Martin’s Point Health Care on Veranda Street in Portland. Ben McCanna/Staff Photographer

The Medicare Advantage insurance program that is at the heart of this week’s $22.5 million settlement between Martin’s Point Health Care and the U.S. Department of Justice has siphoned off billions of dollars from Medicare, the government health insurance program for people ages 65 and older.

Practices brought to light in Maine by a whistleblower, as well as similar methods of overbilling, have become widespread in Medicare Advantage plans across the country, according to research and analysis by experts in Medicare policy. And although the practices don’t affect patients directly, this overcharging – which includes adding unnecessary codes to patients’ medical conditions to extract extra money from Medicare – threatens services provided by traditional Medicare and the financial solvency of Medicare itself.

“These Medicare Advantage plans are getting grossly overpaid,” said David Lipschutz, an attorney who works for a national nonprofit that advocates for Medicare.

Dr. Donald Berwick, who headed up the Centers for Medicare and Medicaid Services during the Obama administration and is currently a health policy lecturer at Harvard University, agreed that the status quo with how Medicare Advantage operates is “highly destabilizing” to Medicare.

Medicare Advantage is a replacement plan for Medicare that typically offers an array of benefits not included under traditional Medicare – such as vision, dental, and hearing, and may have lower out-of-pocket costs – which makes the plans attractive for those who can afford them.

Martin’s Point is a primary care provider with six locations in Maine, including Portland, and has 60,000 members enrolled in a Medicare Advantage plan.


The settlement, filed in court on Monday, detailed allegations of how Martin’s Point’s Medicare Advantage plan would code patients’ historical conditions – such as for cancer, stroke, and heart disease – as current health conditions to obtain money from Medicare that it was not entitled to receive. It’s the largest Medicare fraud settlement in state history.

As part of the settlement, Martin’s Point was not required to admit to any wrongdoing. Its officials have declined interview requests.

“Martin’s Point repeatedly pressured and directed employees and contractors to ignore unsupported codes – such as coding historical conditions as active – because deleting those codes would hurt profitability,” court records state.

Lipschutz, associate director for The Center for Medicare Advocacy, a Connecticut-based nonprofit law firm that advocates for improved Medicare services and to protect access to the program, said the current system of Medicare Advantage overbilling is extremely lucrative for the firms selling those plans.

The financial rewards are so great, that the penalties for getting caught gaming the system are not stiff enough to stop plans from continuing to overcharge, he said.

“The incentives are in place for Medicare Advantage plans to maximize profits, regardless of whether this is causing inappropriate additional costs borne by federal taxpayers,” Lipschutz said. “These settlements appear to now be part of the cost of doing business.”


Berwick said the practice – called “upcoding” – has become so ingrained in the system that Medicare Advantage plans that properly followed all the rules would be “driven out of business.”

But the current system is creating a vicious cycle – estimates of the overbilling range from $12 billion to $75 billion per year – where Medicare Advantage enrollees receive more generous benefits at the expense of traditional Medicare, Lipschutz said. Medicare Advantage plan enrollees tend to be wealthier and healthier than traditional Medicare patients, skewing the risk pool and making it more costly for the federal government to care for Medicare patients. If in response to rising costs, Medicare slashes reimbursement rates paid to doctors, while Medicare Advantage continues to reap record profits, that could incentivize healthcare providers to limit the number of traditional Medicare patients, he said.

The irony is that gaming the system means that Medicare Advantage is pretending its patients are much sicker than they are, Lipschutz said.


Also, with Medicare Advantage plans flush with cash they shouldn’t have, they can offer increasingly generous benefits, attracting even more enrollees, Lipschutz said. The larger Medicare Advantage becomes – it currently has nearly half of all Medicare-eligible enrollees – the bigger the threat to Medicare’s financial solvency.

“You could see this spiral of growing enrollment in private Medicare Advantage plans, to the detriment of traditional Medicare,” Lipschutz said.


Although the scheme destabilizes the Medicare program, it doesn’t cause overbilling of the patients themselves.

