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Increasing Medicare Advantage audits, lawsuits a troubling trend, but also a CDI and coding opportunity

By Brian Murphy

The past year and in particular the last few weeks have seen an alarming uptick in the number of Medicare Advantage plans under scrutiny. The Office of Inspector General (OIG) is taking a close look at how these plans, which include the likes of insurance giants Aetna, Humana, and Anthem, are collecting and submitting data used for risk-adjusted payments.

Medicare Advantage is popular and growing alternative to traditional Medicare, with many plans offering a robust package of benefits. Today it covers some 29 million Americans, or 45% of Medicare-eligible patients. By 2025, Medicare Advantage plans are expected to account for half of total Medicare enrollment, some 35 million beneficiaries, according to the Congressional Budget Office.

But that growth has come with a cost: Although these plans tout better quality and cost control, the likes of the independent Kaiser Family Foundation determined that Medicare Advantage members cost CMS $321 more per person than those enrolled in traditional Medicare, or an additional $7 billion in spending.

That ballooning cost has brought with it increased scrutiny, not just for Medicare Advantage plans but participating hospitals and healthcare organizations. Following is a non-exhaustive list of news items I’ve been keeping. 

It’s long, so buckle up.

Medicare Advantage under scrutiny

Last month The Washington Post published Beat cancer? Your Medicare Advantage plan might still be billing for it. Firms mined patient records for outdated, irrelevant conditions to increase profits, Justice Department contends.

The article describes a Qui Tam (i.e., whistleblower reporting fraud perpetrated against the federal government) civil lawsuit filed by medical records auditor Kathy Ormsby against the Palo Alto Medical Foundation, which has 1,600 doctors, and its parent affiliate, 24-hospital Sutter Health. The suit resulted in a settlement with the government in August 2021 for $90 million, although Palo Alto and Sutter denied wrongdoing or liability.

From the article:

Palo Alto Medical Foundation, which has 1,600 doctors, and its parent affiliate, Sutter Health, which runs 24 hospitals in Northern California, settled the case with the government in August 2021 for $90 million. It admitted no wrongdoing or liability.

The government said its investigation confirmed that Palo Alto Medical and Sutter systematically added false diagnoses to patient records. In a sample of hundreds of cases Ormsby audited, the government’s lawsuit said, she discovered 90 percent of diagnoses for cancer were invalid, as were 96 percent for stroke and 66 percent for fractures.

“As we continued to audit, I started to see more things,” Ormsby said in an interview with The Washington Post, the only time she has spoken publicly since reporting the alleged misconduct in 2015. “I couldn’t believe how bad it was.”

An article published by The Washington Post is naturally going to garner widespread attention, and it caught mine, but it’s only the tip of a larger iceberg. Other recent headlines point to a widespread, systemic issue:

Kaiser Permanente is now under the spotlight, with the OIG joining six whistleblowers in a case alleging that the Kaiser Permanente consortium members (collectively Kaiser), submitted inaccurate diagnosis codes to receive higher MA reimbursements. A statement issued by the Department of Justice stated that:

In order to increase its Medicare reimbursements, Kaiser allegedly pressured its physicians to create addenda to medical records after the patient encounter, often months or over a year later, to add risk-adjusting diagnoses that patients did not actually have and/or were not actually considered or addressed during the encounter, in violation of Medicare requirements.    

Kaiser has come out with a statement disputing those claims, stating in part:

Our medical record documentation and risk adjustment diagnosis data submitted to the Centers for Medicare & Medicaid Services comply with applicable laws and Medicare Advantage program requirements. Our policies and practices represent well-reasoned and good-faith interpretations of sometimes vague and incomplete guidance from CMS. For nearly a decade, Kaiser Permanente has achieved consistently strong performance on Risk Adjustment Data Validation audits conducted by CMS. With such a strong track record with CMS, we are disappointed the Department of Justice would pursue this path.  

Risk adjustment has been on the radar of CMS and the OIG for some time. CMS estimates that 9.5% of payments to MA organizations are improper, mainly due to unsupported diagnoses submitted by MA organizations. This issue made it on to the OIG Work Plan in Nov. 2019, and we are seeing the results of these audits rolling out now. 

