Enforcement and physician education are two keys to limiting health plan upcoding, a costly scheme that exploits the Medicare system, health policy experts told Fierce Healthcare.
A recent analysis from The Wall Street Journal found UnitedHealthcare and Humana add diagnoses to members through chart reviews and at-home visits to make them appear sicker, resulting in $50 billion of unnecessary reimbursement from Medicare to care for allegedly sicker patients. Some individuals with diagnoses added to their charts did not receive treatment for those conditions.
Both insurers pushed back against these claims, arguing the calculations were incorrect, but patient upcoding is far from a foreign concept and is not unique to these two insurance companies.
“We all know there’s a lot of upcoding going on in the industry,” said John Gorman, a venture fund founder and former official in the Office of Managed Care, now the Centers for Medicare & Medicaid Services (CMS), under the Clinton administration. Gorman pointed to recent regulations as CMS’ attempts to crack down on the abuse in the system but said there is clearly more work that needs to be done.
“In many cases, the plans are literally fabricating codes out of air and submitting them to the feds for reimbursement,” he explained. “That has resulted in billions of dollars in payments they are not entitled to.”
Through Medicare Advantage, payment is based on the health and sickness of the patient population. Instead of the traditional fee-for-service landscape, managed care is done on a per member per month basis. Diagnosis codes go into the data that calculate the health of a population through a risk adjustment score. These data moves from a patient encounter, to the doctor, to a management services organization, up to the health plan and finally to the government.
Problems start to occur when the medical record documentation is incomplete or incorrect along this chain, said John Kelly, chair of the Barnes & Thornburg’s healthcare practice and former assistant chief for healthcare fraud in the Department of Justice.
“You have to ensure, from the top down, there are controls and standards being set, audits and reviews being conducted and trainings [completed],” he explained. “Everyone has responsibility along the chain.”
One-way chart reviews are when patients keep seeing new codes added to their charts, but codes should also be removed when appropriate. One-way chart reviews are one of the most common allegations in Medicare Advantage False Claims Act cases, said Kelly. He added that physicians need to be trained and educated on how to keep more robust records.
More enforcement is the best way to stop this practice, an easy concept in theory but one that CMS has not effectively implemented, said Gorman. With $50 billion leaking out of the system in this analysis alone, there needs to be more of a federal spotlight on the issue.
“Most CMS staffers are either program apparatchiks or policy wonks,” he said. “They’re not investigators. There’s a very small team that do certain fraud investigations, but it’s mostly on the fee-for-service or long-term care side of the house. There’s never been a real investigative capability into health plans and this kind of activity taking reimbursement from payment.”
“A billion dollars to go after $50 billion would not be uncalled for,” added Gorman.
It may be that using diagnosis codes in this way is a flawed approach and prone to loopholes and abuse.
“Brokers and agents have gotten very crafty about how they use marketing dollars, unapproved marketing materials and inducements like gift cards to get beneficiaries to join the plan of brokers’ choosing,” said Gorman.
A CMS rule from November instituted new guidelines banning misleading Medicare Advantage television ads. But, this month a district court in Texas halted implementation of a broker compensation final rule from April.
Kelly told Fierce Healthcare that enforcement is most commonly seen through the False Claims Act. In 2023, False Claims Act settlements exceeded $2.68 billion.
“We know there’s somewhere around 20 to 30 active open Medicare Advantage cases that are being handled,” said Kelly. “What’s interesting is we don’t know the number under seal.”
For plans and providers, scrutiny on this space is not expected to die down, and, with more people now enrolled in Medicare Advantage than traditional Medicare, it’s more important than ever that data submitted to the government are accurate.
“This is not going anywhere,” he said.