Recent data posits that the majority of roughly $9.2 billion worth of questionable payments through Medicare Advantage (MA) last year can be attributed to just 20 insurance companies, said a recent Health and Human Services Inspector General report. 

The report noted that the Centers for Medicare and Medicaid Services (CMS) risk adjusts payments by using beneficiaries' diagnoses to provide higher payments to private companies taking part in the MA program when they have higher-than-average medical costs. The Inspector General said this could create a financial incentive to make beneficiaries seem as sick as possible to maximize payments. 

As a control, the government uses both chart reviews (the MA company's review of the beneficiary's medical record to identify diagnoses the provider did not submit or submitted in error) and health risk assessments (when—in order to diagnose a beneficiary and identify possible gaps in care—a health care professional collects information from a beneficiary about the beneficiary’s health). 

The Inspector General found that $9.2 billion of these payments were from diagnoses that were reported only on chart reviews and HRAs, and no other service records, leading the office to suspect that insurers were gaming the system. The Inspector General found that 20 of the 162 MA companies drove a disproportionate share of these questionable payments: Each company generated a share of payments from these chart reviews and HRAs that was more than 25 percent higher than its share of enrolled MA beneficiaries. 

The report singled out one unnamed company as particularly responsible, as it had 40 percent of the risk-adjusted payments from both chart reviews and HRAs, yet enrolled only 22 percent of MA beneficiaries. In addition, this company accounted for about a third of all payments from diagnoses reported solely on chart reviews and more than half of all payments from diagnoses reported solely on HRAs. Further, almost all of its
HRAs were conducted in beneficiaries’ homes.

"Since in-home HRAs are often conducted by vendors hired by MA companies (and not likely conducted by beneficiaries’ primary care providers), this raises particular concerns about the quality of care coordination for these beneficiaries and the validity of diagnoses that were reported on the HRAs," said the report. 

The Inspector General recommended, one, increasing oversight of the 20 companies, two, take additional actions to determine appropriateness of HFAs and chart reviews, and three, perform periodic monitoring of to see which MA companies have a disproportionate share of risk adjustment payments.