Federal officials, facing criticism they overpay Medicare Advantage plans for the elderly by billions of dollars annually, are seeking new power to recover excessive charges.
The Centers for Medicare and Medicaid Services says its wants to set up “a formal process to recoup overpayments” made to the health plans. The draft regulation is set to be published on July 14 and a final decision on the proposal is due by November 1.
Federal officials have struggled to pay the senior care plans accurately for years. A Center for Public Integrity investigation published last month found that Medicare paid the health plans nearly $70 billion in “improper” payments — mostly inflated fees from overstating the health risks of patients — from 2008 through 2013 alone.
Medicare expects to pay more for sicker patients and less for those in good health using a formula known as a risk score. But CMS largely trusts health plans to identify and return any money paid in error.
In its proposal, CMS acknowledges it lacks a process for routinely going after these overpayments—even though its own auditors estimate that Medicare loses billions annually as a result.
How much money CMS expects to recover also remains unclear. CMS said the health plans could be on the hook for overpayments dating back six years, but the agency did not indicate that it is ramping up audits to catch health plans that overbill.
CMS said that once it identifies an overpayment, most health plans return the money. Cases in which they don’t do so voluntarily happen “very infrequently,” according to CMS. The agency said health plans would routinely be notified of payment errors and allowed to appeal any repayment orders through an administrative process.
"Deterring improper payments is a top priority for CMS in order to protect beneficiaries and taxpayers," said CMS spokesman Raymond Thorn. "This new rule is just another tool that CMS would use to recover improper payments in the Medicare program."
It’s unclear, though, whether CMS will stick to its guns. In the past, the agency has regularly backed off proposed efforts to tighten oversight in the face of industry opposition. The draft regulation was quietly disclosed late last week. According to the rulemaking process, it will be subject to a public comment period before a final decision to issue the rule is made.
“We are evaluating the proposal,” said Clare Krusing, a spokeswoman for America’s Health Insurance Plans, the industry’s trade group.