Grassley Drops Gloves on Alleged Medicare Advantage System Gaming

A powerful U.S. Senator is demanding answers regarding the perceived ineffectiveness of Centers for Medicare & Medicaid Services (CMS) efforts to address apparently sizeable overpayments to Medicare Advantage plans.

U.S. Sen. Chuck Grassley (R-Iowa) earlier this week sent a letter to newly confirmed CMS Administrator Seema Verma asking pointed questions about enormous disparities in anticipated and actual recoveries made in relation to such overpayments. Specifically, Grassley, the chairman of the Senate Judiciary Committee, cited a Center for Public Integrity estimate that $70 billion in risk score overpayments were made between 2008 and 2013 – a figure that, broken down by year, dwarfs CMS’s 2007 overpayment estimate of $128 million, which was followed by a settlement of just $3.4 million. 

“The difference in the assessment and the actual reovery is striking and demands an explanation,” Grassley wrote. “Further … (the $128 million estimate) appears low and could very well be just the tip of the iceberg.”

“By all accounts, risk score gaming is not going to go away,” Grassley added. “Therefore, CMS must aggressively use the tools at its disposal to ensure that it is efficiently identifying fraud and subsequently implementing timely and fair remedies. The use of these tools is all the more important as Medicare Advantage adds more patients and billions of dollars of taxpayer money is at stake.”

Grassley concluded the letter by asking Verma five specific questions, listed here verbatim:

1. What steps will CMS take, or is currently taking, to ensure that insurance companies are not fraudulently altering risk scores? Please explain.
2. Why did CMS not disclose to the Committee that it estimated that Medicare overpaid five plans by $128 million in 2007?
3. Why did the Obama Administration only recover $3.4 million from the CMS pilot audit rather than $128 million? Please explain.
4. In the past two years, how many Medicare Advantage audits have been performed? How many audits are currently ongoing?
5. Is it still CMS’s position that it obligates $30 million per year auditing Medicare Advantage?

Medicare Advantage is an increasingly popular alternative to traditional Medicare; a report published online by Kaiser Health News this week noted that its privately run health plans have enrolled more than 18 million elderly and disabled people — about a third of those eligible for Medicare — at a cost to taxpayers approaching $200 billion a year.

“The plans also enjoy strong support in Congress,” the report read. “Medicare is supposed to pay the health plans higher rates for sicker patients and less for people in good health using a formula called a risk score.”

However, the Kaiser report noted that CMS records have revealed that billions of tax dollars are wasted annually in the program, partly because some health plans exaggerate how sick their patients are by inflating risk scores and boosting their payments improperly.

“The U.S. Government Accountability Office (GAO), the watchdog arm of Congress, has sharply criticized CMS for its failure to ferret out overcharges and in April 2016 called for ‘fundamental improvements’ in audits of Medicare Advantage plans. GAO also found that CMS has spent about $117 million on Medicare Advantage audits, but recouped just under $14 million in total,” the report read. “Medicare Advantage plans have (also) been the target of at least a half-dozen whistleblower lawsuits alleging patterns of overbilling and fraud.”

The Kaiser report further noted that details of the audits disclosing the $128 million in overpayments to health plans were part of a cache of confidential CMS documents released through a Freedom of Information Act lawsuit filed by the Center for Public Integrity. The documents reportedly identified the companies chosen for the initial Medicare Advantage audits as plans located in Florida, New Jersey, New Mexico, Pennsylvania, and Washington State.

 “In the audits, CMS repeatedly found that the health plans couldn’t document their patients were as sick as the insurer had claimed,” Kaiser’s report read. “For example, auditors couldn’t confirm that one-third of the diseases the health plans had been paid to treat actually existed, mostly because patient records lacked ‘sufficient documentation of a diagnosis.’”

Overall, Kaiser reported, Medicare paid the wrong amount for nearly two-thirds of patients whose records were examined; all five plans were far more likely to charge too much than too little. For 1 in 5 patients, the overcharges were $5,000 or more for the year, according to the audits.

EDITOR’S NOTE:

RACmonitor will be conducting a two-part educational webcast on Managed Care Organizations with Duane Abbey on May 25 and June 15, 2017 at 1:30 p.m. ET. 

    U.S. Sen. Chuck Grassley (R-Iowa)