Despite criticisms over inaction, the HHS is aware of the flurry of fraud in the Medicare Advantage program that’s costing the government billions of dollars a year, and is thinking about how to curb it, department officials said at HLTH this week.
The HHS is currently reviewing public comments on how to improve MA, including strategies for paring back on fraud and abuse, and plans to make policies based on the evidence, HHS Secretary Xavier Becerra said Tuesday. That could include changing the risk adjustment formulas.
“There are some who say there’s been a racket going on where the industry is upcoding to get greater reimbursement from Medicare. Lots of folks have looked into this,” Becerra said. “We are in the process of getting public comment from folks and scrubbing those comments to take a look at that. But it’s one of those issues where we want to continue to improve the Medicare program.”
In MA, the government pays private insurers fixed rates to manage care for their members. Those rates increase as patients get sicker. As a result, payers are incentivized to code their patients at higher-acuity levels in a process called upcoding, resulting in skyrocketing spending in MA — a program originally designed to save the government money while improving the quality of Medicare services.
The CMS could reduce insurers’ rates in response to the overbilling, though the agency has yet to do so and even increased MA payments by 5% for 2023. In addition, a Trump administration regulation that would allow the CMS to extrapolate fines for overbilling to all of a plans’ customers has not yet been finalized.
Regulators have considered changing how they calculate patient risk and therefore reimbursement levels for providers, work that Becerra said the HHS is continuing.
“We’ll make sure the risk adjustment formulas take into account the actual care that’s being provided and pay for that care, not for care that wasn’t provided that costs more,” Becerra said.
Major insurers in the MA program have been sued for fraudulent coding, including UnitedHealth, Humana, Elevance and Kaiser Permanente. However, payers have continued to build out their MA offerings and invest into expanding their rolls in the program.
Estimates vary on how much money the additional diagnoses are costing the government. Congressional advisory group MedPAC estimates they led to $12 billion in overpayments in 2020, while another piece of research chalked the overpayments at $25 billion that year.
The fraud has contributed to rising worries about Medicare’s long-term solvency as America’s population skews increasingly older. Researchers and legislators have pinpointed MA reforms as one key area to curb unnecessary costs, with lawmakers in the House and Senate calling for increased oversight of the program over worries about the quality of coverage offered, among other concerns.
Most recently, Senate Democrats on Tuesday called for more consumer protections in MA, worried by misleading marketing practices around the plans.
“We got a very robust response, not only to that request for information, but also the conversations that have occurred after that,” Meena Seshamani, Medicare lead at the CMS, said Wednesday at HLTH.
Despite the program’s flaws, HHS leaders reiterated their backing for MA as a whole — especially as the program continues to grow. By 2023, the majority of Medicare seniors are expected to be in MA.
“We’ll see where we go,” Becerra said. But “we have to make sure that the taxpayers aren’t being overcharged for the service that we received.”