HHS watchdog accuses MA plans of inflating payments by nearly $7B annually

By | December 16, 2019

Dive Brief:

  • Medicare Advantage health plans may be inflating capitated payments by as much as $ 6.7 billion a year, according to a new report by the HHS Office of Inspector General.
  • The suspected inflation is primarily the result of tacking on new diagnosis codes as part of a review of existing medical charts, a practice intended to encourage payers to take on MA enrollees who may be particularly costly to care for.
  • OIG recommended that CMS take steps to tighten the audit processes of such charts, among other changes to better monitor the practices of health plans.

Dive Insight:

The MA program has been growing steadily in recent years, nearly doubling over the past decade to include 21 million Americans, or about a third of all Medicare enrollees. However, the new OIG report concludes that some of the program growth is tied to cost inflation, and that payers may be responsible.

OIG analyzed 17 million records in 2016 tied to chart reviews performed by 426 MA plans. Such reviews allow insurers to go back and analyze face-to-face patient encounters to ensure that they all care pathways are being appropriately compensated. OIG discovered that more than 99% of the time when a chart review occurred, insurers tacked on a new diagnoses that bumped up the capitated payments they received.

Adding codes for heart disease and diabetes was particularly commonplace. By contrast, chart reviews that led to diagnoses being removed occurred less than 1% of the time, OIG found.

As a result, the MA plans netted $ 6.9 billion in additional capitated payments, offset by $ 200 million in payment reductions through the removal of additional diagnoses.

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OIG also said CMS has been fairly lax in enforcing requirements that chart reviews be tied to face-to-face encounters with patients, potentially allowing payers to skirt such requirements.

The watchdog agency recommended CMS conduct closer audits of chart reviews undertaken by MA plans in order to confirm any added diagnoses. It also recommended CMS evaluate stricter enforcement of the face-to-face encounter rules tied to chart reviews. CMS said it concurred with OIG’s recommendations.

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