CMS must improve examination of risk-adjusted payments to MA plans, OIG says

Medicare Advantage
A federal watchdog is concerned Medicare Advantage plans can game Medicare rules to make patients appear sicker than they are in order to get higher payments. (Getty/designer491)

A federal watchdog is concerned Medicare’s rules have enabled Medicare Advantage (MA) plans to make patients appear sicker than they are to get higher payments.

A report issued Thursday by the Department of Health and Human Services Office of Inspector General (OIG) questions the use of chart reviews by MA plans. OIG is concerned that such chart reviews can be used by plans to get higher risk-adjusted payments from the Centers for Medicare & Medicaid Services (CMS).

Chart reviews allow MA organizations to add or delete diagnoses in their encounter data “based on reviews of patients’ records,” the report said. However, a chart review could let MA organizations circumvent CMS’ face-to-face requirement, which mandates a physician or practitioner has seen the patient. The MA plan could also add unnecessary diagnoses in order to make patients appear sicker and therefore get more money, the report said.

OIG looked at encounter data from 2016 used to determine risk-adjusted payments in 2017 and found several issues with chart reviews.

“Diagnoses that [Medicare Advantage organizations] reported only on chart reviews—and not on any service records—resulted in an estimated $6.7 billion in risk-adjusted payments for 2017,” the report said.

CMS based about $2.7 billion in risk-adjusted payments on chart review diagnoses that MA plans didn’t link to a specific service provided to the beneficiary, OIG said.

“Although limited to a small number of beneficiaries, almost half of [MA organizations] reviewed had payments from unlinked chart reviews where there was not a single record of a service being provided to the beneficiary in all of 2016,” the report added.

OIG also found that MA plans “almost always” used chart reviews to add instead of delete diagnoses.

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The findings raise concerns about payment integrity and whether diagnoses are inaccurate or unsupported.

“There may be a qualify-of-care concern that beneficiaries are not receiving needed services for potentially serious diagnoses listed on chart reviews, but with no service records,” OIG said.

OIG dinged CMS for not reviewing the financial impact of chart reviews in encounter data on risk-adjusted payments.

“CMS has not yet performed audits that validate diagnoses reported on chart reviews in the encounter data against beneficiaries’ medical records,” OIG said. “CMS reported that it plans to begin audits that would include such chart reviews later this year.”

CMS needs to provide targeted audits for risk-adjusted payments resulting from solely chart reviews and reassess whether to allow chart reviews not linked to a service record to be used as a source of diagnosis, the report said. CMS agreed with the recommendations.

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The report comes at a time when the MA program is expanding. Nearly 1200 new plans were introduced over the past two years, according to CMS. The agency projects 24.4 million Medicare beneficiaries out of approximately 60 million will sign up for an MA plan for 2020.

CMS is also considering changes to how it audits MA plans but is getting fierce pushback from providers and the insurance industry.