Government audits just released as the result of a lawsuit detail widespread billing errors in private Medicare Advantage health plans going back years, including overpayments of thousands of dollars a year for some patients.
Since 2004, privately run Medicare Advantage plans, an increasingly popular alternative to traditional Medicare, have been paid using a risk score calculated for each patient who joins. Medicare expects to pay higher rates for sicker people and less for those in good health.
But the internal audits, never before made public, provide striking new evidence of billing mistakes – mostly overcharges –in the Medicare Advantage program. Four of the audits were recently obtained by the Center for Public Integrity through a court order in a Freedom of Information Act lawsuit.
The audits involve four health plans: an Aetna Health Inc. plan in New Jersey, Independence Blue Cross in the Philadelphia area; Lovelace Health Plan in Albuquerque, NM, and a Care Plus plan in South Florida. Care Plus is a division of Humana, Inc.
Last month, the Center for Public Integrity reported on a fifth such audit at PacifiCare in Washington State, an arm of giant UnitedHealth Group, the nation’s largest Medicare Advantage plan.
In all five audits, two sets of auditors inspected medical records for a sample of 201 patients at each plan for 2007. If the medical chart didn’t document that a patient had the illnesses the plan reported, Medicare asked for a refund. Auditors also gave plans credit for underpayments they discovered.
Among the findings:
- Medicare paid the wrong amount for 654 of the 1,005 patients in the sample, an error rate of nearly two thirds. The payments were too high for 579 patients and too low for 75 of them. The total payment error topped $3.3 million in the sample.
- Auditors concluded that risk scores were too high for more than 800 of the 1,005 patients, which in many cases, but not all, led to hefty overpayments. Medicare’s annual payment for more than 200 patients was at least $5,000 higher than merited, according to the audits.
- Auditors could not confirm one-third of the 3,950 medical conditions the health plans reported, mostly because records lacked “sufficient documentation of a diagnosis.” The names of the medical conditions were redacted by federal officials.
The federal Centers for Medicare and Medicaid Services, or CMS, which conducted the audits, had no comment.
None of the health plans would discuss the audit findings. Aetna, in a statement, said the company had “raised a number of questions and concerns” regarding the results and was “awaiting a response from CMS.”
Clare Krusing, a spokeswoman for America’s Health Insurance Plans, the insurance industry’s primary trade group, said the audits “overstated” the payment errors. Health plans have since improved their record keeping and offer better care for people with chronic health conditions than traditional Medicare, Krusing said.
“The evidence is overwhelmingly clear that these programs (Medicare Advantage) deliver the right care for beneficiaries,” she said.
The records are coming to light at a time of rapid expansion – and consolidation—in the Medicare Advantage market. Enrollment has neared 17 million, about one of every three people eligible for Medicare. Last week, Aetna announced plans to buy competitor Humana for $37 billion.