OIG claims Humana overcharged Medicare by almost $108 million

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A new audit from Health and Human Services' Office of the Inspector General alleges that a Humana health plan for Florida seniors improperly collected almost $198 million in 2015 by failing to comply with some federal coding requirements and overstating how sick some of its patients were.

OIG found that Humana did not submit some diagnosis codes to the Centers for Medicare and Medicaid Services for use in the risk adjustment program in accordance with federal requirements. Although most of the diagnosis codes that Humana submitted were supported in the medical records – resulting in validation of 1,322 of the 1,525 sampled enrollees' Hierarchical Condition Categories (HCCs) – the remaining 203 HCCs were not validated, resulting in overpayments.

There were also 15 HCCs for which the medical records supported diagnosis codes that Humana should have submitted to CMS but did not, according to OIG.

Because of that, OIG alleges that the risk scores for the 200 sampled enrollees should have been based on 1,359 HCCs, not the 1,525 that were initially submitted. This, the agency claimed, is the source of the approximately $197.7 million in overpayments for 2015.

"These errors occurred because Humana's policies and procedures to prevent, detect and correct noncompliance with CMS's program requirements, as mandated by federal regulations, were not always effective," the OIG said.

The agency recommended that Humana refund the overpayments to the federal government and enhance its policies to prevent, detect and correct noncompliance for diagnosis codes that are used to calculate risk-adjusted payments.

HUMANA'S RESPONSE

Humana disagreed with the findings and with OIG's recommendations. The insurer provided additional medical record documentation which, Humana said, substantiated specific HCCs. Humana also questioned the audit and statistical sampling methodologies, and said the report reflected misunderstandings of legal and regulatory requirements underlying the MA program.

"While we are continuing to review the HHS OIG report, the report does not account for many of the substantive concerns Humana has consistently raised with HHS about RADV methodology," Humana spokesperson Mark Mathis told Healthcare Finance News on Tuesday. 

"OIG's methodology is inconsistent with statistical and actuarial principles," he said. "It fails to maintain actuarial equivalence with the Medicare FFS program as required by the Social Security Act. These concerns are closely aligned with the comments Humana submitted to CMS in connection with the agency's Proposed Rule regarding the CMS RADV audit process, which has been pending since 2019."

Mathis added that Humana has a comprehensive approach to Medicare risk-adjustment compliance, and will work with CMS and OIG to resolve the review.

"As the report acknowledges, the recommendations do not represent final determinations, and Humana will have the right to appeal if CMS does determine an overpayment exists," said Mathis.

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. CMS then maps certain diagnosis codes, on the basis of similar clinical characteristics, severity and cost implications, into HCCs. CMS makes higher payments for enrollees who receive diagnoses that map to HCCs.

A private alternative to original Medicare, MA has enrolled more than 26 million people to date, according to industry trade group America's Health Insurance Plans. With about four million members, Humana is among the largest insurers in the country.

THE LARGER TREND

Humana ended 2020 on a down note, posting a record net loss of $274 million in the fourth quarter, financial documents show. First quarter results for 2021 are expected soon.

Medicare Advantage, meanwhile, is popular with seniors, but has been the target of government investigations, whistleblower lawsuits and Medicare audits claiming that some plans boosted their payments by exaggerating the severity of illnesses treated. An OIG report from 2020 found that improper payments to MA plans topped $16 billion in 2019.

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