AMARILLO, TX – Medicare Advantage fraud has become a significant concern in the U.S. healthcare system. Private insurance companies administering Medicare Advantage (MA) plans are accused of exploiting the system through overbilling, inflating diagnoses, and unlawfully denying necessary care to patients. These fraudulent practices cost taxpayers billions and jeopardize the quality of care for Medicare beneficiaries.
Background on Medicare Advantage
Medicare Advantage, also known as Medicare Part C, is a program where private insurers offer Medicare benefits as an alternative to traditional Medicare. These plans cover over 33 million seniors and disabled people in the U.S., constituting over half of all Medicare beneficiaries. MA plans appeal to seniors as they often provide additional benefits like vision, dental, and hearing services, with lower out-of-pocket costs than traditional Medicare.
However, Medicare Advantage has increasingly been criticized for waste, fraud, and abuse. A key issue lies in how the government reimburses these private insurers. Insurers receive payments based on the “risk score,” which is supposed to ensure higher payments for sicker patients who require more expensive care. This system has been widely manipulated, with insurers inflating patients’ risk scores by exaggerating diagnoses to receive higher payments from the government.
Overbilling and Risk Adjustment Fraud
One of the most prominent fraud cases involves UnitedHealth Group, the largest Medicare Advantage provider. The U.S. Justice Department (DOJ) alleged that the insurer overcharged the government by more than $1 billion through an arrangement that involved manipulating patient records to make patients appear sicker than they were. According to the DOJ, this led to inflated risk scores and higher payments from Medicare, without corresponding increases in care quality or patient outcomes.
Whistleblowers have played a crucial role in exposing these fraudulent activities. Multiple lawsuits filed under the False Claims Act have alleged that insurers, including UnitedHealth, knowingly submitted false data to Medicare to maximize profits. These cases revealed that the company often failed to report unsupported diagnoses and ignored findings from its audits that showed errors in risk scoring. For example, a federal audit found that nearly half of the diagnoses at one UnitedHealth plan were invalid, leading to substantial overpayments to the insurer.
Despite these revelations, the Centers for Medicare & Medicaid Services (CMS) has been criticized for failing to take aggressive action to recover these overpayments. Even though audits conducted between 2011 and 2015 identified significant issues, CMS needs to be faster to finalize the results and recoup funds. The agency’s reluctance to crack down on these fraudulent practices has been attributed to concerns over the potential disruption to care for millions of seniors enrolled in Medicare Advantage plans.
Office of Inspector General Review
In April 2022, the Office of Inspector General (OIG) published its review called “Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care.” In this review, the OIG looked into a random sample of 250 denials of prior authorization requests and 250 payment denials issued by 15 of the largest Medicare Advantage Organizations (MAO) during June 1-7, 2019.
Based on its review the OIG found that thirteen percent of prior authorization denials were for service requests that met Medicare coverage rules, likely preventing or delaying medically necessary care for Medicare Advantage beneficiaries, and eighteen percent of payment denials were for claims that met Medicare coverage rules and MAO billing rules, which delayed or prevented payments for services that providers had already delivered. Imaging services, stays in post-acute facilities, and injections were three prominent service types among the denials that met Medicare coverage rules, and MAOs reversed some initial prior authorization denials and payment denials for requests that met Medicare coverage rules and MAO billing rules.
Based on this review, the OIG recommended that CMS (1) issue new guidance on the appropriate use of MAO clinical criteria in medical necessity reviews, (2) update its audit protocols to address the issues identified in the report, such as MAO use of clinical criteria, and/or examine particular service types, and (3) direct MAOs to take additional steps to identify and address vulnerabilities that can lead to manual review errors and system errors.
The OIG performed an additional review that was published early 2023 titled “The Inability To Identify Denied Claims in Medicare Advantage Hinders Fraud Oversight.” This review revealed that the current systems and processes fail to accurately identify denied claims within Medicare Advantage plans, significantly impairing efforts to detect and prevent fraud. This inability poses a substantial challenge to effective fraud oversight within the program, undermining its ability to ensure proper utilization of funds and protect beneficiaries from fraudulent practices. Addressing this issue is crucial for improving the integrity and efficiency of Medicare Advantage operations.
