RSN: FOCUS | 'Someone Will Fall Victim': Insiders Reveal Elite Anguish as Russia's War Falters
08 October 22
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Friends, rivals and enemies took their seats in the Grand Kremlin Palace as Vladimir Putin gathered the country’s elite to formalise Russia’s illegal annexation of four occupied regions in Ukraine.
The ceremony was meant to portray strength and unity, but within 24 hours had been overshadowed by Russia’s failures on the battlefield. These losses, which continued into this week on the southern and eastern fronts in Ukraine, have led to a major, unprecedented rupture within the ruling class as the Kremlin seeks scapegoats for a series of military embarrassments.
The following account is based on 15 interviews with former government and defence officials, members of the military, political observers, journalists, opposition members, and an inmate at a prison where Wagner founder Yevgeny Prigozhin recruited soldiers to join his mercenary group in Ukraine.
The seven-month-long Russian invasion of its neighbour has plunged the Russian ruling elite into uncertainty, the sources say, and within it a growing understanding the war cannot be won.
Some ambitious officials have seen opportunity in the chaos, pitching to the Kremlin on ways to turn around a failing war and a botched mobilisation. Others are lying low, seeking to hold on to power or avoid punishment. Western intelligence agencies have reported high levels of dissatisfaction among the Russian army and in the country’s elite. Some have even suggested a coup could take place.
Two of Vladimir Putin’s most notorious lieutenants, Prigozhin and the Chechen leader Ramzan Kadyrov, have openly declared war against the defence minister, Putin loyalist Sergei Shoigu, and his top generals following a series of disastrous defeats that have left Russia’s army in retreat.
“Putin is a very destructive personality, he will play the different factions off each other and see what the best outcome will be,” a former defence ministry official told the Guardian. “He doesn’t know how to fix relationships, so in the end, someone will fall victim. Putin just wants to see what is best for him and the war in Ukraine.”
Marat Gabidullin, a former Wagner commander who knows Prigozhin from his time at the paramilitary group, said he wasn’t “surprised to see Prigozhin stepping into the spotlight” at this moment.
“On the current wave of patriotism, he wants to position himself as a fierce defender of the motherland who created a professional military organisation. He wants to show that he can fight better than the regular army. We always had tensions with the ministry of defence, we really didn’t like each other.”
According to a former senior defence official who worked with Shoigu and Prigozhin, the rivalry between the two men is a longstanding feud that goes back to the founding of Wagner in 2014 after the annexation of Crimea. It was exacerbated, the person said, when Shoigu recently fired deputy defence minister Dmitry Bulgakov, an official who had reportedly helped Prigozhin obtain lucrative contracts supplying the army.
“Prigozhin will now be out for revenge against Shoigu,” that person said. He described Prigozhin as a person with “no morals, no conscience, and no hobbies … He is a machine in the bad sense of the word.”
Prigozhin has found an unlikely ally in Kadyrov, the volatile leader of Chechnya who has established the North Caucasus republic as a personal fiefdom in exchange for securing its loyalty to Russia. Yet in the recent conflict, he has emerged as one of the harshest critics of the Russian defence ministry, claiming his own fighters could take Kyiv within days even after the Russian army had been repulsed.
Shortly after the Russian defeat last week at Lyman, a crucial railway hub in the Donetsk region, Kadyrov unleashed a withering attack on the Russian general staff and at the central military district commander Alexander Lapin responsible for the city’s defence.
“The shame isn’t that Lapin is incompetent,” Kadyrov wrote on Telegram. “It’s that he’s being shielded from above by the leadership in the General Staff. If it was up to me, I would bust him down to a private, take away his medals and send him with a rifle to the front in order to cleanse his shame in blood.”
“Military nepotism will not lead anywhere good,” he added.
“Beautiful, Ramzan, keep it up,” Prigozhin chimed in. “These punks should be shipped to the front barefoot with machine guns.”
Putin for years has pitted his underlings against one another in order to prevent them from uniting against him. Since early in the war, rumours have circulated through Moscow about fistfights at the Kremlin involving Shoigu and other officials (none have been confirmed).
