In 2011, federal officials thought auditing private Medicare Advantage insurance plans that were allegedly overcharging the government for medical services would reap big savings for taxpayers. However, the audits painted a different story, showing Medicare overpaid health plans a significant chunk of money, according to Kaiser Health News.
Here are seven key points:
1. A first round of audits uncovered Medicare overpaid five health plans by $128 million in 2007. CMS opted to settle the audits in 2012 for $3.4 million.
2. For one in five patients, overcharges totaled $5,000 or more annually, according to the audits.
3. The five health plans that Medicare overpaid include:
● A Florida Humana plan
● PacifiCare in Washington
● A New Jersey Aetna plan
● An Independence Blue Cross plan in Philadelphia
● A New Mexico-based Lovelace Medicare plan, which Blue Cross has since acquired
4. Federal officials have struggled to limit billing errors among MA plans. The Center for Public Integrity got access to records through a Freedom of Information Act lawsuit which found many MA plans engage in "upcoding," or embellishing how sick patients are in reality. In August 2016, Center for Public Integrity found 35 of 37 health plans CMS audited overcharged Medicare.
5. In 2004, the government set up MA so the program would pay higher rates for sick patients, which resulted in many plans engaging in upcoding. Such charges reached $4 billion in 2005.
6. Therefore, the government created Risk Adjustment Data Validation, which aimed to hold those health plans that could not justify their fees with medical evidence accountable. A CMS official wrote in an undated presentation that the agency "pretty much went with the honor system with the plans."
7. Michael S. Adelberg, a former CMS official and an industry consultant, told KHN the audit process "was probably rushed" and the audits "raised strong industry concerns."