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Amid billions in recoveries, Medicare Advantage problems still linger


By now you've probably seen the fraud recovery numbers released last week by the Department of Justice (DOJ) and the Department of Health and Human Services (HHS): $27.8 billion in Medicare recoveries in nearly two decades, $3.3 billion of it rolling in last year. That breaks down to $7.70 recovered for every dollar spent in fiscal year 2014.

It's not a bad efficiency rating, but you have to wonder if federal administrators dislocated a shoulder giving themselves such a hearty pat on the back. HHS Secretary Sylvia Mathews Burwell said the "impressive recoveries" reflect the government's willingness to "prosecute the most egregious instances of healthcare fraud and prevent future fraud and abuse." Attorney General Eric Holder called it an "extraordinary return on investment" that "speaks to the skill, the tenacity, and the inspiring success of hardworking men and women fighting on behalf of the American people."

Not to take away from those hardworking people at the DOJ, but "extraordinary" might be a stretch, and I'm not sure "tenacity" plays much of a role. More likely, as the feds also point out, the provisions of the Affordable Care Act that let investigators move away from a "pay and chase" model to a more targeted approach that has driven fraud recoveries since 2010. Prior to that, the creation of the Health Care Fraud Prevention and Enforcement Action Team (HEAT), coupled with increased funding to the Medicare Strike Force, helped investigators target pervasive fraud schemes.

While these billion-dollar figures are impressive a first glance, if you're like me, you start to wonder: If we recovered $27 billion in the last 18 years, how many more billions are out there?

It's a question that intelligent people have tried to answer, but in light of a recent report from the Center for Public Integrity (CPI), some of those missing billions may be stashed away in Medicare Advantage plans, an area the government has been content to ignore.

CPI has been attacking the Medicare Advantage issue for some time now--but according to the most recent report, the government has been well aware of Medicare overcharges since 2009, thanks to an unpublished study that showed widespread billing errors and overpayments cost the government billions. Previous Medicare audits have said that number could be as high as $650 million in 2007 alone, and CPI said the program contributed to $70 billion in overpayments between 2008 and 2013. A Government Accountability Office (GAO) report (.pdf) indicates improper payments reached $12 billion in 2014.

That $12 billion pales in comparison to the $45 billion in overpayments linked to Medicare Parts A and B, but what's unnerving is that the government essentially dismissed the Medicare Advantage overpayment warnings in 2009. According to CPI, the unpublished study found that risk scores, used to measure the overall health of Medicare Advantage beneficiaries and the subsequent reimbursement a payer receives from the government for their care, grew twice as fast between 2004 and 2008 compared to standard Medicare plans.

A CMS spokesman told CPI that researchers were told to shorten the study before publishing on a government research site, but "competing workloads" prevented the researchers from resubmitting.

That sounds like an awfully convenient excuse considering billions of dollars swirling around, not to mention the immense political backing tied to the plans. Even a modest 0.95 percent cut to Medicare Advantage plans in 2016 has drawn the ire of providers, payers, and advocacy groups. A statement signed by 53 senators called for "stability" within the program, the American Hospital Association said cuts would have a "significant downstream impact," and America's Health Insurance Plans said Medicare Advantage is "critically important for the more than 16 million seniors enrolled."

There's no doubt that Medicare Advantage plans are critically important to senior citizens who require comprehensive health coverage, but it's also clear that the system is dramatically flawed. The risk scores used to calculate payments are too easily misconstrued, leading the government to waste billions on unnecessary payments. It certainly appears that Medicare Advantage butters the bread of the payers that offer the plans--and that the government has willingly offered a knife and all the ingredients for the last several years.

There are clues that that the government may shift its focus. In November, the Office of Inspector Genersl (OIG) said it would turn its eye towards Medicare Advantage plans, particularly those with inflated risk scores. In 2012, the OIG urged CMS to ensure fraud and abuse programs were implemented in organizations that offered Medicare Advantage plans. President Barack Obama's budget proposal includes $36 billion in cuts to the program in the next 10 years.

If the same aggressive approach applied to the home health and medical supply industries was levied against those taking advantage of Medicare Advantage risk scores, recovery numbers might be a whole lot higher. Amid the backslapping and congratulatory rhetoric, let's hope the feds don't continue to ignore the rampant fraud and abuse that has been sitting under their noses for years. - Evan (@HealthPayer)

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OIG: New audits will focus on managed care, Medicare Advantage plans