The Biden administration estimated Monday that new and tougher penalties for submitting improper charges on the taxpayers’ tab for Medicare Advantage care could result in a $4.7 billion collection from insurance companies.
For years, federal watchdogs have been warning about questionable charges on the government’s private version of the Medicare program, with investigators raising the possibility that insurance companies are bilking taxpayers out of billions of dollars each year by claiming members are sicker than they are in order to receive inflated payments.
When an audit reveals that insurers were charged for diagnoses that were not reflected in the patient’s medical records, the Department of Health and Human Services said it will begin collecting payments from them. According to the agency, the government has not sought refunds for those payments in over a decade.
“Today, we are taking some long overdue steps to move us in the direction of accountability,” HHS Secretary Xavier Becerra said over the phone with reporters on Monday.
According to the agency, the penalties are expected to return $4.7 billion over the next decade.
The questionable payments are made through Medicare Advantage, a thriving program that nearly half of the 60 million Medicare beneficiaries enroll in. Medicare Advantage differs from traditional Medicare in that private companies provide plans that are reimbursed for care by the government. Medicare cost the government $900 billion last year.
With the rise in popularity has come growing concern that insurers are ripping off taxpayers by overstating how sick a patient is in order to obtain higher government reimbursements. In 2017, the HHS Office of Inspector General raised concerns about $6.7 billion in payments to patients whose diagnoses were not supported by medical records.
Insurers have been preparing to fight the long-awaited final rule, with company leaders raising concerns about the audits’ accuracy. According to Matt Eyles, president of America’s Health Insurance Plans, the lobbying arm for health insurance companies, the move will raise insurance rates.
“Our position remains the same: this rule is illegal and fatally flawed, and it should have been withdrawn rather than finalized,” Eyles said.