A Former Health Insurance Executive Is Blowing The Whistle On Billions Of Dollars In Medicare Fraud


During the Bush administration, a Clinton-era initiative on Medicare was formalized under the name Medicare Advantage. The idea was that, by bringing the efficiency of private enterprise into the complicated Medicare bureaucracy, doctors could be paid more efficiency, competition for services would go up, and the plan would improve for all involved. Instead, a whistle-blower alleges, major insurance companies defrauded the government out of billions.

The New York Times is reporting on a lawsuit brought by former UnitedHealthcare executive Benjamin Poehling, who alleges he oversaw what amounted to a simple fraud. The issue was simple: The sicker a patient was, the more money United, and others managing Medicare Advantage plans would see, in order to discourage them from refusing patients with more serious conditions. The problem is that the higher payments don’t flow from care, but rather from diagnosis, and if one problem could be spun as the cause of another, the insurer got more money:

As Mr. Poehling’s lawyer, Mary Inman, described it, the government would pay UnitedHealth $9,580 a year for enrolling a 76-year-old woman with diabetes and kidney failure, for instance, but if the company claimed that her diabetes had actually caused her kidney failure, the payment rose to $12,902 — an additional $3,322.

Adding to the problem, some conditions made more cash but others didn’t, so even potential problems like high blood pressure were ignored. Instead, health insurance companies data-mined patients looking for any way to rearrange diagnoses to receive higher payments. Just to make things that much more unpleasant, Poehling alleges his team only got bonuses for more expensive diagnoses, not more accurate data or better health outcomes, the whole reason one would legitimately do this in the first place.

Poehling, it should be noted, isn’t doing this entirely out of altruism: He gets a percentage of any funds recovered, and estimates put total Medicare Advantage fraud at $10 billion a year. Then again, he first filed suit, under seal, in 2011; it was unsealed until very recently. One of the reasons for that might be that United is currently suing the government over rules that would require it to prove the diagnoses it reports are verified by patient charts, and to pay penalties if it overstates a diagnosis. And, while all this is happening, UnitedHealth is facing questions over why it left Affordable Care Act exchanges while remaining in Medicare Advantage, which accounted for most of its profits in a recent report.

(via New York Times)