A health plan from Humana Inc. for seniors in Florida falsely raised nearly $ 200 million in 2015 by exaggerating how sick some patients were, according to a new federal audit, which is seeking to reclaim the money.
The health and human services Inspector General’s Office A refund recommendation, if finalized, would be “by far the largest” control fine ever imposed on a Medicare Advantage company, said Christopher Bresette, an assistant regional inspector general at HHS.
“This [money] must go back to the federal government, ”he said in an interview.
Humana sharply contested the findings of the audit, which was to be made public on Tuesday. A company spokesperson said Humana will work with Medicare officials “to resolve this assessment” and noted that the recommendations “do not represent final decisions, and Humana will have the right to appeal.”
Medicare Advantage, a fast-growing private alternative to original Medicare signed up more than 26 million people, according to America’s Health Insurance Plans, an industry association. Based in Louisville, Kentucky, Humana is one of the largest of these insurers, with approximately 4 million members.
While Medicare Advantage is popular with seniors, it has been the target of multiple governments to investigate, Ministry of Justice and whistleblower lawsuits and Medicare audits which concluded that some plans increased their government payments by exaggerating the severity of the diseases they treated. A 2020 report Estimated improper payments to the plans were more than $ 16 billion in the previous year.
But efforts to recover even a small fraction of the overpayments in recent years have stalled amid strong industry resistance to government control methods.
Now, the OIG is rolling out a series of audits that, for the first time, could hook health plans for reimbursing tens of millions of dollars or more on Medicare. The OIG plans to conduct five to seven similar audits within a year or two, officials said.
The Humana audit, conducted from February 2017 to August 2020, linked overpayments to medical conditions for which health plans are additionally paid for because they are expensive to treat, such as some cancers or diabetes with serious medical complications.
Auditors examined a random sample of 200 patients’ medical records to ensure that the patients had the illnesses for which the health plans were paid for, or that the conditions were as severe as claimed in the health plan.
For example, Medicare paid $ 244 a month, or $ 2,928 a year, for a patient reportedly suffering from serious complications from diabetes. But medical records Humana provided couldn’t confirm that diagnosis, meaning the health plan should have received $ 163 less per month for patient care, or $ 1,956 for the entire year, according to the audit.
Likewise, in 2015, Medicare paid $ 4,380 too much to treat a patient whose throat cancer had resolved, the audit said. In other cases, however, auditors said Medicare underpaid Humana thousands of dollars because the plan submitted incorrect billing codes.
Ultimately, auditors said Medicare Humana overpaid $ 249,279 for the 200 patients whose medical cards in the sample were scrutinized. Auditors used a technique called extrapolation to estimate the prevalence of such health plan billing errors.
“As a result, we estimate that Humana has received at least $ 197.7 million in net overpayments for 2015,” the audit said, adding that Humana’s policy to prevent these errors “was not always effective” and needs improvement.
According to the audit, the OIG notified Humana of its findings in September 2020. A final decision on how to collect the money rests with the Centers for Medicare & Medicaid Services, or CMS, which operates Medicare Advantage. Under federal law, the OIG is responsible for identifying waste and mismanagement in federal health care programs, but can only recommend reimbursement. CMS had no comment.
While controversial, extrapolation is often used in medical fraud investigations, except Medicare Advantage investigations. Since 2007, the industry has criticized the extrapolation method and, as a result, largely avoided accountability for ubiquitous billing errors.
Industry protests aside, OIG officials say they are confident that their improved audit tools will withstand scrutiny. “I believe what we have here is solid,” said OIG official Bresette.
Michael Geruso, an associate professor of economics at the University of Texas-Austin who has researched Medicare Advantage, said extrapolation “makes perfect sense” as long as it is based on a random sample.
“It appears this is a healthy step forward for the OIG to protect US taxpayers,” he said.
The OIG first used the extrapolation technique in February audit of Michigan’s Blue Cross and Blue Shield who uncovered $ 14.5 million in overpayments for 2015 and 2016. In response, Blue Cross said it would take steps to fix payment errors from other years and refund $ 14.5 million. Blue Cross spokesman Helen Stojic said the trial is “still pending.”
But Humana, with a lot more money at stake, is fighting back. Humana “is very proud of what the company believes is its industry-leading approach” to ensure correct billing, Sean O’Reilly, a vice president of the company, wrote in a December 2019 letter to the OIG that the control surprised.
O’Reilly wrote that Humana “has never received any feedback from CMS that its program is inadequate in any way.”
The nine-page letter states that the audit “reflects misunderstandings regarding certain statistical and actuarial principles and legal and regulatory requirements.” Demanding Humana to pay back the money ‘would be a serious departure from the legal requirements underlying the [Medicare Advantage] payment model, ”the company said.
Humana has persuaded the OIG to ditch about $ 65 million from its initial estimate of the overpaid. In 2015, Medicare paid the plan about $ 5.6 billion to treat about 485,000 members, mostly in South Florida.
Humana is not alone in rejecting audits.
AHIP, the industrial trade group, has a long history opposite extrapolation of payment errors, and in 2019 a CMS proposal to do it called “fatally flawed”. The group did not respond to requests for comment.
Health care adviser Richard Lieberman said insurers remain “strongly opposed” and are likely to go to court to try to evade potential multi-million dollar fines.
Lieberman noted that CMS has “hesitated” in deciding how to protect tax dollars, as Medicare Advantage plans have grown rapidly and cost taxpayers more than $ 200 billion a year. CMS says it has yet to be completed its own audits dates back to 2011, which are years overdue.
The dispute has remained largely invisible to patients, who are not directly affected by overpayments to the plans. Many seniors sign up because Medicare Advantage provides benefits not included in original Medicare and may cost them less out of pocket, although it limits their choice of doctors.
But some critics argue that inaccurate medical records pose the risk of improper treatment. Dr. Mario Baez, a Florida physician and whistleblower, seniors said “could be endangered because of false information in their medical records.”