The Office of the Inspector General for the Department of Health and Human Services (“OIG”) has issued a report of its audit of Cigna-HealthSpring of Tennessee’s (“Cigna”) submission of diagnosis codes for its Medicare Advantage members to CMS, which entitled Cigna to additional risk adjustment payments under the Medicare program.  The OIG found that the Medicare program had overpaid Cigna approximately $5.9 million for 2016 and 2017 through Cigna’s submission of diagnosis codes that were not supported by patients’ medical records.

The government pays Medicare Advantage plans a capitated per member per month amount regardless of whether the member receives medical care.  The formula for determining the capitated amount includes a risk adjustment factor based on members’ diagnoses.  In other words, the Medicare program pays higher capitated payments for those members who are expected to require higher than average costs for medical care. Medicare uses diagnoses reported by providers on claims submissions to the Medicare Advantage plans in calculating the risk-adjusted payments. Medicare Advantage plans are, however, permitted to add diagnoses supported by medical records.

In a previous OIG report entitled “Some Medicare Advantage Companies Leveraged Chart Reviews and Health Risk Assessments to Disproportionately Drive Payments,” the OIG found that Medicare Advantage plans’ addition of diagnosis codes “have been a major driver of improper payments in the MA program.”

OIG’s audit of Cigna consisted of a review of ten diagnosis codes Cigna submitted to CMS that the OIG considers “at a higher risk of being miscoded, which may result in overpayments from CMS.”  The audit sampled 279 unique enrollee years for these ten high-risk diagnosis codes. It found that for “195 of the 279 sampled enrollee-years, the medical records that Cigna provided did not support the diagnosis codes….” Extrapolating these findings to the universe of claims from 2016 and 2017, the OIG found that Cigna had been overpaid approximately $5.9 million.

As a result of its audit, the OIG recommended that:

  • Cigna refund $5.9 million in overpayments to the Federal Government
  • Cigna identify similar instances of noncompliance for the ten high-risk diagnoses occurring before and after the audited time period and refund any resulting overpayments
  • Cigna continue to examine its compliance procedures to identify areas of improvement “to ensure that diagnosis codes that are at high risk for being miscoded comply with Federal requirements.”

Cigna did not concur with the OIG’s recommendations.

The OIG’s Report in Brief of the Cigna audit is linked here and the HHS press release is linked here.

Whatley Kallas, LLP’s earlier report on a New York Times article exposing how Medicare Advantage plans have increased their profits by billions by adding diagnosis codes to make their members appear sicker than they actually are is linked here.  Whatley Kallas’s earlier report on the OIG Report on Medicare Advantage plans leveraging chart reviews to drive payments is linked here.

The attorneys at Whatley Kallas have found that Medicare Advantage plans frequently deny and underpay claims in order to increase their profits, for example by overturning physicians’ decisions to admit patients for inpatient treatment and by downgrading diagnosis codes submitted by providers.

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