Ida Hellander, MD, David Himmelstein, MD, and Steffie Woolhandler, MD, conducted the study (pdf), which will appear in the International Journal of Health Services. The researchers found MA insurers gained excess payments from the Medicare program in five ways:
1. Selective enrollment of healthier beneficiaries before 2004 ($41 billion).
2. Enrolling Medicare beneficiaries who have lower health costs and are within Medicare's "Hierarchical Condition Categories" after 2004 ($122.5 billion).
3. Overpayments mandated within Congress' 2003 Medicare Prescription Drug, Improvement, and Modernization Act, including duplicate payments for indirect medical education ($84.4 billion, which includes point four).
4. Bonus payments from CMS' Medicare Advantage Quality Bonus Payment Demonstration, which the Government Accountability Office said will cost $8.35 billion over 10 years.
5. Duplicate payments on behalf of beneficiaries who receive all or part of their care at VA facilities, which is already covered by the government ($34.8 billion).
The researchers used several sources to collect the data, including the GAO, the Medicare Payment Advisory Commission, the National Bureau of Economic Research, the Commonwealth Fund and others.
"We've long known that Medicare has been paying private insurers more than if their enrollees had stayed in traditional free-for-service Medicare, but no one has assessed the full extent of these overpayments," Dr. Hellander, lead author of the study, said in a news release. "Nor has anyone systematically examined the many ways that private insurers have gamed the system to maximize their bottom line at taxpayers' expense."