Medicare Advantage fraud has been an area of increasing focus recently. Earlier this year, the Department of Justice intervened in two whistleblower lawsuits against UnitedHealth. Investigations into the operation of other Medicare Advantage plans are reportedly continuing. And the amount of money at stake in this area continues to increase as more and more people elect to replace traditional Medicare with a private plan from an insurance company authorized through Medicare Advantage.
The United States has joined a lawsuit brought by whistleblowers under the False Claims Act accusing UnitedHealth Group of bilking Medicare by fraudulently boosting payments through the inflation of plan members’ risk scores under Medicare Advantage. In other words, UnitedHealth told the United States that patients were sicker than they were and collected more money from the government as a result. This is the first major government enforcement action unsealed under Attorney General Jeff Sessions and the New York Times called it a case of fraud that likely implicated “billions” of dollars in Medicare payments.
From 2013 to 2015, Medicare paid out a total of $125 billion under the Medicare Fee-For-Service program according to a recent article in Bloomberg. The improper payment rates exceeded 10% for all three years examined. As a result, the U.S. Government required a report from the Department of Health and Human Services’ Office of Inspector General regarding plans to address the problem.
A 2012 audit of a Medicare Advantage plan provided by UnitedHealth Group through PacifiCare of Washington State of 201 patients found 153 erroneous diagnoses out of 786 diagnoses. In total, the Government paid too much for nearly half of the patients on the insurance plan.
Medicare should have paid less in 49 percent of bills, with higher payments 15 percent in the audit. As a result, the government asked the health insurer to pay the difference, a total penalty for UnitedHealth of only $381,000 since the audit only involved a small number of cases and the government did not seek to predict the adjustment in the other patient populations.
And yet it formed the basis of a three year legal battle that remains ongoing. UnitedHealth objected to having to collect the medical records to support the erroneous diagnoses. 64 percent of the improper payments involved insufficient documentation. For example, 38% of the objectionable records lacked a physician’s signature.
The internal estimates of CMS officials concerning Medicare Advantage fraud totaled $13.5 billion in billing errors in 2010 alone. The Center for Public Integrity had previously estimated that improper payments to Medicare Advantage plans could top $12 billion in 2014.
A recent study by the National Bureau of Economic Research suggested that $2 billion of those improper payments are the result of upcoding. The working paper estimates that patients on Medicare Advantage plans have 6% to 16% higher risk scores than they would under traditional Medicare. The paper, which stops short of calling all issues the result of intentional manipulation, also suggests that CMS hasn’t gone far enough with its 2010 decrease in risk scores.
The Department of Justice has been investigating the use of risk adjustment scores in MA plans at healthcare plans, providers and vendors. Humana, one of the largest U.S. providers, has previously disclosed a government inquiry into its practices, for example. Several health care whistleblowers have already filed lawsuits under the False Claims Act to challenge fraud in insurance plans in this area as well.
Audits like the one performed on UnitedHealth are called Risk Adjustment Data Validation. If risk scores are inaccurate, it can cause Medicare to pay higher rates for people who are not as sick as the health care provider or insurer represents. In the audit, auditors typically review medical records to confirm that patient conditions are properly documented and the facility was entitled to payment.
The Center for Public Integrity obtained the documents concerning UnitedHealth through a FOIA request.
Medicare Advantage has been a hot topic since it now treats 17 million Americans at a cost of more than $150 billion a year. It is the subject of a few different bills in Congress at the moment. A recent bill to extend the period of time for comment on rates and policy changes by 15 days just passed the House. And another to extend poorly rated drug plans set to be eliminated in 2015 to be extended until 2018 to give seniors using the Medicare plans a chance to find a different insurance plan.
Aetna appears to have gotten itself in some pretty big trouble. The Centers for Medicare and Medicaid Services (CMS), effectively Aetna’s authority figure, has punished the insurer for violations related to Aetna’s administration of the Medicare Advantage plan. The violations stem from Aetna’s move to change coverage for drugs in certain plans. According to a letter sent by CMS to Aetna, the insurer failed to properly transition some patients from the old drug formulary to the new one, and some patients were delayed in receiving their prescriptions because their medications were improperly denied (a drug formulary is a list of drugs preferred by a health plan).
CMS has imposed sanctions on Aetna, so the insurer won’t be pushing its plans or enrolling any seniors for a while. The sanctions don’t affect current Medicare enrollees. The company and some analysts are downplaying the effect of the sanctions on Aetna’s bottom line. However, according to research by Goldman Sachs, $5.7 billion out of Aetna’s 2009 revenue of $34.7 billion came from Medicare Advantage and prescription drug plans.
Aetna may not be all that concerned after all, considering that the new health care reform bill will cut government payments to Medicare Advantage by $132 billion over the next 10 years. Perhaps Aetna is actually rubbing its hands together in gleeful anticipation of the millions of Americans who will be required to buy some type of insurance in the future.
Whether or not Aetna took this course of action in anticipation of changes to Medicare Advantage under the health care bill, it will be interesting to see how Aetna’s role in the insurance saga will unfold over the coming years.