What’s the Difference: Managed Care Organizations and Medicare Advantage

How many of you know that Medicare Advantage (MA) plans is a synonym of Managed Care Organizations (MCOs)? I’m talking about an analogy between Medicare and Medicaid.

I’m sure many of you made the connection right away, but it took me a minute. What is important to note is that MA plans and MCOs can act as Recovery Audit Contractors (RACs), Unified Program Integrity Contractors (UPICs), Targeted Probe-and-Educate (TPE), or whatever acronym you want to create, like the federal government so often does.

More people are choosing MA plans as a private insurance alternative to traditional Medicare. Similarly, on the state Medicaid front, Medicaid recipients are being forced to accept MCOs instead of traditional Medicaid. In the public sector, it would be like the government telling me that because I live in Wake County, North Carolina, if I am enrolled in MA, my plan must be with Blue Cross Blue Shield (BCBS), but if I am enrolled in Medicaid, my MCO must be Alliance.

These MA plans and MCOs are private companies, not nonprofits. Obviously, a company’s purpose is to create profit. This must be a key goal for any company; otherwise, they would not be in business.

Why am I writing about business 101?

Because every contract that the Centers for Medicare & Medicaid Services (CMS) signs is reviewed by the President. Well, maybe not Biden, but maybe Chiquita Brooks-LaSure (the Administrator of CMS). These contracts, like RAC contracts, incentivize finding fraud. We all know that the RAC contracts used to read, for example, if you accuse a provider of owing $12 million, the RAC will be paid 13.5 percent. Quite a payday for accusing a provider of committing a “credible allegation of fraud.” Congress, thankfully, changed the contingency fee to only be paid after appeals are litigated.

The government also audited MA plans.

These 90 federal audits revealed widespread overcharges and other errors in payments to MA plans, with some plans overbilling the government more than $1,000 per patient a year, on average. Why are we putting MA and MCOs in charge of managing our Medicare and Medicaid tax dollars? They are usurping a fire hose of tax dollars. They choose whether to contract with providers, whether to pay providers, what rate they should pay providers, whether the providers are following regulations, whether the providers owe recoupments, and much more. In my opinion we are giving these private insurance companies, like Aetna or Optum or BCBS, winning Powerball lottery tickets.

When the government audited MA plans a couple of years ago, the audits uncovered about $12 million in net overpayments for the care of 18,090 patients sampled, though the actual overall losses to taxpayers are likely much higher.

Officials at CMS said they intended to extrapolate the payment error rates from those samples across the total membership of each plan — and recoup an estimated $650 million from MA plans.

But years have passed, and that has yet to happen. CMS was set to unveil a final extrapolation rule on Nov. 1, 2022, but recently put that decision off until February 2023, which also did not happen.

The 90 audits are the only ones CMS has completed over the past decade, a time when Medicare Advantage has grown explosively. Enrollment in the plans more than doubled during that period, passing 28 million in 2022, at a cost to the government of $427 billion.

Some have claimed that CMS and the federal government in general have fallen short on their jobs to supervise these MA plans. So too have the state Medicaid departments fallen short.

Whether it’s the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG), CMS, RACs, UPICs, or some other entity, someone should monitor or supervise the MA plans and MCOs as they reign over our tax dollars.

Maybe it should be us at RACmonitor.