GAO finds Medicare Advantage plans overpaid $5.1 billion

A photo of dollar bills falling from skyJust last month, I wrote about how the government was falling short in its job to collect hundreds of millions of dollars in Medicaid overpayments. That news came from a report released by the Department of Health and Human Services’ Office of the Inspector General.

The saga continues with another report from the Government Accountability Office which finds that insurers that offer Medicare Advantage plans received up to $5.1 billion in overpayments between 2010 and 2012. These plans are offered by private companies that contract with Medicare to provide both Part A and Part B benefits.

The GAO audit is critical of how the Centers for Medicare and Medicaid Services (CMS) calculated payment rates for Medicare Advantage plans.  It notes that the plans are incentivized to adjust the risk scores for private Medicare beneficiaries versus public fee-for-service patients.

The report found the following:

GAO estimated that cumulative Medicare Advantage (MA) risk scores in 2010 were 4.2 percent higher than they likely would have been if the same beneficiaries had been enrolled continuously in Medicare fee-for-service (FFS). For 2011, GAO estimated that differences in diagnostic coding resulted in risk scores that were 4.6 to 5.3 percent higher than they likely would have been if the same beneficiaries had been continuously enrolled in FFS. This upward trend continued for 2012, with estimated risk scores 4.9 to 6.4 percent higher.

While CMS did not change its risk score adjustment methodology for 2013, agency officials said they may revisit their methodology for future years.

Click here to read the full report.


Medicare Secondary Payer Act preempts state law

Jan. 2, 2013 – A lawsuit against 15 insurers in New York Supreme Court alleging they violated state law by going after patients for reimbursement who receive personal injury settlements has been dismissed.

The case involved the Medicare Secondary Payer Act, which is intended to prevent Medicare Advantage plans from claiming reimbursement of health care benefits from their enrollees who recover accident-related payments from third parties.

According to federal law, payments by Medicare Advantage Plans (MA Plans) are secondary to recoveries by beneficiaries in accident and other tort cases.

The plaintiffs claimed that efforts by the MA Plans violated a New York law which states that recoveries in an action for personal injuries, medical, dental, or podiatric medicine, or wrongful death, are conclusively presumed not to include any compensation for the cost of healthcare services. Accordingly, recoveries by individuals and settlement of such claims would not be available for reimbursement to insurers who provide health benefits related to such events.

The court held that the federal law that governs MA Plans preempts the state law and permits the MA Plans to seek recovery of benefits paid if an enrollee receives compensation in settlement of such claims.

Click here to read more.


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