Overbilling by Medicare Advantage Plans: A Big Problem Getting Little Attention

LBN’s Emily Collins reports that overbilling of Medicare is back in the news. A government audit has revealed that PacifiCare, a subsidiary of UnitedHealth Group, rampantly overbilled Medicare in nearly half the claims that were made during a three-year period. The audit results were released to the Center for Public Integrity.

The result has been a legal battle between UnitedHealth Group and the federal government. The payments in question were made for participants in the company’s Medicare Advantage plan. UnitedHealth says that the audit was unfair and that its results are inaccurate. An NPR report discussing the audit calls it an example of government oversight. The audits test the accuracy of a billing tool called a risk score.

The audits look for overstated charges called “upcoding” that overstate a patient’s condition and treatment, generating higher reimbursements from Medicare. Officials from the Centers for Medicare & Medicaid Services (CMS) apparently became aware some years ago that the risk scores were rising faster for patients on Medicare Advantage than for those on traditional Medicare.

PacifiCare was one of five pilot audits conducted in 2008. The audit’s findings include these, taken from the report by the Center for Public Integrity:

 Medicare paid the wrong amount for 128 of the 201 patients, an error rate of nearly two-thirds. Payments were too high for 98 of the patients, too low for 30 of them.

 One in five medical conditions could not be confirmed and most of these errors triggered higher payments than justified. CMS officials redacted the names of the medical conditions.

Auditors cited a “lack of sufficient documentation of a diagnosis” most often as the cause for either denying or slashing payments. However, in more than a third of the errors, payment was denied because the medical file was missing the required signature of the doctor who treated the patient.

The article also talks about a 2012 letter to UnitedHealth stating that the company owed the government $381,776. UnitedHealth filed an appeal later that year. While it is not clear what happened next in this situation, CMS later said that it would take seriously any overcharges and would protect taxpayers and the integrity of the program. One possible step CMS could take would be the imposition of penalties called extrapolations. Collins suggests that, somewhere between 2008 and 2012, CMS may have changed its mind and decided to let the Advantage plan providers off the hook.

This supposition is supported by slides from a confidential presentation prepared by CMS in 2011. The presentation acknowledges that plans have an incentive to overstate claims in order to increase their revenue. The presentation estimates Medicare Advantage payment errors of $13.5 million for the year 2010. Nothing has been done to rectify the payment errors. Senators Grassley and McCaskill have expressed interest in the overpayment problem, so this may not be the end of the story.

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