Medicare Chart Reviews: Should You Be Concerned About Fraud?

December 20, 2019 HMS

Medicare Advantage (MA) plans are privately run health solutions that differ from traditional Medicare in a variety of ways. They often offer beneficiaries services like dental or vision coverage, telemedicine consults or transportation services to appointments that aren’t covered under traditional Medicare plans.

Although members typically have a limited choice of medical providers, Medicare Advantage plans are popular. In 2018, approximately 21 million individuals were enrolled in these plans, representing over one third of Medicare beneficiaries. Close to 30% of the $711 billion spent in 2018 on Medicare went to Medicare Advantage plans.

Each month, Medicare Advantage organizations receive a fixed payment for each member from the Centers for Medicare and Medicaid Services (CMS). If the payment exceeds the cost of the care provided to the member, the organization can keep the difference as profit. Risk adjustment plays an important role in MA plans, since this determines how large a member’s monthly payment is. Although sicker beneficiaries have higher costs of care, risk adjustment ensures that Medicare Advantage organizations receive higher monthly reimbursements to compensate for these costs.

Unfortunately at some Medicare Advantage organizations, the allure of higher payments for higher risk patients has led to unscrupulous behavior, overestimates of member risk and fraudulent payments.

Medicare Advantage in the News…

Many different types of fraud have been reported at Medicare Advantage plans, ranging from falsifying the severity of patient diagnoses to one-way reviews, denial of covered benefits, underpayments to providers, misrepresenting patient demographics and more. Kaiser Health News has documented at least 18 cases of fraud at Medicare Advantage plans.

The problem hasn’t gone unnoticed by the federal government. In October 2019, the U.S. Department of Justice stated that HealthCare Partners Holdings LLC, doing business as DaVita Medical Holdings LLC, agreed to pay $270 million to the government. This fine resulted from providing false information that caused Medicare Advantage Plans to receive inflated Medicare payments.

The U.S. Department of Health and Human Services’ Office of the Inspector General (OIG) has also been investigating fraud at Medicare Advantage organizations. On December 10, 2019, the OIG published the report “Billions in Estimated Medicare Advantage Payments from Chart Reviews Raise Concerns.”

In the Medicare Advantage world, chart reviews are a double-edged sword. When used as intended, they improve the accuracy of risk adjusted payments by adding or deleting diagnoses to patients’ encounter data. When used fraudulently, chart reviews enable Medicare Advantage organizations to evade CMS’s face-to-face encounter requirements and exaggerate patient diagnoses. This results in inappropriately inflated risk-adjusted payments.

According to the records reviewed by the OIG, around $2.7 billion in risk-adjusted payments were made based on chart review diagnoses that weren’t linked to a specific service provided to the patient or to a face-to-face visit. These findings have raised concerns about data integrity, payment integrity, and quality of care at some Medicare Advantage organizations.

In response, the OIG has recommended that CMS conduct audits that validate diagnoses reported in chart reviews, reevaluate the risks and benefits of using chart reviews that aren’t linked to service records to be used as inputs to risk adjustment, and provide targeted oversight of those Medicare Advantage plans that received risk adjusted payments resulting from chart reviews with no service records.

Restoring the Public Trust in Medicare Advantage

Of course, not every Medicare Advantage organization has engaged in fraudulent behavior. Unfortunately, however, a few “bad apples” can negatively influence public perceptions and justifiably increase the level of scrutiny from regulators.

Many plans are looking to third party partners to prevent fraud, waste, and abuse from occurring at their organizations. CMS’s Medicare Recovery Audit Contractor (RAC) program is designed to identify improper Medicare payments to fight fraud, waste, and abuse. Last year, HMS was the highest performing RAC program, identifying more improper Medicare payments than any other RAC.

In addition to participation in the RAC program, HMS’s Program Integrity Solutions identify and recover overpayments, detect and prevent fraud and ensure regulatory compliance. For example, Claim Edits and Analytics use a broad range of pre- and post-pay edits to review claims for error and potential abuse. Edits create claim-level breakdowns of improper billing issues for instant compliance verification and overpayment protection. Post-pay analytics target behavior and payment anomalies to flag high-risk patterns.

In light of the OIG report, Clinical Claim Review services may be of particular interest to Medicare Advantage plans. HMS’s staff of highly experienced clinicians and coders compare medical claims against medical records to ensure that services documented are accurately coded and billed in the medical claim. Machine learning driven algorithms identify and select claims with the highest potential for payment inaccuracy.

Conclusion

According to the Coalition Against Insurance Fraud, fraud costs U.S. healthcare payers $80 billion a year. The fraud, waste, and abuse identified in the OIG’s report on Medicare Advantage alone represents 3% of that number. As taxpayers, we all have an interest in reducing that number and improving the efficiency of government healthcare programs. For Medicare Advantage plans, implementing a fraud solution may be a good first step. To learn more about HMS’s Payment Integrity Solutions, feel free to contact us.

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