“This balancing game might work in peacetime, but right now it distracts from the war efforts,” said Marat Gelman, a former adviser to Vladimir Putin and now a critic of the Kremlin leader.
These kinds of public spats are “new, important, and unprecedented too”, said Dmitry Oreshkin, a veteran Russian political scientist. “We haven’t seen such an open and public battle amongst the elites before for Putin’s attention.”
One Chechnya watcher said that Kadyrov’s criticism of the military reflected his ambitions to be “something more than just the head of a region”. The former defence official similarly said that Kadyrov was aiming for a senior role in the government.
“He knows that war is his time to shine, he has to strike now,” the former defence official said.
“Everyone is playing the blame game, and Kadyrov is at the forefront of it,” said Farida Rustamova, a Russian journalist who has written on divisions in the Russian elite. “He sees himself as one of the leaders of the war. Like the son Putin never had. It feels like a snowball that is getting bigger and bigger with every defeat.”
The two men are not the only ones leading a pile-on against the Russian military. TV propagandists such as Margarita Simonyan and Vladimir Soloviev have openly criticised the execution of the draft, accusing the military of fomenting instability in the country by attempting to recruit Russians unfit for service.
“Our people are not stupid,” said Andrei Kartapolov, a former army general and head of the State Duma’s defence committee, while accusing the military of lying in its daily updates on the war. “They can see that they are not being told the truth.”
A Russian-installed official in Ukraine even suggested Shoigu should shoot himself because of failures in the Ukraine conflict.
The attacks on the defence ministry come at one of the most dangerous moments in the war, after Russia’s army has lost thousands of square miles of territory and has been unable to stabilise its lines in Kharkiv, Donetsk or now in the Kherson region.
“The Kremlin is looking for scapegoats. There have been three obvious failures: the start of the war, the latest military failures, and the botched mobilisation,” said Gelman, the former Putin adviser.
Shoigu and other top military officials are the obvious target. Once seen by Russia’s public as the man who modernised Russia’s army and oversaw the successful 2014 Crimea operation, Shoigu is now facing a backlash for the military’s failures. And there are clear temptations to sack him.
“There are always ways to let off pressure,” said a well-connected Moscow political observer, who asked not to be named when discussing the military. “We have a wonderful minister of defence. A fantastic chief of the general army staff. If the defeats continue … there are always possibilities [to sack them]. And everyone will support it. They’ll say [Putin’s] finally acting tough, punishing the guilty.”
The feeling may be mutual. According to the former defence official, “knowing Shoigu, I truly believe he would be happy to get sacked right now. He wants out of this mess.”
The native of Tuva had always been an unenthusiastic supporter of the 2014 war in the Donbas but was overruled by a cadre of hawkish Kremlin advisers including Nikolai Patrushev, the person said. He also was not in favour of the more recent “annexations” of occupied Ukrainian territory, he added.
But Putin knows he can trust Shoigu and sacking him would be deeply embarrassing, said that official.
“Even if Shiogu isn’t happy with what is happening, he’ll always be loyal to Putin and do his job,” the person said. “Putin knows he can fully trust him.”
That reflected a sense among a number of Russian elites that despite the challenges posed by the upstarts that the weight of Russia’s main ministries: the army, FSB, police and others would far exceed the threat posed by them.
Kadyrov didn’t have the authority to tell Putin to replace his defence minister, said a former top official. And Kadyrov was considerably more measured in his private interactions with Putin than in his public statements, the person said. Prigozhin, meanwhile, was just an “operator”.
“I cannot imagine that the FSB would allow either Prigozhin or Kadyrov to acquire any political power,” said Yevgenia Albats, a Russian investigative journalist and editor of the New Times. “It’s impossible.”
Albats, who recently left Russia after being targeted repeatedly for her reporting, said that her contacts among Russian officials estimated that at least 70% of top officials – people she referred to as the nomenklatura – were opposed to the war.
Another well-connected journalist who works on state television said that “intense dread” has taken hold of much of the political elite.
“The higher you go, the more desperation you feel. There is general understanding now that the war can’t be won.”
