top of page

Time's Running Out for Medicare's Trust Fund

A recent article from MarketWatch brings up an important point: The Medicare trust fund is in trouble, but not for the reasons you might suspect.


The headline is a whopper: Medicare Advantage could get up to $1.6 trillion more [emphasis mine] than it’s entitled to over the next decade, and that will hurt the Medicare trust fund.


Here's a trillion-dollar question--why is Medicare Advantage getting so much money? And why is the federal government promoting this financial insanity?


In theory, Medicare Advantage was meant to demonstrate the private sector's ability to promote competition and lower costs. In practice, that approach has failed over the past two decades. The fact is that healthier Medicare Advantage (MA) members cost the government more per patient than sicker traditional Medicare members on a Per Member Per Month (PMPY) basis.


My perspective is this additional cost is primarily due to coding and risk scoring, and it's no wonder why there are now over 3,000 Part C private insurers cashing in on higher reimbursement rates. Per the MarketWatch article, the Committee for a Responsible Federal Budget (CRFB) believes “these overpayments stem from incentives that lead MA plans to report enrollee diagnoses more completely than physicians billing traditional Medicare. As a result, MA beneficiaries appear sicker than they are relative to traditional Medicare beneficiaries which leads to higher payments."


In short, coding is the culprit here. Using Coding to determine reimbursement enables misleading billing practices that insurers game for their company's gain. As I've argued before, coding is the greatest problem in healthcare (See Code Red Part 2: Improving Healthcare Requires Trade-Offs, Not Solutions).


One might think that draining the Medicare Trust Fund by over a trillion dollars is irresponsible, especially for the sake of a program that was supposed to save money. Being a (Medicare) Trust Fund Baby (Boomer), has me wondering why Medicare and Congress continue to authorize this strategy.



0 views0 comments

Comments


bottom of page