The Office of the Inspector General of the Department of Health and Human Services has issued a report entitled “Some Medicare Advantage Companies Leveraged Chart Reviews and Health Risk Assessments to Disproportionately Drive Payments.” The OIG undertook the review due to concerns that Medicare Advantage (MA) plans “may leverage both chart reviews and Health Risk Assessments (HRAs) to maximize risk-adjusted payments, without beneficiaries receiving care for these diagnoses,” and that these payments “have been a major driver of improper payments in the MA program.”

The government pays MA 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 MA plans in calculating the risk-adjusted payments. However, MA plans are permitted to add diagnoses based on retrospective chart reviews and at-home HRAs. Past OIG investigations have revealed that risk-adjusted payments for additional diagnoses reported by some MA plans are not reflected in a beneficiary’s medical records.

The current OIG Report found that 20 of the 162 MA plans: “drove a disproportionate share of the $9.2 billion in payments from diagnoses that were reported only on chart reviews and HRAS, and on no other service records. These companies’ higher share of payments could not be explained by the size of their beneficiary enrollment.” In particular, the OIG Report found that one company “further stood out in its use of chart reviews and HRAs to drive risk-adjusted payments without encounter records of any other services provided to the beneficiaries…” This company had 40% of the payments from chart reviews and HRAs – $3.7 billion out of $9.2 billion in payments – but only 22% of the market.

As a result of its investigation, OIG has recommended that CMS:

  1. Provide oversight of the 20 MA plans that have a disproportionate share of the risk-adjusted payments from chart reviews and HRAs;
  2. Take additional actions to determine the appropriateness of payments and medical care for the one company that substantially drove these payments;
  3. Perform periodic monitoring to identify MA plans that have a disproportionate share of these payments.

CMS neither concurred nor disagreed with the three recommendations, but stated that it would take them under consideration.

The OIG Report is linked here. Whatley Kallas, LLP’s article on OIG’s previous report documenting concerns with risk-adjusted payments to MA plans based solely on HRAs is linked here.

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