Albats said that for now, the opposition to the war that has taken hold among senior officials was unlikely to threaten Putin himself.
“They’re very afraid. Even people I have known for my life, known for several decades, my friends. We no longer can meet because I became so toxic.”
“For there to be a schism people need to stop being afraid,” Albats said. “Where should these guys even meet? The phones are tapped, the flats are tapped.”
Oreshkin, the political scientist, said the risks for any party to move against Putin was simply too high.
“This whole system is built around a vozdh, a leader. If you get rid of Putin you have to be able to deliver quick results, but everyone knows that is not possible right now.”
On the other extreme, Kadyrov and Prigozhin’s macho personas appear to have filtered into the Kremlin. One person who knows Sergei Kiriyenko, a presidential administration figure who had been tasked with managing politics in the occupied territories, said his decision to dress in fatigues and visit the region was probably inspired by them: “In the time of the freaks, you have to dress up as one too,” he said.
Valery Fyodorov, head of the state-run WCIOM polling centre, said that Prigozhin is still largely unknown, and until a video of him at a prison surfaced last month, he was a “man without a face”.
But Kadyrov polls well even among Russians, he said. “He says the right things … He presents himself as a foot-soldier soldier of Putin. And that’s how people view him … he doesn’t position himself like a Chechen fighter, but like a Russian one.”
And in a time when Russian military officials are seen as dithering and duplicitous, a swaggering ex-con with his own private army may be dangerous.
“Prigozhin spoke with a lot of confidence,” said Ivan, an inmate at the penal colony No 8 in the Tambov region. “We all listened when he spoke, and trust me that is not easy to shut up a good [number] of prisoners. He is one of us in the end, a former inmate. I think many who signed up did so because they trust Progzhin. They don’t trust the authorities, but they believe Prigozhin when he tells them that they will be let free.”
A doctor and patient. (photo: Rawpixel/Getty Images)
By next year, half of Medicare beneficiaries will have a private Medicare Advantage plan. Most large insurers in the program have been accused in court of fraud.
Anthem, a large insurer now called Elevance Health, paid more to doctors who said their patients were sicker. And executives at UnitedHealth Group, the country’s largest insurer, told their workers to mine old medical records for more illnesses — and when they couldn’t find enough, sent them back to try again.
Each of the strategies — which were described by the Justice Department in lawsuits against the companies — led to diagnoses of serious diseases that might have never existed. But the diagnoses had a lucrative side effect: They let the insurers collect more money from the federal government’s Medicare Advantage program.
Medicare Advantage, a private-sector alternative to traditional Medicare, was designed by Congress two decades ago to encourage health insurers to find innovative ways to provide better care at lower cost. If trends hold, by next year, more than half of Medicare recipients will be in a private plan.
But a New York Times review of dozens of fraud lawsuits, inspector general audits and investigations by watchdogs shows how major health insurers exploited the program to inflate their profits by billions of dollars.
The government pays Medicare Advantage insurers a set amount for each person who enrolls, with higher rates for sicker patients. And the insurers, among the largest and most prosperous American companies, have developed elaborate systems to make their patients appear as sick as possible, often without providing additional treatment, according to the lawsuits.
As a result, a program devised to help lower health care spending has instead become substantially more costly than the traditional government program it was meant to improve.
Eight of the 10 biggest Medicare Advantage insurers — representing more than two-thirds of the market — have submitted inflated bills, according to the federal audits. And four of the five largest players — UnitedHealth, Humana, Elevance and Kaiser — have faced federal lawsuits alleging that efforts to overdiagnose their customers crossed the line into fraud.
The fifth company, CVS Health, which owns Aetna, told investors its practices were being investigated by the Department of Justice.
In statements, most of the insurers disputed the allegations in the lawsuits and said the federal audits were flawed. They said their aim in documenting more conditions was to improve care by accurately describing their patients’ health.
Many of the accusations reflect missing documentation rather than any willful attempt to inflate diagnoses, said Mark Hamelburg, an executive at AHIP, an industry trade group. “Professionals can look at the same medical record in different ways,” he said.
