Modern Healthcare

Chart reviews boost Medicare Advantage payments by $6.7 billion

- By Shelby Livingston

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 reporting 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 a Dec. 12 OIG report.

The diagnoses reported from the chart reviews, which included serious illnesses like cancer, diabetes and heart disease, were not supported by records of a patient’s face-to-face visit with a clinician, though that is required.

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 (Medicare Advantage plans) 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.

The CMS also called into question the OIG’s findings, noting the $6.7 billion estimate may be inaccurate because the OIG’s analysis focused only on encounter data.

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.

Medicare 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 who are expected to incur higher medical costs, based on the patients’ demographi­c informatio­n and diagnoses submitted to the CMS by the Advantage insurer. Diagnoses are required to be supported by the patient’s

The OIG’s findings add to other evidence that Medicare Advantage insurers may find ways to exaggerate their patients’ illnesses to obtain higher payments.

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’ charts to find diagnoses clinicians failed to report to the insurer or reported in error. The OIG report shows that insurers conducted a staggering amount of chart reviews in 2016: A total of 553 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; that process is loathed by insurers, though the Medicare Payment Advisory Commission supports using it.

The OIG’s findings add to other evidence that Advantage insurers may find ways to exaggerate patients’ illnesses to obtain higher payment. The OIG previously audited Advantage plans and found they were overpaid by hundreds of millions of dollars because of risk scores that weren’t supported by diagnoses.

Moreover, the U.S. Justice Department intervened in whistleblo­wer lawsuits alleging UnitedHeal­th Group used chart reviews to exaggerate members’ conditions to obtain higher payments.

According to the OIG’s 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. ●

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