OIG report questions $6.7B in ‘inflated’ MA payments to health insurers

A federal watchdog agency is raising concerns that health insurers that sell Medicare Advantage plans are using chart reviews to make seniors appear sicker than they are in order to inflate risk adjustment payments they receive from the program. 

The practice is estimated to have cost the federal government $6.7 billion in improper Medicare Advantage payments in 2017, according to a new report by the Office of Inspector General. 

“Our findings highlight potential issues about the extent to which chart reviews are leveraged by [Medicare Advantage organizations] and overseen by [the Centers for Medicare & Medicaid Services,” the agency wrote.

The report found that insurers “almost always” used chart reviews as a tool to add — rather than delete — diagnoses in more than 99% of chart reviews. 

CMS requires diagnoses to be documented in the medical record as a result of a face-to-face physician visit in order for it to be eligible for risk adjustment, the report explained. 

CMS, however, doesn’t require insurers to link the chart reviews with a to a specific service, which allows them “opportunities to circumvent CMS’ face-to-face requirement and inflate risk adjustment payments inappropriately.” The agency analyzed 2016 MA encounter data for diagnoses that were reported on just chart reviews and not on any services record for the study. 

“CMS based an estimated $2.7 billion in risk adjusted payments on chart review diagnoses that MAOs did not link to a specific service provided to the beneficiary-much less a face to-face visit. Although limited to a small number of beneficiaries, almost half of MAOs reviewed had payments from unlinked chart reviews where there was not a single record of a service being provided to the beneficiary in all of 2016,” the report stated.

The OIG recommended that CMS provide targeted oversight on insurers that received risk-adjusted payments based on unlinked chart reviews in 2016, conduct additional audits to validate diagnoses and reassess it chart review policies. CMS agreed with each of the recommendations.