The government now spends nearly as much on Medicare Advantage’s 29 million beneficiaries as on the Army and Navy combined. It’s enough money that even a small increase in the average patient’s bill adds up: The additional diagnoses led to $12 billion in overpayments in 2020, according to an estimate from the group that advises Medicare on payment policies — enough to cover hearing and vision care for every American over 65.
Another estimate, from a former top government health official, suggested the overpayments in 2020 were double that, more than $25 billion.
The increased privatization has come as Medicare’s finances have been strained by the aging of baby boomers. But for insurers that already dominate health care for workers, the program is strikingly lucrative: A study from the Kaiser Family Foundation, a research group unaffiliated with the insurer Kaiser, found the companies typically earn twice as much gross profit from their Medicare Advantage plans as from other types of insurance.
For people choosing between traditional Medicare and Medicare Advantage, there are trade-offs. Medicare Advantage plans can limit patients’ choice of doctors, and sometimes require jumping through more hoops before getting certain types of expensive care.
But they often have lower premiums or perks like dental benefits — extras that draw beneficiaries to the programs. The more the plans are overpaid by Medicare, the more generous to customers they can afford to be.
“Medicare Advantage is an important option for America’s seniors, but as Medicare Advantage adds more patients and spends billions of dollars of taxpayer money, aggressive oversight is needed,” said Senator Charles Grassley of Iowa, who has investigated the industry. The efforts to make patients look sicker and other abuses of the program have “resulted in billions of dollars in improper payments,” he said.
Many of the fraud lawsuits were initially brought by former employees under a federal whistle-blower law that allows them to get a percentage of any money repaid to the government if their suits prevail. But most have been joined by the Justice Department, a step the government takes only if it believes the fraud allegations have merit. Last year, the department’s civil division listed Medicare Advantage as one of its top areas of fraud recovery.
“It’s an extremely high priority for us,” said Michael Granston, a deputy assistant attorney general for the civil division.
In contrast, regulators overseeing the plans at the Centers for Medicare and Medicaid Services, or C.M.S., have been less aggressive, even as the overpayments have been described in inspector general investigations, academic research, Government Accountability Office studies, MedPAC reports and numerous news articles, over the course of four presidential administrations.
Congress gave the agency the power to reduce the insurers’ rates in response to evidence of systematic overbilling, but C.M.S. has never chosen to do so. A regulation proposed in the Trump administration to force the plans to refund the government for more of the incorrect payments has not been finalized four years later. Several top officials have swapped jobs between the industry and the agency.
C.M.S. officials declined interview requests. In a statement, the C.M.S. administrator, Chiquita Brooks-LaSure, said the agency recently sought feedback on how to improve the program. “We are committed to making sure that Medicare dollars are used efficiently and effectively in Medicare Advantage,” she said.
The popularity of Medicare Advantage plans has helped them avoid legislative reforms. The plans have become popular in urban areas, and have been increasingly embraced by Democrats as well as Republicans. Nearly 80 percent of U.S. House members signed a letter this year saying they were “ready to protect the program from policies that would undermine” its stability.
“You have a powerful insurance lobby, and their lobbyists have built strong support for this in Congress,” said Representative Lloyd Doggett, a Texas Democrat who chairs the House Ways and Means Health subcommittee.
Some critics say the lack of oversight has encouraged the industry to compete over who can most effectively game the system rather than who can provide the best care.
“Even when they’re playing the game legally, we are lining the pockets of very wealthy corporations that are not improving patient care,” said Dr. Donald Berwick, a C.M.S. administrator under the Obama administration, who recently published a series of blog posts on the industry. “When you skate to the edge of the ice, sometimes you’re going to fall in.”
The program’s promise
Congress’s first attempt to design a privatized Medicare plan paid insurers the same amount for every patient with similar demographic characteristics.
In theory, if the insurers could do better than traditional Medicare — by better managing patients’ care, or otherwise improving their health — their patients would cost less and the insurers would make more money.
