Dive Brief:
A Medicare Advantage plan run by CVS inflated diagnoses for its members between 2018 and 2019, resulting in almost $7 million in estimated overpayments, according to a new audit by the HHS Office of the Inspector General.
Last week, the HHS OIG published an audit of Coventry Health and Life Insurance Company that found the large majority of diagnoses that Coventry submitted to the CMS to justify its members’ health needs were unsupported by medical records from actual providers.
Regulators recommended that Coventry search for other instances of noncompliance following the audit period and refund the $7 million, along with any additional overpayments it’s able to identify. Coventry, which largely disagreed with the audit’s findings, refused.
Dive Insight:
A majority of Medicare beneficiaries are now enrolled in Medicare Advantage plans, in which private payers receive a monthly lump sum from the CMS for managing their care. That reimbursement is adjusted based on enrollees’ health needs, so insurers get paid more for sicker members. The government tracks enrollees’ health through diagnosis codes collected by their MA insurer.
The point of this arrangement was to incentivize insurers to control healthcare costs for Medicare seniors, saving the government money while improving upstream primary care. It’s also inadvertently resulted in a practice called upcoding, in which insurers exaggerate the health risks of their members to artificially inflate their reimbursement.
Upcoding is a serious issue. MA plans are expected to see a payment increase of 10% this year compared to traditional Medicare due to upcoding alone, according to congressional advisory group MedPAC. Over the next decade, upcoding could lead to Medicare overpaying MA plans by $600 billion, per a Committee for a Responsible Federal Budget analysis of MedPAC’s findings.
The HHS OIG’s audit of Coventry is the latest in a series of reviews checking the accuracy of diagnosis codes that MA organizations submit to the CMS. The audit, which ran from July 2022 through this past October, identified diagnoses at a higher risk for being miscoded and grouped them into specific categories, like acute stroke, sepsis or prostate cancer.
It found that most medical records provided by Coventry didn’t support the diagnosis codes, and that in many cases Coventry couldn’t find any verifying patient documentation at all.
“Coventry’s policies and procedures to prevent, detect, and correct noncompliance with CMS’s program requirements, as mandated by Federal regulations, could be improved,” HHS OIG wrote in its report. “On the basis of our sample results, we estimated that Coventry received at least $6,995,522 in net overpayments for 2018 and 2019” — roughly 0.2% of the $3.5 billion in total reimbursement that Coventry received from the government during that period.
In response, St. Louis-based Coventry said the government’s audit methodology was biased because it focused on diagnosis codes that were at high risk of resulting in overpayments instead of looking at coding for its entire population, in which conditions could be exaggerated for some patients but underexaggerated for others.
“We believe OIG’s Draft Report departs from clear and contrary Medicare guidance — including from OIG itself — and contributes to the false impression that MA plans are gaming the system,” Patrick Jeswald, CVS’ chief compliance officer for Medicare, wrote in a letter to the agency.
“We have looked critically at our risk adjustment programs and provider contracts and will continue to do so. Yet despite all of this work, it will never be possible to ensure the thousands of providers servicing MA members will code the millions of submissions accurately every time,” Jeswald added.
CVS did not agree to pay back the estimated overpayments, saying the HHS OIG’s $7 million estimate was flawed and that OIG has no statutory authority to ask for a refund.
Coventry covers almost 200,000 MA enrollees.
Upcoding is not unique to CVS. The HHS OIG has performed more than twenty such audits, with most of them finding the majority of diagnosis codes submitted by MA organizations aren’t supported by evidence — including for plans run by Humana, Cigna, Centene and other insurance companies.
Though President Donald Trump’s election was viewed as a net positive for the massive MA industry, top healthcare regulators in his administration has been more open to cracking down on practices like upcoding than many expected.
CMS Administrator Mehmet Oz, who has supported MA plans in the past, said during his confirmation hearings that he planned to heavily scrutinize the privatized Medicare plans — a promise Oz followed through on last month when the CMS announced it planned to ramp up MA overpayment audits.
Republicans in Congress have also said they’re considering targeting fraud, waste and abuse in Medicare in their massive reconciliation bill currently being reviewed by the Senate. Though, some members of leadership have walked back their previous comments, concerned about the political blowback from touching the massive federal insurance program after influential payer lobbies argued any reform of coding practices would amount to an attack on Medicare seniors.
