Newly released federal audits reveal widespread overcharges and other billing errors for Medicare Advantage health plans for seniors, with some plans charging an average give the government more than $1,000 per patient per year.
A summary of 90 audits, examining invoices from 2011 to 2013 and the most recent completed, obtained exclusively by KHN through the Freedom of Information Act lawsuit pulled three years, was resolved at the end of September.
Government audits discovered about $12 million in net overpayments for the care of 18,090 patients sampled, although the actual damage to taxpayers could be much higher. Medicare Advantage, a rapidly growing alternative to original Medicare, is primarily operated by large insurance companies.
Officials at the Centers for Medicare & Medicaid Services said they plan to extrapolate the billing error rate from those samples on each plan’s total membership — and get back an estimate of about $650 million.
But after nearly a decade, that hasn’t happened yet. CMS was set to publish its final extrapolation rule on November 1 but postponed that decision until February.
Ted Doolittle, former deputy director of CMS’s Center for Program Integrity, which oversees Medicare’s efforts to combat payment fraud and abuse, said the agency has not held the programs accountable. Medicare Advantage. “I think CMS has failed at this job,” said Doolittle, now a healthcare advocate for the state of Connecticut.
Doolittle said CMS seems to be “carrying water” for the insurance industry, which is “turning money” from Medicare Advantage. “From the outside, it looks quite smelly,” he said.
In an email in response to written questions posed by KHN, Dara Corrigan, the CMS deputy administrator, said the agency has not yet told health plans how much they owe because the calculations “have not been completed.” benevolent”.
Corrigan declined to say when the agency would complete its work. “We have a fiduciary and statutory obligation to address nonconforming payments across all of our programs,” she said.
The 90 audits are the only ones CMS has completed in the past decade, a time when Medicare Advantage has exploded. The number of people enrolling in the plans has more than doubled in that period, surpassing 28 million by 2022, at a cost to the government of $427 billion.
According to government records, 71 of the 90 audits uncovered net overpayments, averaging up to $1,000 per patient in 23 audits. According to the filing, Humana, one of the largest sponsors of Medicare Advantage, overpaid that $1,000 on average on 10 out of 11 checks.
Not a Modern Healthcare subscriber? Sign up today.
The average CMS payment for the remaining packages is too little, from $8 to $773 per patient.
The auditor flags overpayments when a patient’s records do not demonstrate that the person has a disease for which the government has paid the health plan to treat, or if medical evaluators assess disease less severe than required.
That happened on average just over 20% of the medical conditions examined over a three-year period; rates of unconfirmed diseases are higher in some plans.
As Medicare Advantage’s popularity among seniors grew, CMS struggled to keep its audit procedures and growing losses to the government, much of it secret.
That approach has frustrated both the industry, which has called the audit process “seriously flawed” and hopes to wreck it, as well as Medicare advocates, who worry that a Some insurance companies are avoiding defrauding the government.
“In the end, it was taxpayer money that was spent,” said David Lipschutz, a senior policy attorney with the Center for Advocacy for Medicare. “The public deserves more information about that.”
At least three parties, including KHN, have sued CMS under the Freedom of Information Act to shake loose details of overpayment audits, which CMS calls Risk Adjusted Data Validation or RADV .
In one case, CMS charged a law firm upfront $120,000 and then offered nothing in return, according to court filings. The law firm filed a lawsuit last year and the case is pending in federal court in Washington, DC
KHN sued CMS in September 2019 after it failed to respond to FOIA’s request for an audit. Under the settlement, CMS agreed to hand over audit summaries and other documents and pay $63,000 in legal fees to Davis Wright Tremaine, the law firm representing KHN. CMS does not admit to improperly withholding records.
high coders
Most of the tested plans fall into what CMS calls the “encryption strength group”. That means they are among the most active in seeking extra payments for patients they perceive to be sicker than average. The government pays for health plans using a formula called a “risk score” that is supposed to give higher rates to sicker patients and lower rates to healthier people.
But often medical records provided by health plans do not support those claims. Unsupported conditions range from diabetes to congestive heart failure.
Overall, the average overpayments for health plans ranged from as low as $10 to as high as $5,888 per patient collected by Touchstone Health HMO, a health insurance plan. in New York terminated the contract “by mutual consent” in 2015, according to CMS filings.
Most audited health plans have 10,000 or more members, which dramatically increases the amount of overpayments when rates are extrapolated.
In total, the plans received $22.5 million in overpayments, though these were offset by a $10.5 million underpayment.
Auditors scrutinize 30 contracts each year, a small sample of about 1,000 Medicare Advantage policies nationwide.
UnitedHealthcare and Humana, the two largest Medicare Advantage insurers, accounted for 26 of the 90 three-year policy audits.
Eight inspections of UnitedHealthcare plans found overpayments, while another seven found government underpayments.
UnitedHealthcare spokeswoman Heather Soule said the company welcomes “the programmatic oversight that RADV audits provide.” But she said the audit process needs to compare Medicare Advantage with original Medicare to provide a “complete picture” of overpayments. “Three years ago, we made a recommendation to CMS that they conduct a RADV audit of every plan, every year,” Soule said.
Humana’s 11 audits with overpayments included plans in Florida and Puerto Rico that CMS audited twice in three years.
Florida’s Humana Plan was also the target of an unrelated audit in April 2021 by the inspector general of Health and Human Services. That audit, which included the 2015 bills, concluded that Humana improperly collected nearly $200 million that year by exaggerating the medical conditions of some patients. Officials have also not recovered any of the funds.
In an email, a spokeswoman for Humana, Jahna Lindsay-Jones, called the CMS test results “preliminary” and noted that they were based on a sampling of claims that went back years.
“While we continue to have genuine concerns about how CMS audits are conducted, Humana remains committed to working closely with regulators to improve the Medicare Advantage plan in ways that increase accessibility. access to seniors with lower-cost, high-quality care,” she wrote.
Paying Competition
The results of the 90 audits, although dated many years ago, reflect more recent findings about a series of other government reports and whistleblower lawsuits alleging that Medicare Advantage plans often regularly inflate patient risk scores to charge the government billions of dollars.
Brian Murphy, an expert on medical records documentation, said overall reviews show the issue is “absolutely an epidemic” in the industry.
Auditors are finding the same inflated fees “over and over again,” he said, adding: “I don’t think there’s enough oversight.”
When it comes to getting money back from health plans, extrapolation is the big bottom line.
Although extrapolation is commonly used as a tool in most Medicare audits, CMS officials have never applied it to Medicare Advantage audits because of strong opposition from the insurance industry. harsh.
Mary Beth Donahue, president of the Better Medicare Coalition, a group that advocates for Medicare Advantage, said: “Although this data is more than a decade old, many recent studies have demonstrated Medicare’s affordability. Advantage and responsible management of Medicare funds. The industry “brings better care and better outcomes” to patients, she said.
But critics say CMS only audits a small percentage of Medicare Advantage policies nationwide and should do more to protect tax dollars.
Doolittle, a former CMS official, said the agency needs to “start keeping up with the times and do these audits every year and extrapolate the results.”
But Kathy Poppitt, a health care attorney in Texas, questioned the fairness of asking insurance companies for large refunds years later. “Health plans fight to the teeth and don’t make this easy for CMS,” she said.
Kaiser Health News is a national health policy news service. This is an editorially independent program of the Henry J. Kaiser Family Foundation not affiliated with Kaiser Permanente.
Download Modern Healthcare’s app to stay informed when there’s breaking industry news.
