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Saturday, May 20, 2017

UnitedHealth Overbilled Medicare by Billions, U.S. Says in Suit

I see reports like this and the behavioral economist in me thinks "of course this would happen." For it to not happen would be the surprise. It's like when you incent your child with M&Ms to use the potty. "Sweetie, everytime you tinkle in the potty, you will get an M&M." In short time, she learns amazing bladder control and tinkles 20 times a day maximizing the M&M reward. Grown ups are not different. Given the opportunity, we optimize an incentive. Whether it's an optimization or an exploration is a matter of perspective isn't it? Optimization from the perspective of the one receiving the incentive, exploitation from the one dispensing the incentive. This is an example of the cobra effect--when a designed incentive has an unintended consequence. CMS really should be asking, "How did our policy for Medicare Advantage unintentionally incent the observed practice by United Healthcare (and others)?" The remedy lies in the answer to this question. With answer in hand, the program may be adjusted to mitigate the cobra effect.
from Rajesh Harrykissoon, MD

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