The Journal. - Medicare, Inc. Part 1: How Insurers Make Billions From Medicare

Episode Date: June 6, 2025

Medicare Advantage was designed to save the government money. But a Wall Street Journal investigation found that private insurers used the program to generate extra payments through questionable diagnoses. The investigation uncovered instances of potentially deadly illnesses like AIDS, where patients received no follow-up care, as well as diagnoses that were medically impossible. This happened in part when insurers sent nurse practitioners into Medicare Advantage recipients’ homes. Jessica Mendoza discusses the investigation with WSJ’s Christopher Weaver as well as a nurse who participated in the program.  Further Listening: -A Life-or-Death Insurance Denial  -Even Doctors Are Frustrated With Health Insurance  Sign up for WSJ’s free What’s News newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Medicare is America's government-run health care plan. It provides care for anyone 65 and over and some people with disabilities. But what a lot of people may not realize is that a majority of those on Medicare get it through a program called Medicare Advantage. Yeah, there's more than 60 million people in Medicare and more than half of those are in Medicare Advantage. Yeah, there's more than 60 million people in Medicare, and more than half of those are in Medicare Advantage at this point. And the thing about Medicare Advantage

is that the plans are paid for by the government, but managed by private insurance companies. Medicare Advantage is sort of dominated by these huge insurance companies, like United Health Group, Humana, Aetna, and Elevents. And that's really why we called the series at some level Medicare, Inc. Because people think, oh, this is a government program. But it's also a huge, huge, huge business for some of the biggest companies in America.

I'm Chris Weaver. I'm Anna Wildy Matthews. I'm an investigative reporter at The Wall Street Journal. And I cover health insurance for The Wall Street Journal. My colleagues Anna and Chris have been investigating the Medicare Advantage program for over a year. So, when you and the team looked into the program, what did you find? What we found was that Medicare Advantage insurers were basically gaming the system to get paid billions of dollars more, and

at the same time creating barriers to accessing care. Over the next two episodes, we'll lay out some of what the Journal's investigative reporting team found. Today is about how insurers use questionable practices to profit off of the Medicare system. In total, what we determined was that Medicare Advantage insurers over a three-year period had got paid $50 billion for diagnoses that they alone added to patients' records. And what astounded me was that basically the magnitude and just the total amount of dollars that they were getting from sort of chasing that incentive to make people be sick

around the paper. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Friday, June 6th. This is Medicare, Inc. Part 1. How private insurers pocketed billions from Medicare. So, Anna, Chris, why did you guys want to look into Medicare Advantage in the first place? Medicare Advantage cost the federal government more than $460 billion last year. That's a lot of money. Yeah, that's right. So we decided to dip into this area, which is just a huge portion of the federal budget, so we could see how these giant insurers were operating, what kind of care they were providing, and how much they were getting paid. In 2023, the investigations team got their hands on Medicare

data that goes back about a decade. The information included things like service charges and other records. Once you sort of have the data in your hands, that's just really only the beginning of the process. Nothing is simple in this program. Nothing is simple about how the insurers are paid. Nothing is really simple about what they do. So we paired that with extensive interviews

of doctors, medical providers, patients, and other people who interact with the system. As they went through the data, something stood out to Chris. There were diagnoses on patients' records that were put there by insurers. This is important because of how Medicare Advantage works. For certain kinds of diagnoses, many of which are expensive to treat, the private insurer gets an extra payment from the government.

That payment is meant to cover the cost of treatment. The federal government pays insurers essentially monthly lump sums to cover all of their care. And those lump sums go up when people are sicker. So like an example would be somebody who's obese might generate like a 30% higher payment for the insurer than the same person who's not. Or somebody who has diabetes might generate for the insurer like a 10% higher payment than somebody who doesn't.

