Insurer Mined Medicare Patient Data for Big Benefit, Report Says – How it’s Costing Taxpayers

A recent Senate Judiciary Committee investigation concluded that UnitedHealth Group – America’s largest health insurer – appears to be using the Medicare Advantage program to make billions in excess profits.

The report, released by Sen. Chuck Grassley (R-Iowa), explains how UnitedHealth has developed some strategies to increase payments from the federal government. Investigators reviewed more than 50,000 pages of internal company documents, including training materials and research tools.

The findings suggest that the company has turned the technology billing process into a revenue driver, often with little evidence that patients are getting improved care for the extra money the government has paid.

How risk adjustment works

To understand the report, you need to understand how Medicare Advantage pays insurers. Unlike traditional Medicare, which pays for each service performed, Medicare Advantage health insurance plans receive a fixed monthly fee for each member enrolled.

This payment is risk adjusted. So if a member has a serious health condition – such as diabetes or heart disease – the government pays the insurer an extra amount each month to cover the expected higher costs of their care.

This system is designed to prevent insurers from enrolling only healthy people. However, the Senate report suggests that UnitedHealth used it to increase the “sickness” of its members in order to increase revenue.

According to the report, UnitedHealth does not treat risk adjustment as a cost-effective payment tool, but as a “major profit-oriented strategy.”

Medical records of money mines

The investigation reveals tactics used by UnitedHealth to identify and send as many diagnosis codes as possible:

• Chart update: Code teams were reportedly hired to conduct secondary reviews of medical records and look for conditions that may have been noted by physicians but not billed. When they receive it, they submit it to Medicare for payment.
• Home inspection: UnitedHealth sent nurses to members’ homes to “assess health risks,” according to the report. These visits often lead to new diagnoses that increase payments. However, the report notes that these visits often did not lead to follow-up care or treatment for newly diagnosed conditions. We reported on this expensive practice last year.
• Supplier allowances: The report describes how the insurer offered financial incentives to doctors to refer more cases.

Among the review’s findings is a lack of standardization in UnitedHealth’s testing program.

While the company invested resources in finding “under-coded” charts (where it could demand more money), it did not apply the same intensity to finding “over-coded” charts (where it was overpaid).

If insurers discover a mistake that led to an overpayment, they must return that money to the government. The investigation suggests that UnitedHealth’s systems were designed to identify revenue opportunities while ignoring errors that would require them to pay money.

What does this mean for taxpayers?

This behavior has a direct impact on the financial health of Medicare. When insurers are overpaid, it drains the Medicare Trust Fund quickly, potentially jeopardizing benefits for future generations.

As Grassley explained in a statement accompanying the report:

“The massive spending on UnitedHealth Group is not only hurting the Medicare Advantage program, it’s hurting the American taxpayer.”

The report stops short of blaming reckless criminal behavior but highlights a systemic issue where incentives can be misdirected. When an insurer can make more money getting codes than managing health, the focus can easily shift from patient care to data mining.

Possible changes to the system

The report is part of a growing wave of scrutiny about Medicare Advantage overbilling. While it doesn’t immediately change how your system works, it adds pressure on Congress and the Centers for Medicare and Medicaid Services to curb these practices.

In the meantime, people with Medicare Advantage plans — regardless of provider — should check the chart’s accuracy. Regularly review your medical records to ensure that the illnesses listed in your charts and files match the care you are receiving.