Medicare Advantage plans overcharged Medicare, audits show: Shots


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A photo illustration shows four images separated by bars.  The first image is of money and a Medicare card, the second is of an older man sitting in a chair, the third is a close-up of money, the fourth is a spreadsheet of payments totaling over $8 million.

Eric Harklerod/KHN/Getty Images/Unsplash/Centers for Medicare and Medicaid Services Data

A recently released federal audit finds widespread overcharges and other errors in payments to Medicare Advantage health plans, with some plans billing the government an average of more than $1,000 per patient per year.

The summaries of the 90 audits, which examined bills from 2011 to 2013 and recently completed reviews, were obtained exclusively through a three-year Freedom of Information Act lawsuit by KHN, which was released in September. It was finally resolved.

The government audit revealed a net overpayment of nearly $12 million for the care of 18,090 sampled patients, although the actual loss to taxpayers is likely to be much higher. Medicare Advantage, a rapidly growing alternative to original Medicare, is primarily run by major insurance companies.

Officials at the Centers for Medicare and Medicaid Services have said they intend to extrapolate payment error rates from those samples into each plan’s total membership — and recover an estimated $650 million from insurers as a result.

But even after almost a decade, this has not happened. CMS was set to unveil a final extrapolation rule on November 1, but recently postponed that decision until February.

Ted Doolittle, former deputy director of the CMS Center for Program Integrity, which oversees Medicare’s efforts to fight fraud and billing abuse, said the agency has failed to hold Medicare Advantage plans accountable. “I think CMS fell to this task,” said Doolittle, who is now Connecticut’s state health care advocate.

Doolittle said CMS appears to be “carrying water” for the insurance industry, which is “making money hand over fist” from Medicare Advantage plans. “From the outside, it looks very stinky,” he said.

In an emailed response to written questions asked by KHN, CMS deputy administrator Dara Corrigan said the agency has not told health plans how much they owe because the calculation “has not been finalized.”

Corrigan declined to say when the agency would complete its work. “We have a fiduciary and statutory duty to address unfair payments across all of our programs,” she said.

Enrollment in Medicare Advantage plans has more than doubled in the last decade

There are only 90 audits CMS has completed over the past decade, a time when Medicare Advantage has grown explosively. Enrollment in the plans more than doubled during that period, to more than 28 million in 2022, costing the government $427 billion.

Seventy-one of the 90 audits revealed net overpayments, which averaged above $1,000 per patient in 23 audits, according to government records. Humana, one of the largest Medicare Advantage sponsors, had an average payment of more than $1,000 in 10 of 11 audits, according to records.

CMS paid the remaining plans much less on average, anywhere from $8 to $773 per patient.

What is overpayment?

Auditors mark overpayments when a patient’s records fail to document that the person had a medical condition that the government paid the health plan to treat, or if medical reviewers believe the disease Less severe than claimed.

This occurred on average for more than 20% of medical conditions screened over a three-year period; Some schemes had higher rates of undiagnosed diseases.

As Medicare Advantage has grown in popularity among seniors, CMS has struggled to keep its audit procedures and the government’s growing deficit under wraps.

That approach has frustrated both industry, which has blasted the audit process as “fatally flawed” and hopes to torpedo it, and Medicare advocates, who worry that some insurers are getting away with ripping off the government. Huh.

“At the end of the day, it’s taxpayer dollars that were spent,” said David Lipschutz, a senior policy attorney at the Center for Medicare Advocacy. “The public deserves more information about that.”

At least three parties, including KHN, have sued CMS under the Freedom of Information Act to seek disclosure about the overpayment audit, which CMS calls Risk Adjustment Data Validation, or RADV.

KHN sued CMS in September 2019 after the agency failed to respond to a FOIA request for the audit. Under the settlement, CMS agreed to hand over the audit summary and other documents and pay $63,000 in legal fees to Davis Wright Tremaine, the law firm representing KHN. CMS did not admit to wrongful retention of records.

