Vice President Kamala Harris outlined a new proposal for home health care on “The View” on Tuesday, describing a Medicare expansion plan that she said would help what is called the “sandwich generation” to take care of aging parents.That constituency includes many adults who find themselves straddling the responsibility of rearing their children at the same time that their parents need more assistance to stay at home.“There are so many people who are right in the middle,” said Ms. Harris on the ABC talk show. She recalled caring for her mother, Shyamala Gopalan Harris, before she died of cancer in 2009. “It’s about dignity for that individual. It’s about independence for that individual,” she said.Home health services that last more than a few months represent “the biggest gap in Medicare,” said David Grabowksi, a health policy professor at Harvard who studies long-term care. Medicaid, the federal-state program for the poor, covers home care for elderly and disabled Americans who need it, but people are forced to spend all their savings to qualify and often face long waiting periods.The Harris campaign said that the plan would be paid for with savings from the expansion of Medicare price negotiations with drug manufacturers, which is expected to lower government spending for older people’s prescriptions. But it is not clear how much the additional benefits under the Harris plan would cost.“This would be transformative from a care perspective,” Mr. Grabowski said, but he added that the price could be very high. “There will be a lot of sticker shock once this is costed out.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe.

Vice President Kamala Harris outlined a new proposal for home health care on ABC’s “The View” on Tuesday, a plan for expanding Medicare coverage aimed at helping what is called the “sandwich generation” take care of their aging parents.Many adults find themselves straddling the dual responsibilities of rearing their children at a time when their parents need more assistance to stay at home.And millions of Americans struggle to find affordable home care for themselves or their loved ones as they become older. Medicare, the federal insurance program for older Americans, does not cover long-term care and will generally pay for a home aide only if a patient is recovering from an acute medical condition, like a stroke, and only for a short time, often just a few months.While Medicaid will pay for a home aide if someone is poor or has no assets, there are long waiting lists to qualify. And in many areas of the country, there is a severe shortage of workers because of low wages and better, less stressful jobs in other businesses.Most people have no choice but to rely on a family member to care for them because they cannot afford the cost of care, which can surpass the expense of an assisted living facility. Agencies can charge about $30 an hour, according to Genworth, a long-term care insurance company. Others end up spending most of their assets and seeking care in a nursing home, where Medicaid does not have waiting lists.Judy Feder, a professor of public policy at Georgetown University, who published a recent paper on a possible Medicare home-care benefit, said such a policy would fill a major gap in Medicare, and relieve financial and physical burdens on family members. The private market for long-term care insurance has not functioned well, she said: “It’s a catastrophic, unpredictable event for which you need insurance.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe.

Despite the explosion in ransomware hacks like the one against Change Healthcare, regulation is spotty and few new safeguards have been proposed to protect patient data, vulnerable hospitals and medical groups.The recent cyberattack on the billing and payment colossus Change Healthcare revealed just how serious the vulnerabilities are throughout the U.S. health care system, and alerted industry leaders and policymakers to the urgent need for better digital security.Hospitals, health insurers, physician clinics and others in the industry have increasingly been the targets of significant hacks, culminating in the assault on Change, a unit of the giant UnitedHealth Group, on Feb. 21.The ransomware attack on the nation’s largest clearinghouse, which handles a third of all patient records, had widespread effects. Fixes and workarounds have alleviated some distress, but providers are still unable to collect billions of dollars in payments. Many smaller hospitals and medical offices are still having trouble getting paid more than a month after Change was first forced to shut down many of its systems.Even now, very little information about the exact nature and scope of the attack has been disclosed. UnitedHealth said that it had advanced more than $3 billion to struggling providers, and that it expected more of Change’s services to be available in the coming weeks as it brought the systems back online.The F.B.I. and the Department of Health and Human Services are investigating the Change hack, including whether patients’ records and personal information have been compromised. Because Change’s network acts as a digital switchboard that connects information from a patient’s first doctor visit to a diagnosis like cancer or depression and then subsequent treatment to a health insurer for benefits and payments, there is a risk that people’s medical history could be exposed for years.The attack on Change is just the most far-reaching example of what has become nearly commonplace in the health care industry. Ransomware attacks, in which criminals shut down computer systems unless the owners pay the hackers, affected 46 hospital systems last year, up from 25 in 2022, according to the data security firm Emsisoft. Hackers have also taken down companies that provide services such as medical transcription and billing in recent years.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe.

