Yahoo Finance Insurers made patients appear sicker — pocketing $50 billion from Medicare, WSJ analysis finds
Gloria Lee was diagnosed with diabetic cataracts after a nurse stopped by her Boston home for a quick checkup.
Lee, a retired accountant, told The Wall Street Journal she had received several calls from her Medicare insurer in 2022 offering the free in-home visit before she finally agreed. It was a perk of her insurance policy and came with a $50 gift card, the representative had said.
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But Lee’s doctor later told her she didn’t have diabetes, let alone the cloudy vision sometimes caused by the disease. The Journal notes, however, the insurer, a unit of UnitedHealth Group, would have benefited from the nurse’s diagnosis, as Medicare pays insurers more for sicker patients — up to around $2,700 more a year for those with diabetic cataracts at the time.
Private insurance companies involved in Medicare Advantage — a government program in which private insurers oversee Medicare benefits — made hundreds of thousands of dubious diagnoses from 2018 to 2021 that triggered extra taxpayer-funded payments, according to an analysis by the Journal, and Medicare paid insurers around $50 billion for diagnoses added just by insurers to patient records.
How these diagnoses were made
Instead of saving Americans money on the costs of care, the report suggests Medicare Advantage has added billions of dollars in costs. Medicare permits insurers to add their own diagnoses to ones submitted by patients’ own doctors. The analysis, however, found many diagnoses were added for which patients received no treatment or contradicted their doctors’ opinions. Some questionable diagnoses included diabetic cataracts and HIV.
Private insurers pay doctors to review medical charts, according to the Journal, and offer financial benefits, like gift cards, to patients who agree to home visits. This can gave way for diagnoses to be added. For example, Cigna Group agreed to pay $172 million last year to settle a lawsuit filed by the Justice Department over its Medicare Advantage practices for allegedly using in-home health risk assessments and had medical coders conduct chart reviews to help report severe health conditions and increase payments.
In its analysis, the Journal says it found that some diagnoses were made that doctors were unaware of and patients received no care for, or that were apparently false. As an example, over 66,000 Medicare Advantage patients were diagnosed with diabetic cataracts even though they already had gotten cataract surgery.
“It’s anatomically impossible,” Dr. Hogan Knox, an eye specialist at University of Alabama at Birmingham, told the Journal. “Once a lens is removed, the cataract never comes back.”
Meanwhile, another 36,000 diabetic cataract patients didn’t receive any treatment related to diabetes.
Similarly, around 18,000 Medicare Advantage patients were diagnosed with HIV through their insurers, but weren’t receiving treatment from their doctors. Each HIV diagnosis generated about $3,000 a year in added payments to insurers, according to the Journal.
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Insurers call the analysis 'inaccurate' and 'flawed'
The Journal’s analysis showed insurer-driven diagnoses by UnitedHealth for diseases that no doctor treated made a stunning $8.7 billion in payments to the company in 2021.
UnitedHealth spokesman Matthew Wiggin told the publication its analysis was “inaccurate and biased,” and that Medicare Advantage “provides better health outcomes and more affordable health care for millions of seniors” than traditional Medicare. He added that the additional payments helped cover the cost of medical care, reduced premiums and provide other benefits for Medicare Advantage members.
He also called the analysis flawed because it correlates insurer diagnoses with subsequent medical care, and said the COVID-19 pandemic disrupted care and lowered treatment rates during the period that was analyzed by the Journal.
Another spokesperson from major insurer Humana called the Journal’s analysis “flawed and misleading,” noting its internal data showed more of its HIV patients diagnosed through home visits were getting treated than the Journal found.
The Journal says it consulted over a dozen experts about its analysis of the Medicare data who concluded the methodology to be sound. The data was reviewed under a research agreement with the federal government.
Medicare administrators are making changes
Several experts and studies have highlighted suspiciously high rates of insurer-driven diagnoses in Medicare Advantage — but administrators are making changes to the list of diseases that grant insurers higher payments.
Starting in 2026, diagnoses such as diabetic cataracts will pay less or nothing extra to insurers. However, some diseases, like asthma, are getting added to the list.
John Gorman, a former Medicare official and founder of two companies that review records and conduct home visits on behalf of Medicare insurers, doesn’t think the changes will actually fix the problem.
“Any time you base a system like this on diagnosis codes, there’s going to be rampant abuse of the system,” he told the Journal. “[Insurers] will find something else to make up the revenue.”
A study from the University of Southern California found dementia diagnoses among Medicare Advantage members jumped 7.8% in 2019 after dementia was added to the list of diseases that same year.
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