But some insurers engaged in strategies — like locating their enrollment offices upstairs, or offering gym memberships — to entice only the healthiest seniors, who would require less care, to join. To deter such tactics, Congress decided to pay more for sicker patients.
Almost immediately, companies saw ways to exploit that system. The traditional Medicare program provided no financial incentive to doctors to document every Cigna hired firms to perform similar at-home assessments that generated billions in extra payments, according to a 2017 whistle-blower lawsuit, which was recently joined by the Justice Department. The firms told nurses to document new diagnoses without adjusting medications, treating patients or sending them to a specialist.
According to the lawsuit, some patients were diagnosed with cancer and heart disease. Nurses were told to especially look for patients with a history of diabetes because it was not “curable,” even if the patient now had normal lab findings or had undergone surgery to treat the condition.
The company declined to comment. “We will vigorously defend our Medicare Advantage business against these allegations,” Cigna said in an earlier statement regarding the lawsuit.
Adding the code for a single diagnosis could yield a substantial payoff. In a 2020 lawsuit, the government said Anthem instructed programmers to scour patient charts for “revenue-generating” codes. One patient was diagnosed with bipolar disorder, although no other doctor reported the condition, and Anthem received an additional $2,693.27, the lawsuit said. Another patient was said to have been coded for “active lung cancer,” despite no evidence of the disease in other records; Anthem was paid an additional $7,080.74. The case is continuing.
The most common allegation against the companies was that they did not correct potentially invalid diagnoses after becoming aware of them. At Anthem, for example, the Justice Department said “thousands” of inaccurate diagnoses were not deleted. According to the lawsuit, a finance executive calculated that eliminating the inaccurate diagnoses would reduce the company’s 2017 earnings from reviewing medical charts by $86 million, or 72 percent.
In a statement, the company, now named Elevance, said it would “vigorously defend our Medicare risk adjustment practices” and accused the government of holding it to standards “that are not grounded in formal statutory and regulatory rules.”
Some of the companies took steps to ensure the extra diagnoses didn’t lead to expensive care. In an October 2021 lawsuit, the Justice Department estimated that Kaiser earned $1 billion between 2009 and 2018 from additional diagnoses, including roughly 100,000 findings of aortic atherosclerosis, or hardening of the arteries. But the plan stopped automatically enrolling those patients in a heart attack prevention program because doctors would be forced to follow up on too many people, the lawsuit said.
Kaiser, which both runs a health plan and provides medical care, is often seen as a model system. But its control over providers gave it additional leverage to demand additional diagnoses from the doctors themselves, according to the lawsuit.
“The cash monster was insatiable,” said Dr. James Taylor, a former coding expert at Kaiser who is one of 10 whistle-blowers to accuse the organization of fraud.
At meetings with supervisors, he was instructed to find additional conditions worth tens of millions of dollars. “It was an actual agenda item and how could we get this,” Dr. Taylor said.
, so many records were incomplete. Under the new program, insurers began rigorously documenting all of a patient’s health conditions — say depression, or a long-ago stroke — even when they had nothing to do with the patient’s current medical care.
In one early case, a Florida medical practice was accused of falsifying diagnoses to enrich its owner and Humana. When Humana told the doctor who owned the practice that his Medicare risk adjustment, or M.R.A., scores had increased significantly, he responded by email, according to the whistle-blower lawsuit: “Good, I am trying to buy that house based on M.R.A. scores.” The case was settled for more than $3 million.
The doctor denied any wrongdoing. Humana declined to comment on the lawsuit and said it takes compliance “seriously.” The company recently told investors it had been questioned by the Justice Department about its billing practices and expected additional litigation.
At conferences, companies pitched digital services to analyze insurers’ medical records and suggest additional codes. Such consultants were often paid on commission; the more money the analysis turned up, the more the companies kept.
The insurers also began hiring agencies that sent doctors or nurses to patients’ homes, where they could diagnose them with more diseases.
