government oversight. (For a meme on this topic, check out this Tweet from Rik Renard.)

My guest, as I mentioned earlier, is Betsy Seals. Listen to our conversation about how MA plans are in the hot seat right now. Later in the fall, Betsy will be coming back to talk about trends in the Medicare Advantage marketplace.

Betsy Seals is the CEO and cofounder of Rebellis Group, a consulting firm established to provide advisory and hands-on services to Medicare Advantage Organizations (MAOs) and their subcontractors. Betsy is a nationally recognized leader in the managed care industry with over 20 years of experience.

Betsy brings to the table a solid mix of leadership and business acumen, as well as regulatory and strategic knowledge within the managed care landscape. Betsy’s expertise is focused in the areas of mergers and acquisitions, compliance, sales and marketing, strategy, supplemental benefit landscape, innovative benefit design that address social determinants of health, and health plan operations.

Prior to founding Rebellis Group, Betsy served as the chief consulting officer for Gorman Health Group (GHG). In this role, Betsy managed the Medicare consulting practice, including implementation of strategic initiatives, development of new practice areas, and oversight of day-to-day consulting operations.

Prior to her role as chief consulting officer, Betsy served as senior vice president, compliance operations, where she assisted MAOs and Part D sponsors to attain and maintain compliance with the Centers for Medicare & Medicaid Services (CMS) regulations and guidance by conducting risk assessments, preparing organizations for CMS audits, performing mock CMS audits, and creating and implementing internal and delegated entity oversight programs.

Before joining GHG, Betsy worked for MAOs, where she served in customer service and compliance with responsibility for creation and implementation of oversight programs, CMS audit preparation, implementation of internal corrective action plans, and the day-to-day management of compliance operations. Betsy has also worked as a CMS subcontractor to conduct CMS Compliance Program audits.

08:15 What’s happening with sales and marketing in the healthcare industry? 11:04 What’s happening with the focus on recouping improper payments? 13:32 “When you look at the fundamentals of it, these are federal dollars. And what we’re talking about is federal dollars that were paid when they should not have been paid.” 15:39 Are improper claim payments an administrative problem, or something more intentional? 16:20 “The health plan has a responsibility to catch those issues.” 20:10 What are specialty pharmacy prescriptions being scrutinized for? 22:12 “If this is where CMS is headed … the health plan should’ve already been doing this.” 23:58 Why do you see a bigger focus on social determinants of health? 25:54 Do these health plan audits actually have any teeth? 27:01 What is the biggest penalty a health plan can face from an audit? 29:57 “Navigating the Medicare program … was near to impossible. I know the program, and even for me, it was hours and hours and hours and hours on the phone.”

@betsyseals of @GroupRebellis discusses #MedicareAdvantage plans on our #healthcarepodcast. #healthcare #podcast #digitalhealth

What’s happening with sales and marketing in the healthcare industry? @betsyseals of @GroupRebellis discusses #MedicareAdvantage plans on our #healthcarepodcast. #healthcare #podcast #digitalhealth

What’s happening with the focus on recouping improper payments? @betsyseals of @GroupRebellis discusses #MedicareAdvantage plans on our #healthcarepodcast. #healthcare #podcast #digitalhealth

“When you look at the fundamentals of it, these are federal dollars. And what we’re talking about is federal dollars that were paid when they should not have been paid.” @betsyseals of @GroupRebellis discusses #MedicareAdvantage plans on our #healthcarepodcast. #healthcare #podcast #digitalhealth

Are improper claim payments an administrative problem, or something more intentional? @betsyseals of @GroupRebellis discusses #MedicareAdvantage plans on our #healthcarepodcast. #healthcare #podcast #digitalhealth

“The health plan has a responsibility to catch those issues.” @betsyseals of @GroupRebellis discusses #MedicareAdvantage plans on our #healthcarepodcast. #healthcare #podcast #digitalhealth

What are specialty pharmacy prescriptions being scrutinized for? @betsyseals of @GroupRebellis discusses #MedicareAdvantage plans on our #healthcarepodcast. #healthcare #podcast #digitalhealth

“If this is where CMS is headed … the health plan should’ve already been doing this.” @betsyseals of @GroupRebellis discusses #MedicareAdvantage plans on our #healthcarepodcast. #healthcare #podcast #digitalhealth

Why do you see a bigger focus on social determinants of health? @betsyseals of @GroupRebellis discusses #MedicareAdvantage plans on our #healthcarepodcast. #healthcare #podcast #digitalhealth

Do these health plan audits actually have any teeth? @betsyseals of @GroupRebellis discusses #MedicareAdvantage plans on our #healthcarepodcast. #healthcare #podcast #digitalhealth

What is the biggest penalty a health plan can face from an audit? @betsyseals of @GroupRebellis discusses #MedicareAdvantage plans on our #healthcarepodcast. #healthcare #podcast #digitalhealth

“Navigating the Medicare program … was near to impossible. I know the program, and even for me, it was hours and hours and hours and hours on the phone.” @betsyseals of @GroupRebellis discusses #MedicareAdvantage plans on our #healthcarepodcast. #healthcare #podcast #digitalhealth

Recent past interviews:

Click a guest’s name for their latest RHV episode!

Dave Chase, Cora Opsahl (EP373), Cora Opsahl (EP372), Dr Mark Fendrick (Encore! EP308), Erik Davis and Autumn Yongchu (EP371), Erik Davis and Autumn Yongchu (EP370), Keith Hartman, Dr Aaron Mitchell (Encore! EP282), Stacey Richter (INBW34), Ashleigh Gunter, Doug Hetherington, Dr Kevin Schulman, Scott Haas, David Muhlestein, David Scheinker, Ali Ucar, Dr Carly Eckert, Jeb Dunkelberger (EP360), Dan O’Neill, Dr Wayne Jenkins, Liliana Petrova, Ge Bai, Nikhil Krishnan, Shawn Rhodes, Pramod John (EP353), Pramod John (EP352), Dr Eric Bricker, Katy Talento