Insurers Offering Medicare Health Plans Overpaid by US Government

Insurers offering Medicare health plans have been overpaid byte United States government. They have in fact been overpaid, in 2010, by as much as just over 3 billion dollars; this is obviously a significant sum of money and should not be taken lightly.

Auditors said that this miscalculation happened because the government did not accurately assess how ill beneficiaries were and because of that ended up paying out too much money.

Medicare Advantage

The United Health Group, Inc. of Minnesota, and the Humana Inc. of Kentucky, are two of the insurer groups who offer coverage to individuals aged 65 and older. They offer this specific type of coverage through Medicare Advantage, which is an alternative medical plan to the traditional federal health program for individuals who are either elderly or disabled. Democrats have historically criticized Medicare for overpaying companies for advantage plans. The health care overhaul, in 2010, reduced payments through tithe year 2019.

Managed Care Plans

Managed care plans are still said to be overpaid, according to the Government Accountability Office, which is Congress’s investigatory arm. Additionally, it was found that medical insurers received between 1.2 and 3.1billion dollars more than they should have received, in the year 2010, and that this was a result of miscalculation of risk.

Risk Adjustment

These overpayments are seen to be direct consequence of overestimating how ill their customers were—this estimation process is a process called risk adjustment. Henry Waxman of California, the senior Democrat on the House Energy and Commerce Committee, said that the United States of America simply cannot continue to overpay health plans in Medicare, just as working families and businesses simply cannot afford to do so. Patients who use Medicare Advantage usually receive superior care, when compared to individuals using traditional Medicare.

Therefore, it is thought that conclusions about whether or not the Medicare Advantage system pays appropriately should not, according to Robert Zirkelbach, be based on The Government Accountability Office and their analyses. Robert Zirkelbach is the spokesman for a Washington trade group.

Risk Calculations for Medicare

Medicare calculates the risk of coverage for Advantage customers every month; they perform this calculation each and every month by considering the individual’s age, his or her gender, and any of his or her major medical conditions and disabilities that would affect the insurance payout. The insurance plans receive larger payments for individuals with a higher risk score, according to monthly calculations.

Enrollment in an Advantage plan totaled about 11 million people for the year 2010; this number accounts for about 24 percent of the total Medicare beneficiaries for that year. Medicare cost the United States an estimated 525 billion dollars, according to the Centers for Medicare and Medicaid Services.

The United States paid about $114 billion to Advantage plans in 2010, according to the Government Accountability Office. Furthermore, Medicare cost an estimated $525 billion, according to the Centers for Medicare and Medicaid Services. Obviously this is an issue that needs work and continued thought and input.

Claire Al-Aufi

Claire Al-Aufi is a contributing author for Hive Health Media who provides updates on health and fitness news.

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