The OIG takes on Payers but Trickle Down is Likely

Medlearn Media NPOS Non-patient outcome spending

Two key insurers were recently targeted for HHS OIG scrutiny.

I was all set to dive into the September audits of HumanaChoice and BlueCross Blue Shield (BCBS) of Tennessee conducted by the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) when I listened to Dr. Ronald Hirsch during a recent edition of Monitor Mondays when he reported on Cigna Healthspring.

I was also struck by the low error rate. As I dug in, it became clear that all three talked about validating diagnoses, but Cigna was a Hierarchical Condition Category or HCC audit. The outcome remains important for three reasons:

  • First, HCCs are a derivative measure so an errant diagnosis may not be fatal.
  • Second, an error rate this low means that the HHS OIG is unlikely engage in large numbers of this type of audit.
  • Finally, the OIG reiterated that “incorrect diagnosis codes are errors that lead to improper payments, even if the payment is less than it should be.”

The OIG recommended recovering less than $40,000. That means the OIG is recommending recovery of an amount that’s probably less than the OIGs cost of the audit. I’m not clear how that prevents waste.

Once I satisfied myself on Cigna, I headed back to HumanaChoice and BCBS of Tennessee. Each of these was an extrapolated audit purporting to validate high-risk diagnoses. The nine diagnoses included the following: acute stroke, acute heart attack, embolism, vascular claudication, major depressive disorder, lung cancer, breast cancer, colon cancer, and prostate cancer.

The OIG claimed there was an overall error rate of 75 percent for Humana and 78 percent for BCBS. But those numbers are deceiving.

The OIG claimed a 100-percent error rate for breast cancer for both payers. BCS also had a 100-percent error rate for acute heart attack and Humana had a 100-percent error rate for acute stroke. Only vascular claudication and major depressive disorder had error rates of less than 90 percent.

Both Medicare Advantage (MA) plans raised the usual issues challenging the reviewer’s knowledge and skill, the use of a physician tiebreaker, and the OIGs failure to adhere to the Centers for Medicare & Medicaid Services (CMS) Medicare Risk Adjustment Validation or (RADV) methodology. The OIG dismissed the payer’s entirely accurate observations with the usual canned response of essentially “we’re the OIG.”

Humana contested the findings for 10 claims in five diagnoses and BCBS contested 14 claims in seven diagnoses. Assuming Humana is correct on every contested claim it still would have an alleged 80 percent error rate. Similarly, if BCBS is correct it still has an alleged 73- percent error.

We should be concerned with the OIG’s audit for several reasons:

  • The definitions of diagnoses described by the OIG may not correspond to typical coding criteria. When 2 coders differ in their reviews the OIG uses a non-standard way to “break the tie.”
  • Next, the OIG ties the diagnosis, in some cases, to therapeutic requirements.
  • Third, these error rates mean the OIG will continue these audits. We should expect them to expand to provider audits.  Coding audits may be less susceptible to the ambiguity of inpatient status audits.
  • Fourth, payers rarely take reductions in revenue well. I expect payers will increase scrutiny of claims.

As payers see reductions in revenue associated with audits they will do one of two things: reduce services areas or work to reduce services.

Facebook
Twitter
LinkedIn

John K. Hall, MD, JD, MBA, FCLM, FRCPC

John K. Hall, MD, JD, MBA, FCLM, FRCPC is a licensed physician in several jurisdictions and is admitted to the California bar. He is also the founder of The Aegis Firm, a healthcare consulting firm providing consultative and litigation support on a wide variety of criminal and civil matters related to healthcare. He lectures frequently on black-letter health law, mediation, medical staff relations, and medical ethics, as well as patient and physician rights. Dr. Hall hopes to help explain complex problems at the intersection of medicine and law and prepare providers to manage those problems.

Related Stories

Leave a Reply

Please log in to your account to comment on this article.

Featured Webcasts

The Cost of Ignoring Risk Adjustment: How HCCs Impact Revenue & Compliance

The Cost of Ignoring Risk Adjustment: How HCCs Impact Revenue & Compliance

Stop revenue leakage and boost hospital performance by mastering risk adjustment and HCCs. This essential webcast with expert Cheryl Ericson, RN, MS, CCDS, CDIP, will reveal how inaccurate patient acuity documentation leads to lost reimbursements through penalties from poor quality scores. Learn the critical differences between HCCs and traditional CCs/MCCs, adapt your CDI workflows, and ensure accurate payments in Medicare Advantage and value-based care models. Perfect for HIM leaders, coders, and CDI professionals.  Don’t miss this chance to protect your hospital’s revenue and reputation!

May 29, 2025
I050825

Mastering ICD-10-CM Coding for Diabetes and it’s Complications: Avoiding Denials & Ensuring Compliance

Struggling with ICD-10-CM coding for diabetes and complications? This expert-led webcast clarifies complex combination codes, documentation gaps, and sequencing rules to reduce denials and ensure compliance. Dr. Angela Comfort will provide actionable strategies to accurately link diabetes to complications, improve provider documentation, and optimize reimbursement—helping coders, CDI specialists, and HIM leaders minimize audit risks and strengthen revenue integrity. Don’t miss this chance to master diabetes coding with real-world case studies, key takeaways, and live Q&A!

May 8, 2025
2025 Coding Clinic Webcast Series

2025 ICD-10-CM/PCS Coding Clinic Update Webcast Series

Uncover critical guidance. HIM coding expert, Kay Piper, RHIA, CDIP, CCS, provides an interactive review on important information in each of the AHA’s 2025 ICD-10-CM/PCS Quarterly Coding Clinics in easy-to-access on-demand webcasts, available shortly after each official publication.

April 14, 2025

Trending News

Featured Webcasts

The Two-Midnight Rule: New Challenges, Proven Strategies

The Two-Midnight Rule: New Challenges, Proven Strategies

RACmonitor is proud to welcome back Dr. Ronald Hirsch, one of his most requested webcasts. In this highly anticipated session, Dr. Hirsch will break down the complex Two Midnight Rule Medicare regulations, translating them into clear, actionable guidance. He’ll walk you through the basics of the rule, offer expert interpretation, and apply the rule to real-world clinical scenarios—so you leave with greater clarity, confidence, and the tools to ensure compliance.

June 19, 2025
Open Door Forum Webcast Series

Open Door Forum Webcast Series

Bring your questions and join the conversation during this open forum series, live every Wednesday at 10 a.m. EST from June 11–July 30. Hosted by Chuck Buck, these fast-paced 30-minute sessions connect you directly with top healthcare experts tackling today’s most urgent compliance and policy issues.

June 11, 2025
Open Door Forum: The Changing Face of Addiction: Coding, Compliance & Care

Open Door Forum: The Changing Face of Addiction: Coding, Compliance & Care

Substance abuse is everywhere. It’s a complicated diagnosis with wide-ranging implications well beyond acute care. The face of addiction continues to change so it’s important to remember not just the addict but the spectrum of extended victims and the other social determinants and legal ramifications. Join John K. Hall, MD, JD, MBA, FCLM, FRCPC, for a critical Q&A on navigating substance abuse in 2025.  Register today and be a part of the conversation!

July 16, 2025

Trending News

Happy National Doctor’s Day! Learn how to get a complimentary webcast on ‘Decoding Social Admissions’ as a token of our heartfelt appreciation! Click here to learn more →

CYBER WEEK IS HERE! Don’t miss your chance to get 20% off now until Dec. 2 with code CYBER24