Challenges in recovering overpayments to Medicare Advantage plans

Medicare pays private insurers to insure Medicare patients, through what are known as Medicare Advantage plans. The idea is that Medicare pays a fixed amount per patient per month, and if private insurers are able to be more efficient with their care, the insurers can keep the difference. If insurers are less efficient and lose money on patients, they are responsible for the loss. However, one factor is that Medicare will pay more for patients who have more complex or severe health conditions. On the surface, reimbursing insurers more for sicker patients is very reasonable. In practice, however, the insurers are the ones who determine whether a patient is sick enough to qualify for the greater reimbursement. Although certain guidelines are supposed to be followed, it might not be difficult to imagine how some rules are bent. The government has tried to recover some overpayments to Medicare Advantage plans, but KFF Family News reported on the challenges of doing so.

One of the structural challenges of the payment recovery seems to be related to the length of time the lawsuits can take (over a decade), and how Medicare staff leave their jobs -- sometimes to take up jobs related in the Medicare Advantage industry. Another challenge is that Medicare is concerned about continuity of care and the challenges that might arise if a Medicare Advantage insurer leaves the market.