An in-depth report by the Wall Street Journal reveals that Medicare Advantage (MA) insurers were paid $50 billion from 2018 to 2021 for thousands of questionable diagnoses. The newspaper analyzed billions of Medicare records and discovered in some cases patients never received subsequent care for their supposed diagnoses and, in others, doctors say patients couldn’t possibly have the condition.
The bombshell report revealed that many of the diagnoses that insurers added to patients’ medical records were for conditions in which patients received no treatment. Medicare will pay more to insurers for certain conditions. One example cited in the report was for diabetic cataracts. UnitedHealth members were 15 times as likely to have the diagnoses listed in their medical record compared to the average patient in traditional Medicare. Eye doctors told WSJ that they doubt that so many patients from one insurer could have the rare disease. In total, the investigation found that 66,000 patients were diagnosed with diabetic cataracts even though they had previously undergone cataract surgery. Cataracts do not return after the damaged lens is removed and replaced by a plastic insert. Another 36,000 members didn’t receive services or prescription medicine for diabetes.
The investigative team from WSJ examined Medicare data under a research agreement with the federal government. Patient names were not included but the data offered details of patient visits to doctors, hospitals, and prescriptions. The team focused on claims that they concluded were for high-risk diagnoses that were added by insurers to the medical records after a doctor’s visit or sending medical workers to conduct home assessments.
According to the analysis, UnitedHeath was paid $8.7 billion in 2021 for the insurer-added diagnoses.
But AHIP, a national trade association that represents the health insurance industry, says the WSJ paints a flawed, incomplete, and outdated picture of MA chart reviews and health risk assessments.
One problem is the 2018-2021 time period covered in the article predates significant reforms that the Centers for Medicare & Medicaid Services (CMS) have made to MA risk adjustments and audits, AHIP said. CMS implemented a new risk adjustment model in 2024 that limits risk adjustment payments for several diagnoses that the agency determined were more prevalent in the MA program. Services for diabetic cataracts will be paid less or nothing extra under the new model, AHIP said. The association also pointed out that in 2023, CMS finalized a new risk adjustment data validation model that overhauls the oversight of diagnoses submitted for risk adjustment purposes. Read the entire AHIP statement here.
However, lawmakers and federal watchdog groups have had MA under the microscope for improper practices. Inspector General Christi A Grimm told attendees at RISE National 2023 that of the 17 audits the Office of Inspector General conducted since 2019, there was no support for nearly 69 percent of diagnoses used for risk adjustment, which led to over $100 million in overpayments to MA plans. Risk adjustment is designed to pay plans more to care for sicker patients, but the program has had few ways to effectively assess whether plans are legitimately caring for a sicker population or are just upcoding diagnoses, she said.
“OIG’s audit work has demonstrated that some of the largest insurance companies and their plans across different markets have consistently received risk adjustment overpayments,” Grimm said. “CMS, GAO, and others have identified similar patterns, highlighting concern about the integrity of risk adjustment payments… We understand how important risk adjustment is to the overall success of the program. With billions of dollars in risk adjustment payments each year, it is mission critical work for us to ensure these payments are accurate both for the program and for the wellness of beneficiaries.”