Report: Correcting Medicare Advantage overpayments could save billions

Correcting overpayments in the Medicare Advantage program could save the federal government billions of dollars, according to a new Government Accountability Office report.

A coding difference between the privately run Medicare Advantage (MA) program and the traditional fee-for-service (FFS) Medicare program has resulted in MA beneficiaries being classified as sicker than if they were under traditional Medicare, according to the report, which was requested by House Democrats. The report found that MA plans were overpaid by $1.2 billion to $3.1 billion in 2010.

Like FFS Medicare, MA plans cover skilled nursing facility stays following acute episodes and other post-acute care. MA also includes special needs plans (SNPs) for chronically ill and disabled individuals, such as dual eligibles. Democrats have targeted MA overpayments as a means of cutting waste, although the Obama administration gave the program help last year due to Affordable Care Act cuts.

The GAO recommended that the Centers for Medicare & Medicaid Services improve the accuracy of its risk score adjustments by “incorporating adjustments for additional beneficiary characteristics, using the most current data available, accounting for all relevant years of coding differences, and incorporating the effect of coding difference trends.”