In September 2021 the OIG released the report, Some Medicare Advantage Companies Leveraged Chart Reviews and Health Risk Assessments to Disproportionately Drive Payments. In it, the OIG claims that a minority of Medicare Advantage companies are claiming a disproportionate share of reimbursements. From the report:

Our findings raise concerns about the extent to which certain MA companies may have inappropriately leveraged both chart reviews and HRAs to maximize risk adjusted payments. We found that 20 of the 162 MA companies drove a disproportionate share of the $9.2 billion in payments from diagnoses that were reported only on chart reviews and HRAs, and on no other service records. These companies’ higher share of payments could not be explained by the size of their beneficiary enrollment. Each company generated a share of payments from these chart reviews and HRAs that was more than 25 percent higher than its share of enrolled MA beneficiaries.

The OIG recommended in the report that CMS should provide oversight of these 20 Medicare Advantage companies and perform periodic monitoring.

Finally, at a recent hearing held by the Energy and Commerce subcommittee on oversight and regulations, lawmakers cited several concerns about widening disparities in coverage between traditional Medicare and Medicare Advantage plans, among other concerns. Leslie Gordon, the Government Accountability Office’s acting director for healthcare, testified that the GAO designated Medicare Advantage as a “high risk program” and urged immediate reforms and recommendations, including that CMS take steps to better validate Medicare Advantage encounter data including medical record review.

All these reports point toward a similar conclusion: The practice of reporting diagnoses that lack clinical support and/or fail to meet criteria for compliant HCC reporting is being closely watched, improper Medicare Advantage denials are being scrutinized, and calls for returned overpayments are coming. 

And we now know that these plans won’t be let off the hook for past or future sins. In a recent ruling the Supreme Court of the United States rejected a UnitedHealth appeal of the Medicare Advantage overpayment rule, paving the way for recoupments.

Takeaways

CDI and coding professionals operating in Medicare Advantage networks play a critical role in protecting their organizations against audits and lawsuits, including diagnoses ultimately used for HCC assignment. Some are already serving in this capacity, but the numbers are too low.

Outpatient CDI—which often, though not always, includes review and improvement of chronic conditions, for the purposes of compliant capture of HCC codes among other purposes, including preventing more costly admissions—has not been adopted as quickly as some hoped/predicted. A poll asked on an episode of the August 2021 ACDIS Podcast indicated that just 24% of more than 400 listeners were engaged in outpatient CDI (the same number was borne out in a 2021 CDI Week Industry Overview Survey). 

For those not involved in OP CDI, the largest bucket (30%) said a lack of staff or dedicated resources and time were their largest obstacle.

Hospital organizations need to invest in more than just HCC capture software solutions. They need to invest in people. CDI professionals know the difference between an old acute condition that no longer has any bearing on a given patient’s treatment, and one that is chronic and the subject of ongoing monitoring and treatment that should be appropriately captured. Machines do not.

We sometimes hear that artificial intelligence (AI) is a panacea that will fix all problems, but AI remains a tool that needs to work in concert with a human being. Machines that flag diagnoses and ask providers to redocument them, without supporting MEAT criteria (I.e., whether the diagnosis was monitored, evaluated, assessed, treated), will lead to upcoding and the high-profile audits shown above. Just as much as Medicare Advantage plans that only focus on revenue improvement, not record integrity.

CDI and coding professionals add contextual thinking to determine patient acuity, educate providers on the perils of self-coding, and recognize outdated problem lists that require maintenance and should not be used for blind code assignment by a machine. Prospectively reviewing patient charts and reminding physicians to redocument appropriate diagnoses, if they meet MEAT criteria, is not inappropriate or fraudulent, if the conditions exist and are being treated. On the other hand, mining for old conditions and reporting them regardless of clinical support will get your organization in trouble.

A final word: Many of the audits and actions listed above are under dispute. As is the case with the complicated, 50 shades of grey healthcare system we operate under, Medicare Advantage organizations will counter with evidence that their claims submissions are compliant, and diagnoses vetted for accuracy prior to submission. Some organizations will be proven innocent; others will face recoupment or other, stiffer penalties. Time will tell the full story.

But these audits and lawsuits should be viewed as both a warning, and a clarion call, to get your outpatient CDI programs up and running. The financial health, compliance, and reputation of your hospitals depend on them.

For further information

For a well-balanced primer on Medicare Advantage I recommend this article by The Commonwealth Fund: https://www.commonwealthfund.org/publications/explainer/2022/may/medicare-advantage-policy-primer#14 

About the author  

Brian Murphy is the founder and former director of the Association of Clinical Documentation Integrity Specialists (2007-2022). In his current role as Branding Director of Norwood he enhances and elevates careers of mid-revenue cycle healthcare professionals.

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