Berwick said if current trends continue, Medicare Advantage overcharging could further threaten the Medicare hospital insurance trust fund, which according to the Kaiser Family Foundation is currently at about $170 billion but is slated to be depleted by 2029. If the trust fund runs out, Congress could slash Medicare benefits, raise taxes or come up with other fixes to make it solvent again.

Martin’s Point Health Care, 331 Veranda St., Portland. Ben McCanna/Staff Photographer

In recent years, the Justice Department has gone after numerous providers of Medicare Advantage plans across the country and reached settlements in the millions, including with major insurers like Anthem, United Health Group, and Independent Health Group in Buffalo. An October 2022 article in the New York Times showed eight of the 10 largest Medicare Advantage insurers having submitted inflated bills to Medicare, according to a recent analysis by federal audits.

Lipschutz said the current penalties do not appear to be enough to stop the practice. Suspending operating licenses for insurance companies would be a substantial penalty, but he said he’s not seeing that happen.

“If these companies are defrauding the federal government, why are they allowed to continue to operate?” Lipschutz said.

Criminal penalties for executives also could help deter “upcoding.”


“You very rarely see health executives being led away in handcuffs,” Lipschutz said. The settlement agreement with Martin’s Point did not rule out future criminal charges, but there have not been any criminal charges filed in connection with the case.

Berwick said depending on how it’s done, “upcoding” in many cases is legal, even though it’s harmful to the system. But he said the more aggressive insurance companies are at “upcoding,” the closer they “skate to the edge” of legality, and those responsible could face criminal charges.


Lipschutz said Congress or Medicare officials also could devise other solutions, such as limiting or eliminating “risk adjustment” payments for patients. Under “risk adjustment,” Medicare Advantage is paid more if the patient is sicker, giving financial incentives to insurers to code patients with conditions they don’t have or had years ago. Congress could simply eliminate “risk adjustment” or use other formulas to balance out potential overpayments, he said.

The issue is starting to attract the attention of members of Congress.

Matthew Felling, a spokesman for Sen. Angus King, I-Maine, said in response to questions from the Press Herald that “Senator King is engaged in efforts to improve Medicare Advantage and to protect the long-term solvency of the program.”


In February, U.S. Rep. Chellie Pingree, D-Maine, was among dozens of members of Congress who sent a letter to the Centers for Medicare and Medicaid Services urging the agency to continue reforming Medicare Advantage plans.

“We believe there is still much more that needs to be done to protect seniors and people with disabilities from fraud and abuse,” the letter read. “We urge you to build on your current work to improve Medicare by fixing the harms to patient care and rapidly increasing costs within the Medicare Advantage program. This will also save money that can then be used to reinvest in seniors’ and people with disabilities’care.”

Steve Amendo, spokesman for Martin’s Point, released a statement on Monday that said, “the settlement is not related to member care or the payment of member claims.”

“Despite denying liability for the litigation claims at issue, Martin’s Point ultimately determined that settlement of this matter was appropriate rather than engaging in the cost and uncertainty of protracted litigation,” he said.

According to court filings, the claims of erroneous coding that were brought to light by whistleblower Alicia Wilbur, a former Martin’s Point employee who received $3.8 million in the settlement, were not enough to stop Martin’s Point from continuing its practices.

“Stunningly, in 2017, when Martin’s Point retroactively reviewed a sample of three years of medical charts, it found that the patients did not have (or the charts did not support) 60% of the illnesses reported to, and paid by (the Center for Medicare and Medicaid Services),” the complaint reads. “In response, Martin’s Point did nothing: it did not investigate further, broaden its sample size nor look for these errors in prior periods. On information and belief, it did not even notify CMS and kept the resulting overpayments.”

Wilbur has not responded to a request through her attorney to be interviewed.

Lipschutz said until reforms are enacted, there are enough loopholes for the problems to continue.

“There’s a lot of wiggle room right now for plans to exploit, to try to defend an indefensible practice,” he said.

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