A new study shows an increase in the rate of inpatient complications, including infections and falls, though patients were no more likely to die.The rate of serious medical complications increased in hospitals after they were purchased by private equity investment firms, according to a major study of the effects of such acquisitions on patient care in recent years.The study, published in JAMA on Tuesday, found that, in the three years after a private equity fund bought a hospital, adverse events including surgical infections and bed sores rose by 25 percent among Medicare patients when compared with similar hospitals that were not bought by such investors. The researchers reported a nearly 38 percent increase in central line infections, a dangerous kind of infection that medical authorities say should never happen, and a 27 percent increase in falls by patients while staying in the hospital.“We were not surprised there was a signal,” said Dr. Sneha Kannan, a health care researcher and physician at the division of pulmonary and critical care at Massachusetts General Hospital, who was the paper’s lead author. “I will say we were surprised at how strong it was.”Although the researchers found a significant rise in medical errors, they also saw a slight decrease (of nearly 5 percent) in the rate of patients who died during their hospital stay. The researchers believe other changes, like a shift toward healthier patients admitted to the hospitals, could explain that decline. And by 30 days after patients were discharged, there was no significant difference in the death rates between hospitals.Other researchers who reviewed the study said that while it didn’t provide a complete picture of private equity’s effects, it did raise important questions about the quality of care in hospitals that had been taken over by private equity owners.“This is a big deal because it’s the first piece of data that I think pretty strongly suggests that there is a quality problem when private equity takes over,” said Dr. Ashish Jha, the dean of the Brown University School of Public Health, who has also studied hospital safety extensively.Over the last two decades, private equity firms have become major players in health care, purchasing not just hospitals but also a growing number of nursing homes, physician practices and home health care companies. The firms pool money from institutional investors and individuals to form investment funds, often buying hospitals and other entities through high levels of debt, with an eye to reselling them in a few years. A separate recent study suggested the firms were consolidating physician groups in certain local markets, potentially leading to higher prices.So far, these firms own a small share of hospitals in the United States, though the numbers are hard to measure because the transactions are not always public.Several media reports have shown that some of the acquired hospitals have been forced to close because of financial distress, and some have come under regulatory scrutiny for quality problems. But such examples are not necessarily typical.“The private equity industry plays an essential role in providing local hospitals with the capital they need to improve patient care, expand access and drive innovation,” said Drew Maloney, the chief executive of the American Investment Council, a trade group for the industry. “This research doesn’t reflect private equity’s full record of strengthening health care across the country.”The industry has recently come under scrutiny. This month the Senate Budget Committee began a bipartisan investigation into private equity ownership of hospitals. And bills from several Democrats in Congress have pushed for more public reporting of private equity deals in health care, and for broader reforms on ways the firms can acquire companies and earn profits.“They are preventable adverse events that everyone thinks shouldn’t happen in hospitals,” one analyst said.Monica Jorge for The New York TimesSeveral studies have examined private equity firms’ financial effects on hospitals. The new paper, which examines 51 hospitals between 2009 and 2019, provides new evidence that those changes may result in more dangerous conditions for patients. The researchers, who also include Dr. Zirui Song from Harvard and Joseph Dov Bruch from the University of Chicago, received funding from Arnold Ventures, a group that supports a wide array of health care research and has been critical of the private equity industry.Previous research found that patients were less likely to die after visiting a private equity-backed hospital. But the researchers said they wanted to focus their study on specific measures like medical errors that more directly reflected the care in a hospital instead of patient deaths, which are more likely to be influenced by the health status of the patients entering the hospital.The researchers examined a range of errors that Medicare tracks and that Medicare encourages hospitals to minimize. Hospitals with high levels of some of these problems — like central line infections — must pay financial penalties to the government. Though not all of the errors happened often enough to be measured with precision, and the complications occurred rarely overall, all of the eight individual measures studied in the paper worsened in the hospitals purchased by private equity funds.Rates of these complications have generally been declining for about 15 years, as hospitals have worked to reduce them and as best practices for avoiding them have become more widespread.“They are preventable adverse events that everyone thinks shouldn’t happen in hospitals,” said Dr. David Blumenthal, the former president of the Commonwealth Fund, a nonprofit health care research group, who reviewed the study.Some private equity owners may be overly eager to cut costs, leading to a decline in the quality of care, he said. “It’s about the style of investing,” he said. “It’s about the aggressiveness and short-time-frame profits and returns on investment that are sought.” In the cases where they do not pursue this strategy, private equity can be positive, Dr. Blumenthal added: “It brings capital. It brings innovation.”The researchers said the most likely explanation for the increased errors was fewer hospital employees, an effect that has been measured in other studies of private equity. “Reductions in staffing after acquisition could explain all of these findings,” Dr. Song said.But this paper did not directly measure staffing levels in the hospitals it examined.Dr. Song has advocated more government oversight of private equity firms in health care. But several scholars who have studied the firms said that while the new paper raises serious concerns, it still leaves some important questions unanswered for policymakers.“This should make us lean forward and pay attention to what’s happening,” said Zack Cooper, a professor of economics at Yale, who has examined the industry. “It shouldn’t cause us to introduce wholesale policies yet.”Vivian Ho, a professor of economics at Rice, was a coauthor on a paper that documented reductions in staffing after the firms bought hospitals, including small cuts to nursing. Professor Ho noted that it’s hard to be sure whether the reductions were the result of the change in leadership, or ownership by a private equity firm specifically, but she said the results were alarming enough that she was eager to see more evidence.“I’m willing to believe that it is because of the staffing issues,” she said. “You just combine that with the anecdotal reports of what is going on in some of these hospitals, and it is a consistent story.”

