Health insurers have their way with regulators
Second in a three-part series.
Four years ago, Medicare auditors came to an alarming conclusion: the federal government shouldn’t have paid a half-dozen insurance plans hundreds of millions of dollars to treat seniors in especially poor health.
The findings signaled that billing errors could be deeply rooted within private Medicare Advantage plans — which contract with the federal government to care for nearly 16 million elderly Americans — and that these abuses could be wasting taxpayer dollars at a ferocious clip.
Related: Key findings from the second installment of 'Medicare Advantage Money Grab'
Medicare expects to pay higher rates for legitimately sicker people who may require expensive care. But the auditors concluded that all six health plans they visited couldn’t justify the money they took in for 40 percent or more of their patients. That triggered whopping overpayments which auditors pegged at nearly $650 million for 2007 alone — just for those six plans.
One major Texas health plan was paid to care for a man it said had brain cancer. But his medical file showed he was treated for an enlarged prostate, a common ailment that didn’t merit any added payment, auditors wrote.
In Arizona, a health plan collected thousands of dollars from Medicare to treat congestive heart failure in a patient seen for knee pain, according to auditors. In Pennsylvania, a person treated for blurry vision was charted as having serious heart disease.
Related: Hill on Medicare Advantage billing practices
It took years for the Department of Health and Human Services (HHS) inspector general to publish those findings, and government officials have yet to pry back more than a tiny fraction of the disputed money, the Center for Public Integrity has learned.
And despite the bundle of taxpayer dollars on the line, the HHS inspector general didn’t do any more audits, and decided in 2013 to scrap similar future reviews as part of a budget cut.
Robert Trusiak, a former Department of Justice prosecutor, said that “at the very least” federal officials should have demanded refunds from the health plans and lowered the boom on any plan caught “gaming” Medicare.
Related: How risk scores work
“The dollars here are huge,” he said.
The money’s not likely to be returned. The Center for Public Integrity’s yearlong investigation of the Medicare Advantage industry found that federal officials over the past decade have missed multiple opportunities to corral tens of billions of dollars in overcharges and other billing errors tied to a complex payment formula known as a “risk score.”
Health plans collect medical data that is used to compute the health risks for each patient enrolled, but there’s been little to deter plans from jacking up the resulting “risk scores.” When risk scores overstate a patient’s illness, the plans make more money from Medicare. There’s little chance patients or the public will find out when this happens because federal officials have kept most audit results confidential.
Related: Fee-for-service, defined
Washington health-care lawyer Thomas C. Hill said insiders have known of “significant problems” with Medicare Advantage billing practices for years. But they’ve received scant public notice because neither industry nor government has much to gain by letting the secrets spill out, he said.
“The government isn’t in the best light when there’s that high an error rate,” Hill said. “They are reluctant to expose that to the world.”
Officials from the HHS IGs office defended the findings in the half dozen audits, but declined to comment beyond that. Officials from the Centers for Medicare and Medicaid Services (CMS), the HHS agency that actually runs the program, declined to comment at all, despite numerous requests.
Related: RADV audits, defined
Big scores
Medicare unveiled risk scores in 2004. Congress wanted to systematically pay more for people with chronic or costly diseases, such as cancer and diabetes with complications, and less for those in robust health. Lawmakers also hoped to cut Medicare waste and billing abuse that can occur when doctors and hospitals are paid for each and every thing they do, a practice known as “fee for service.” That can give them a financial incentive to do more to earn more.
Medicare adjusts the risk scores used in the Medicare Advantage program based on more than 70 conditions and their severity. That can mean thousands of extra dollars over the course of a year to treat a single patient.
Related: Risk score, defined
Take depression. Mild and temporary feelings of sadness and hopelessness don’t increase Medicare payments. But if that depression and other symptoms linger for at least two weeks it may be classified as “major depressive disorder” and generate hundreds of dollars in payments to the Medicare Advantage plan to treat that patient.
Patients never know how their health is rated because neither the health plan nor Medicare shares risk scores with them — and the process itself is so arcane and secretive that it remains unfathomable to many health professionals.
Health plans that cheat can face civil or criminal penalties, but federal officials largely trust them to collect medical data for risk scores accurately for the millions of seniors they sign up.
Related: New audits may recover missing millions — or not
The Centers for Medicare and Medicaid Services conducts its own periodic audits — separate from the HHS IG efforts — known as Risk Adjustment Data Validation, or RADVs. But CMS has yet to impose major penalties when it detects inflated risk scores in those audits, though it may do so for the first time later this year (see sidebar). Still, CMS moves so sluggishly that it will likely take a decade or more to review hundreds of current Medicare Advantage contracts, records show.
CMS is but one part of the giant Health and Human Services Department. The HHS Office of Inspector General is supposed to backstop CMS and act as a watchdog to make sure that taxpayer dollars aren’t misspent. But CMS and the HHS OIG are in conflict over how best to conduct these audits. Neither would comment on the process.
Meanwhile, taxpayer losses pile up by the billions.
Related: How risk scores changed
Based on its own sampling of data from health plans, CMS has estimated that faulty risk scores triggered nearly $70 billion in what officials deemed “improper” payments to Medicare Advantage plans from 2008 through 2013. Most were overcharges sparked by health plans “upcoding” — overstating how sick their patients were — or failing to document that patients actually had diseases the plans were paid to treat, according to CMS. Overall, Medicare paid the health plans about $135 billion in 2013 alone.
But which health plans consistently have been overpaid — and by how much — remains under wraps. While CMS audits have detected billing errors in 30 percent or more of the patient files reviewed, the agency cloaks the identities of health plans audited and the results. CMS officials declined a Center for Public Integrity request to make its audits public or discuss the process. Last month the Center sued in an effort to obtain those audits.
The CMS policy means that those six audits by the HHS inspector general — which does publish its findings — stand as the only public account detailing Medicare Advantage billing practices over the past decade.
Related: More in the 'Medicare Advantage Money Grab' series
Those inspector general’s audits began late in 2008. Drafts weren’t presented to the health plans until two years later. The eye-popping findings didn’t begin to dribble out until 2012 — even though Medicare paid the health plans hundreds of billions of dollars in the interim as enrollment began to surge.
Dr. Todd M. Husty, a Florida physician and medical billing consultant, said he was “shocked” that the HHS inspector general failed to step up their audits given the early findings. “They could have cleaned this up four years ago,” he said. The health plans “were kind of sailing along not looking at how accurate their risk scores were because nobody ever dinged them.”
Patrick Burns, a co-director of Taxpayers Against Fraud, a Washington-based group, said that only stiff penalties will protect taxpayers from getting fleeced.
There’s more to this story. Click here to read the rest at the Center for Public Integrity.
This story is part of Medicare Advantage Money Grab. Billing errors cost taxpayers billions. Click here to read more stories in this investigation.
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Copyright 2014 The Center for Public Integrity. This story was published by The Center for Public Integrity, a nonprofit, nonpartisan investigative news organization in Washington, D.C.
