Dive Brief:
- Audits from a federal oversight agency reveal that the two largest Medicare Advantage insurers together overcharged the federal government nearly $180 million in 2020 and 2021. This overcharging was attributed to them inflating the health needs of their members, raising more concerns about potential manipulation of the privatized Medicare program.
- According to the HHS Office of the Inspector General, HumanaChoice and UnitedHealthcare of Wisconsin often submitted diagnosis codes to Medicare that lacked proper medical documentation, resulting in an excess of $131 million and $47 million in reimbursements, respectively, for the two-year period.
- The HHS OIG recommended that these insurers refund the overpayments to CMS and improve their compliance processes to prevent submitting unsupported codes. Both Humana and UnitedHealthcare have countered this by asserting that the audit methodology is flawed and they do not intend to return any funds.
Dive Insight:
In Medicare Advantage, the federal government pays private insurers a per-member monthly fee to manage care for Medicare seniors. This amount can increase or decrease based on the health needs of individual members. The idea is to ensure that insurers receive more funds for seniors who require more medical attention, thereby creating a balance that discourages cherry-picking healthier individuals.
However, this structure also motivates insurers to exaggerate their members’ health needs to secure higher reimbursements, a practice termed upcoding.
CMS assesses the health status of MA enrollees by gathering diagnosis codes from these insurers. Certain diagnoses carry a higher risk of being inflated, leading the HHS OIG to conduct investigations examining whether codes for serious conditions like acute stroke and heart attack were being misapplied.
The recent audits, released on Tuesday, focused on plans run by the two biggest MA insurers in the U.S., UnitedHealthcare and Humana, which together cover about 15 million seniors in this privatized Medicare landscape.
The HHS OIG examined 11 groups of high-risk diagnosis codes for the payment years of 2020 and 2021. They categorized plans’ members with one or more of these high-risk diagnoses into a metric termed “enrollee-years” to analyze specific conditions over time.
For HumanaChoice, the audit found that out of 220 sampled enrollee-years, 178 lacked proper medical record support. This results in approximately $670,000 in overpayments, which extrapolated to the entire contract amounts to about $130.9 million.
On the other hand, for UnitedHealthcare of Wisconsin, 183 out of 250 sampled enrollee-years also lacked medical documentation, leading to roughly $722,000 in overpayments. The agency inferred that this plan received at least $46.9 million in improper payment across 2020 and 2021.
The inappropriate coding patterns varied but typically involved plans either representing a more severe diagnosis than the actual condition or using codes for conditions members had previously recovered from, as noted in the report.
Both Humana and UnitedHealthcare have expressed disagreement with the conclusions drawn in the audits, arguing that the methodology appears biased toward identifying overpayments.
They informed the HHS OIG that they feel no obligation to return funds or to reassess their coding practices.
“Humana takes its compliance responsibilities seriously,” stated a spokesperson from the company based in Kentucky. “While we strongly disagree with the OIG’s methodology and findings, we remain committed to collaborating with CMS to maintain affordable healthcare for older Americans.”
“We disagree with the current approach to validating data,” a representative from UnitedHealthcare remarked. “The methodology in this report shows a need for modernization, and we are dedicated to working with CMS and the OIG to enhance the audit process.”
This isn’t the first instance where these major insurers have come under scrutiny for coding issues. UnitedHealthcare, in particular, has faced criticism. A Senate investigation earlier this year highlighted the company’s extensive coding practices intended to maximize the risk scores of their members.
Smaller insurers have also been scrutinized. This spring, the HHS OIG audited Blue Cross and Blue Shield of Alabama, Gateway Health Plan, and Priority Health, finding that the improper coding inflated overpayments by $7 million, $4.3 million, and $4.4 million, respectively, in the years 2018 and 2019.
In response to these issues, CMS has initiated some measures to combat upcoding. In April, they finalized a policy to prevent MA plans from being reimbursed for diagnoses that are not connected to any actual medical encounters.