The federal agency claims the company’s practices amount to antitrust activity, a new salvo in the government’s scrutiny of health care consolidation that has led to higher prices.After vowing to tackle consolidation in the health care industry, the Federal Trade Commission filed an antitrust lawsuit on Thursday that challenged the growing practice of private-equity firms backing companies that amass medical practices and dominate local markets.The suit targeted a large doctors’ group that operates anesthesia practices in several states, claiming the group and the private equity firm advising and financing it were consolidating doctors’ groups in Texas so they could raise prices and increase their profits.The agency brought the civil lawsuit in federal court against U.S. Anesthesia Partners and Welsh, Carson, Anderson & Stowe, a private-equity firm in New York.“These tactics enabled USAP and Welsh Carson to raise prices for anesthesia services — raking in tens of millions of extra dollars for these executives at the expense of Texas patients and businesses,” said Lina M. Kahn, the chair of the F.T.C., in a statement. “The F.T.C. will continue to scrutinize and challenge serial acquisitions, roll-ups and other stealth consolidation schemes that unlawfully undermine fair competition and harm the American public.”The case is significant because it focuses on a business strategy that has become increasingly common in health care. Private equity firms have been helping companies to buy more doctors’ practices in various medical specialties, and those purchases have allowed them to control a large share of certain local markets.The suit is also unusual because it was also brought against the private equity investor, which now owns a minority stake in U.S. Anesthesia Partners, and not just the company.A recent study from researchers at the Petris Center at the University of California, Berkeley, and the Washington Center for Equitable Growth, a progressive think tank in Washington, found that private equity-funded consolidation had led to price increases in gastroenterology, dermatology and other medical specialties.The F.T.C. has said it considers this type of health care merger to be an enforcement priority, a sign that this case may be the first of several scrutinizing the growth of private equity in the industry. The firms have argued that their businesses do not violate federal antitrust law.The suit argues that Welsh Carson and U.S. Anesthesia Partners have expanded their reach across Texas with an explicit goal of using market share to raise prices its doctors and nurses would be paid by insurers.Brian Regan, the head of Welsh Carson’s health care group who sat on the board of U.S. Anesthesia Partners, was quoted in the lawsuit as telling lenders who were financing a key deal that the firm planned to “build a platform with national scale by consolidating practices with high market share in a few key markets” and to improve “negotiating leverage” with insurers.After learning of the strategy, an executive in a practice the firm bought in Austin, Texas, responded, “Awesome! Cha-ching,” according to the suit.The suit also accused U.S. Anesthesia Partners of conspiring with another large anesthesia company to stay out of its markets in Texas. The name of that company was redacted from the legal filing.Two of the largest acquisitions in U.S. Anesthesia Partners’ history were previously reviewed and approved by the F.T.C.Welsh Carson and U.S. Anesthesia Partners disputed the F.T.C.’s claims and said they would fight the lawsuit.“The F.T.C.’s civil complaint is based on flawed legal theories and a lack of medical understanding about anesthesia, our patient-oriented business model and our level of care for patients in Texas,” said Dr. Derek Schoppa, a Texas physician and board member of U.S. Anesthesia Partners, in a statement.The company said its commercial prices in Texas had only “increased modestly over the years,” remaining “essentially” flat after being adjusted for inflation.Amy Stevens, a spokeswoman for Welsh Carson, said the private equity firm was “disappointed” by the suit. “Unfortunately, this is consistent with the series of recent lawsuits that the F.T.C. has filed using litigation to pursue radical policy theories,” she said in a statement. “We are confident we will prevail.”Fiona Scott Morton, a professor of economics at Yale and the former chief economist for the Justice Department’s antitrust division, said the case highlighted how many small mergers could have the same effect as a large one.“If each individual transaction is small but there’s lots of them, you end up with a cumulative effect,” she said. “It’s important not to get caught up in evaluating one transaction at a time and missing the forest for the trees.”

