Consumer Fraud

Note to Whistleblowers: Feds Fail To Recover Most Medicare Advantage Overpayments

Pills Stethascope on Money 435x289 Note to Whistleblowers: Feds Fail To Recover Most Medicare Advantage OverpaymentsA new Congressional audit performed by the Government Accountability Office (GAO) found that privately administered Public Medicare Advantage plans systematically overbill the government billions of dollars, but they are rarely forced to repay the money or penalized for their actions.

The GAO audit, which was prompted by a Center for Public Integrity investigation exposing billing fraud among the plans, illuminates the government’s serious shortcomings in recouping vital Medicare funds from companies aiming to boost their profits.

Medicare Advantage Plans enroll more than 17 million seniors and receive more than $160 billion from the government every year. The Center for Public Integrity’s “Medicare Advantage Money Grab” report documented nearly $70 billion in improper payments to the health plans from 2008 through 2013, and that is just part of the picture.

The GAO report sharply criticized the methods that the Centers for Medicare and Medicaid Services use to detect overcharges and recover overpayments, especially what the Center for Public Integrity calls “a secretive and lengthy audit process called Risk Adjustment Data Validation (RADV),” which “has cost the government way more than it has returned to the treasury.”

According to the GAO, the Department of Health and Human Services (HHS) has spent about $117 million on RADV audits but has recovered just $14 million. HHS argues that just the threat of an audit has moved the health plans to return about $650 million in overpayments to the government, but that is just a mere fraction of the estimated total overpayments.

“Medicare officials have quietly conducted these audits since 2008,” the Center for Public Integrity explained. “But they have never imposed stiff financial penalties even as evidence built up that billing errors were deeply rooted and wasting tax dollars at an alarming clip.”

Much of the billing fraud is rooted in a billing formula called a “risk score,” which bills at higher rates for sicker patients and less for patients in good health – a practice known as “upcoding.” Since their introduction in 2004, however, risk scores have been run on the honor system. Some reviews of risk score payments have found that nearly a third of patients enrolled in 22 private health plans weren’t as sick as billing statements indicated.

Moreover, the Centers for Medicare and Medicaid Services allow audits and appeals to drag on for years, the GAO said, pointing to audits of 2007 payments still under appeal.

However, the government’s struggle to recover overpayments underscores an area where whistleblowers can – and often do – play a substantial role. According to the Center for Public Integrity, at least half a dozen whistleblowers have filed False Claims Act lawsuits that accuse Medicare Advantage plans of inflating Medicare charges.

The False Claims Act allows whistleblowers with the inside scoop to be the eyes and ears for the government in cases of suspected fraud and other wrongdoing that otherwise would likely remain hidden from outside regulatory authorities.

Since January 2009, the U.S. Department of Justice has recovered a total of more than $27.4 billion through False Claims Act cases, with more than $17.4 billion of that amount recovered in cases involving fraud against federal health care programs. The majority of those recoveries resulted from whistleblower actions.

The Center for Public Integrity
Righting Injustice