Physician Practice

Release of secret Medicare Advantage audits reveal significant billing errors, inflated risk scores

Physician Practice Insider, July 28, 2015

The release earlier this month of secret Medicare Advantage audits CMS conducted on several major health insurers revealed the insurers were overpaid by more than $3.3 million in 2007. It may have been solely due to inadvertent billing errors and inflated risk scores as opposed to intentional fraud, but it’s unclear because the regulators aren’t talking.

The audits, which were conducted in 2008 on at least five insurers across the country as part of a larger investigation on Medicare risk adjustments by HHS and the Department of Justice, showed significant problems with billing-related risk score calculations that were used for beneficiaries who joined a Medicare Advantage plan.
The calculations in question are based on hierarchical condition categories (HCC) physicians are required to document for the program, which is covered under Part C of Medicare.
Medicare Advantage was introduced in 2004 and combines Part A and B services, and sometimes Part D benefits, provided through a private insurer rather than CMS. It’s the fastest growing version of Medicare—estimated to account for 30% of beneficiaries—largely because it fills gaps in traditional coverage, costs seniors less for out-of-pocket expenses, and offers extra benefits.
The Center for Public Integrity (CPI) launched an extensive investigation into Medicare Advantage in 2014, publishing numerous reports that showed regulators estimated inflated risk scores and other errors between 2008 and 2013, errors that totaled a whopping $70 billion in overpayments to insurers. CPI also learned of six whistleblower lawsuits that were filed.
Thanks to a recent court order supporting a Freedom of Information Act filing by CPI, CMS finally released results of four of the 2007 internal audits on July 10, 2015. CMS has otherwise been unwilling to publicly release much information at all associated with Medicare Advantage plans.
CMS refused to disclose records of how the audits were settled, the current status of industry audits, or even how many total audits were conducted, according to CPI. The audits were conducted in 2008, CPI reported, but the findings weren’t submitted to insurers until 2012, and then there was a lengthy appeals process.
The newly released documents deal with four insurers: an Aetna Health Inc. plan in New Jersey, Independence Blue Cross of Pennsylvania, Lovelace Health Plan in New Mexico, and Care Plus, a division of Humana, Inc., in Florida.
In June, CPI separately reported a fifth audit involving PacifiCare of Washington State, which is part of UnitedHealth Group, the nation’s largest Medicare Advantage provider.
A jointly published report on the four audits by CPI and National Public Radio shows CMS auditors reviewed medical records for 201 patients enrolled with each Medicare Advantage plan and discovered numerous issues.
Auditors found CMS was incorrectly billed for 654 of 1,005 patients in the sample group—payments were too high for 579 patients and too low for 75 beneficiaries, according to the report. Risk scores were also too high for more than 800 patients, which led to hefty overpayments in many cases.
The report further shows auditors weren’t able to confirm a third of the 3,950 medical conditions contained in patients’ medical records, chiefly due to insufficient documentation by physicians.
The problems revealed by the audits have not been publicly characterized by regulators as willful acts of fraud by insurers, although individual cases have been brought against some physicians and Humana did disclose in February it was being investigated by the DOJ as part of its larger Medicare review. DaVita Healthcare also received a subpoena for records in March.
But perhaps, as coding specialists have said, widespread industry confusion exists surrounding HCCs and how to properly assign risk scores to patients. The audit results released by CMS would appear to lend some credence to the idea that confusion and misunderstanding are the chief culprits here.
HCCs, which are also being used in payment models for Accountable Care Organizations, are based on physicians’ documentation of a patient’s complete medical history. Each Medicare Advantage patient is assigned a risk-adjustment factor score, which is used to predict the person’s care in the following year.
The score is calculated annually and is affected by complicating conditions or comorbidities, which could increase the ratio and result in higher payments. The commercial payer administering the health plan reviews the documentation submitted by the physician and can adjust the billing coding before it is submitted for payment.
A physician, for example, may neglect to document an old diagnosis for a patient from several years ago that may not pose an immediate problem for the person now when they see the physician for an unrelated illness. That old diagnosis, however, could significantly increase payment on that patient and so the insurer corrects the patient’s score.
If the billing adjustment is not supported by documentation from an in-person session between the physician and patient—regardless of whether it’s correct—it’s invalid and cannot be used to increase payment.

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