The federal government distributed nearly $70 billion in improper reimbursement to Medicare Advantage plans — mostly in overpayments — from 2008 to 2013, according to an investigation conducted by the Center for Public Integrity.
The improper payments can be traced back to risk score errors, according to the Center. Starting in 2004, CMS started paying Medicare Advantage plans — which are administered by private health insurers and offer an alternative to traditional Medicare — based on risk scores meant to reflect patients' overall health. Medicare reimburses plans at higher rates for sicker patients who will likely require more expensive care.
Based on an analysis of Medicare Advantage enrollment data, government audits, research papers and other documents, the Center found rising risk scores of Medicare Advantage patients rose faster than the national average in at least 1,000 counties between 2007 and 2011, increasing costs by more than $36 billion. For instance, risk scores at MMM Healthcare in San Juan, Puerto Rico, increased by an average of 11 percent, compared with the nationwide growth rate of 3 percent. Furthermore, in more than 200 counties, the cost of some Medicare Advantage plans was at least 25 percent greater than the cost of traditional Medicare coverage, according to the report. In 2011, on average, Medicare Advantage plans were paid $9,900 per person.
Congressional auditors have also claimed Medicare Advantage plans are overpaid. In January 2013, the Government Accountability Office reported CMS made between $3.2 billion and $5.1 billion in excess payments to Medicare Advantage plans between 2010 and 2012 because of unjustifiably high risk scores.
Some say the increase in risk scores indicates health insurers' aggressive billing, rather than a sicker patient population. However, health insurance industry experts say they aren't overcharging and only want to be paid fairly, according to the report. America's Health Insurance Plans Director of Communications Clare Krusing told the Center the trade organization is working with federal officials to improve risk score data reporting.
For more information, read the full report here.
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