Humana, Aetna, EmblemHealth overpaid by Medicare: HHS OIG

Three health insurance companies overcharged taxpayers by more than $140 million combined by exaggerating the severity of Medicare Advantage members' illnesses, according to reports the Health and Human Services Department Office of Inspector General published Thursday.

Humana, HealthAssurance Pennsylvania — a unit of CVS Health subsidiary Aetna — and EmblemHealth deny the accusations and reject the OIG's recommendations that the Centers for Medicare and Medicaid Services recoup a portion of the alleged overpayments.

Related: DOJ loses bid to toss Humana Medicare Advantage case

According to the OIG reports, the three insurers misused diagnosis codes to generate higher federal reimbursements under the Medicare Advantage risk-adjustment program. The investigative agency estimates that EmblemHealth received at least $130 million more than it should have in 2015, that Humana collected at least $13.1 million too much in 2017 and 2018, and that HealthAssurance got $4.2 million extra in 2018 and 2019.

Medicare Advantage carriers are paid more for covering enrollees who are sicker or more complex and consume more healthcare. CMS bases these payments on the diagnosis codes insurers submit.

In all three cases, the OIG concludes that Humana, EmblemHealth and HealthAssurance used codes that did not match patient medical records.

Despite these findings, the OIG recommends that two of the insurers repay only a fraction of the alleged overpayments it detected. The auditing agency recommends EmblemHealth give back $551,917 and Humana refund $6.8 million. But the OIG says HealthAssurance should return the full $4.2 million.

This discrepancy stems from limitations CMS placed on itself in the Medicare Risk Adjustment Data Validation program final rule last year.

In 2018, the agency proposed giving itself the authority to claw back Medicare Advantage risk-adjustment overpayments from 2011 on, which triggered intense opposition from the insurance industry. When the agency finalized the regulation in 2023, it allowed recoupments dating from 2018 or later. At the time, CMS projected it would collect $4.7 billion in overpayments from 2023 to 2032. Humana has sued to block the policy.

In written responses included in the OIG reports, CVS Health, Humana and EmblemHealth criticized the agency's methodology, findings and recommendations.

“We believe the audit did not appropriately address the requirement of actuarial equivalence with traditional Medicare reimbursement,” an Aetna spokesperson wrote in an email. “In effect, OIG applied impractical standards that are not contemplated or required by law.”

Humana has “consistently called for CMS to audit every plan, every year, using the right methodology that is consistent with the underlying principles of the Medicare Advantage model,” a spokesperson wrote in an email.

"EmblemHealth complies with all CMS requirements and federal, state and local regulations. EmblemHealth disagreed with OIG’s audit findings and provided additional information resulting in OIG revising their initial report," a spokesperson wrote in an email.