And in Medicare Advantage, the incentives are basically to make patients look sicker on paper because insurance get paid more when they do that. And what do the health insurance companies have to say about your reporting? Insurers have defended their practices. They've argued that some of their practices lead to diagnosing patients with serious conditions sooner so they can get the treatment that they need. They argue that their practices lead to better outcomes for patients and end up costing beneficiaries

less than traditional Medicare. Last year, the team published a series of stories based on the data in their reporting. One of those stories caught the eye of a nurse practitioner, and what she read really resonated with her. All of the things that I'd been feeling and dealing with over the past seven years were sitting there in front of me on a piece of paper, which is why I wrote to Chris and said,

you are spot on. I'm Kristen Bell, and I'm from Maine. I'm a nurse practitioner, and I worked for for United Health Care for seven and a half years. You have the same name as the actress. Does that ever come up? Yeah. So my patients would always be like, you're not that Kristen Bell. And I'd be like, yeah, sorry.

Here I thought. Yeah, exactly. I was going to have you sign my frozen poster or whatever. Kristen started working for UnitedHealth in 2017. She'd visit patients at their homes as part of a program called House Calls. It's available to people who are signed up for the company's Medicare Advantage plans. The idea behind the program, according to UnitedHealth, is to help improve care. For instance, by catching diseases early, especially if it's something a doctor might have missed. The nurse practitioner visits usually took about an hour,

and Kristen says she saw around four patients a day. She says the work felt meaningful. I liked the customer service aspect of it. You know, the reason that it was good is because the people didn't have primary care provider or intermittent primary care, especially in the rural areas. The information that we were able to glean was really helpful. And I can't tell you how many times I would go over medications with people and they'd

be missing something or they'd be taking it wrong. UnitedHealth told us that it sends home visit findings to primary care doctors and that the visits are not intended to replace appointments with them. As part of her visits, Kristen did a lot of testing on her patients. What were you trying to assess with each patient? I was trying to assess where they needed help. So, for example, we were doing urine test strips and that gave me a lot of information

about how somebody was doing. Oh, you're dehydrated. Oh, you have kidney disease. Oh, you have glucose in your urine. I'm going to call your doctor. You know, that kind of stuff. Were you being directed to do anything specific, these visits by your employer or your manager?

Well, it didn't seem so at first. After she'd been with house calls for a little while, Kristin noticed some things that made her pause. Like, when she entered a patient's information into her laptop or tablet, she says the UnitedHealth software would automatically start suggesting diagnoses based on what she put in. Documents show that these suggestions would appear in a so-called diagnosis cart on the side of the screen, and the suggestions would show up even if the patient didn't feel

any symptoms. UnitedHealth told us that the final diagnosis was left up to the nurse practitioner and that the company is confident that its clinicians act in good faith. Kristin also started getting the message from a manager that she should do more testing on her patients. My first year, I refused to do some of the tests that they asked us to do because I was like, this patient is asymptomatic. I'm not doing this test on this patient.

It's just a waste of their time. It's a waste of my time. There's nothing to be gathered from this. Then when I had my annual review, my manager was like, you know, you did a great job and your patients love you and everything. But what you really need to work on is, you know, the testing that we're trying to deliver to the patients. And I said, look, you look, if somebody is asymptomatic,

you don't test somebody for everything if they come into the hospital. You test them for what they're having difficulties with. She said to me, Kristen, we're not billing for any of this. Just do the testing. Just do it. And I was like, OK. After working at the House Calls program for about a year,

Kristen told us that she eventually began doing the tests she was asked to do. And after that, she got a raise. So that's when I was like, Ah, that's kind of sketchy. You know, there's something going on here. UnitedHealth told us that their nurse practitioners are not, quote, incentivized based on the number of conditions they diagnose. Chris looked at a three-year period where Medicare Advantage insurers

sent out nurse practitioners like Kristin to run tests and add diagnoses to patient records, including diagnoses of the kinds of conditions that trigger those extra payments. The extra payments added up to about $15 billion during that time. And some of those diagnoses weren't even real. That's next.

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Meal prep? Delivered. Snacks? Delivered. Fresh fruit? Delivered. Grocery delivery? On repeat for just $2.50 a month. Learn more at PCcexpress.ca. Chris and Ana found that diagnoses weren't just showing up on Medicare Advantage patient records after home visits. They were also on records

after patients went to see doctors or hospitals. The team found that over a three-year period, all of these additional diagnoses added up to $50 billion in federal payments to the insurers. These are conditions that no doctor or hospital treated, and that insurers basically went behind the scenes to add or dispatch nurses to patients' houses to sort of work them over, do a bunch of tests, that kind of thing, but for which they were getting no care. And it was astounding.

