Waste of the Day: A Stroke of Luck

Topline: Private insurance companies collected up to $462 million from the federal government in 2021 by falsely claiming their patients had suffered strokes and needed increased healthcare, according to an audit released by the Department of Health and Human Services this May.

False stroke diagnoses

Key facts: The audit reviewed 554 Medicare Advantage plans that offer seniors government-subsidized health insurance as an alternative to traditional Medicare. 

Almost 774,000 patients were listed as suffering a stroke in 2020, but for more than 240,000 of them, there was no record of a hospital visit for treatment.

Auditors investigated 97 of the cases in more detail and found signs of potential fraud with all of them. There were 68 patients who truly had suffered strokes in past years, but their insurance companies submitted records claiming the stroke happened in 2020 and they would require increased healthcare costs in 2021. 

One patient was supposedly diagnosed with a stroke, but then sent home without any treatment. If the patient actually had a stroke, they would have been sent to the emergency room

Another patient was diagnosed with a stroke by a pharmacist, who cannot legally make a diagnosis for Medicare.

Medicare Advantage is the problem

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Background: The audit adds to a long list of problems associated with risk adjustment in Medicare Advantage, one of the largest sources of fiscal waste in Washington.

Medicare Advantage providers are not reimbursed by the government based on what they actually spend on healthcare for their patients. Instead, they are paid up front every month based on their patients’ “risk score,” or a prediction of how expensive their patients’ healthcare will be.

To inflate their patients’ risk scores and get more government funding, insurance companies often exaggerate or fabricate diagnoses. The Committee for a Responsible Federal Budget estimates the practice will cost taxpayers $1 trillion to $1.4 trillion from 2024 to 2033.

Summary: Medicare Advantage was originally meant to decrease the taxpayer burden of offering seniors healthcare, but loopholes and poor internal controls have made it a hotbed for potential fraud.

The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com.

This article was originally published by RealClearInvestigations and made available via RealClearWire.