Federal officers resolved greater than a decade in the past to crack down on whopping authorities overpayments to non-public Medicare Benefit medical insurance plans, which have been siphoning off billions of tax {dollars} yearly.
However Facilities for Medicare & Medicaid Companies officers have but to demand any refunds — and over time the non-public insurance coverage have morphed right into a politically potent juggernaut that has signed up greater than 33 million seniors and is aggressively lobbying to stave off cuts.
Critics have watched with alarm because the business has managed to deflate or deflect monetary penalties and steadily achieve clout in Washington by means of political contributions; tv promoting, together with a 2023 Tremendous Bowl function; and different actions, together with mobilizing seniors. There’s additionally a revolving door, wherein senior CMS personnel have cycled out of presidency to take jobs tied to the Medicare Benefit business after which returned to the company.
Sen. Chuck Grassley (R-Iowa) mentioned Medicare Benefit fraud “is losing taxpayer {dollars} to the tune of billions.”
“The query is, what’s CMS doing about it? The company should tighten up its controls and work with the Justice Division to prosecute and get well improper funds,” Grassley mentioned in an announcement to KFF Well being Information. “Clearly that’s not taking place, a minimum of to the extent it must be.”
David Lipschutz, an legal professional with the Middle for Medicare Advocacy, a nonprofit public curiosity legislation agency, mentioned policymakers have an unsettling historical past of yielding to business stress. “The well being plans throw a mood tantrum after which CMS will again off,” he mentioned.
Authorities spending on Medicare Benefit, which is dominated by massive medical insurance firms, is anticipated to hit $462 billion this yr.
New particulars of the federal government’s failure to rein in Medicare Benefit overcharges are rising from a Division of Justice civil fraud case filed in 2017 towards UnitedHealth Group, the insurer with probably the most Medicare Benefit enrollees. The case is pending in Los Angeles. The DOJ has accused the enormous insurer of dishonest Medicare out of greater than $2 billion by mining affected person data to search out further diagnoses that added income whereas ignoring overcharges which may have diminished payments. The corporate denies the allegations and has filed a movement for abstract judgment.
Data from the court docket case are surfacing because the Medicare Benefit business ramps up spending on lobbying and public relations campaigns to counter mounting criticism.
Whereas critics have argued for years that the well being plans value taxpayers an excessive amount of, the business additionally has come beneath hearth extra not too long ago for allegedly scrimping on very important well being care, even dumping lots of of 1000’s of members whose well being plans proved unprofitable.
“We acknowledge it is a essential second for Medicare Benefit,” mentioned Rebecca Buck, senior vice chairman of communications for the Higher Medicare Alliance, which types itself as “the main voice for Medicare Benefit.”
Buck mentioned initiatives geared toward slashing authorities funds could immediate well being plans to chop very important providers. “Seniors are saying loud and clear: They’ll’t afford insurance policies that may make their well being care costlier,” she mentioned. “We need to ensure that Washington will get the message.”
AHIP, a commerce group for well being insurers, additionally has launched a “seven-figure” marketing campaign to advertise its view that Medicare Benefit offers “higher care at a decrease value,” spokesperson Chris Bond mentioned.
Revolving Door
CMS, the Baltimore-based company that oversees Medicare, has lengthy felt the sting of business stress to gradual or in any other case stymie audits and different steps to cut back and get well overpayments. These points typically entice little public discover, despite the fact that they’ll put billions of tax {dollars} in danger.
In August, KFF Well being Information reported how CMS officers backed off a 2014 plan to discourage the well being plans from overcharging amid an business “uproar.” The rule would have required that insurers, when combing sufferers’ medical data to determine underpayments, additionally search for overcharges. Well being plans have been paid billions of {dollars} by means of the information mining, referred to as “chart evaluations,” in accordance with the federal government.