A new study finds that private equity firms own more than half of all specialists in certain U.S. markets.In recent years, private equity firms have been gobbling up physician practices to form powerful medical groups across the country, according to a new report released Monday.In more than a quarter of local markets — in places like Tucson, Ariz.; Columbus, Ohio; and Providence, R.I. — a single private equity firm owned more than 30 percent of practices in a given specialty in 2021. In 13 percent of the markets, the firms owned groups employing more than half the local specialists.The medical groups were associated with higher prices in their respective markets, particularly when they controlled a dominant share, according to a paper by researchers at the Petris Center at the University of California, Berkeley, and the Washington Center for Equitable Growth, a progressive think tank in Washington, D.C. When a firm controlled more than 30 percent of the market, the cost of care in three specialties — gastroenterology, dermatology, and obstetrics and gynecology — increased by double digits.When Private Equity Takes OverResearchers found that when a firm controlled more than 30 percent of the market, the prices paid by private insurers for gastroenterology and other specialties increased sharply.

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Average price of gastroenterology visit
Source: Nicholas C. Petris Center on Health Care Markets and Consumer Welfare, University of
California, Berkeley; Washington Center for Equitable GrowthBy The New York TimesThe paper, published by the American Antitrust Institute, documented substantial private equity purchases across multiple medical specialties over the last decade. Urology, ophthalmology, cardiology, oncology, radiology and orthopedics have also been major targets for such deals.“It’s shocking when you look at it,” said Laura Alexander, director of markets and competition policy for the Washington Center, who said private equity firms dominated only a handful of markets a decade ago. By looking at individual markets, the researchers were able to document the local impact. “National rates mask this much more acute problem in local markets,” she said.The higher prices paid by private insurers contribute to high insurance premiums, and may increase out-of-pocket costs for patients.Private equity firms, which pool funds from institutional investors and individuals to form investment funds, tend to purchase companies using debt, with an eye to reselling them in a few years. The industry has turned to health care fairly recently, but it has begun purchasing doctors’ practices at a steady clip, combining smaller practices to form larger companies.When a private equity arm of a Canadian pension fund, OMERS Private Equity, bought Gastro Health, a large gastroenterology medical group, in 2021, it proceeded to acquire nearly a dozen smaller practices, according to the researchers, who say the group is now dominant in markets including the Miami area. The company now operates in seven states, employing over 390 doctors. The researchers saw similar patterns in other markets, where a firm would buy one large practice, then increase its market share by adding nearby smaller practices in the same medical specialty.Historically, doctors’ practices have been relatively small, and owned by doctors themselves. But that model has been rapidly declining as the business of medicine has become more complex and the insurance companies that negotiate with doctors over prices have become bigger. Nearly 70 percent of all doctors were employed by either a hospital or a corporation in 2021, according to a recent analysis from the Physicians Advocacy Institute.“We’re seeing a fundamental change in how medicine is being practiced in the U.S.,” said Richard Scheffler, a professor of health economics and public policy at Berkeley and director of the Petris Center.Hospitals and insurance companies have also bought out many independent physicians’ practices. Optum, an arm of the publicly traded UnitedHealth Group, which also owns one of the nation’s largest insurers, employs roughly 70,000 physicians. Studies have shown that these types of concentrated ownership of doctors in a given market are also associated with higher prices.Private equity is often viewed by physicians as an attractive alternative to having their practice bought by a hospital. In part, the doctors are “getting more scale and gaining efficiencies,” including help with office administration and technology, said Lisa Walkush, a national managing principal for the professional services firm Grant Thornton. “It can be a really good thing, but the private equity firms have to keep their promises and be held accountable,” she said.Michael Kroin, the founder and chief executive of Physician Growth Partners, a Chicago firm that advises independent practices, said the private equity firms “provide scale to allow independent practice groups to survive and maintain their autonomy.” If they could, given their rising costs and how squeezed they feel by insurers, “every independent group would want to increase its fees,” he said.The private equity industry has begun to attract particular scrutiny from researchers and policymakers. Lawmakers in the House are considering legislation to require more reporting when the firms buy health care companies. Currently, the acquisitions can be difficult to track. The authors of the new paper relied on data on deals from a company called PitchBook, which they then matched with doctors in a health care claims database to measure payments from private health insurers.The researchers couldn’t be sure whether the payment increases they measured happened because doctors were performing more complex procedures or just negotiating higher prices, but they suspected the prices explained most of the effect.Previous studies of private equity-acquired hospitals and physician practices from Zirui Song, an associate professor of health policy and medicine at Harvard Medical School, have also documented increasing revenue associated with the purchases. In an interview, Dr. Song said he expected the industry would continue to buy doctors’ practices in the coming years. “We still have a lot of small physician-owned specialty practices,” he said. “That’s an opportunity for consolidation. It’s an easy opportunity.”Critics of the industry, including Professor Scheffler, have also raised concerns about the medical care delivered by private equity-owned health care companies, arguing that the industry’s emphasis on profits could cause patient harm. Research on private equity ownership of nursing homes has shown evidence of lower staffing levels and higher rates of prescriptions for antipsychotic medicines.But little rigorous research has been published on patient care in the office-based medical specialties that the new paper focuses on.How the change in ownership and independence affects doctors and how they treat patients “has been very severely understudied,” said Barak Richman, a professor of law and business administration at Duke University, who reviewed the paper. But he said there is evidence that these firms are skilled at exploiting loopholes in existing regulations to maximize their profits.“Private equity is like the system on steroids,” said Sherry Glied, the dean of the Wagner School of Public Service at New York University. “Every time there’s an opportunity for making money, P.E. is going to move faster than everyone else. And consolidation is the way to do that.”While federal regulators are contemplating changes to how they oversee these deals, researchers say the report underscores the need to pay attention to what happens when a company makes a series of seemingly modest acquisitions. “This builds the case for strong antitrust tools for these incrementally small but collectively larger consolidation trends,” said Erin Fuse Brown, the director of the Center for Law, Health and Society at Georgia State University.

