A new Health Justice Monitor commentary on fraudulent diagnostic upcoding and risk adjustments by Medicare Advantage insurers.
By James G. Kahn, MD/MPH
Summary
Investigative reporting by Bloomberg highlights the work of whistleblowers and the federal government to combat fraudulent upcoding by Medicare Advantage plans. But Medicare itself greatly worsens the problem, by failing to properly regulate aggressive (largely legal) upcoding.
Excerpt
Major Insurers Are Scamming Billions from Medicare, Whistle-Blowers Say
Bloomberg
April 12, 2022
By John Tozzi
Each year, [Medicare Advantage] plans submit giant data files to Medicare with diagnostic codes meant to reflect their members’ illnesses. Those codes determine how much they get paid. A federal watchdog warned in March that coding differences brought Medicare Advantage plans $12 billion in excess payments in 2020, compared to what traditional Medicare would have paid to cover the same population. The cumulative extra payments since 2007 will soon top $100 billion, according to the Medicare Payment Advisory Commission, or MedPAC.
…
The Department of Justice called policing Medicare Advantage an important priority on its anti-fraud agenda. The agency said in February that it pursued health plans that gamed the system “by submitting unsupported diagnosis codes to make their patients appear sicker than they actually were….”
Health-care companies developed increasingly sophisticated methods to maximize payments. A cottage industry of vendors emerged to help them. They mine data from patient charts, send staff to do health-risk assessments in patients’ homes and prod doctors to review potentially missed diagnoses.
…
Commentary
Comment by: Jim Kahn
This article highlights how even the most respected HMOs, like Group Health and Kaiser, fall prey to the temptations of increased revenue from highly suspect diagnostic upcoding practices. It’s terrific that whistleblowers and the federal government team up to catch and punish offenders, and perhaps discourage others.
However, the real money isn’t in the fraud, it’s in the legal upcoding that Medicare Advantage plans do and Medicare (CMS) fails to properly regulate. It’s well understood that MA plans have a much greater incentive than traditional Medicare to find and document diagnoses, because these added codes raise the capitation payments to MA whereas they don’t affect traditional Medicare reimbursements. CMS knows about this bias, and is permitted to adjust the payment levels to counteract it. But they put a cap on the size of the adjustment, even as upcoding grows rapidly in magnitude. The difference between upcoding and the allowable adjustment represents pure profit for MA plans.
The amounts at risk are staggering. CMS estimates $100 billion so far. Rick Kronick, a prominent health policy researcher, looks at trends and estimates a far greater toll in years to come. In a Nov 2021 article on the impact of sharply rising Medicare Advantage coding intensity he estimated that “total Medicare payments to MA will be $600 billion higher over the 2023-2031 period than … if the coding intensity adjustment were set [accurately] … $85 billion will be paid by beneficiaries in higher Part B premiums, and $515 billion in higher net Medicare spending.”
That’s highway robbery (by the MA plans) and dereliction of duty (by CMS).
Risk adjustment is being massively gamed by private insurers. Time to change the game, to single payer.
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