Insurers Game Medicare System to Boost Federal Bonus Payments

The number in the corner of Upton Martin’s Medicare plan card from Humana Inc. changed twice over the past four years. He didn’t think anything of it, and his coverage didn’t seem different in any way.

The changes, though, were evidence of a lucrative maneuver that has allowed Humana and other providers of Medicare Advantage plans to collect additional revenue from the federal government.

Medicare ranks privately managed plans such as Mr. Martin’s on a five-star quality scale and provides financial bonuses to providers of top-ranked plans. Mr. Martin’s plan was set to be downgraded, which would have cost Humana its bonus. So the company merged plans covering Mr. Martin and more than a million others into different contracts with higher scores. That preserved the bonuses.

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March 11, 2018 13:32 ET (17:32 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
By Anna Wilde Mathews and Christopher Weaver