Some insurers often claimed patients were sicker than average, without proper evidence

Most of the audited plans fall under what CMS calls the “High Coding Intensity Group”. This means they were most aggressive in demanding extra payment for patients they claimed were sicker than average. The government pays for health plans using a formula called a “risk score,” which is supposed to assign higher rates to sicker patients and lower rates to healthier ones.

But often medical records provided by health plans fail to support those claims. Unsupported conditions ranged from diabetes to congestive heart failure.

In total, per-patient payments ranging from a low of $10 to a high of $5,888 were collected by the New York health plan, Touchstone Health HMO, whose contract was terminated “by mutual consent” in 2015, according to CMS records. average payment.

Two big insurers who overcharged Medicare, according to audit: United Healthcare and Humana

Most of the audited health plans had 10,000 members or more, which quickly adds up to overpayment amounts when rates are added. UnitedHealthcare and Humana, the two largest Medicare Advantage insurers, accounted for 26 of the 90 contract audits over three years.

Overall, 90 audits found plans that received $22.5 million in overpayments, although these were offset by $10.5 million in underpayments.

Auditors examine 30 contracts a year, a small sample of the roughly 1,000 Medicare Advantage contracts nationwide.

Eight audits of UnitedHealthcare plans found overpayments, while seven others found the government had underpaid.

UnitedHealthcare spokeswoman Heather Soule said the company welcomes “the program oversight that the RADV audit provides.” But she said the audit process needs to compare Medicare Advantage to original Medicare to provide a “full picture” of overpayments. “Three years ago, we suggested to CMS that they conduct RADV audits on every scheme every year,” Soule said.

The 11 audits of the higher-paying Humana included plans in Florida and Puerto Rico that CMS audited twice in three years.

The Florida Humana plan was also the target of an unrelated audit in April 2021 by the health and human services inspector general. That audit, which included the billings in 2015, concluded that Humana improperly collected about $200 million that year in overpayments from some sick patients in Medicare Advantage plans. The authorities are yet to recover any of that money.

In an email, Humana spokeswoman Jahna Lindsay-Jones called the CMS audit findings “preliminary” and said they were based on a sampling of years-old claims.

“While we continue to have concrete concerns about how the CMS audits are conducted, Humana remains committed to working closely with regulators to improve the Medicare Advantage program, which provides seniors with high-quality, low-cost health care. increase access to cost-effective care,” she wrote.

a billing showdown looms

The results of the 90 audits, though years old, mirror recent findings from other government reports and whistleblower lawsuits — several released last year — alleging that Medicare Advantage plans routinely overcharged the government by billions. increased the patient risk score for Dollar.

Brian Murphy, an expert in medical records documentation, said the reviews collectively show the problem remains “absolutely endemic” in the industry.

“Auditors are getting the same inflated fee over and over again,” he said, adding, “I don’t think there’s enough oversight.”

Extrapolation is the big sticking point when it comes to getting money back from health plans.

Although extrapolation is routinely used as a tool in most Medicare audits, CMS officials never implemented it in a Medicare Advantage audit due to strong opposition from the insurance industry.

“Although this data is more than a decade old, recent research demonstrates the affordability of Medicare Advantage and the responsible stewardship of Medicare dollars,” said Mary Beth Donahue, president of the Better Medicare Alliance, a Medicare Advantage advocacy group. He said the industry “provides better care and better outcomes” for patients.

But critics argue that CMS audits only a small percentage of Medicare Advantage contracts nationwide and should do more to protect tax dollars.

Doolittle, a former CMS official, said the agency should “start to move with the times and do these audits on an annual basis and estimate the results.”

But Texas health care advocate Cathy Poppitt questioned the fairness of demanding huge refunds from insurers after so many years. “Health plans are going to fight tooth and nail and CMS is not going to make it easy,” she said.

KHN (Kaiser Health News) is a national, editorially independent newsroom and a program kff (Kaiser Family Foundation).

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