MA 'honor system' prone to abuse, report finds

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Grassley says MA's honor system is "worrisome"
Grassley says MA's honor system is "worrisome"

A lack of auditing by the Centers for Medicare & Medicaid Services has left the Medicare Advantage program open to overbilling and abuse, a new report from the Center for Public Integrity alleged.

The report found that CMS elected to complete 30 audits on Medicare Advantage plans each year, despite having the staff and resources to do as many as 80. The first round of Medicare Advantage audits was expected to be completed in 2014, but have yet to be finished, the report found.

Audits on 37 Medicare Advantage plans conducted in 2007 were originally predicted to collect $500 million and $800 million for CMS, but only managed to recoup less than $14 million. Another audit scrutinized in the report found an error rate that was more than 10% higher than average in 2005. The audit's finding projected overpayments to Medicare Advantage plans to reach $4.2 billion.

Overpayments to Medicare Advantage plans — estimated to be in the billions for recent years — are largely due to the system of risk scores used to calculate reimbursements, according to the the report. Many believe some risk scores have been purposely inflated to boost reimbursements.

The risk score system has few abuse safeguards in place, resulting in what one CMS memo described to be an “honor system.”

The government's seemingly relaxed take on Medicare Advantage audits is “worrisome,” Senator Chuck Grassley (R-IA) said in a statement to the Center for Public Integrity.

"The agencies are responsible for getting the payments right in the first place and pursuing full refunds of all overpayments for the taxpayers," Grassley said. “This is a multi-billion-dollar government program, not the office coffee kitty. CMS, [Department of Justice] and Congress have to get it right.”

In a statement to the Center for Public Integrity, a spokesman for CMS said the agency “takes seriously program integrity and payment accuracy in Medicare Advantage, and is taking steps to protect taxpayers, Medicare beneficiaries and the Medicare program.”