A Congressional committee has taken aim at waste in the popular Medicare Advantage health insurance program for seniors, ordering an extensive audit of billing errors and overcharges by insurers — mistakes estimated to cost taxpayers billions of dollars every year.
The Government Accountability Office, the watchdog arm of Congress, is conducting the probe at the request of the House Ways and Means Committee. Results are due next spring.
GAO auditors will target efforts by the Centers for Medicare and Medicaid Services (CMS), which runs the senior care program, to ensure the privately run health plans are paid accurately and that any overpayments are recovered for taxpayers. Medicare Advantage is an alternative to standard Medicare and is mostly run by private insurance carriers.
“Right now everything is on the table,” said James Cosgrove, who heads the GAO’s health care division. “This is not something we have focused on before.”
The GAO audit comes in the wake of the Center for Public Integrity’s “Medicare Advantage Money Grab” series published in June, which showed that the government has struggled for years to stop the health plans from charging too much.
Medicare pays health plans using a complex formula known as a risk score, which is supposed to raise rates for sicker patients and lower them for people in good health. But the industry has long faced criticism that some plans overstate how sick some patients are to boost Medicare revenue, a practice known as “upcoding.”
“Given the prevalence of upcoding by some MA plans, we hope that the GAO audit will result in CMS paying plans more accurately and fairly while reducing wasteful overpayments,” said David A. Lipschutz, an attorney with the Center for Medicare Advocacy in Washington.
America’s Health Insurance Plans, the industry’s trade group, wouldn’t comment on the GAO audit. CMS had no comment either.
Medicare Advantage has grown explosively under the risk-scoring formula, which Congress put in place in 2004. Officials expect the program to cost taxpayers as much as $160 billion this year, as enrollment nears 16 million, or about one in three elderly and disabled people on Medicare.
In the past, however, CMS officials have stated that inflated risk scores drain billions from the treasury. CMS has largely trusted health plans to identify and return any money paid in error and has repeatedly scaled back its efforts to go after overpayments, often in the face of industry lobbying and pressure.
GAO reviewers are zeroing in on Medicare’s primary tactic for recouping overcharges, a secretive audit process called Risk Adjustment Data Validation, or RADV.
Medicare officials have quietly conducted these audits since 2008. But they have never imposed stiff financial penalties for overcharges that have been uncovered through the RADV process, despite evidence that billing errors have been deeply rooted and waste tax dollars at an alarming clip, records show.
For instance, audits of six plans found that health plans couldn’t justify payments from the government for 40 percent or more of their patients. The resulting overpayments were pegged at nearly $650 million for 2007 alone — just for those six plans.