Aug. 8, 2014 - Many Medicare
Advantage health plans routinely overbill the government for treating
elderly patients - and have done it for years, a federal study shows.
Department of Health and Human
Services researchers found that many plans exaggerate how sick their
patients are and how much they cost to treat. Medicare expects to pay
the privately run plans — an alternative to traditional Medicare —$160
billion this year.
The HHS study does
not accuse any specific insurers of wrongdoing or name the plans that
were scrutinized. But the researchers offer the most comprehensive
evidence to date that suspect billing practices have been common across
much of the Medicare Advantage industry and are likely to get worse
unless officials crack down.
“Further policy changes will likely
be necessary,” the study concludes.
Congress created Medicare Advantage
in 2003 to encourage private insurance companies to venture into the
senior care market. The plans now insure 16 million elderly and disabled
people, nearly a third of those eligible for Medicare. They are popular
with seniors because they often provide extra benefits, such as
eyeglasses and dental care, and can cost less out-of-pocket than
Medicare pays the Advantage health
plans higher rates for sicker patients and less for healthy people using
a complex formula called a “risk
score.” But the HHS study spells out several ways health plans have
inflated those scores, from reporting surprisingly high levels of
medical conditions such as alcohol or drug dependence to billing for an
inordinately high number of patients with complications of diabetes.
Despite its broad implications for
Medicare spending, the study by HHS researchers Richard Kronick and W.
Pete Welch has attracted scant notice in Washington. It was quietly
posted late last month on an online research site run by the Centers for
Medicare & Medicaid Services, part of HHS.
Kronick directs the HHS Agency for
Healthcare Research and Quality, whose mission is to improve health care
delivery. Welch works for the HHS Office of the Assistant Secretary for
Planning and Evaluation. The authors note that the study does not
necessarily reflect HHS views, but both offices are influential in
advising the government on policy matters.
CMS officials declined comment.
“This is clearly impacting what
taxpayers are paying for Medicare Advantage, I think, not in a good
way,” said Dr.
David Wennberg, a researcher at the Dartmouth Institute for Health
Policy and Clinical Practice who has studied Medicare billing trends.
Health care fraud expert Malcolm
Sparrow, a professor at Harvard’s Kennedy School of Government, said the
problems with billings based on risk scores reveal how “financial
incentives” can improperly influence how medicine is practiced.
Medicare Advantage plans are paid a
set monthly fee for each patient based on the risk scores, and the
government largely trusts the health plans to report the health status
of people they enroll. About 70 medical conditions can boost payment
Clare Krusing, a spokeswoman for
America’s Health Insurance Plans, the industry’s trade group, said the
higher billing resulted from health plans working with patients “to
understand their specific health conditions, and consequently make sure
they get the care they need.”
“What was not highlighted (in the
study) is the fact that these programs have demonstrated improved
quality in patients’ health,” she wrote in an email.
However, the study concludes that
people who join Medicare Advantage plans are healthier than those who
remain on standard Medicare, which pays doctors and hospitals for each
service they provide. The study also says it’s “unlikely” the higher
payments health plans derive from diagnosing more medical conditions
“are related to substantial health benefits.”
In short, the numbers of patients
diagnosed with diseases which result in higher payments increased far
faster at many Medicare Advantage health plans than among people on
standard Medicare. Exaggerating the severity of a medical condition to
raise fees is known in medical circles as “upcoding.”
For instance, “drug and alcohol
dependence” is as much as eight times more common in the highest coding
Medicare Advantage plans than among patients in standard Medicare.
Even more striking, according to
the study, is how much higher reported diabetes rates have been in
certain health plans than others. The study tracked rapid rises in many
medical conditions from 2004, when risk scoring began, through last
year, and made them public for the first time.
Overall, diabetes with serious
complications, which pays higher rates, was reported up to five times
more often among enrollees in some Medicare Advantage plans than among
people on standard Medicare. Conditions such as major depression also
were far more common in some plans than others.
Holly J. Cassano, a medical coding
consultant in Florida, said the government’s decision to make the
billing data public was “an enormous leap … in the right direction for
continued transparency in all areas of health care.”
“The main issue, now that it has
been revealed, is ‘upcoding’, which no one likes to discuss, but the
data is in black and white and speaks volumes,” Cassano, CEO of Accucode
Consulting, wrote in an email.
Medicare Advantage enjoys solid
political backing on Capitol
Hill and has successfully
fought back efforts by the Obama administration to make substantial
cuts to its payment rates. Lobbying by the insurance industry and the
fear of angering seniors also has largely quieted concerns in Congress
that Medicare Advantage plans can be a poor value for taxpayers.
Congress recognized problems with
Medicare Advantage coding as far back as 2005, when lawmakers directed
CMS to find ways to cut back on rising, and presumably unjustified, risk
scores. But CMS didn’t act until 2010, when it adjusted risk scores
downward. The Affordable Care Act theoretically requires further
reductions, but the political storm over the planned cuts has made their
CMS has cut back payment levels for
several diseases that appear to have prompted upcoding by Medicare
Advantage plans. But the study’s authors noted that health plans are
likely to find new conditions to replace lost revenue.
Even though the study does not name
plans, it says all those examined had at least 10,000 members and that
one plan among the highest billers had more than 200,000 members. The
study indicates that the longer patients stay in Medicare Advantage, the
more their risk scores rose, suggesting that government’s failure to
reel in coding has been costly.
The Center for Public Integrity has
sought similar billing data from CMS for the past year as well as the
names of Medicare Advantage plans that have been suspected of
overbilling the government — and by how much. In late May, the Center sued the
Department of Health and Human Services to make its Medicare Advantage
audits and other related records public. The lawsuit is pending.
Last month, CMS published a draft
regulation that would allow for “a formal process to recoup
overpayments” made to the health plans. A final decision on the proposal
is due by Nov. 1.
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