One company, Mobile Medical Examination Services, worked with Anthem and Molina, among others. Its doctors and nurses were pushed to document a range of diagnoses, including some — vertebral fractures, pneumonia and cancer — they lacked the equipment to detect, according to a whistle-blower lawsuit. According to the lawsuit, employees who drew patients’ blood often were not provided with a centrifuge or cooler; spoiled blood analyzed a day later produced strange results that could be used to justify valuable diagnoses, including kidney disease and leukemia. The company was acquired by Quest Diagnostics after the case was settled for an undisclosed amount in 2016; Quest said the company complies with all federal and state laws and regulations.
Marc T. Brown, a Kaiser spokesman, said in a statement, “We are confident in our compliance with Medicare Advantage risk-adjustment program requirements,” and added, “Our policies and practices represent well-reasoned and good-faith interpretations of sometimes vague and incomplete guidance from C.M.S.”
Last year, the inspector general’s office noted that one company “stood out” for collecting 40 percent of all Medicare Advantage’s payments from chart reviews and home assessments despite serving only 22 percent of the program’s beneficiaries. It recommended Medicare pay extra attention to the company, which it did not name, but the enrollment figure matched UnitedHealth’s.
A civil trial accusing UnitedHealth of fraudulent overbilling is scheduled for next year. The company’s internal audits found numerous mistakes, according to the lawsuit, which was joined by the Justice Department. Some doctors diagnosed problems like drug and alcohol dependence or severe malnutrition at three times the national rate. But UnitedHealth declined to investigate those patterns, according to the suit.
Matthew Wiggin, a spokesman for the company, called the inspector general’s report “misleading.” He said the company uses diagnostic coding to improve patient care, and noted that the whistle-blower in the lawsuit had not worked for the company in nearly a decade. “Our chart review process complies with regulatory standards,” he said, adding, “Our robust compliance program also proactively seeks to identify fraud, waste and abuse in the system.”
The company countered by suing Medicare, arguing that it wasn’t required to fix inaccurate records before regulations changed in 2014. It won at first, then lost on appeal. In June, the Supreme Court declined to hear the case.
Inaction at Medicare
Even before the first lawsuits were filed, regulators and government watchdogs could see the number of profitable diagnoses escalating. But Medicare has done little to tamp down overcharging.
Several experts, including Medicare’s advisory commission, have recommended reducing all the plans’ payments. Congress has ordered several rounds of cuts and gave C.M.S. the power to make additional reductions if the plans continued to overbill. The agency has not exercised that power.
The agency does periodically audit insurers by looking at a few hundred of their customers’ cases. But insurers are fined for billing mistakes found only in those specific patients. A rule proposed during the Trump administration to extrapolate the fines to the rest of the plan’s customers has not been finalized.
Some of the agency’s top leaders have had close ties to industry. Marilyn Tavenner, a former C.M.S. administrator, left in 2015, then ran the main trade group for health insurers; she was replaced by Andy Slavitt, a former executive at UnitedHealth. Jonathan Blum, the agency’s current chief operating officer, worked for an insurer after leaving the agency in 2014, then became an industry consultant, before returning to Medicare last year.
Ted Doolittle, who served as a senior official for the agency’s Center for Program Integrity from 2011 to 2014, said officials at Medicare seemed uninterested in confronting the industry over these practices. “It was clear that there was some resistance coming from inside” the agency, he said. “There was foot dragging.”
There are signs the problem is continuing.
“We are hearing about it more and more,” said Jacqualine Reid, a government research analyst at the Office of Inspector General who has analyzed Medicare Advantage overbilling.
The Justice Department has brought or joined 12 of the 21 cases that have been made public. But whistle-blower cases remain secret until the department has evaluated them. “We’re aware of other cases that are under seal,” said Mary Inman, a partner at the firm Constantine Cannon, which represents many of the whistle-blowers.
But few analysts expect major legislative or regulatory changes to the program.
“Medicare Advantage overpayments are a political third rail,” said Dr. Richard Gilfillan, a former hospital and insurance executive and a former top regulator at Medicare, in an email. “The big health care plans know it’s wrong, and they know how to fix it, but they’re making too much money to stop. Their C.E.O.s should come to the table with Medicare as they did for the Affordable Care Act, end the coding frenzy, and let providers focus on better care, not more dollars for plans.”
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