The CMS press workplace declined to answer written questions posed by KFF Well being Information. However in an announcement, it referred to as the company a “good steward of taxpayer {dollars}” and mentioned partially: “CMS will proceed to make sure that the MA program provides strong and steady choices for individuals with Medicare whereas strengthening cost accuracy in order that taxpayer {dollars} are appropriately spent.”
Courtroom data from the UnitedHealth case present that CMS efforts to tighten oversight stalled amid years of technical protests from the business — equivalent to arguing that audits to uncover overpayments have been flawed and unfair.
In a single case, Jeffrey Grant, a CMS official who had decamped for a job supporting Medicare Benefit plans, protested the audit components to a number of of his former colleagues, in accordance with a deposition he gave in 2018.
Grant has since returned to CMS and now could be deputy director for operations on the company’s Middle for Shopper Data and Insurance coverage Oversight. He declined to remark.
At the least a dozen witnesses within the UnitedHealth case and the same DOJ civil fraud case pending towards Anthem are former rating CMS officers who departed for jobs tied to the Medicare Benefit business.
Marilyn Tavenner is one. She led the company in 2014 when it backed off the overpayment regulation. She left in 2015 to go business commerce group AHIP, the place she made greater than $4.5 million throughout three years on the helm, in accordance with Inside Income Service filings. Tavenner, who’s a witness within the UnitedHealth case, had no remark.
And in October 2015, as CMS division chiefs have been batting round concepts to crack down on billing abuses, together with reinstating the 2014 regulation on information mining, the company was led by Andy Slavitt, a former govt vice chairman of the Optum division of UnitedHealth Group. The DOJ fraud swimsuit focuses on Optum’s information mining program.
Within the authorized proceedings, Slavitt is recognized as a “key custodian relating to ultimate choice making by CMS” on Medicare Benefit.
“I don’t have any consciousness of that dialog,” Slavitt instructed KFF Well being Information in an e mail. Slavitt, who now helps run a well being care enterprise capital agency, mentioned that in his CMS tenure he “was recused from all issues associated to UHG.”
‘Improper’ Funds
CMS officers first laid plans to curb escalating overpayments to the insurers greater than a decade in the past, in accordance with paperwork filed in August within the UnitedHealth case.
In a January 2012 presentation, CMS officers estimated that they had made $12.4 billion price of “improper funds” to Medicare Benefit teams in 2009, principally as a result of the plans did not doc that sufferers had the circumstances the federal government paid them to deal with, in accordance with the court docket paperwork.
As a treatment, CMS got here up with an audit program that chosen 30 plans yearly, taking a pattern of 201 sufferers from every. Medical coders checked to verify affected person recordsdata correctly documented well being circumstances for which the plans had billed.
The 2011 audits discovered that 5 main Medicare Benefit chains did not doc from 12.3% to 25.8% of diagnoses, mostly strokes, lung circumstances, and coronary heart illness.
UnitedHealth Group, which had the bottom price of unconfirmed diagnoses, is the one firm named within the CMS paperwork within the case file. The identities of the 4 different chains are blacked out within the audit data, that are marked as “privileged and confidential.”
In a Could 2016 non-public briefing, CMS indicated that the well being plans owed from $98 million to $163 million for 2011 relying on how the overpayment estimate was extrapolated, court docket data present.
However CMS nonetheless hasn’t collected any cash. In a shock motion in late January 2023, CMS introduced that it will accept a fraction of the estimated overpayments and never impose main monetary penalties till 2018 audits, which have but to get underway. Precisely how a lot plans will find yourself paying again is unclear.
Richard Kronick, a former federal well being coverage researcher and a professor on the College of California-San Diego, mentioned CMS has largely did not rein in billions of {dollars} in Medicare Benefit overpayments.
“It’s affordable to assume that stress from the business is a part of the rationale that CMS has not acted extra aggressively,” Kronick mentioned.
CMS data present that officers thought of strengthening the audits in 2015, together with by limiting well being plans from conducting “house visits” to sufferers to seize new prognosis codes. That didn’t occur, for causes that aren’t clear from the filings.