After intense lobbying by insurers, U.S. health officials say curbs aimed at overbilling by Medicare Advantage will be eased in over 3 years.The Biden administration on Friday finalized new rules meant to cut down on widespread overbilling by private Medicare Advantage insurance plans, but softened the approach after intense lobbying by the industry.Regulators are still moving forward with rules that will lower payments to insurers by billions of dollars a year. But they will phase in the changes over three years, rather than all at once, and that will lessen the immediate effects.In the short term, private health plans will still be able to receive payments that Medicare officials do not think are appropriate. The system will eventually eliminate extra funds the plans receive for covering patients under 2,000 diagnoses, including 75 that appear to be the subject of widespread manipulation by the plans.But the extended timetable could also mitigate concerns raised by health plans, doctors and others that the broad policy change might result in unintended consequences, such as increases in premiums or reductions in benefits for Medicare Advantage beneficiaries.The nation’s top Medicare official acknowledged on Friday that the industry’s feedback influenced the shape of the new rules.We were really comfortable in our policies, but we always want to hear what stakeholders have to say,” said Chiquita Brooks-LaSure, the administrator of the Centers for Medicare and Medicaid Services. She said desire for a slower policy change was “something that we really heard come through from our comments, and we wanted to be responsive.”The new payment formula is a reaction to mounting evidence over more than a decade that private insurers have been exploiting a payment formula to extract overpayments from the federal government. Plans are eligible for extra payments for patients whose illnesses could be costlier to cover, which has encouraged many plans to go to great lengths to diagnose their customers with as many health conditions as possible. Insurers are collecting tens of billions of dollars in extra payments a year, according to various estimates.Nearly every large insurer in the program has settled or is facing a federal fraud lawsuit for such conduct. Evidence of the overpayments has been documented by academic studies. government watchdog reports and plan audits.Medicare Advantage now enrolls about half of all Medicare beneficiaries, and its plans are paid more than $400 billion a year. It is popular among its customers, who often enjoy lower premiums and benefits — like vision and dental services — that the basic government Medicare plan doesn’t include.The program has also become profitable for the largest insurance companies. Recent research from the Kaiser Family Foundation found that insurers make about double the gross margins with Medicare plans that they make with their other lines of business. Humana recently announced that it would stop offering commercial insurance to focus on Medicare, which serves older and disabled Americans, and Medicaid, which mostly serves low-income populations.The new rule will eventually eliminate the extra payments for many diagnoses that Medicare Advantage plans were commonly reporting, but which Medicare data did not show were associated with more medical care. Those diagnosis codes included a few that private plans had specifically targeted, like diabetes “with complications” and a form of severe malnutrition that is typically seen in countries experiencing famine.These Diagnoses Are Much More Common in Medicare Advantage Than Traditional MedicareMedicare is proposing to remove bonus payments for patients diagnosed with these conditions.

