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Government audit reveals UnitedHealth Group Medicare Advantage plan overbilling

CMS told insurer to repay $381,000, triggering a secret three-year legal battle

An audit obtained by the Center for Public Integrity found that UnitedHealth Group, the nation's largest Medicare Advantage provider, overbilled the government a little more than $381,000 in a small sample of cases.

CMS did not extrapolate the findings in the audit, which would have led to a far greater financial penalty for UnitedHealth Group. 

UnitedHealth Group appealed the decision and denounced the audit in a letter to CMS--and a three year secret legal battle ensued.

The heavily redacted 2012 audit was provided to CPI as part of a Freedom of Information Act (FOIA) request. It focused on risk scores associated with Medicare Advantage plans provided by UnitedHealth Group through PacifiCare of Washington State. 

The audit reviewed 786 diagnoses from the medical records of 201 Medicare Advantage patients and found that 153 contained errors that led to improper payments, according to CPI. Of those 153 erroneous diagnoses, 64 percent were related to insufficient documentation and 38 percent lacked a physician's signature. Although 15 percent of payments should have been higher, 49 percent should have been lower. As a result, Centers for Medicare & Medicaid Services (CMS) officials told UnitedHealth Group it to repay the difference.

UnitedHealth Group appealed the decision and denounced the audit in a letter to CMS, arguing the sample size was too small and that the company did not have time to collect medical records that supported the erroneous diagnoses.

The case remains unresolved. In March, 2014, a CMS hearing officer remanded the case to the agency for further negotiations, according to CPI.

Confidential slide presentations also obtained by CPI reveal CMS officials were aware of widespread overbilling tied to Medicare Advantage, estimating that billing errors reached $13.5 billion in 2010. In a statement to CPI, Sen. Chuck Grassley (R-Iowa) criticized CMS for withholding internal deliberations and called for more transparency with Medicare Advantage audits. In May, Grassley, who chairs the Senate Judiciary Committee, publically called on the justice department and CMS to investigate Medicare Advantage billing issues.

Recently, Medicare Advantage risk scores have been at the center of at least six whistleblower lawsuits and federal investigations into Humana and other major insurers. Potential overbilling linked to Medicare Advantage plans has also drawn criticism from two senators.

For more:                                                                                                                    
- read the CPI article

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Second senator calls for Medicare Advantage oversight