Eric Harkleroad/KHN /Getty Images/ Unsplash/ Centers for Medicare & Medicaid Services Data
Eric Harkleroad/KHN /Getty Images/ Unsplash/ Centers for Medicare & Medicaid Services Data
Newly launched federal audits reveal widespread overcharges and different errors in funds to Medicare Advantage well being plans, 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, had been obtained solely by KHN by means of a three-year Freedom of Information Act lawsuit, which was settled in late September.
The authorities’s audits uncovered about $12 million in web overpayments for the care of 18,090 sufferers sampled, although the precise losses to taxpayers are possible a lot increased. Medicare Advantage, a fast-growing various to unique Medicare, is run primarily by main insurance coverage corporations.
Officials on the Centers for Medicare & Medicaid Services have mentioned they intend to extrapolate the cost error charges from these samples throughout the whole membership of every plan — and recoup an estimated $650 million from insurers in consequence.
But after practically a decade, that has but to occur. CMS was set to unveil a closing extrapolation rule Nov. 1 however lately put that call off till February.
Ted Doolittle, a former deputy director of CMS’ Center for Program Integrity, which oversees Medicare’s efforts to battle fraud and billing abuse, mentioned the company has failed to carry Medicare Advantage plans accountable. “I believe CMS fell down on the job on this,” mentioned Doolittle, now the well being care advocate for the state of Connecticut.
Doolittle mentioned CMS seems to be “carrying water” for the insurance coverage trade, which is “earning money hand over fist” off Medicare Advantage plans. “From the surface, it appears fairly smelly,” he mentioned.
In an e-mail response to written questions posed by KHN, Dara Corrigan, a CMS deputy administrator, mentioned 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 have a fiduciary and statutory responsibility to deal with improper funds in all of our applications,” she mentioned.
Enrollment in Medicare Advantage plans has greater than doubled within the final decade
The 90 audits are the one ones CMS has accomplished over the previous decade, a time when Medicare Advantage has grown explosively. Enrollment within the plans greater 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 web overpayments, which topped $1,000 per affected person on common in 23 audits, in accordance with the federal government’s information. Humana, {one of the} largest Medicare Advantage sponsors, had overpayments exceeding that $1,000 common in 10 of 11 audits, in accordance with the information.
CMS paid the remaining plans too little on common, wherever from $8 to $773 per affected person.
What constitutes an overpayment?
Auditors flag overpayments when a affected person’s information fail to doc that the particular person had the medical situation the federal government paid the well being plan to deal with, or if medical reviewers decide 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 had been increased in some plans.
As Medicare Advantage’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 method has annoyed each the trade, 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.
“At the tip of the day, it is taxpayer {dollars} that had been spent,” mentioned David Lipschutz, a senior coverage legal professional with the Center for Medicare Advocacy. “The public deserves extra details about that.”
At least three events, together with KHN, have sued CMS beneath the Freedom of Information Act to shake free particulars concerning the overpayment audits, which CMS calls Risk Adjustment Data Validation, or RADV.
KHN sued CMS in September 2019 after the company failed to answer a FOIA request for the audits. Under the settlement, CMS agreed handy over the audit summaries and different paperwork and pay $63,000 in authorized charges to Davis Wright Tremaine, the regulation agency that represented KHN. CMS didn’t admit to wrongfully withholding the information.
Some insurers typically claimed sufferers had been sicker than common, with out correct proof
Most of the audited plans fell into what CMS calls a “excessive coding depth group.” That means they had been among the many most aggressive in in search of additional funds for sufferers they claimed had been sicker than common. The authorities pays the well being plans utilizing a components known as a “threat rating” that’s purported to render increased charges for sicker sufferers and decrease ones for more healthy ones.
But typically medical information provided by the well being plans did not assist these claims. Unsupported circumstances ranged from diabetes to congestive coronary heart failure.
Overall, common overpayments to well being plans ranged from a low of $10 to a excessive of $5,888 per affected person collected by Touchstone Health HMO, a New York well being plan whose contract was terminated “by mutual consent” in 2015, in accordance with CMS information.
Two massive insurers that overcharged Medicare, in accordance with audits: United Healthcare and Humana
Most of the audited well being plans had 10,000 members or extra, which sharply boosts the overpayment quantity when the charges are extrapolated. UnitedHealthcare and Humana, the 2 greatest Medicare Advantage insurers, accounted for 26 of the 90 contract audits over the three years.
In all, the 90 audits discovered plans that acquired $22.5 million in overpayments, although these had been offset by underpayments of $10.5 million.
Auditors scrutinize 30 contracts a yr, a small pattern of about 1,000 Medicare Advantage contracts nationwide.
Eight audits of UnitedHealthcare plans discovered overpayments, whereas seven others discovered the federal government had underpaid.
UnitedHealthcare spokesperson Heather Soule mentioned the corporate welcomes “this system oversight that RADV audits present.” But she mentioned the audit course of wants to check Medicare Advantage 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 mentioned.
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 Health and Human Services inspector normal. That audit, which lined billings in 2015, concluded Humana improperly collected practically $200 million that yr by overstating how sick some sufferers in its Medicare Advantage plans had been. Officials have but to recoup any of that cash, both.
In an e-mail, Humana spokesperson Jahna Lindsay-Jones known as the CMS audit findings “preliminary” and famous they had been primarily based on a sampling of years-old claims.
“While we proceed to have substantive considerations with how CMS audits are performed, Humana stays dedicated to working intently with regulators to enhance the Medicare Advantage program in ways in which enhance seniors’ entry to high-quality, decrease price care,” she wrote.
A billing showdown looms
Results of the 90 audits, although years outdated, mirror newer findings of a slew of different government stories and whistleblower lawsuits — many launched over the previous yr — alleging that Medicare Advantage plans routinely have inflated affected person threat scores to overcharge the federal government by billions of {dollars}.
Brian Murphy, an knowledgeable in medical report documentation, mentioned collectively the evaluations present that the issue continues to be “completely endemic” within the trade.
Auditors are discovering the identical inflated fees “time and again,” he mentioned, including: “I do not suppose there may be sufficient oversight.”
When it involves getting a reimbursement from the well being plans, extrapolation is the massive sticking level.
Although extrapolation is routinely used as a software in most Medicare audits, CMS officers have by no means utilized it to Medicare Advantage audits due to fierce opposition from the insurance coverage trade.
“While this knowledge is greater than a decade outdated, newer analysis demonstrates Medicare Advantage’s affordability and accountable stewardship of Medicare {dollars},” mentioned Mary Beth Donahue, president of the Better Medicare Alliance, a bunch that advocates for Medicare Advantage. She mentioned the trade “delivers higher care and higher outcomes” for sufferers.
But critics argue that CMS audits solely a tiny proportion of Medicare Advantage contracts nationwide and may do extra to guard tax {dollars}.
Doolittle, the previous CMS official, mentioned the company must “begin maintaining with the instances and doing these audits on an annual foundation and extrapolating the outcomes.”
But Kathy Poppitt, a Texas well being care legal professional, questioned the equity of demanding large refunds from insurers so a few years later. “The well being plans are going to battle tooth and nail and never make this straightforward for CMS,” she mentioned.
KHN (Kaiser Health News) is a nationwide, editorially unbiased newsroom and a program of KFF (Kaiser Family Foundation).