And UnitedHealth, more than any other insurer, engaged in those practices. The biggest Medicare Advantage provider, UnitedHealth, told us that the added payments help cover medical care and lower premiums and provide other benefits for members. It also says that chart reviews reflect diagnoses made by patients' doctors. According to the journal's reporting, some of the diagnoses that insurers added to patient records were demonstrably false. One condition that they looked into was diabetic cataracts. Cataracts, which is when eyes cloud over, are common in the elderly.

So is diabetes. Cataracts, which is when eyes cloud over, are common in the elderly. So is diabetes. But there's another, rarer condition called diabetic cataracts, which is when high blood sugar levels cause that cloudy vision. And a diagnosis of diabetic cataracts was tied to thousands of dollars in extra payments, whereas regular cataracts weren't. According to the data seen by the journal team, UnitedHealth Medicare Advantage members were about 15 times as likely to have a diagnosis of diabetic

cataracts compared to the average patient in traditional Medicare. It was this unusual condition that Kristen, the nurse practitioner with house calls, says she was encouraged to put down onpatient charts. So for example, if somebody has diabetes, you know, and I look in their eyes and I see cataracts, I would put cataracts as a diagnosis, but then they would throw it back at me and say no, no, no, no, it's diabetes with diabetic cataracts, even though I didn't know if the diabetes caused the cataracts. Well, we know that the person has diabetes and, you know,

just, you know, just kind of do it. Eye doctors interviewed by the journal team said it was unlikely that such a large share of UnitedHealth patients could have this relatively rare disease. Chris also saw patterns in the data that implied some of the patients who were getting diagnosed with diabetic cataracts didn't have the condition at all. For instance, thousands of patients who received the diagnosis had no record of ever being

treated for diabetes, while other patients had already had their cataracts treated. They'd already had the lenses of both eyes surgically removed and replaced during routine cataract surgeries, and it's literally impossible to get cataracts again after you've had cataract surgery in both eyes. UnitedHealth told us they asked their clinicians to use their medical judgment in diagnosing. The company also said it complies with guidance

from the Department of Health and Human Services. Now remember, the way Medicare Advantage works is that insurers get paid more by the government for certain diagnoses. Because diabetic cataracts are a costly condition, they come with a big payment, one that added up over time. During the three-year period that Chris looked at, the government paid insurers more than $700 million just for recording diabetic

cataracts, even if no doctor provided any treatment. And Medicare Advantage insurers diagnosed all sorts of diseases that were never treated. Like peripheral artery disease. It's a serious condition where blood vessels get narrower, and in some cases, it can lead to amputations. A House Calls training manual reviewed by the investigations team advised nurse practitioners like Kristin to diagnose peripheral artery disease based on results from a device called the quantaflow.

The quantaflow is kind of like a pulse oximeter that gets put on each foot and each hand and then they compare the hand to the feet. And what we're looking for is, is there decreased blood flow to the feet? If the quantiflow showed decreased blood flow, Kristen was supposed to conclude that the patient had peripheral artery disease. But she says she was uncomfortable

making such a definitive diagnosis just based on the device, especially since elderly people often have decreased blood flow. It was a one-data-point diagnosis, right, which isn't necessarily a good way to diagnose anything. But at that split second, if the quantiflow said that the person had peripheral artery disease,

at that split second, they had peripheral artery disease. But the quantiflow had problems. disease at that split second, they had peripheral artery disease. But the quanta flow had problems. Here's Chris again. The quanta flow, it wasn't very specific. Basically, it had a relatively high rate of false positives. And, you know, under certain circumstances, nurses who used it would say, you know, cold in the room or something,

it might produce an inaccurate result. And, you know, one nurse said she used it on herself because she was so concerned about the readings that it was producing and found that she herself apparently had peripheral artery disease, even though like actually she has no signs of it. The maker of Quantaflow, Semler Scientific, said the device assesses risk for the disease. UnitedHealth told us that it tests for the disease during home visits to diagnose it

