GAO Claims Insurers Over-Billed Taxpayers by Billions

While health insurers are reporting losing their shirts on the Obamacare insurance exchanges, their Medicare Advantage plans have over-billed the government by billions of dollars, and have rarely been forced to repay the money or face other consequences for their actions, according to a new Congressional audit by the Government Accountability Office (GAO).

In a report made public on May 9, 2016, the GAO called for “fundamental improvements” to curb overbilling by the health plans, which are paid more than $160 billion annually by the government. The privately run plans have enrolled more than 17 million people.

The GAO said that the Centers for Medicare and Medicaid Services (CMS) has spent about $117 million on audits, but has recouped only $14 million. CMS officials say the mere threats of audits has caused health plans to voluntarily return approximately $650 million in overpayments and that upcoming audits will recover tens of millions more.

“As the Medicare Advantage program continues to grow, safeguarding the program from loss is critical, ” the GAO report said. The report did not name any of the health plans studied.

According to The Center for Public Integrity, the GAO launched its audit in October 2014 after the Center published a series of articles titled: Medicare Advantage Money Grab. The articles documented nearly $70 billion in “improper” payments to health plans, mostly inflated fees from overstating patients’ health risks, from 2008 through 2013 alone.

GAO noted that CMS has failed to target health plans with “known improper payment risk.” The GAO also criticized the agency for allowing audits and appeals to drag on for years. Some audits of 2007 payments to health plans are still under appeal.

In response to the GAO report, America’s Health Insurance Plans, the industry’s trade organization, said, with a straight face, that an “unconfirmed diagnosis” in an audit doesn’t necessarily mean that the person doesn’t have the disease. Think about that for a minute. Would any payer pay for an “unconfirmed diagnosis?”

The Center’s investigation traced the overpayments to abuse of a billing formula called a risk score, which pays higher rates for sicker patients and less for people in good health. Since 2004, however, the risk score formula has largely operated as an honor system, despite criticism that many health plans have overstated how sick some patients are to boost their revenues. That practice is known as “upcoding.”

CMS records released to the Center through a court order in a Freedom of Information Act lawsuit show that over-billing has, according to the Center, “wasted tax dollars almost since risk scores were introduced in 2004.” One confidential review of 2005 payments determined that nearly a third of patients enrolled in 22 health plans weren’t as sick as was claimed. The audit projected overpayments of $4.2 billion as a result. Other CMS documents, claims the Center, revealed that officials dubbed these health plans “high-flyers, ” but did little to reel them in, while audits dragged on for years without reaching conclusions.

CMS has promised annual audits and said the agency, “is strongly committed to program integrity in the Medicare Advantage program and takes seriously our responsibility to protect taxpayer dollars by identifying and correcting improper payments.”