How to Prevent Medicare Advantage Fraud, Waste, and Abuse

US Department of Health and Human Services (HHS) Office of Inspector General Christi A. Grimm gave a lecture at the 2023 RISE National Conference in early March 2023 about Medicare Advantage, or Medicare Part C, and the increased risk of fraud due to the rapid growth of healthcare programs. According to Grimm, the risk of alleged fraud and abuse in Medicare Advantage by plans, vendors, and providers is not to be ignored. This year, 50% of Medicare enrollees are expected to sign up for Medicare Advantage. The increase in the milestone plan’s popularity means it’s more important than ever to identify the risks that may accompany it.

Fraud is an unfortunate part of the healthcare space that affects every payer — from government programs to private insurance companies and everything in between. Medicare Advantage will be no exception. Grimm cited one case in particular of a husband and wife who owned a medical equipment company that fraudulently billed Medicare Part B for orthotic braces. OIG’s enforcement action hindered their original scheme, but the couple continued with their fraudulent billing. This time, they opted to open a new company, but they used their exact same address and then instead billed Medicare Advantage — not Medicare Part B — for the equipment. As Medicare Advantage continues to grow, the risk of provider-level fraud will also increase.

OIG identified a number of other program risks, including upcoding, stinting on care, and misreporting data. Their work shows that program risks in Medicare can have a huge impact for payers, with improper payments potentially costing hundreds of millions of dollars and barriers being imposed on enrollees receiving care. Another big problem OIG has identified involves risk adjustments. Medicare is designed to compensate for sicker patients, but plans can easily stint on care and upcode a patient’s diagnosis.

For example, an OIG report from 2021 examined various Medicare Advantage companies and found that they received over $9 billion in risk adjustment payments in just one year. These risk adjustment payments were for conditions that only appeared in assessments in chart reviews. 20 Medicare Advantage companies accounted for $5 billion of that amount, and OIG found that half a billion dollars ($533 million) in risk adjustment payments were made for patients diagnosed with serious mental illness, including major depressive, bipolar, and paranoid disorders. But upon closer inspection, OIG found there were no service records to show that those plan enrollees received treatment for those conditions. Another $390 million in risk adjustment payments were made for patients who have diabetes with chronic complications, and $122 million was billed for patients with metastatic cancer and acute leukemia. But again, no evidence of treatment was found.

In-home assessments made by plan vendors and partners can also contribute to questionable diagnoses. The top 8 vendors or partners accounted for 89% of the diagnoses with no associated service record. These trends in upcoding and risk adjustment payments certainly raise questions about how to ensure patients with legitimate health problems and needs can receive care and whether the diagnoses submitted are accurate.

Compliance Tips to Reduce Fraud, Waste, and Abuse

Inspector General Grimm offered three value propositions to combat fraud, waste, and abuse in Medicare Advantage. For starters, Grimm stated that “healthy compliance is smart business” because plans have a stake in the Medicare Advantage program achieving its goal of delivering safe, sustainable, and affordable care. Fraud, waste, and abuse ultimately impede that goal and jeopardize the future success of both the program and the plans. “Proactively addressing fraud, waste, and abuse within plans can lead to greater efficiency, better customer service for enrollees, improved public perception, and better plan ratings,” Grimm added.

For attorneys, being proactive can also reduce the risk of qui tam (whistleblower) lawsuits, which often have serious reputational, legal, and financial repercussions. Effective risk reduction creates a “feedback loop” that makes Medicare Advantage even more attractive for future enrollees, policymakers, Congress, shareholders, and investors. “Again, it’s just smart business practice,” said Grimm.

Second, Grimm stated that Medicare Advantage is under increased scrutiny from OIG, so payers and plans should embrace self-policing and rigorous oversight. After all, downplaying the value of oversight carries serious organizational risk, and companies that dismiss problems may find themselves defending their actions later in other forums, like lawsuits. Plans can demonstrate they take fraud, waste, and abuse seriously by self-policing and effectively responding to any issues they may discover.

Third, Grimm explained that because fraud schemes are becoming increasingly sophisticated, plans should work closely with law enforcement to combat illegal activity. If an act of fraud is left undetected or unaddressed, that fraud scheme can have a contagion effect and spread to other plans. “One plan’s health or lack thereof affects the broader population of plans, and each plan has tremendous potential to protect the larger community,” Grimm stated. Working with law enforcement and taking steps to improve lines of communication with other plans can help you detect and stop fraud early.

OIG Increases Scrutiny and Enforcement for Medicare Advantage

Inspector General Grimm ended her lecture with three points about what OIG is doing to combat fraud in Medicare Advantage. First, OIG plans to hold wrongdoers accountable and take swift action against those who defraud Medicare Advantage. This includes fraud committed by plans and providers, as well as fraud against plans, enrollees, and the program. OIG plans to do this by partnering with plans’ investigative units and compliance officials, including the Department of Justice, the Federal Bureau of Investigation, and the Centers for Medicare & Medicaid Services.

Second, OIG will promote access to high-quality care. Efforts include adopting value-based care models with providers, figuring out how to address social determinants of health for enrollees, and deploying technologies to better connect and coordinate care. OIG is also ramping up work to ensure plans meet program requirements in the delivery of care. One way they will accomplish this is by examining issues like network adequacy, benefit design, prior authorization, and payment denials.

Lastly, OIG will provide comprehensive financial oversight of risk adjustment payments to ensure the ongoing integrity of Medicare Advantage. Their goal is to see how program changes affect payment accuracy, and OIG plans to examine other financial issues like bonus payments and medical-loss ratios. OIG will also review payments made by plans to providers and vendors to assess how vendor and contract payments and performance affect the financial integrity of Medicare Advantage.

Break Down Silos Through a Shared Commitment to Provider Network Integrity

Ultimately, being proactive and prioritizing actions to prevent fraud, waste, and abuse in Medicare Advantage is a necessary step compliance managers, plans, and payers should take to uphold the integrity of their plans and organizations. Improved integrity will allow both private plans and Medicare to deliver safe, effective, fraud-free care to the over 31 million seniors and people with disabilities that it currently serves. “I can tell you with great certainty that you will see us expanding our oversight of Medicare Advantage in the coming months and years,” said Grimm. “Now is truly the time to embrace the benefits of proactive, effective compliance actions and oversight.”

ProviderTrust is a healthcare data and technology company based in Nashville, Tennessee that empowers a safer healthcare for patients, providers, and payers by leveraging always-accurate compliance intelligence.

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