Among the PacifiCare audit findings:
- Medicare paid the wrong amount for 128 of the 201 patients, an error rate of nearly two-thirds. Payments were too high for 98 of the patients, too low for 30 of them. In total, the plan was overpaid by $381,776 during 2007.
- One in five medical conditions could not be confirmed and most of these errors triggered higher payments than justified. CMS officials redacted the names of the medical conditions.
- Auditors cited a “lack of sufficient documentation of a diagnosis” most often as the cause for either denying or slashing payments. However, in more than a third of the errors, payment was denied because the medical file was missing the required signature of the doctor who treated the patient.
CMS records show that the audit dragged on for years because officials changed some rules in the middle of the game and set up a lengthy and bureaucratic appeals process for health plans to follow.
CMS shared “preliminary” audit findings with the company in December 2010, but took nearly two years more to present a final version.
In a letter on Aug. 21, 2012, CMS officials said UnitedHealth owed the government $381,776. CMS said that it would deduct the money from upcoming payments to the plan, and reminded the company it could appeal.
But the flap didn’t end there, for reasons that are not explained in the exchange of testy letters between the company and government.
Scott Theisen, UnitedHealth Group chief financial officer, filed an appeal in a Sept. 20, 2012 letter. He argued that the sample was too small and that the insurer didn’t give the company enough time to secure sufficient medical records to justify its billing
“Thus the amount of the overpayment claimed to be due by CMS cannot be accurate,” Theisen wrote
On March 14, 2014, a CMS hearing officer remanded the case to the agency for further negotiations.
CMS wouldn’t say what happened next. In a statement, the agency wrote: “CMS takes seriously program integrity and payment accuracy in Medicare Advantage, and is taking steps to protect taxpayers, Medicare beneficiaries and the Medicare program. CMS is exploring how to make RADV hearing officer decisions public in such a way that safeguards the protected health information of Medicare Advantage enrollees.”
UnitedHealth Group and the other health plans audited, clearly dodged a financial bullet.
CMS had announced in June 2008 that it would start applying penalties known as “extrapolation,” which have been widely used in other types of Medicare fraud investigations.
This meant that the billing error rate found in the sample of 201 patients would be applied to the PacifiCare of Washington plan. That could have dramatically boosted the penalty.
But somewhere between 2008 and 2012, officials changed their mind and let Medicare Advantage plans off the hook.
CMS officials have never explained fully why they decided against extrapolating the audit findings.
But a confidential CMS presentation dated March 30, 2011 perhaps offers more than a clue. Each of 15 slides states “for internal government use only,” and notes that “unauthorized disclosure may result in prosecution to the full extent of the law.”
One slide estimates payment errors in Medicare Advantage at $13.5 billion for 2010 and notes that health plans “have an incentive to submit more diagnoses” in order to raise their payments.
But when CMS sought opinions on the audits in December 2010, it received more than 500 comments.
“These comments express significant resistance to the implementation of the RADV audits and payment recovery based on extrapolated payment error estimates,” CMS said in the presentation. The presentation went on to say: “Successful payment recovery based on payment error identified in these RADV audits will depend on CMS’ ability to address the challenges raised.”
CMS said it was “expecting to respond to the comments and finalize the payment error calculation methodology and overall strategy shortly.”
As of last month, more than four years later, that still hasn’t been done.
This story was co-published with NPR.