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Senator Calls for Scrutiny of Health Payers, Medicare Fraud

One senator is demanding answers from CMS after an audit details health payer overcharges for Medicare Advantage services.

CMS audit details Medicare fraud

Source: Thinkstock

By Jesse Migneault

- Senator Chuck Grassley (R-Iowa) is asking federal officials to investigate charges that Medicare Advantage plans were overcharged by health payers.

In a letter to CMS Acting Administrator Seema Verma, Grassely cited an improper 2007 federal payout for $125 million as “low and could very well be just the tip of the iceberg,” in fraudulent claims and payments. From 2008 to 2013 Medicare Advantage has been at the center of a $70 billion payment manipulation scandal.

Chairman of the Senate Judiciary Committee, Grassely sent the letter, dated April 17th, to CMS administrator Seema Verma.  In the letter the Chairman of the Senate Judiciary Committee asked CMS about its current steps to prevent fraudulent Medicare Advantage billing. The letter also included an inquiry into whether CMS has conducted any additional audits the last several years, and if there are any audits currently ongoing.

“CMS must aggressively use the tools at its disposal to ensure that it is efficiently identifying fraud and subsequently implementing timely and fair remedies,” wrote Grassely. “The use of these tools is all the more important as Medicare Advantage adds more patients and billions of dollars of taxpayer money is at stake.”

The most recent letter follows a letter written by Grassely to CMS in 2015. The previous letter also addressed Medicare Advantage overcharges through a risk score gaming that allegedly cost US taxpayers over $70 billion.

The CMS response to Grassely’s 2015 letter stated the agency had conducted two audits of Medicare Advantage billings in 2007 that resulted in the recovery of $13.7 million. Based on CMS documents, this was from Medicare Advantage overpayments of $128 million to five separate health plans.

“The difference in the assessment and the actual recovery is striking and demands an explanation,” Grassley claimed.

Grassley asked what steps CMS is taking “to ensure that insurance companies are not fraudulently altering risk scores” and how many audits are now being conducted.

Medicare Advantage payments are determined by the risk score of individual enrollees. Patients are divided into two categories; high-risk patients, with higher healthcare costs, and lower-risk patients, with less associated costs. To cover the high-risk patients Medicare Advantage plans charge more for coverage. 

Risk gaming occurs when payers inflate patient risk scores and request higher payments. ““By all accounts, risk score gaming is not going to go away,” Grassely stated.

A review of records obtained from CMS by FOIA requests revealed a pattern of overpayment. Several CMS audits found a consistent absence of documents showing proof of patients being as sick as they claimed to be for Medicare Advantage billings.

One example showed auditors couldn’t confirm the existence of one-third of the diseases the health plans had received payment for treating. This was due to patient records that lacked “sufficient documentation of a diagnosis.”

CMS concluded that federal payouts for incorrect amounts occurred in nearly two-thirds of patients whose records were examined, with one in five patients having overcharges of $5,000 or more.

AHIP has publicly denied the widespread overcharging of Medicare Advantage by its members. In a 2016 report the association claimed that Medicare Advantage “has a better track record compared to traditional fee-for-service Medicare with fewer payment errors.”

AHIP further went on to state that audits of risk assessments could “disrupt the care being provided by plans,” and “‘unconfirmed’ diagnoses do not necessarily mean beneficiaries do not have the conditions reported by the plans.”

With an aging population, member growth in Medicare Advantage plans is expected to expand significantly in coming years. This expansion could open the way for additional fraudulent billing, as noted by Grassely. To combat this the senator called for additional CMS audits.

“The use of these tools is all the more important as Medicare Advantage adds more patients and billions of dollars of taxpayer money is at stake,” Grassley said.

CMS stated the federal agency spends close to $30 million annually to audit Medicare Advantage billings. A 2016 the GAO report to Congress stated that CMS had spent $117 million to recover $14 million in overcharges for Medicare Advantage. 

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