Fred Schulte, KFF Health News
Medicare Advantage well being plans are blasting a authorities proposal this week that may hold their reimbursement charges flat subsequent 12 months whereas making different cost adjustments.
But some well being coverage specialists say the plan may assist scale back billions of {dollars} in overcharges which have been frequent in this system for greater than a decade.
On Jan. 26, Centers for Medicare & Medicaid Services officers introduced they deliberate to lift charges paid to well being plans by less than a tenth of a percent for 2027, far lower than the trade anticipated. Some of the biggest, publicly traded insurers, equivalent to UnitedHealth Group and Humana, noticed their stock prices plummet in consequence, whereas trade teams threatened that folks 65 and older may see service cuts if the federal government didn’t kick in extra money.
In Medicare Advantage, the federal authorities pays non-public insurance coverage corporations to handle well being take care of people who find themselves 65 and older or disabled. But much less seen within the brouhaha over charges: CMS additionally proposed limiting plans from conducting what are known as “chart reviews” of their clients. These critiques can lead to new medical diagnoses, typically together with situations sufferers haven’t even requested their docs to deal with, that improve authorities funds to Medicare Advantage plans.
The observe has been criticized for greater than a decade by authorities auditors who say it has triggered billions of {dollars} in overpayments to the well being plans. Earlier this month, the Justice Department introduced a record $556 million settlement with the nonprofit well being system Kaiser Permanente over allegations the corporate added about half 1,000,000 diagnoses to its Advantage sufferers’ charts from 2009 to 2018, producing about $1 billion in improper funds.
KP didn’t admit any wrongdoing as a part of the settlement.
“I do think the administration is serious about cracking down on overpayments,” mentioned Spencer Perlman, a well being care coverage analyst in Bethesda, Maryland.
Perlman mentioned that whereas the Trump administration strongly helps Medicare Advantage, officers are “troubled” by plans that rake in undue income through the use of chart critiques to invoice the federal government for medical situations even when no remedy was supplied.
In a news release, CMS Administrator Mehmet Oz mentioned curbing this observe would guarantee extra correct funds to the plans whereas “protecting taxpayers from unnecessary spending that is not oriented towards addressing real health needs.”
“These proposed payment policies are about making sure Medicare Advantage works better for the people it serves,” Oz mentioned.
Richard Kronick, a former federal well being coverage researcher and a professor on the University of California-San Diego, known as the proposal “at least a mildly encouraging sign,” although he mentioned he suspected well being plans would possibly ultimately discover a manner round it.
Kronick has argued that switching seniors to Medicare Advantage plans has price taxpayers tens of billions of {dollars} greater than maintaining them within the government-run Medicare program, due to unbridled medical coding excesses. The insurance coverage have grown dramatically lately and now enroll about 34 million members, or greater than half of individuals eligible for Medicare.
David Meyers, an affiliate professor on the Brown University School of Public Health, known as the proposed restriction on chart critiques “a step in the right direction.”
“I think the administration has been signaling pretty strongly they want to cut back on inefficiencies,” he mentioned.
The outcry from trade, largely directed on the proposal to basically maintain Medicare Advantage cost charges flat, was fast and sharp.
“If finalized, this proposal could result in benefit cuts and higher costs for 35 million seniors and people with disabilities when they renew their Medicare Advantage coverage in October 2026,” mentioned Chris Bond, a spokesperson for AHIP, previously often called America’s Health Insurance Plans.
CMS is accepting public feedback on the proposal and says it’s going to concern a closing choice on the cost charges and different provisions by early April.
Meyers mentioned well being plans typically declare they are going to be pressured to slash advantages once they aren’t happy with CMS funds. But that hardly ever occurs, he mentioned.
“The plans can still make money,” he mentioned. “They mostly are very profitable, just not as profitable as shareholders expected.”
The authorities pays Medicare Advantage plans greater charges to cowl sicker sufferers. But over the previous decade, dozens of whistleblower lawsuits, government audits, and other investigations have alleged that well being plans exaggerate how sick their clients are to pocket funds they don’t deserve, a tactic recognized within the trade as “upcoding.”
Many Medicare Advantage well being plans have employed medical coding and analytics consultants to overview sufferers’ medical charts to search out new diagnoses that they then invoice to the federal government. Medicare guidelines require that well being plans doc — and deal with — all medical situations they invoice.
Yet federal audits have proven for years that many well being plans’ billing practices don’t maintain as much as scrutiny.
A December 2019 report by the Department of Health and Human Services inspector basic discovered that the well being plans “almost always” used chart critiques so as to add, moderately than delete, diagnoses. “Over 99 percent of chart reviews in our review added diagnoses,” investigators mentioned.
The report discovered that diagnoses reported solely on chart critiques — and never on any service information — resulted in an estimated $6.7 billion in funds for 2017.
This week’s proposal will not be the primary time CMS has tried to crack down on chart critiques.
In January 2014, federal officers drafted a plan to limit the observe, solely to abruptly back off a number of months later amid what one company official described as an “uproar” from the trade.
The medical insurance trade has for years relied on aggressive lobbying and public relations campaigns to struggle efforts to rein in overpayments or in any other case scale back taxpayers’ prices for Medicare Advantage.
What occurs this time will say loads about whether or not the Trump administration is severe about cracking down on controversial, long-standing cost practices in this system.
Perlman, the coverage analyst, mentioned it’s “quite common” for CMS to partially backtrack when confronted with opposition from the trade, equivalent to by phasing in adjustments over a number of years to melt the blow on well being plans.
David Lipschutz, an lawyer with the Center for Medicare Advocacy, a nonprofit public curiosity regulation agency, mentioned finalizing the chart overview proposal “would be a meaningful step towards reining in overpayments to Medicare Advantage plans.”
But prior to now, he mentioned, even a minor change to Advantage funds has led the trade to protest that “the sky will fall as a result, and the proposal is usually dropped.”
“It’s hard to tell at this stage how this will play out,” Lipschutz mentioned.
KFF Health News is a nationwide newsroom that produces in-depth journalism about well being points and is among the core working packages at KFF—an impartial supply of well being coverage analysis, polling, and journalism. Learn extra about KFF.
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