How Medicare Advantage Plans Overcharge Taxpayers

In April 2016, government auditors asked a Blue Cross Medicare Advantage health plan in Minnesota to turn over the medical records of patients treated with a foot disease that Their owners were prosecuted for fraud.

Medicare paid Blue Cross more than $20,000 to cover the care of 11 patients seen by Aggeus Healthcare, a chain of podiatry clinics, in 2011.

Blue Cross said it could not find any records to justify the payments because Aggeus shut down following the indictment, which allegedly falsified patient medical records. So Blue Cross asked the Centers for Medicare & Medicaid Services for a “hardship” waiver of the strict requirement that health plans withhold these files in the event of an audit.

CMS accepted the request, and the auditor removed 11 patients from a random sample of 201 Blue Cross program members whose records were reviewed.

A review of 90 government audits, released exclusively to KHN in response to a Freedom of Information Act lawsuit, revealed that health insurers issuing Medicare Advantage plans have attempts to circumvent regulations that require them to record medical conditions for which the government has paid them for treatment.

The audits, the most recent ones completed by the agency, are intended to validate payments to Medicare Advantage health plans between 2011 and 2013.

As KHN reported late last month, auditors discovered millions of dollars in improper payments — citing an average of more than $1,000 in fees per patient a year — by nearly two dozen health plans.

The hardship claims, along with other documents KHN obtained through the lawsuit, shed light on the confidential audit process Medicare relies on to hold Medicare Advantage health plans accountable. increasingly popular — is an alternative to the original Medicare program and is run primarily by large insurance companies.

Responding to the audit’s findings, Senator Chuck Grassley (R-Iowa) called for “active oversight” to recover the excessive charges.

“CMS must actively use every tool available to ensure that it effectively identifies Medicare Advantage fraud and work with the Department of Justice to prosecute and recover improper payments,” Grassley said. in a written statement to KHN.

Medicare reimburses Medicare Advantage plans by using a complex formula called a risk score to calculate higher rates for sicker patients and lower rates for healthier people.

But federal officials rarely require documentation verifying that patients have these conditions or that they are as severe as claimed. Only about 5% of Medicare Advantage plans are audited annually.

When auditors called in, previously hidden CMS logs showed, they often found little or no support for diagnoses submitted by Advantage plans, such as obstructive pulmonary disease. chronic, diabetes or vascular disease. Although auditors look at the records of a relatively small sample of patients, they can extrapolate error rates to large numbers of patients in a Medicare Advantage health plan and calculate millions of dollars. in overpayments.

Overall, CMS auditors flagged diagnostic billing codes — which indicate what the patient was treated for — as invalid more than 8,600 times. The audits included records for 18,090 patients over a three-year period.

In many cases, the auditor finds that the health care provider’s medical information providing a diagnosis is unclear, the provisioning record is unacceptable, or the record lacks the required signature. . Other files carry wrong patient names or are missing altogether.

The percentage of payment codes rejected by auditors varied widely across 90 audits. According to CMS filings, the invalid code rate was as high as 80% at Touchstone Health, a defunct New York HMO. The company was also shown to have the highest average annual overage charge – $5,888 per patient billed to the government.

In contrast, seven health plans had less than 10% of their codes flagged.

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