CMS said this month that it has yet to implement 2014 recommendations regarding the comparison of so-called encounter data.

July 19—Congressional auditors are pushing for greater scrutiny of the appropriateness of payments to Medicare Advantage plans following the release of estimates that 10 percent of such payments are improper.

The Government Accountability Office (GAO), Congress’s nonpartisan investigative body, urged several steps to sharpen scrutiny of Medicare Advantage (MA) plans, which enrolled more than 18 million beneficiaries as of June, or more than 32 percent of total Medicare beneficiaries.

The impetus for greater scrutiny followed release of a May report by the U.S. Department of Health and Human Services (HHS) that found HHS failed to meet its goal for limiting improper payments to MA plans. A goal of keeping the share of improper payments to 9.14 percent of all payments was established in FY15, but in FY16 the actual share was 9.99 percent.

The improper payments to MA plans totaled $16 billion in FY 16. In comparison, improper payments totaled $41 billion from Medicare fee-for-service to providers and an estimated $144.3 billion for federal government payments as a whole.

The greater scrutiny of MA plans could also impact hospitals, given that 22 of the 41 providers that have launched health plans since 2010 operate MA plans, and MA is the primary or only line of insurance business for 17 of those providers, according to a recent Robert Wood Johnson Foundation analysis.

James Cosgrove, director of Health Care for the GAO, said 71 percent of improper payments to MA plans and 60 percent to Medicare FFS providers stemmed from documentation errors, as opposed to fraud and abuse.

GAO also has found that CMS is lagging in implementing its plans to improve the accuracy of payments to MA plans. For instance, the agency has lagged in expanding the recovery audit contractor (RAC) program into MA audits as required by the Affordable Care Act. In 2015, CMS said it was seeking an MA RAC entity to help the agency increase the number of MA plans that can be audited annually. However, earlier this month, CMS officials told GAO that agency leadership is still evaluating its strategy for the planned MA RAC, according to July 17 testimony before the House Ways and Means Committee’s Oversight Subcommittee.

Cosgrove also raised alarms that CMS reported this month that it has yet to implement 2014 recommendations regarding the comparison of so-called encounter data. Such data are used to adjust insurers’ MA rates based on the health of their enrollees.

“Because CMS is making payments that are based on data that have not been fully validated for completeness and accuracy, the soundness of billions of dollars in Medicare expenditures remains unsubstantiated,” Cosgrove noted during the hearing.

CMS began using encounter data for risk adjustment in 2015, although it hasn’t completed the task of validating the data. The agency said it plans to fully transition to using MA encounter data for risk adjustment purposes by 2020.

Steps Urged

GAO recommended ways that CMS should increase MA plan scrutiny, including the following:

  • Improve the methodology for selecting MA plans to audit, emphasizing those with the greatest potential for improper-payment recovery
  • Focus audits on MA plans that are most likely to have improper payments
  • Improve the timeliness of the primary auditing process

CMS officials told GAO this month that the agency has taken “initial actions” to implement those steps, “but none had been fully implemented.”

The inefficiency and dated approach of CMS’s auditing process—known as risk adjustment data validation (RADV)—drew specific concerns among members of the congressional panel.

“What takes so long to do these audits?” Rep. George Holding (R-N.C.) said at the hearing.

The audit process, which includes multiple rounds of document review, takes at least 18 months, according to Jonathan Morse, acting director of CMS’s Center for Program Integrity. CMS has completed a RADV audit of 2007 MA payments and is still conducting audits for payment years 2011, 2012, and 2013.

“It’s a very thoughtful and time-consuming process for us to go through and make sure we are calculating everything very carefully,” Morse said. “They are labor-intensive for us to do because it takes clinical expertise to go through the medical record, make sure everything is there, make sure everyone is reading it accurately, and that we agree on the assessment.”

Although software is used in some parts of the audit process, the process requires review of specific medical records by someone with clinical knowledge.

“You’ve got to be able to look at a medical record and know if that finding is supported by the documentation,” Morse said.

Part D Focus

Morse repeatedly hailed the expected impact of coming implementation of the so-called lock-in provision of the Comprehensive Addiction and Recovery Act, which was enacted in 2016. That provision allows Medicare Part D plans to limit a beneficiary’s access to coverage for frequently abused drugs to one prescriber and pharmacy.

“That’s been very effectively used by the private plans and by state Medicaid programs,” Morse said.

Such programs, as well as limits on the volume of drugs that can be authorized, help explain why private drug plans are able to prevent fraud, waste, and abuse better than the federal government, he said.

Separately, Rep. Pat Meehan (R-Pa.) raised concerns about recent findings from a Senate subcommittee that among 8,900 “actionable complaints” of fraud and abuse in the Part D program, only about 7 percent were investigated.

Morse said CMS also may forward fraud and abuse allegations to law enforcement or to the insurer to address.

“We also need to balance that with the latitude we need to be able to give providers in their prescribing patterns,” Morse said. “The challenge for us is really kind of balancing that fine line of being thoughtful [about] beneficiaries who often need a certain amount of prescriptions.”

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Wednesday, July 19, 2017