The Biden administration has proposed changes to how it would pay private Medicare Advantage plans.“How’s the knee?” one bowler asked another across the lanes. Their conversation in a Super Bowl ad focused on a Biden administration proposal that one bowler warned another would “cut Medicare Advantage.”“Somebody in Washington is smarter than that,” the friend responded, before a narrator urged viewers to call the White House to voice their displeasure.The multimillion dollar ad buy is part of an aggressive campaign by the health insurance industry and its allies to stop the Biden proposal. It would significantly lower payments — by billions of dollars a year — to Medicare Advantage, the private plans that now cover about half of the government’s health program for older Americans.The change in payment formulas is an effort, Biden administration officials say, to tackle widespread abuses and fraud in the increasingly popular private program. In the last decade, reams of evidence uncovered in lawsuits and audits revealed systematic overbilling of the government. A final decision on the payments is expected shortly, and is one of a series of tough new rules aimed at reining in the industry. The changes fit into a broader effort by the White House to shore up the Medicare trust fund.Without reforms, taxpayers will spend about $25 billion next year in “excess” payments to the private plans, according to the Medicare Payment Advisory Commission, a nonpartisan research group that advises Congress.The proposed changes have unleashed an extensive and noisy opposition front, with lobbyists and insurance executives flooding Capitol Hill to engage in their fiercest fight in years. The largest insurers, including UnitedHealth Group and Humana, are among the most vocal, according to congressional staff, with UnitedHealth’s chief executive pressing his company’s case in person. Doctors’ groups, including the American Medical Association, have also voiced their opposition.“They are pouring buckets of money into this,” said Mark Miller, the former executive director of MedPAC, who is now the executive vice president of health care at Arnold Ventures, a research and advocacy group. Supporters of the restrictions have begun spending money to counter the objections.The insurers say the new rule would harm the medical care of millions, particularly in vulnerable communities.The change would force the companies to reduce benefits or increase premiums for Medicare beneficiaries, they say, with less money available for doctors to treat conditions like diabetes and depression.The changes are “stripping funding from prevention and early disease,” said Dr. Patrick Conway, a former Medicare official who is now an executive with Optum, a subsidiary of UnitedHealth that owns one of the nation’s largest physician groups. “As you lower payments for those conditions, you are going to have direct impact on patients.”Since the proposal was tucked deep in a routine document and published with little fanfare in early February, Medicare officials have been inundated with more than 15,000 comment letters for and against the policies, and roughly two-thirds included identical phrases from form letters. Insurers used television commercials and other strategies to urge Medicare Advantage customers to contact their lawmakers. The effort generated about 142,000 calls or letters to protest the changes, according to the Better Medicare Alliance, one of the lobbying groups involved and the one behind the bowling commercial.The showdown underscores just how important — and lucrative — Medicare Advantage has become to insurers and doctors’ groups that are paid by the federal government to care for older Americans. Roughly $400 billion in taxpayer money went to these private plans last year. Profits on Medicare Advantage plans are at least double what insurers earn from other kinds of policies, according to a recent analysis by the Kaiser Family Foundation.To the surprise of many in the industry, leaders in Congress have not stepped forward to vigorously defend the private plans.In interviews this month, top administration health officials said they would not be swayed by the loud outcry from the industry.“We need strong oversight of this program,” said Dr. Meena Seshamani, Medicare’s top official, adding that the agency was committed to “holding the industry accountable for gaming the system.”Stacy Sanders, an adviser to Xavier Becerra, the Health and Human Services secretary, said:“We will not be deterred by industry hacks and deep-pocketed disinformation campaigns.”Growing evidence of abuseOlder Americans have flocked to Medicare Advantage, finding that many policies offer lower premiums and more benefits than the traditional government program.The insurers receive a flat rate for every person they sign up — and get bonuses for those with serious health conditions, because their medical care typically costs more.But numerous studies from academic researchers, government watchdog agencies and federal fraud prosecutions underscore how the insurers have manipulated the system by attaching as many diagnosis codes as possible to their patients’ records to harvest these bonus payments.Four of the largest five insurers have either settled or are currently facing lawsuits claiming fraudulent coding. Similar lawsuits have also been brought against an array of smaller health plans.Medicare officials propose eliminating more than 2,000 specific diagnosis codes — about one-fifth of all codes — from the payment formula for these private plans. Regulators homed in on diagnoses that were not associated with more medical care. A handful of diagnoses were removed because they were prone to abuse by the private plans.Insurers have focused their objections on three common illnesses for which codes would be removed: mild depression; vascular disease; and “diabetes with complications.”These Diagnoses Are Much More Common in Medicare Advantage Than Traditional MedicareMedicare is proposing to remove bonus payments for patients diagnosed with these conditions.

