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Insurers profit on Medicare "float"
Posted: Jan 20, 2011
Washington (AP): Private health insurance plans catering to Medicare recipients are making millions by taking money the government sends in advance - but isn't immediately needed - and using it to make investments, federal ivnvestigators say in a report obtained by The Associated Press.
In financial parlance, it's called "playing the float."
In contrast with another government program that also deals regularly with health insurers, MEDICARE LETS ITS PLANS KEEP THE CASH.
An audit by the Health and Human Services inspector general's office estimates the private Medicare Advantage plans collected $376 million from investment income on advance payments from the government in 2007, the latest year available.
Of 50 plans audited, only TWO told investigators that they subtracted investment earnings from their Medicare bids for the following year. THE REST POCKETED THE MONEY.
Medicare typically pays the plans 46 days before they need the money to cover medical services, the audit found.
Comment: Free money for private health insurance plans that the taxpayers pay for? No wonder their profits are so high. Don't we all wish we were paid in advance of any services we do even if we didn't provide that service?
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Its what insurance companies do. - however
[ In Reply To ..]Schools, and I am sure other businesses, do this too. They consider it good business.
Could this be why Medicare is in bad shape? - Backwards Typist
[ In Reply To ..]My reason for posting this article are these sentences:
Of 50 plans audited, only TWO told investigators that they subtracted investment earnings from their Medicare bids for the following year. THE REST POCKETED THE MONEY.
Medicare typically pays the plans 46 days before they need the money to cover medical services, the audit found.
"Pays the plans 46 days before they need the money to cover medical services"????? Do we pay our doctors 46 days in advance? No. Why does Medicare pay those services in advance?
When I used to bill Medicare - back in the dark ages
[ In Reply To ..]They had a goal to deny claims (this was the Reagan years). Agencies would perform services and run in the hole paying salaries and equipment expenses that incurred. You would generally bill once a month after the service was performed, and then be denied a $10,000 reimbursement, but you had already paid salaries, etc. I am guessing this float is meant to keep business cash flow current. Do you know farming? Most farmers set up operating loans a year in advance and withdraw the cash as needed, I believe. Either they don't have to pay interest on unused money, or they can borrow the money and invest, as long as they pay the piper down the road, I believe. With the credit market, they may not do this anymore.
I may be wrong. Things change.
There is a huge clinic near where I live that is - owned by a large Medicare
[ In Reply To ..]Advantage plan. When you walk in the door, there are all these tables and chairs kind of set up to look like an old country store or restaurant. The kitchen area is right beside it. These are the only part I have actually seen but they are top of the line. A family member is 1 of the 2 greeters there to meet you. She makes as much as a lot of transcriptions probably do and greets and serves coffee.
They have pretty much got it locked up to where most of the patients in the area (most of the county) on that program have to come there. Most general physicians have had to drop them as they were terrible to deal with. They would deny, deny, deny, not to mention the referrals.
Before the office I use to work for quit seeing their patients, we had a patient covered by them wanting to take art classes at the place as they offer them along with many other things, and she was told the only way she could take the class was if she switched her PCP. How is that legal? We had other patients that were Medicare/Medicad eligible (meanin they paid nothing) come in on this insurance and say they were told by the sales person they had to switch. So, they went from a PPO to an HMO and having to swich physicians as no one would take it anymore.
Yes, things like this are a lot of what is wrong with Medicare. You would think there would be some sort of law from these insurance companies making such a profit on a program ultimately paid by the taxpayers. Maybe then Medicare could start raising some reimbursements for the physicians and hosptials.
With my private employer-provided insurance - I have two provider choices
[ In Reply To ..]I live a well-populated area, and virtually all physicians are with one or the other system. There basically is no choice. The system is all so intertwined its like a virus. So, I imagine if a group has ties to a certain private Medicare Advantage plan, that is what I would have to choose. There just aren't that many physicians willing to provide care for a chicken or a dozen eggs.
This one is almost like a private club. You - of course cannot be seen
[ In Reply To ..]if you have any other insurance or as a self pay.
We should get rid of the private "advantage" plans - not Medicare - nm
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