Audits — Hidden Until Now — Reveal Millions in Medicare Advantage Overcharges

Newly launched federal audits reveal widespread overcharges and different errors in funds to Medicare Benefit well being plans for seniors, with some plans overbilling the federal government greater than $1,000 per affected person a yr on common.

Summaries of the 90 audits, which examined billings from 2011 by means of 2013 and are the latest evaluations accomplished, have been obtained completely by KHN by means of a three-year Freedom of Data Act lawsuit, which was settled in late September.

The federal government’s audits uncovered about $12 million in internet overpayments for the care of 18,090 sufferers sampled, although the precise losses to taxpayers are possible a lot larger. Medicare Benefit, a fast-growing various to unique Medicare, is run primarily by main insurance coverage corporations.

Officers on the Facilities for Medicare & Medicaid Providers have stated they intend to extrapolate the cost error charges from these samples throughout the entire membership of every plan — and recoup an estimated $650 million consequently.

However after almost a decade, that has but to occur. CMS was set to unveil a closing extrapolation rule Nov. 1 however put that decision off till February.

Ted Doolittle, a former deputy director of CMS’ Heart for Program Integrity, which oversees Medicare’s efforts to battle fraud and billing abuse, stated the company has failed to carry Medicare Benefit plans accountable. “I believe CMS fell down on the job on this,” stated Doolittle, now the well being care advocate for the state of Connecticut.

Doolittle stated CMS seems to be “carrying water” for the insurance coverage business, which is “being profitable hand over fist” off Medicare Benefit. “From the surface, it appears fairly smelly,” he stated.

In an electronic mail response to written questions posed by KHN, Dara Corrigan, a CMS deputy administrator, stated the company hasn’t advised well being plans how a lot they owe as a result of the calculations “haven’t been finalized.”

Corrigan declined to say when the company would end its work. “We’ve a fiduciary and statutory obligation to deal with improper funds in all of our applications,” she stated.

The 90 audits are the one ones CMS has accomplished over the previous decade, a time when Medicare Benefit has grown explosively. Enrollment within the plans more than doubled throughout that interval, passing 28 million in 2022, at a price to the federal government of $427 billion.

Seventy-one of the 90 audits uncovered internet overpayments, which topped $1,000 per affected person on common in 23 audits, in accordance with the federal government’s data. Humana, {one of the} largest Medicare Benefit sponsors, had overpayments exceeding that $1,000 common in 10 of 11 audits, in accordance with the data.

CMS paid the remaining plans too little on common, anyplace from $8 to $773 per affected person.

Auditors flag overpayments when a affected person’s data fail to doc that the individual had the medical situation the federal government paid the well being plan to deal with, or if medical reviewers choose the sickness is much less extreme than claimed.

That occurred on common for simply over 20% of medical circumstances examined over the three-year interval; charges of unconfirmed ailments have been larger in some plans.

As Medicare Benefit’s recognition amongst seniors has grown, CMS has fought to maintain its audit procedures, and the mounting losses to the federal government, largely beneath wraps.

That strategy has pissed off each the business, which has blasted the audit course of as “fatally flawed” and hopes to torpedo it, and Medicare advocates, who fear some insurers are getting away with ripping off the federal government.

“On the finish of the day, it’s taxpayer {dollars} that have been spent,” stated David Lipschutz, a senior coverage lawyer with the Heart for Medicare Advocacy. “The general public deserves extra details about that.”

At the least three events, together with KHN, have sued CMS beneath the Freedom of Data Act to shake free particulars concerning the overpayment audits, which CMS calls Threat Adjustment Information Validation, or RADV.

In a single case, CMS charged a legislation agency an advance search price of $120,000 after which supplied subsequent to nothing in return, in accordance with courtroom filings. The legislation agency filed go well with final yr, and the case is pending in federal courtroom in Washington, D.C.

KHN sued CMS in September 2019 after the company failed to reply to a FOIA request for the audits. Underneath the settlement, CMS agreed at hand over the audit summaries and different paperwork and pay $63,000 in authorized charges to Davis Wright Tremaine, the legislation agency that represented KHN. CMS didn’t admit to wrongfully withholding the data.

