CMS overpaid Medicare Advantage plans by $5.1B

Insurers that sell Medicare Advantage plans received as much as $5.1 billion in overpayments between 2010 and 2012, according to a new report from the Government Accountability Office.

The problem, federal government auditors say, is the Medicare Advantage program is structured so that it pays insurers more for members with certain medical diagnoses. So Medicare Advantage plans have been classifying their members as being sicker than members in traditional fee-for-service programs.

Moreover, the Centers for Medicare & Medicaid Services didn't appropriately adjust Medicare Advantage members' risk scores to account for the insurers' differences in treatment and diagnostic coding, reported The Hill's Healthwatch.

But the America's Health Insurance Plans pushed back on the GAO's findings. The report "doesn't take into account what plans are doing to identify beneficiaries who have potential health risks and then putting into place programs and services to make sure patients are getting the care they need," AHIP Spokesperson Robert Zirkelbach told Bloomberg.

What's more, Medicare Advantage plans "go out of their way to make sure they know patients' health risks so they can intervene early and avoid complications down the line," he added.

The GAO report comes amid fighting between the insurance industry and the federal government over recently proposed cuts to Medicare Advantage plans. CMS wants to reduce payments per person for Medicare Advantage plans by more than 2 percent in 2014, which could lead to insurers losing a total of $11 billion.

To learn more:
- here's the GAO report (.pdf)
- read the Bloomberg article
- see The Hill's Healthwatch article

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