Medicare Advantage Money Grab: More whistleblowers allege health plan overcharges

See the article series on the Center for Public Integrity 

Jim Swoben and I have been exchanging LinkedIn postings.  We agree that, where there is fraud involved, let the hammer fall. However, where this series of articles by Fred Schulte goes involves some expanded definition of what is fraud and what is appropriate risk revenue management. That is where we are going to disagree about this, as Jim and I have discussed. So let's first get our terms and definitions straight.

Fraud involves intentional and knowing extraction of funds to which you are not entitled, perhaps even through careless negligence as a responsible and accountable player. The series of articles that Fred Schultz publishes on the public integrity website accuse Medicare Advantage Organizations of committing this type of violation across a wide range of activities, some of which are bona fide fraud situations, and some of which are CMS-approved risk revenue management activities. I think it is important that we understand which are which.

If the allegations against Dr. Thompson in South Florida are true, he intentionally bilked the system by submitting fraudulent diagnoses. Assuming that is correct, we should all hope that the DOJ is successful in its prosecution.

But regarding an apples-to-apples comparison of the number of diagnoses codes submitted for similar patients under Medicare Advantage plan coverage versus under Original Medicare on a fee for service basis, we are dealing with a completely different situation. Indeed, the average number of diagnoses submitted on similar patients are very different for very understandable reasons, but not because of fraud.

Under fee for service, physician offices get paid based on procedure codes, so they work diligently to ensure that the optimal codes are reflected in their billings. But their payments are not affected by the diagnostic codes, so they stick with a very limited set of codes that minimally capture the diagnoses involved. In contrast, hospitals are paid with Diagnostic Related Groups (DRGs), which are entirely driven off diagnostic codes, and they code rigorously to ensure that they are paid appropriately based on the burden of illness involved. Likewise, Medicare Advantage Organizations are similarly compensated by CMS by scaling the premiums based on the burden of illness.

CMS requires Medicare Advantage Organizations to document and code using the universal requirement of the ICD-9-CM guidelines, which are reflected in the two examples below. Fee for service practices, however, are very lax about this kind of documentation and diagnostic code capture because it requires extra time and work for which they are not receiving any payment.

For example: a diabetic patient who comes in for a sore throat and is diagnosed with strep throat. Many offices will only use the strep diagnosis code, yet diabetes is still a current diagnosis, and one that surely was considered during treatment options as a part of the Medical Decision Making

Another example: a hypertensive patient with congestive heart failure (CHF) comes in to the office for follow up: many providers do not know that if the CHF and hypertension are related, they must state this, otherwise coders are left to only code them as separate diagnoses. CHF alone and HTN alone may “risk adjust” in models, but “Hypertensive Heart Disease” is more serious.

So to say that Medicare Advantage Organizations are "over-charging" for these is to say that, except where their is fraud involved, the health plans are doing the required documentation and coding required by CMS under their contracts. They are required to ensure that documentation is fully adequate, and where it is not, to submit deletions from their payment requests (called "looking both ways").

The acid test is to take sample medical charts for random patients in care under a fee for service basis and comparable patients on a Medicare Advantage program. Then there should be a comparison of the ICD-9 codes submitted via claims over the previous year to establish accuracy levels. Let's see what the validation rates are for these ICD-9 codes and compare.  Let's also compare the level of specificity as required by the ICD-9 guidelines, which are supposed to be followed irrespective of whether the patient is under a fee for service program or a Medicare Advantage program.  I think we would have a much better picture of relative accuracy. 

Indeed, if you know that Johnny is 5 ft. two inches and that Billy is exactly 5 ft. tall, you cannot say that Johnny is tall.  If they are both 35 years old, Johnny may be taller than Billy, but both are short relative to population averages for men in the U.S.  Accordingly, to employ this analogy for risk adjustment coding purposes, both fall short of fully accurate diagnostic capture.  If we are going to leverage the diagnostic codes also for population health management purposes, we are going to need a better standard for robust diagnostic code capture.  One thing is completely clear, however, fee for service diagnostic coding levels are NOT the gold standard.  

Categories: Risk Adjustment
Tags: DOJ, Center for Public Integrity

Log on to Your Rise Account

Forgot your password?
Create an Account


Latest Posts

CMS Gives EDPS Transition Some Breathing Room

CMS published the final call letter for 2018 yesterday, April 3, which included a welcome accouncement regarding the transition from RAPS to EDPS-based RAF scores. Citing numerous public comments on the subject, CMS throttled back the speed with which they plan to switch over to an encounter-based methodology. Instead of the blended rates originally contemplated, they announced that the more modest blend of 85% RAPS to 15% EDPS would be used in 2018, allowing more time to improve the reliability of the encounter data methods. While the RISE data collaboration study was not cited, we believe that the educational value of our study, along with our communication and advocacy of a more moderate approach by CMS, contributed to the confidence with which plans and other interested parties spoke up during the open comment period. Once again, we owe thanks to the folks at Avalere and Inovalon, as well as at AHIP, for the collegial and professional collaboration. Also, we want to thank the health plans that actively participated in our study for making this work possible. ...
Read More

Take Aways from RISE Nashville Summit

The 11th Annual RISE Nashville Summit continued the event’s tradition of yearly growth. The return to downtown Nashville was widely applauded by attendees, who were glad to be back near Broadway’s nighttime funk and fun. While festive, this year's event occurred in the wake of the new administration in Washington, D.C., and the healthcare themes surrounding the "repeal and replace" of the Affordable Care Act (ACA) cast a long shadow. In contrast to the upbeat, confident notes struck by last year’s keynote speaker Senator Tom Daschle, this year’s sobering keynote address by Howard Fineman, NBC/MSNBC political analyst, The Huffington Post Media Group global editorial director, and bestselling author, was an assessment of the pluses and minuses of our new president. Mr. Fineman's remarks indicated that the political alliances in power will seek to undo what Senator Daschle viewed as "irreversible” a year ago....
Read More

Upcoming Conference


Qualipalooza: The 2nd Annual RISE Quality Leadership Summit 

This unique event incorporates three conferences presented side-by-side: the Star Ratings Strategic Planning Forum, the HEDIS Forum, and the CAHPS, HOS & Member Survey Forum. Register for one conference for an in-depth examination of a single area, or design your own event by opting for the all-access pass and choosing the sessions from each conference which correspond exactly to your interests.


Upcoming Webinar

The Impact of Quality Incentive Models in Medicaid Markets


Thirty-one of our fifty states now have Medicaid managed care, and several markets are expected to implement managed care in the next few years. More than $160B in Medicaid spending occurs through the Managed Care Organizations. As more and more states seek to do more with less, increasing accountability for health quality outcomes is placed on health plans. Join this webinar to learn the typical quality payment approaches states use, issues often faced by health plans under each model and what states are expected to do with payment models tied to quality performance in light of near term Medicaid reform efforts.


Connect With Us

Copyright © 2014 Resource Initiative & Society for Education. All rights reserved.