Excessive Coders

Many of the audited plans fell into what CMS calls a “excessive coding depth group.” Which means they have been among the many most aggressive in looking for additional funds for sufferers they claimed have been sicker than common. The federal government pays the well being plans utilizing a components known as a “threat rating” that’s purported to render larger charges for sicker sufferers and decrease ones for more healthy ones.

However usually medical data equipped by the well being plans didn’t assist these claims. Unsupported circumstances ranged from diabetes to congestive coronary heart failure.

General, common overpayments to well being plans ranged from a low of $10 to a excessive of $5,888 per affected person collected by Touchstone Well being HMO, a New York well being plan whose contract was terminated “by mutual consent” in 2015, in accordance with CMS data.

Many of the audited well being plans had 10,000 members or extra, which sharply boosts the overpayment quantity when the charges are extrapolated.

In all, the plans acquired $22.5 million in overpayments, although these have been offset by underpayments of $10.5 million.

Auditors scrutinize 30 contracts a yr, a small pattern of about 1,000 Medicare Benefit contracts nationwide.

UnitedHealthcare and Humana, the 2 largest Medicare Benefit insurers, accounted for 26 of the 90 contract audits over the three years.

Eight audits of UnitedHealthcare plans discovered overpayments, whereas seven others discovered the federal government had underpaid.

UnitedHealthcare spokesperson Heather Soule stated the corporate welcomes “this system oversight that RADV audits present.” However she stated the audit course of wants to match Medicare Benefit to unique Medicare to offer a “full image” of overpayments. “Three years in the past we made a advice to CMS suggesting that they conduct RADV audits on each plan, yearly,” Soule stated.

Humana’s 11 audits with overpayments included plans in Florida and Puerto Rico that CMS had audited twice in three years.

The Florida Humana plan additionally was the goal of an unrelated audit in April 2021 by the Well being and Human Providers inspector basic. That audit, which coated billings in 2015, concluded Humana improperly collected nearly $200 million that yr by overstating how sick some sufferers have been. Officers have but to recoup any of that cash, both.

In an electronic mail, Humana spokesperson Jahna Lindsay-Jones known as the CMS audit findings “preliminary” and famous they have been primarily based on a sampling of years-old claims.

“Whereas we proceed to have substantive considerations with how CMS audits are performed, Humana stays dedicated to working intently with regulators to enhance the Medicare Benefit program in ways in which enhance seniors’ entry to high-quality, decrease price care,” she wrote.

Billing Showdown

Outcomes of the 90 audits, although years previous, mirror more moderen findings of a slew of different government reports and whistleblower lawsuits alleging that Medicare Benefit plans routinely have inflated affected person threat scores to overcharge the federal government by billions of {dollars}.

Brian Murphy, an professional in medical document documentation, stated collectively the evaluations present that the issue is “completely endemic” within the business.

Auditors are discovering the identical inflated expenses “over and over,” he stated, including: “I don’t suppose there may be sufficient oversight.”

In the case of getting a refund from the well being plans, extrapolation is the massive sticking level.

Though extrapolation is routinely used as a software in most Medicare audits, CMS officers have by no means utilized it to Medicare Benefit audits due to fierce opposition from the insurance coverage business.

“Whereas this knowledge is greater than a decade previous, more moderen analysis demonstrates Medicare Benefit’s affordability and accountable stewardship of Medicare {dollars},” stated Mary Beth Donahue, president of the Higher Medicare Alliance, a bunch that advocates for Medicare Benefit. She stated the business “delivers higher care and higher outcomes” for sufferers.

However critics argue that CMS audits solely a tiny share of Medicare Benefit contracts nationwide and will do extra to guard tax {dollars}.

Doolittle, the previous CMS official, stated the company must “begin maintaining with the occasions and doing these audits on an annual foundation and extrapolating the outcomes.”

However Kathy Poppitt, a Texas well being care lawyer, questioned the equity of demanding enormous refunds from insurers so a few years later. “The well being plans are going to battle tooth and nail and never make this simple for CMS,” she stated.


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