OIG: CMS overpaid Anthem $3.4 million in Medicare Advantage payments

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The Department of Health and Human Services' Office of the Inspector General has found that the Centers for Medicare and Medicaid Services overpaid Anthem roughly $3.4 million because the insurer allegedly failed to comply with certain federal coding requirements.

In conducting an audit of the Medicare Advantage organization, OIG focused on seven groups of high-risk diagnosis codes. The objective was to determine whether selected diagnosis codes that Anthem submitted for use in CMS's risk adjustment program complied with federal requirements.

The OIG sampled 203 unique enrollee-years with the high-risk diagnosis codes for which Anthem received higher payments for 2015 through 2016. The agency limited the review to the portions of the payments that were associated with those codes, which totaled $599,842.

When looking at the seven high-risk groups covered by the audit, most of the selected diagnosis codes that Anthem submitted to CMS for use in the latter's risk adjustment program did not comply with the federal requirements. For 123 of the 203 enrollee-years, the diagnosis codes that Anthem submitted to CMS were not supported in the medical records and resulted in $354,016 of net overpayments for the 203 enrollee-years.

These errors occurred, OIG said, because the policies and procedures that Anthem had to detect and correct noncompliance were not always effective. Based on the sample results, OIG estimated that Anthem received at least $3.47 million of net overpayments for these high-risk diagnosis codes in 2015 and 2016.

WHAT'S THE IMPACT?

Under the Medicare Advantage program, CMS makes monthly payments to MA organizations according to a system of risk adjustment that depends on the health status of each enrollee. Accordingly, MA organizations are paid more for providing benefits to enrollees with diagnoses associated with more intensive use of healthcare resources than to healthier enrollees who would be expected to require fewer resources.

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

The OIG recommended that Anthem refund the $3.47 million in overpayments to the federal government, and identify any similar instances of noncompliance that occurred before or after the audit period. The agency also wants the insurer to enhance its compliance procedures to focus on diagnosis codes that are at high risk of being miscoded.

Anthem, for its part, disagreed with OIG's finding and recommendations, questioning the methodology and whether federal requirements were properly executed. Anthem also said the report reflected misunderstandings of the legal and regulatory requirements underlying the MA program.

THE LARGER TREND

Insurers are doing well in the Medicare Advantage market, and consumers also like the plans that come with additional benefits to original Medicare. A Medicare Advantage study published in December found that more consumers chose MA plans for 2021 due to the plans' supplemental benefits, including those for telehealth and COVID-19.

This is no surprise, as private plans have pushed the supplemental benefits of their MA plans through television and other advertising, including numerous mailings, in a way CMS does not do for traditional Medicare.

Of those who decided on an MA plan because of supplemental benefits, 35% cited COVID-19 supplemental benefits specifically, while 27% cited telehealth benefits, the report said.

In a Morning Consult poll, beneficiaries reported near universal satisfaction with Medicare Advantage's coverage and provider networks, the latter being the oft-cited drawback of the plans, which have been compared to the narrow-network HMO plans of the 1980s.

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com