The government plans to aggressively audit Medicare Advantage plans for overbilling but may face lawsuits.The Biden administration announced a rule Monday cracking down on Medicare private plans that have overcharged the federal government. The rule calls for a more aggressive approach to how plans are audited in the Medicare Advantage program, which enrolls nearly half of all Medicare beneficiaries.The administration said it expects to collect as much as $4.7 billion over a decade from its heightened oversight. The rule strengthens the ability of the government to audit plans and recover the overpayments. It is the government’s strongest action against the practices in more than a decade.At a news conference announcing the change, Xavier Becerra, the health and human services secretary, acknowledged that Medicare had been criticized for not taking a hard enough stand against the plans’ pattern of overcharging. “Today, we are taking some long-overdue steps to move us in the direction of accountability,” he said.As Medicare Advantage has become increasingly popular with older Americans, he said the agency needed to make sure it was properly overseeing the private plans. “We want to encourage correct reporting across the program,” he said.Health insurers had lobbied heavily against the policies in the rule, which relate to a system of risk adjustment, and are likely to bring legal action against the government. Mr. Becerra said he could not speculate on any potential litigation, but he emphasized he thought the new rule was ready “for prime time.”Insurers were upset by the rule. “This rule is unlawful and fatally flawed, and it should have been withdrawn instead of finalized,” said Matt Eyles, president of AHIP, a large insurer trade group, in a statement.Health Care in the United StatesMedicare: The Biden administration announced a rule targeting Medicare private plans that overcharge the federal government. The change strengthens the ability to audit plans and recover overpayments.‘Hospital at Home’ Movement: In a time of strained capacity, some medical institutions are figuring out how to create an inpatient level of care outside of hospitals.Obamacare: A record 16.3 million Americans signed up for health insurance plans through the Affordable Care Act’s marketplaces.Omnibus Bill: The giant spending bill passed by Congress kept the government open. But it also quietly rewrote huge areas of health policy.Evidence from government audits, fraud lawsuits and academic analysis has shown that many plans have been systematically overcharging the federal government for years by exaggerating the health problems of their customers to collect extra payments. But the Centers for Medicare and Medicaid Services, which regulates the plans, has been reluctant to tackle the overcharging in the face of industry opposition, technical complexity and the plans’ popularity.Under current rules, regulators have been closely reviewing a small subset of patient medical records to compare them with billing codes sent to the federal government. Under the new policy, the error rate found in the sample will be extrapolated across all the records in the plans since 2018, a change that would substantially increase the magnitude of possible repayments. Officials said plans owe the government $479 million in overpayments from 2018 alone.The extrapolation approach was first proposed in 2018 by the Trump administration. Monday’s regulation makes the new audit system final. But the original proposal would not have made the payments retroactive. “It’s appropriate to have extrapolation going forward,” said Seema Verma, who was the C.M.S. administrator when the rule was first proposed in 2018. But she said the retroactive nature of the rule was “extremely unfair and problematic.”“They’re likely to get sued,” she saidBut some industry critics had been calling for Medicare to go even further, applying the broader penalties as far back as 2011, when the audits began.“At least we’re on the right track now,” said Ted Doolittle, a former senior Medicare official, who said he was disappointed the agency had gone back only to 2018. But he commended federal officials for their decision to extrapolate from the results of the audits.The rule also does not include a formula adjustment that insurers had asked for, which would have reduced the penalty amounts in some cases. Medicare officials said the change was not necessary.Medicare Advantage plans have become popular and are expected to cover the majority of Medicare beneficiaries by the end of this year. They often offer customers lower premiums than the government Medicare plan, and they cover additional benefits like dental care. Plans have warned that regulations that reduce payments to the plans could erode their ability to offer such extra benefits.The plans have become a major profit center for insurance companies. They earn more gross profit on Medicare plans than other types of insurance, according to a study from the Kaiser Family Foundation, a research group unaffiliated with the insurer Kaiser.In the press call, Dara Corrigan, the C.M.S. director of the center for program integrity, emphasized that even the billions in estimated recoveries from the plans were small compared with the scope of the program. She said the estimated $4.7 billion in recovered overpayments represented one fifth of one percent of federal payments to the plans over the period.The audits will focus on extra payments the plans receive when they care for patients who have serious health conditions. The extra payments are meant to compensate the companies for the additional costs associated with treating sicker patients, as part of risk adjustment. But identifying additional diagnoses in order to collect the extra payments has become a major strategic goal of industry players, which use software, home health visits and other measures to maximize the number of diagnoses for each patient, evidence has shown.Three of the five largest insurers in the industry have been accused of fraud by the Justice Department for inflating diagnoses.Medicare has come under particular criticism for its handling of audits. The audit details were secret until Kaiser Health News was able to review summaries of the examinations from 2011 to 2013 after it settled a three-year Freedom of Information Act lawsuit against the agency last fall. The reporting estimated there were millions of dollars in overpayments that would mean billions of dollars in penalties if they were extrapolated broadly.Insurance companies have long defended the current system of risk adjustment as essential to making sure health plans do not discriminate against older adults with potentially expensive illnesses. “Risk adjustment is critical in providing broad and equitable access to care for seniors,” said Tim Noel, UnitedHealthcare’s C.E.O. for Medicare and retirement, before the rule was announced.AHIP warned in a 2019 letter outlining its objections that “seniors and hardworking taxpayers might see higher costs, reduced benefits, and fewer” Medicare Advantage plan options.The group went on to question whether Medicare officials had the legal authority to extrapolate widespread errors from a limited audit and collect overpayments from mistakes made years before.The rule was released Monday after the closing of markets. Many of the major insurers are public companies, and investors have been awaiting its release.“The managed care companies will challenge the rule but, in any event, it’s only a slight negative for the stocks,” said Les Funtleyder, a health care portfolio manager at E Squared, which holds shares of UnitedHealth Group, in an email. “It could have been worse.”

