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CMS held back on audits, leading to billions in Medicare Advantage overpayments


The Centers for Medicare & Medicaid Services (CMS) knew as far back as 2008 that certain Medicare Advantage plans were pocketing billions in overpayments, but officials still held back on auditing the plans and recouping payments tied to inflated risk scores, according to government records obtained by the Center for Public Integrity (CPI).

Government records indicate that in 2008, CMS officials had already dubbed certain Medicare Advantage providers "high-flyers," but the agency opted to conduct 30 audits each year, less than half of what it was capable of, according to CPI. In 2012, the agency announced it would conduct 30 risk adjustment data validation audits on 2011 claims data, aiming to collect overpayments by 2014. Those audits still aren't finished, although a spokesperson told CPI the agency "anticipates" completion within the next year.

A 2005 audit of 22 Medicare Advantage plans that showed CMS could not confirm diseases for 31 percent of patients. The consulting firm that conducted the audit projected $4.2 billion in overpayments. In another 2007 audit, CMS expected to recoup between $500 million and $800 million from 37 health plans. Instead, CMS collected less than $14 million.

By 2008, CMS officials estimated that improper payments had reached $7 billion, most of which was linked to inflated risk scores.

Although it appears CMS has bungled the audit process, the agency also faced pressure from the insurance industry given the amount of money at stake. At least one government memo indicated that risk scores were particularly vulnerable to abuse, calling it an "honor system."

Sen. Chuck Grassley (R-Iowa), who called on the Department of Justice and CMS to address billing problems tied to Medicare Advantage earlier this year, doubled down on his concerns.

"The agencies also have an obligation to be as transparent as possible about audits, over-payments and everything else in the public interest about a taxpayer-funded program," Grassley told CPI.

The latest news adds to reports that surfaced throughout the year revealing the government's inability to collect on Medicare Advantage overpayments. Last year, CPI reported that the feds failed to act on approximately $32 billion in overpayments between 2008 and 2010.

In August, a whistleblower lawsuit claimed a Dallas-based payer exaggerated in-home assessments to pad reimbursement rates, adding to a half dozen lawsuits filed in April targeting Medicare Advantage plans for inflated risk scores.

For more:
- read the CPI article

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Whistleblower suit implicates dozens of health plans in Medicare Advantage overpayments
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