Political Influence and Lobbying
The Medicare Advantage industry wields considerable political power, which has made it difficult for regulators to implement reforms. Insurers have successfully lobbied against efforts to tighten oversight and enlisted seniors to oppose proposed cuts to Medicare Advantage benefits. Groups like the Better Medicare Alliance, which advocates for MA plans, have spent millions on advertising and lobbying campaigns to protect their interests.
For instance, the Better Medicare Alliance ran a Super Bowl ad in 2023 warning that cuts to Medicare Advantage would harm seniors, portraying any reduction in payments as an attack on the vulnerable elderly population. This type of messaging, coupled with extensive lobbying, has effectively stymied efforts to impose stricter regulations on the industry.
Key lawmakers, including Senators Elizabeth Warren and Pramila Jayapal, have also called for more rigorous oversight of the Medicare Advantage program. In a letter sent to CMS in 2023, they highlighted private insurers’ wasteful spending and unlawful denials of care. They asked for CMS to (1) address perverse incentives in MA’s payment system, including favorable selection and risk code gaming, (2) reform the flawed Quality Bonus Program, and (3) crackdown on private insurers that unlawfully deny care. According to the lawmakers, taking these steps would save hundreds of billions of taxpayer dollars, ensure the sustainability of Medicare, and improve the health outcomes for Medicare enrollees.
Conclusion
Medicare Advantage fraud is a multifaceted issue involving the manipulation of risk scores and significant political lobbying to maintain the status quo. The program’s growth and insurers’ resulting political power have made it difficult to enact meaningful reforms. As a result, taxpayers continue to lose billions of dollars yearly to overpayments, and seniors risk receiving substandard care due to insurers’ focus on profits over patient health.
The challenge moving forward will be balancing the protection of Medicare beneficiaries while ensuring that private insurers are held accountable for their fraudulent practices. Stricter CMS audits, stronger whistleblower protections, and more aggressive prosecution of fraudulent claims will be necessary to restore integrity to the Medicare Advantage program.
While the Medicare Advantage program offers valuable benefits to seniors, systemic reform is critical to address the widespread fraud that undermines Medicare’s financial sustainability, and the quality of care provided to beneficiaries.
Jeffrey Baird, Esq., is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Texas with a national healthcare practice. He represents pharmacies, infusion companies, HME companies, manufacturers, and other healthcare providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or [email protected].
Jacque Steelman, Esq. is a member of the Health Care Group at Brown & Fortunato, PC, a law firm with a national healthcare practice based in Texas. She represents pharmacies, infusion companies, HME companies, manufacturers, and other healthcare providers throughout the United States. Ms. Steelman can be reached at (972) 684-5789 or [email protected].
AAHOMECARE’S EDUCATIONAL WEBINAR
Billing Nonassigned: Steps to Replace Lost Income
Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato & Noel Neil, ACU-Serve
Tuesday, October 15, 2024
1:30-2:30 p.m. CENTRAL TIME
DME suppliers, like other health care providers, are being squeezed by traditional Medicare and Medicare Advantage (“MA”). In the traditional Medicare space, an example of this is the loss by DME suppliers of the 75/25 blended rates. To offset, at least in part, the decrease in reimbursement from traditional Medicare, DME suppliers should look seriously at billing traditional Medicare beneficiaries on a nonassigned basis. The movement to billing nonassigned is aided by the willingness of aging Baby Boomers to pay cash for “Cadillac” products, as opposed to being relegated to accepting “Cavalier” products when the DME supplier takes Medicare assignment. Billing nonassigned means that the Medicare beneficiary pays cash up front to the DME supplier and is directly reimbursed by Medicare. This program will discuss the multiple issues arising out of billing on a nonassigned basis, including the following: (i) What does it mean to bill non-assigned? (ii) If the supplier bills an item nonassigned, can the supplier set the price without limitation? (iii) Must the supplier submit a claim to Medicare so that the beneficiary can be reimbursed? (iv) Can the supplier sell a capped rental item for cash? (v) Does the supplier need to obtain documentation supporting medical necessity? (vi) Is the supplier at risk of having to repay Medicare and/or the beneficiary in the event of a subsequent audit?
Register for Billing Nonassigned: Steps to Replace Lost Income on Tuesday, October 15, 2024, 1:30-2:30 p.m. CT, with Jeffrey S. Baird, Esq. and Noel Neil.
Members: $99
Non-Members: $129
