Private health insurance plans catering to Medicare recipients are making millions by taking money the government sends in advance — but isn't immediately needed — and using it to make investments, federal investigators say in a report obtained by the Associated Press.
Private insurers make nearly $400 million on Medicare float: report
In financial parlance, it's called "playing the float."
In contrast with another government program that also deals regularly with health insurers, Medicare lets its plans keep the cash.
An audit by the HHS inspector general's office estimates that private Medicare Advantage plans collected $376 million from investment income on advance payments from the government in 2007, the latest year available.
Of 50 plans audited, only two told investigators that they subtracted investment earnings from their Medicare bids for the following year. The rest pocketed the money.
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