OIG: Coding errors led to $14M in overpayments to Medicare Advantage plans

Incorrect diagnosis codes from providers led to a $14 million windfall for some Medicare Advantage plans, a federal watchdog found.

The Department of Health and Human Services’ Office of Inspector General audited diagnosis codes for strokes as part of an investigation into codes that are at a high risk of being miscoded. The result was that the Centers for Medicare & Medicaid Services made an estimated $14.4 million in inaccurate payments in 2015 and 2016.

The audit explored Medicare beneficiaries who were covered under traditional Medicare for one year and then choose to enroll in Medicare Advantage the next year. CMS pays MA plans higher rates for these transferred enrollees for one year.

“Through data mining and discussions with medical professionals, we have identified several diagnosis codes that were at high risk of being miscoded and resulting in inaccurate payments,” the audit report released on Sept. 16 said.

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OIG focused on acute stroke diagnosis codes and looked at 582 transferred enrollees that had one instance of a stroke during 2014 or 2016.

“We had reviews performed to determine whether the medical records supported the submitted diagnosis codes,” the agency said.

Almost all of the codes physicians submitted didn’t comply with federal requirements.

“For 580 of the transferred enrollees, the medical records did not support the acute stroke diagnosis codes,” OIG said. “These errors originated from physicians submitting incorrect acute stroke diagnosis codes on claims billed under traditional Medicare.”

But even though the codes originated under traditional Medicare, the MA plan got the higher payments from CMS.

The reason is that CMS didn’t have policies or procedures to identify the beneficiaries that transfer from traditional Medicare to MA and evaluate whether the diagnosis code complied with federal requirements.

The result was MA plans got $14.4 million in inaccurate payments due to the errors.

OIG recommended that CMS educate physicians on how to correctly submit acuate diagnosis codes and how those codes impact MA plans. It should also create policies to identify beneficiaries that transfer and evaluate whether stroke diagnosis codes submitted under traditional Medicare meet federal guidelines.

CMS told OIG it will look at its policies for reviewing codes and will continue to educate providers on how to correctly submit them.

The report comes as enrollment in MA continues to grow. The Congressional Budget Office projects that 47% of Medicare beneficiaries will be in an MA plan by 2029.