OIG – What Were You Thinking?

While many of you are used to me aiming my wrath at payers, today I have a different target: the U.S. Department of Health and Human Services (HHS) Office of Inspector General (HHS).

Yep, the OIG that works with HHS to protect the Medicare Trust Fund from cheaters and thieves. Last week, they released an audit of a Medicare Advantage plan, MMM Healthcare.

This audit was like every other OIG audit of a Medicare Advantage plan (MA), sending a sample of charts to the OIG contractor to determine if the diagnoses submitted by the MA plan for risk adjustment (and obviously, an increased capitation payment) were valid. And as with every other audit of a Medicare Advantage plan, the conclusion was that the plan submitted many invalid diagnoses and was overpaid.

Now that is all great; the OIG should be catching these cheaters, but here are my issues with this audit. As a reminder, in case any of you have just awoken from a years-long coma, the current year is 2024. This audit looked at diagnoses submitted by the MA plan in 2017. Remember 2017? Way back when total knee arthroplasty was still an inpatient-only surgery? That was a heck of a long time ago.

The OIG then notes that the audit work took place between November 2000 and August 2024, and that the audit consisted of a whole 200 charts. If any of you do audits, I am sure you could turn around a full audit of 200 charts, with a comprehensive summary report, in a month or less. Maybe even in a week. Yet the OIG gave their contractor about three years.

The audit did find that in those 200 records, there were 108 improperly reported HCCs, and as a result, the plan was overpaid by about $165,000. The OIG calculated that the plan was overpaid about $59 million.

But here is the problem: the OIG was not allowed to start extrapolating error rates for the calculation of the overpayment until 2018. As a result, all they could demand from the plan was to pay back the $165,000.

This plan was paid $1.4 billion by the Centers for Medicare & Medicaid Services (CMS) for 2017 coverage. $165,000 is pocket change to them. And I would bet the OIG contractor that did the audit was paid a pretty penny, eating up most of that recoupment. That low recoupment and the likely cost of the audit suggests the OIG’s net gain for the Medicare Trust Fund was probably enough to buy one wheeled walker for one traditional Medicare beneficiary.

So, the question is: why in 2020 did the OIG decide to go back three years and audit payments made in 2017, when extrapolation was not allowed, and not just audit 2018 payments, where they could actually do their job and protect the Trust Fund by using extrapolations and getting back the full overpayment? We will never know.

And, to top it off, their reports are usually helpful in detailing the findings so others can learn, but not in this case. Instead of listing the errors in other than very general terms, the OIG report seemed to be intended to show pretty graphics of the calculations of the paid and corrected monthly capitation payments. Knowing that “angina pectoris” compared to “myocardial infarction” results in a $188 monthly payment difference is a lot less helpful than knowing the incorrect diagnoses for all 108 errors that others could use to ensure they have not been making similar errors.

Do better, OIG, for the Trust Fund and for all providers. We know you can.