Private insurers managing Medicare Advantage plans likely will be scrutinized more intensely as the Centers for Medicare & Medicaid Services seeks to rectify a "longstanding problem" of improper payments.
CMS said Friday it may have overpaid Medicare Advantage plans by as much as $12.4 billion in 2011, amounting to an 11 percent error rate, compared to an 8.6 percent rate in traditional Medicare, reported Bloomberg.
To help reduce that error rate, CMS auditors will examine 30 plans to determine whether clinical records justify payments for medical services. The auditors will review 200 patients' medical records and calculate the percentage of improper payments. Medicare will then reduce future payouts to the insurer to recoup any overpayments.
"We're absolutely confident that this is a valid sample to do these audits," Medicare Deputy Administrator Jonathan Blum told Bloomberg.
The enhanced audits are a result of a federal report that found Medicare Advantage plans were overpaid by as much as $3.1 billion in 2010. The report alleged that insurers were classifying their customers as being sicker than if they were enrolled in traditional Medicare, thereby triggering higher reimbursement rates.
Although CMS didn't disclose which insurers it will audit, UnitedHealth and Humana likely are on the list because they are the two largest Medicare Advantage providers with 2.2 million and 1.9 million customers, respectively.
The audits also will include "predictive modeling" technology, which already has stopped, prevented or identified $20 million in overpayments through November 2011, CMS Acting Administrator Marilyn Tavenner said in an agency blog post.
CMS is only auditing one year's worth of claims, but it still expects to recoup $370 million, according to the Associated Press.