- Federal regulators are auditing Medicare Advantage plans sold by CVS Health's payer arm Aetna as the government continues to crack down on inaccurate or fraudulent risk-adjustment scores in the program.
- In a financial filing with the Securities and Exchange Commission on Wednesday, CVS disclosed HHS' Office of the Inspector General was looking at its MA business, amid a slew of recent whistleblower lawsuits and audits finding improper practices in the program. Currently, Aetna covers more than 2.9 million beneficiaries in its MA plans.
- CVS contends the reviews are a regular part of doing business in federal programs and said it "expects CMS and the OIG to continue these types of audits."
The federal government regularly audits health plans to ensure they comply with CMS regulations and aren't gaming the system to secure higher payments. CMS pays plans on a per-member basis, then adjusts payments based on the acuity or severity of their member's health status, as supported by provider data like diagnostic codes.
Typically, the sicker a member is, the higher the plan's reimbursement.
But as MA plans have grown to now cover more than 40% of all Medicare beneficiaries, so too has fraud and abuse. A 2020 OIG report found that MA paid $2.6 billion a year for diagnoses unrelated to any clinical services.
That's resulted in the government stepping up its efforts to review and audit providers' medical records to make sure they support the diagnostic codes that determine patients' health status — and the resulting risk-adjusted premium payments to insurers.
Roughly a year ago, following a whistleblower complaint, the Department of Justice sued Cigna, alleging it falsified its MA members' health statuses to nab an extra $1.4 billion in overpayments from CMS. Similarly, in April an OIG audit led the government to find Humana had overcharged CMS by almost $200 million using inaccurate documentation.
Anthem, the second-largest private insurer in the U.S., has also come under fire. The Indianapolis-based payer was sued by the DOJ early last year for allegedly failing to correct inaccurate diagnosis codes, a practice that resulted in at least $100 million in overpayments. Then in late May, an OIG audit said Anthem allegedly received another $3.4 million in overpayments using the same practice.
And just Monday, the DOJ joined six whistleblower lawsuits against integrated system Kaiser Permanente alleging Kaiser submitted inaccurate diagnosis codes to receive higher reimbursement in MA.
In the filing, CVS noted it may also have to refund premium payments if its risk-adjustment payments aren't supported by medical record data.
Regulators tweaked their MA audit methodology in 2012. Among other changes, CMS now extrapolates error in risk-adjusted payments from a sample of about 200 members to all payments made under the contract being audited.
Insurers have argued against this methodology, saying that method of analysis is actuarily unsound given the small sample size. However, OIG has previously said it would be unrealistic to review every single claim.
Medicare Advantage is a key strategic area for CVS, as government products continue to drive growth for the payer. The business topped internal expectations in the second quarter, swelling membership about 10% year over year, CFO Shawn Guertin told investors on a Wednesday call, helping spur the Woonsocket, Rhode Island-based healthcare behemoth to overall revenue of $72.6 billion in the quarter.
Aetna is the fourth-largest MA insurer by enrollment, trailing UnitedHealthcare (with 27% of the market), Humana (18%) and Blue Cross Blue Shield plans (14%), according to the Kaiser Family Foundation.