HHS' Office of Inspector General has raised new concerns about Medicare Advantage insurers' use of medical chart reviews to obtain higher payments from the federal government.
An analysis of 2016 Medicare Advantage data found that insurers who reported additional diagnoses after combing patients' medical charts were able to increase their payments from the CMS by an estimated $6.7 billion in 2017, according to the OIG's report published Thursday.
Though it is a requirement, these diagnoses reported from the medical chart reviews, which included serious illnesses like cancer, diabetes and heart disease, were not supported by records of a patient's face-of-face visit with a clinician.
While health insurers have insisted that they review patients' charts to ensure accurate Medicare Advantage payments, the analysis showed they only rarely submitted chart reviews that deleted incorrect diagnoses. Chart reviews that resulted in deleted diagnoses decreased payments by just $196.5 million.
"Chart reviews can be a tool to improve the accuracy of risk-adjusted payments by allowing (Medicare Advantage organizations) to add and delete diagnoses in the encounter data based on reviews of patients' records," the OIG wrote. "However, chart reviews—particularly those not linked to service records—may provide MAOs opportunities to circumvent the Centers for Medicare & Medicaid Services' face-to-face requirement and inflate risk-adjusted payments inappropriately."
A spokeswoman for America's Health Insurance Plans, the insurance industry's lobbying organization, said the OIG's report is based on a type of data with well-documented challenges, and noted that the OIG didn't review medical records for the analysis. AHIP has long argued that "encounter data" is often incomplete or inaccurate and would reduce insurers' payments.
The CMS also called into question the OIG's estimated dollar amount of risk-adjustment payments based on only chart reviews. The agency said the amount may be inaccurate because the OIG's analysis focused only on encounter data and not another type of data that is also used to calculate payments.
The way the federal government calculates payments to Medicare Advantage plans gives insurers an incentive to make their plan members appear as sick as possible on paper. That incentive doesn't exist in the original Medicare program.
Advantage organizations are paid a per member, per month amount to provide care. In a process known as risk-adjustment, payments are altered to pay more for sicker seniors that are expected to incur higher medical costs, based on the patients' demographic information and medical diagnoses submitted to the CMS by the Advantage insurer. Diagnoses are required to be backed up by the patient's medical record and documented from a face-to-face visit with a clinician.
Because sicker members net higher payments, insurers often hire third-party vendors to pore over patients' medical charts to find diagnoses that clinicians failed to report to the insurer or reported in error. The OIG report showed that insurers conducted a staggering amount of chart reviews in 2016: A total 553 Medicare Advantage organizations submitted 52.6 million chart reviews for risk-adjustment purposes, for an average of more than 95,000 reviews per insurer.
The CMS allows chart reviews to be submitted as encounter data, which is information about patients documented by doctors and hospitals and is increasingly used by the CMS to determine Advantage payments. Encounter data is blended with Risk Adjustment Processing System data to calculate payments and is loathed by insurers, though the Medicare Payment Advisory Commission supports using it.
The OIG's findings add to other evidence that Medicare Advantage insurers may find ways to exaggerate their patients' illnesses to obtain higher payments. The OIG has previously audited Advantage plans and found that they were overpaid by hundreds of millions of dollars because of risk scores that weren't supported by medical diagnoses. Moreover, the U.S. Department of Justice has intervened in whistleblower lawsuits alleging that UnitedHealth Group used chart reviews to exaggerate its plan members' conditions to obtain higher payments.
According to the OIG's new report, insurers submitted 40.6 million chart reviews adding diagnoses, and for 41% of those reviews, there were no records of a patient visit, procedure, test or supplies that contained those diagnoses.
"This means that, for the entire year, these beneficiaries may not have received any other services for the medical conditions indicated by the diagnoses," the OIG wrote.
It also found that 10 Medicare Advantage parent companies that enroll 70% of Advantage members drove 79% of the risk-adjusted payments from chart reviews. Advantage insurers received payments based solely on chart reviews for 1.7 million patients. In one extreme case, a patient had diagnoses reported only on chart reviews that resulted in about $229,050 in risk-adjusted payments to the insurer.
Insurers can link a chart review to a specific service associated with the diagnosis, but the CMS does not require this, according to the OIG report. The OIG estimated that the CMS based $2.7 billion in payments on chart review diagnoses that the insurers did not link to any service provided to the beneficiary in 2016.
"For beneficiaries with unlinked chart reviews, and no records of services in all of 2016, it is not at all clear what services were used to generate diagnoses added on these chart reviews," it wrote.
The OIG recommended that the CMS provide more oversight of insurers that received payments from unlinked chart reviews and conduct audits to validate the diagnoses reported on chart reviews. It also advised the CMS to reassess the risks and benefits associated with allowing unlinked chart reviews to be used for risk adjustment. The agency agreed with the recommendations.