early and that it expected clinicians to use their judgment. According to the journal's reporting, those peripheral artery disease diagnoses led to nearly $1.4 billion in additional payments to UnitedHealth between 2019 and 2021. Semler Scientific was also under investigation by the Justice Department for potential fraud. The company announced in May it had reached a tentative agreement to settle the case for nearly $30 million. The company did not respond to requests for comment about the investigation. Those questionable diagnoses weren't just for rare diseases like diabetic cataracts

or peripheral artery disease. They were also for HIV, the virus that causes AIDS. During a four-year period, thousands of Medicare Advantage recipients had diagnoses of HIV added to their records by their insurance companies. For each of had diagnoses of HIV added to their records by their insurance companies. For each of these diagnoses, insurers received a payment of about $3,000 a year. But when Chris looked into patients' follow-up care, many of them weren't getting it. There were no physician claims. There were no drugs prescribed to them.

And 100% of those people, people ideally if they actually have HIV would be getting antiretroviral therapy and in reality fewer than one in five were. Right, because the point of being diagnosed is so that you can get treatment. Yeah, right, that's right. We interviewed a bunch of experts about this particular finding, you know, AIDS specialist, and they almost universally concluded that those people didn't really have HIV. What they surmised is basically that they were getting tested for HIV, screened for HIV, and that however the insurers were reviewing charts to add diagnoses on the back end, they

were picking up those screening exams and just like inferring a diagnosis out of it. Chris says that because of the way this diagnosis is added to a patient's records, some people may not even know about it. Among the United Health patients, according to Medicare data, hardly anyone given an HIV diagnosis in that period had started antiretroviral treatment in the following years. The company said it disputes the journal's analysis, adding that its internal data from a year later, 2022, showed a treatment rate of more than triple what the journal found.

Last year, Medicare Advantage insurance companies were paid more than $460 billion. Who ends up paying for that? Where is that money coming from? That's us, right? It's the taxpayer-funded program. Yeah, you pay Medicare taxes with each of your paychecks and that's where it goes. And some of this money was going toward diseases that no doctor ever treated, right?

Does that mean the system isn't really working? I mean, the problem here is that insurers are layering diagnoses on patients, generating billions and billions and billions of dollars more in taxpayer-funded reimbursement. And in many cases, the patients don't have them, aren't getting treated for them, and that's waste. That's waste for taxpayers. For private insurers, for them and that's waste, you know, that's waste for taxpayers.

For private insurers, Medicare Advantage has driven a huge amount of growth in that industry and vast changes in the way health care is provided and paid for. It's added to the kind of the runaway cost of American health care. So it sounds like there are some holes in the system. Yeah, I mean there's a lot of ways to make money in Medicare, and that's fueled a lot of growth in the industry. And our stories are just some of the strategies that these companies have embraced. Billing for costly or unnecessary diagnoses,

that's one strategy. Another strategy is withholding care from patients who actually need it. The Journal reported on this too. We found that people in their last year of life left Medicare Advantage and went back to traditional Medicare at double the rates of other enrollees. That's my colleague Ana again. Why would people in that last year of life leave Medicare Advantage at a higher rate

than everybody else? It raises the question of whether these people who are very sick and have very intense and expensive health needs were running into barriers in accessing the care that they wanted or the care that they felt they needed. We'll hear more from Ana tomorrow on the second part of Medicare Inc. That's all for today, Friday, June 6th. This episode was produced by Jeevika Verma and edited by Laura Morris. Additional reporting by Mark Merrimont, Tom McGinty, and Andrew Malika. The Journal is a co-production of Spotify and The Wall Street Journal.

The show is made by Catherine Brewer, Pia Gadkari, Carlos Garcia, Rachel Humphreys, Ryan Knutson, Sophie Coddner, Matt Kwong, Colin McNulty, Annie Minoff, Laura Morris, Enrique Perez de la Rosa, Sarah Platt, Alan Rodriguez Espinosa, Heather Rogers, Pierce Singie, Jeevika Verma, Lisa Wang, Catherine Whalen, Tatiana Zemmese, and me, Jessica Mendoza. Our engineers are Griffin Tanner, Nathan Singapok, and Peter Leonard. Our theme music is by So Wiley.

Additional music this week from Katherine Anderson, Peter Leonard, Billy Libby, Emma Munger, So Wiley, and Blue Dot Sessions. Fact Checking by Mary Mathis. Thanks for listening. See you tomorrow.