GAO States CMS Overpaid Medicare Advantage Plans During the Years of 2010 to 1012–Flawed Risk Assessment Calculation Errors
CMS discovers fraudulent use of algorithm and will sue several plans for $70B
CMS Discovers That Insurers Offering Medicare Advantage “Really Know How To Sharp Shoot A Model With Adjusting Risk For Profit”, A Common Everyday Occurrence in Financial Markets… - Medical Quack
A report issued this week by the Government Accountability Office reports that the Centers for Medicare & Medicaid Services overpaid the Medicare Advantage program run by private health insurers by between $3.2 billion and $5.1 billion for the years 2010-2012.
The overpayments, according to GAO, were the result of CMS inadequately adjusting based on health status for members enrolled in Medicare Advantage.
Insurers who run MA plans are paid a set amount per beneficiary, adjusted by a risk score that calculates the expected consumption of health services in the coming year for each beneficiary.
In practice, the risk scores for beneficiaries with the same health conditions and with the same demographic profile should be the same. However, the GAO discovered in its analysis that coding differences between Medicare Advantage enrollees and those enrolled in the traditional fee-for-service Medicare plan led to “inappropriately high MA risk scores and payments to MA plans.”
Insurers who run MA plans are paid a set amount per beneficiary, adjusted by a risk score that calculates the expected consumption of health services in the coming year for each beneficiary.
In practice, the risk scores for beneficiaries with the same health conditions and with the same demographic profile should be the same. However, the GAO discovered in its analysis that coding differences between Medicare Advantage enrollees and those enrolled in the traditional fee-for-service Medicare plan led to “inappropriately high MA risk scores and payments to MA plans.”
Fraud, What Fraud?
The Medicare Advantage (MA) program was established in 2003 in order to incentivize health plans to provide better care for the elderly and control expenses in doing so. Nearly 16 million seniors are presently enrolled in MA, costing an estimated $150 billion in taxpayer’s money every year. The MA program has grown in popularity with Medicare beneficiaries because it has lower out of pocket expenses than traditional Medicare, offers more benefits, and fills some gaps in coverage.
Unlike the fee-for-service payment arrangement in traditional Medicare, where each service is billed directly to the government, Medicare Advantage plans receive a monthly, set capitated payment to provide care for their enrolled Medicare beneficiaries. However, health plans do receive a higher monthly capitated payment to care for sicker patients, based on the patient’s “risk score”. The risk score is determined by a variety of factors, but is primarily based on the patient’s Hierarchical Chronic Conditions, or HCC score, which are conditions tied to specific ICD-9 diagnoses. Risk scores are required to be backed-up by medical record documentation, but the government still has difficulty verifying each diagnosis. (no simple process)
While the problem of false or improper billing is essentially eliminated in the MA program, fraud remains an issue nonetheless. Recent investigations by The Center for Public Integrity have highlighted some of the more egregious practices occurring in the Medicare Advantage program related to risk scores, which are not only damaging to the program’s reputation, but have also cost America’s taxpayers an astounding $70 billion since 2008. However, the most shocking part of their investigation is highlighting how little control the government has in reigning in this problem.
Research has shown that MA Plans exhibit greater “coding intensity” in documenting disease conditions, so that an MA enrollee’s risk score grows substantially faster than an FFS enrollee’s risk score. Once Medicare enrollees switch from the traditional Medicare fee-for-service program to a Medicare Advantage plan, their HCC scores increase. Medicare Advantage plans contend that the higher scores are due to sicker patients, but without intense auditing, it is difficult to support or disprove that logic.
In addition to the diagnoses obtained from primary physician records, another method gaining ground among Medicare Advantage plans to bolster risk scores is via home health visits. While home health services may legitimately uncover previously unknown medical conditions, more unscrupulous health plans may leverage home health visits as a tool to inflate risk scores, and thus increase their profits from these patients by thousands of dollars each year. Health plans argue that these visits improve patient care, but opponents claim they unnecessarily inflate costs without actually providing more medical services.
Health Care Financing, CMS and HHS have devolved to a dysfunctional chaotic state. The OIG reports these matters to Congress. So why do your legislators do nothing about it?
Perhaps it is because they are not smart enough to plan health care while running the rest of the government.
