Did your health plan screw Medicare?

Today, KHN released details of 90 previously secret government audits revealing millions of dollars in overpayments to Medicare Advantage health care plans for seniors.

The audits, covering bills from 2011 to 2013, are the most recent financial audits available, even as health plan enrollments have exploded over the past decade to more than 30 million and are expected to grow further.

KHN released audit spreadsheets as industry prepares for final regulation that could order health plans to repay hundreds of millions, if not billions, of dollars or more in overages to the Treasury Department – payments dating back a decade or more. The decision from the Centers for Medicare & Medicaid Services is expected on February 1.

KHN obtained the long-hidden audit summaries through a three-year Freedom of Information Act lawsuit against CMS, which was settled in late September.

In November, KHN reported that audits uncovered about $12 million in net overpayments for the care of 18,090 sampled patients. In all, 71 of the 90 audits uncovered net overpayments, which averaged more than $1,000 per patient across 23 audits. CMS underpaid the remaining plans on average, anywhere from $8 to $773 per patient.

Audit spreadsheets released today identify each health plan and summarize the findings. Medicare Advantage, a rapidly growing alternative to original Medicare, is primarily operated by major insurance companies. The contract numbers for the plans indicate where the insurers were at the time.

Since 2018, CMS officials said they would recover about $650 million in overpayments from the 90 audits, but the final amount is far from certain.

Spencer Perlman, an analyst at Veda Partners in Bethesda, Maryland, said he believes data released by KHN indicates government recoveries for potential overpayments could reach $3 billion.

“I don’t see the government giving up those dollars,” he said.

For nearly two decades, Medicare has paid for health plans using a billing formula that pays higher monthly rates for the sicker patients and lower monthly rates for the healthier ones.

However, on the rare occasions that reviewers have reviewed medical records, they have often been unable to confirm that patients had the diseases listed or that the conditions were as serious as the health plans claimed.

Since 2010, CMS has advocated that overpayments discovered when sampling each health plan’s medical records should be extrapolated across members, a practice commonly used in government audits. This can multiply the overpayment requirement from a few thousand dollars to hundreds of millions for a large health plan.

But the industry has managed to push back against this regulation despite dozens of audits, investigations and lawsuits against whistleblowers alleging widespread fraud and billing abuses in the program that costs taxpayers billions each year.

CMS should clarify what it will do with the next regulation, both for the collection of past and future audits. CMS is currently conducting audits for 2014 and 2015.

UnitedHealthcare and Humana, the two largest Medicare Advantage insurers, accounted for 26 of 90 contract audits over the three years.

Humana, one of Medicare Advantage’s largest sponsors, had above-average overpayments of $1,000 in 10 of 11 audits, according to the records.

That could spell trouble for the Louisville, Kentucky-based insurer that relies heavily on Medicare Advantage, according to Perlman. He said Humana’s liability could exceed $900 million.

Mark Taylor, director of corporate and financial communications at Humana, did not comment on the overpayment estimates.

Commenting on the upcoming CMS rule, he said in an emailed statement, “Our primary focus will remain on our members and the potential impact any changes could have on their benefits. … We hope CMS joins us in protecting the integrity of Medicare Advantage.”

Eight audits of UnitedHealthcare plans found overpayments, while seven others found the government had underpaid.

In a conference call with reporters this week, Tim Noel, who leads UnitedHealthcare’s Medicare team, said the company wants CMS to make rule changes but remains “very comfortable” with what the audit results will show. 2011-13.

“Like all government programs, payers and beneficiaries need to know that the Medicare Advantage program is well managed,” he said.

He said the company supports annual testing of Medicare Advantage plans.

But Perlman said the sheer size of the program makes annual audits “completely impractical.”

These audits are “incredibly time-consuming and labor-intensive” to conduct,” he said.

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