Proposed regulations would crack down on misleading ads for the private plans and would enhance scrutiny of denials for coverage of medical care.Federal health officials are proposing an extensive set of tougher rules governing private Medicare Advantage health plans, in response to wide-scale complaints that too many patients’ medical claims have been wrongly denied and that marketing of the plans is deceptive.Medicare Advantage is the private-sector alternative to the federal program covering those 65 and over and the disabled. By next year, more than half of Medicare recipients are expected to be enrolled in private plans. These policies are often less expensive than traditional Medicare and sometimes offer attractive, additional benefits like dental care.Despite their popularity, the plans have been the subject of considerable scrutiny and criticism lately. A recent report by the inspector general of the U.S. Department of Health and Human Services found that several plans might be inappropriately denying care to patients. And nearly every large insurance company in the program, including UnitedHealth Group, Elevance Health, Kaiser Permanente and Cigna, has been sued by the Justice Department for fraudulently overcharging the government.The period leading up to this year’s enrollment deadline, Dec. 7, amplified widespread criticism about the deceptive tactics some brokers and insurers had used to entice people to switch plans. In November, Senate Democrats issued a scathing report detailing some of the worst practices, including ads that appeared to represent federal agencies and ubiquitous television commercials featuring celebrities.Federal Medicare officials had said they would review television advertising before it aired, and the new rule targets some of the practices identified in the Senate report that caused some consumers to confuse the companies with the government Medicare program. A proposed regulation would ban the plans from using the Medicare logo and require that the company behind the ad be identified.“It is certainly a shot across the bow for brokers and insurers in response to the rising number of complaints about misleading marketing activities,” said Tricia Neuman, the executive director of the center for Medicare policy at the Kaiser Family Foundation. Ms. Neuman and her team routinely review television ads from the plans.The proposal would also allow beneficiaries to opt out of marketing calls for plans and would limit how many companies can contact a beneficiary after he or she fills out a form asking for information. The Senate report described patients who had received dozens of aggressive marketing calls they did not request.David Lipschutz, an associate director at the Center for Medicare Advocacy, said that while the federally proposed rules did not include everything on his wish list, the goals were wide-reaching and significant.“This is really a meaningful response,” he said. “And where we sit, we don’t get to say that that often.”Mr. Lipschutz said that the changes would ultimately be judged by how effectively and aggressively Medicare enforced the standards. Much of the deceptive marketing is now conducted by brokers, agents and other third-party marketing firms who are paid commissions when they enroll people, not by the insurers themselves. The proposed rule would hold insurers accountable for the actions of the firms they hire.“These proposals are an important step toward protecting seniors in Medicare from scammers and unscrupulous insurance companies and brokers,” Senator Ron Wyden, the Oregon Democrat who chairs the Senate Finance Committee, said in a statement.The rules would also address the health plans’ use of techniques that require the company to approve certain care before it would be covered. Patients and their doctors complained to Medicare that the private plans were misusing prior authorization processes to deny needed care. The inspector general’s report estimated that tens of thousands of individuals had been denied necessary medical care that should be covered under the program.The new proposal would require plans to disclose the medical basis for denials and rely more heavily on specialists familiar with a patient’s care to be involved in the decision-making. Medicare has also established tighter time limits for answers on authorizations; patients now often wait up to 14 days. The new rules would also require authorization to cover the full length of a treatment so patients don’t have to continually request identical approvals.Dr. Meena Seshamani, the director of the Center for Medicare and a deputy administrator at the Center for Medicare and Medicaid Services, said the changes had been influenced by thousands of public comments solicited by the agency and by lawmakers.“The proposals in this rule we feel would really meaningfully improve people in Medicare’s timely access to the care they need,” she said.The insurance industry has said it is generally supportive of regulators’ efforts to protect Medicare enrollees from deceptive marketing, and the Better Medicare Alliance, a group that advocates for Medicare Advantage, said it agreed with officials “that there must be no room in the system for those who would deceive seniors,” according to a statement from the group’s chief executive, Mary Beth Donahue.Ms. Donahue added that her group was continuing to review the agency’s proposals on how patients have to seek prior authorization for treatment. She said the organization hoped to work with Medicare officials to improve the process.Hospitals, which have been pushing for changes that would address their concerns that insurers were abusing prior authorization, applauded the proposals. But they emphasized that the Biden administration’s health officials would have to commit to enforcing the stricter oversight.“The agency really needs to keep their eye on the ball,” said Molly Smith, the group vice president for public policy at the American Hospital Association, a trade organization.The proposed regulations are not yet final. Health officials are soliciting comments from the public and may make changes.