CMS overpaid PacifiCare $115M for alleged inappropriate diagnosis codes

UnitedHealth Group subsidiary PacifiCare of Texas has received $115 million in overpayments from the Centers for Medicare & Medicaid Services, according the Health & Human Services Office of Inspector General to a report, released last week.

In 2007, the OIG alleged PacifiCare, which is one of the largest Medicare Advantage plans in the country, inappropriately used patient diagnosis codes to increase risk-adjusted reimbursements. The OIG based this conclusion after reviewing 100 sample cases and finding 43 beneficiaries with incorrect payments.

The report included three examples of how PacifiCare's submitted diagnosis codes weren't supported by documentation. For one beneficiary, PacifiCare submitted a "major depressive disorder" diagnosis code, but documentation said the patient had leg pain and difficulty walking.

In a second example, PacifiCare submitted diagnosis of "peripheral vascular disease," but the patient complained of pain in her right foot, caused by a heavy can that fell on her. OIG said that in another case, PacifiCare claimed a patient had "malignant neoplasm of the brain," but medical records showed treatment for an enlarged prostate and didn't mention brain cancer or indicate that brain cancer affected the care or treatment provided.

PacifiCare disagreed with the report findings, claiming its analysis was flawed. "PacifiCare strongly disagrees with the findings in the draft report and believes that the analysis, methodology and extrapolation used by the OIG in its audit are flawed," Thomas Paul, CEO of UnitedHealth subsidiary Ovations, wrote in a response to the OIG report. "Significantly, the OIG fails to account for the underlying complexities of risk-adjustment payments in its audit methodology, and as a result, grossly overestimates an alleged overpayment amount."

And UnitedHealth Group officials told the OIG that its member providers were responsible for the accuracy of the diagnoses PacifiCare submitted.

To learn more:
- read the OIG summary and report (.pdf)

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