OIG audit finds millions in MA overpayments for one company over 2 years

Photo: Kiyoshi Hijiki/Getty Images

A recent audit by the Office of the Inspector General found that a sampled Medicare Advantage organization did not comply with federal requirements for the program.

The OIG reviewed one MA organization, MediGold, and focused on seven groups of high-risk diagnosis codes submitted to the Centers for Medicare and Medicaid Services for use in CMS's risk adjustment program.

Most of the selected diagnosis codes that MediGold submitted to CMS did not comply with federal requirements, the OIG said. Specifically, for 189 of the 210 sampled enrollee-years, the medical records that MediGold provided did not support the diagnosis codes and resulted in $469,907 in net overpayments. 

On the basis of its sample results, the OIG estimated that MediGold received at least $3.7 million of net overpayments for 2017 and 2018. 

WHY THIS MATTERS

Under the Medicare Advantage program, the Centers for Medicare and Medicaid Services makes monthly payments to MA organizations according to risk adjustment based on the health status of each enrollee. MA organizations are paid more for providing benefits to enrollees with diagnoses associated with more intensive use of healthcare resources than to healthier enrollees.

To determine the health status of enrollees, CMS relies on MA organizations to collect diagnosis codes from their providers and submit them to CMS. Some diagnoses are at higher risk for being miscoded, which may result in overpayments, OIG said.

For MediGold, CMS selected a stratified random sample of 210 unique enrollee-years with the high-risk diagnosis codes for which the MA insurer received higher payments for 2017 through 2018. For 189 of the 210 sampled enrollee-years, the medical records that MediGold provided did not support the diagnosis codes and resulted in $469,907 in net overpayments, the OIG said.

The OIG recommended MediGold:

• refund to the government the $2.2 million of estimated net overpayments. 
• identify, for the high-risk diagnoses included in this report, similar instances of noncompliance that occurred before and after the audit period and refund any resulting overpayments.
• continue its examination of its existing compliance procedures to identify areas where improvements could be made to ensure that diagnosis codes that are at high risk for being miscoded comply and take the necessary steps to enhance those procedures.

MediGold disagreed with some of the OIG findings and requested that it withdraw all of its recommendations. Specifically, MediGold did not agree with findings for 30 of the 194 enrollee-years in error identified in the draft report, and it provided additional information for consideration. 

MediGold did not directly agree or disagree with findings for the remaining 164 enrollee-years. 

MediGold did not agree with the audit methodology, use of extrapolation, standards for data accuracy and the medical record review process.

After reviewing MediGold's comments and the additional information MediGold provided, the OIG reduced the number of enrollee-years in error and revised the amount in the first recommendation. The OIG maintains that its second and third recommendations remain valid.

Because of federal regulations that limit the use of extrapolation in Risk Adjustment Data Validation audits for recovery purposes to payment years 2018 and forward, the OIG is recommending a refund of $2.2 million in net overpayments ($224,001 for the sampled enrollee-years from 2017 and an estimated $2 million for 2018).

THE LARGER TREND

Federal audits released in late 2022 show widespread overcharges and other errors in payments to Medicare Advantage health plans for seniors, with some plans overbilling the government more than $1,000, per patient, per year, on average, according to Kaiser Health News.

In 2023, University of Southern California Schaeffer Center for Health Policy and Economics research estimated that overpayments in MA could be at least $75 billion.

Earlier this year, CMS finalized an updated Part C Risk Adjustment Model in the CY 2024 Rate Announcement, and began a three-year phase-in of the use of that model, starting this year. For 2025, CMS is proposing to continue phasing in the updated risk adjustment model. 
 

Email the writer: SMorse@himss.org