In any case, audits for 2011 by means of 2015 “usually are not but ultimate and are topic to vary,” CMS official Steven Ferraina said in a July court docket affidavit.
“It’s galling to me that they haven’t recovered greater than they’ve,” mentioned Edward Baker, a whistleblower legal professional who has studied the difficulty.
“The federal government must be extra aggressive in oversight and enforcement of the business,” he mentioned.
Senior CMS official Cheri Rice advisable within the October 2015 e mail thread with key workers that CMS may commit extra sources to supporting whistleblowers who report overbilling and fraud.
“We predict the whistleblower exercise might be as efficient – or much more efficient – than CMS audits in getting plans to do extra to stop and determine threat adjustment overpayments,” Rice wrote.
However the handful of circumstances that DOJ may realistically deliver towards insurers can not substitute for CMS fiscal oversight, Baker mentioned.
“Sadly, that makes it seem that fraud pays,” he mentioned.
Spending Surge
In December, a bipartisan group of 4 U.S. senators, together with Invoice Cassidy (R-La.), wrote to CMS to voice their alarm in regards to the overpayments and different issues. “It’s unclear why CMS hasn’t taken stronger motion towards overpayments, regardless of this being a longstanding subject,” Cassidy instructed KFF Well being Information by e mail.
In January, Sen. Elizabeth Warren (D-Mass.) and Rep. Pramila Jayapal (D-Wash.) referred to as for CMS to crack down, together with by proscribing use of chart evaluations and residential visits, referred to as well being threat assessments, to extend plan revenues.
Cassidy, a doctor, mentioned that “upcoding and abuses of chart evaluate and well being threat assessments are well-known issues CMS may tackle instantly.”
Advocates for Medicare Benefit plans, whose greater than 33 million members comprise over half of individuals eligible for Medicare, fear that an excessive amount of deal with cost points may hurt seniors. Their analysis exhibits most seniors are pleased with the care they obtain and that the plans sometimes value them much less out-of-pocket than conventional Medicare.
Buck, the spokesperson for the Higher Medicare Alliance, mentioned that because the annual open enrollment interval begins in mid-October, seniors may even see “fewer advantages and fewer plan decisions.”
The group has ramped up whole spending in recent times to maintain that from taking place, IRS filings present.
In 2022, the latest yr obtainable, the Higher Medicare Alliance reported bills of $23.1 million, together with greater than $14 million on promoting and promotion, whereas in 2023, it paid for a Tremendous Bowl advert that includes seniors in a bowling alley and left viewers with the message: Slicing Medicare Benefit was “nuts.”
Bruce Vladeck, who ran CMS’ predecessor company from 1993 by means of 1997, mentioned that when authorities officers first turned to Medicare managed care teams within the Nineteen Nineties, they rapidly noticed well being plans enlist members to assist press their agenda.
“That’s totally different from most different well being care supplier teams that foyer,” Vladeck mentioned. “It’s a political weapon that Medicare Benefit plans haven’t been in any respect reluctant to make use of.”
The Higher Medicare Alliance reported lobbying on 18 payments this yr and final, in accordance with OpenSecrets. Some are particular to Medicare Benefit, equivalent to one requiring insurers to report extra detailed information about remedies and providers and one other to increase the advantages they’ll provide, whereas others extra broadly concern well being care prices and providers.
Proposed reforms apart, CMS seems to imagine that eliminating well being plans that allegedly rip off Medicare may go away weak seniors within the lurch.
Testifying on behalf of CMS in a Could 2023 deposition within the UnitedHealth Group swimsuit, former company official Anne Hornsby mentioned some seniors may not “discover new suppliers simply.” Noting UnitedHealth Group is the one greatest Medicare Benefit contractor, she mentioned CMS “is fascinated about defending the continuity of care.”
KFF Well being Information is a nationwide newsroom that produces in-depth journalism about well being points and is without doubt one of the core working applications at KFF — the impartial supply for well being coverage analysis, polling, and journalism.
