Medicare Advantage Audits Are “the New Black”

MA plans have grown to now cover more than 40 percent of all Medicare beneficiaries, and with that has come more fraud and abuse.

In case you didn’t know, instead of orange, Medicare Advantage (MA) is “the new black.” Since MA plans are paid more for sicker patients, there are huge incentives to fabricate co-morbidities that may or may not exist.

Medicare Advantage appears primed to become the most-audited arena in healthcare. Home health, behavioral health, and the two-midnight rule had held the gold medal for highest number of audits, but MA may soon prevail.

As an example, last week, a New York health insurance plan for seniors, along with DxID, the medical analytics company with which the insurer is affiliated, was accused by the U.S. Department of Justice (DOJ) of committing healthcare fraud to the tune of tens of millions of dollars. These alleged sums are exceedingly high, which also attracts auditors – especially the auditors that are paid on contingency fee, which is almost all of them.

The Centers for Medicare & Medicaid Services (CMS) pays Medicare Advantage plans using a complex formula called a “risk score,” which is intended to render higher rates for sicker patients and less for those in good health. The aforementioned data-mining company combed through electronic medical records to identify missed diagnoses, pocketing up to 20 percent of new revenue it generated for the health plan. But the DOJ alleges that DxID’s reviews triggered “tens of millions” of dollars in overcharges when those missing diagnoses were filled in with exaggerations of how sick patients were, or with charges for medical conditions the patients did not have.

MA plans have grown to now cover more than 40 percent of all Medicare beneficiaries, and with this have come more fraud and abuse. A 2020 report by the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) found that MA paid $2.6 billion a year for diagnoses unrelated to any clinical services.

Diagnosis fraud is the main issue upon which auditors are focusing. Juxtapose the other alphabet-soup auditors – MACs, SMRCs, UPICs, ZPICs, MCOs, TPEs, RACs – and it becomes clear that they concentrate on documentation nitpicking. I once had a client accused of fraud, waste, and abuse (FWA) for using purple ink. Other examples include purported failure to write the times “in or out” when the CPT® code definition includes the amount of time.

Audits will be ramping up, especially since HHS has reduced the Medicare appeals backlog at the administrative law judge (ALJ) level by 79 percent, which puts the department on track to clear the backlog by the end of the 2022 fiscal year.

As of June 30, 2021, HHS had 86,063 pending appeals remaining at the Office of Medicare Hearings and Appeals (OMHA), according to the latest status report, acquired by the American Hospital Association (AHA). The department started with 426,594 appeals. This is progress!

Programming Note: Listen to healthcare attorney Knicole Emanuel’s RAC Report every Monday on Monitor Mondays, 10 a.m. EST.